New Oriental Education & Technology Group (NYSE:EDU) announced that it will release its results for the fiscal third quarter ending February 28, 2018 before the US stock market opens on April 24, 2018.
The education industry has also brought the popularity of 2017 to 2018, and the education industry is still accelerating its running, financing, strategic cooperation, and international layout. It seems to be changing all the time.
What kind of answer will New Oriental Education & Technology Group, one of the two heroes in the domestic education industry, give to many investors in the third quarter?
(photo source: New Oriental Education & Technology Group's official website)
First, the analyst forecasts
According to Bloomberg data, analysts predict New Oriental Education & Technology Group Q3:
Revenue was $604 million, up 38% from the same period last year.
Adjusted net profit was $82.729 million, up 9% from a year earlier.
Adjusted earnings per share were $0.168, up 10.6 per cent from a year earlier.
In terms of ratings, of the 26 analysts covered by Bloomberg:
A total of 24 people were given a "buy" rating, accounting for 92.3%
2 gave a "hold" rating, accounting for 7.7%；
No analyst gave a "sell" rating, accounting for 0%.
Analysts predicted an average target price of $107.19, with New Oriental Education & Technology Group at $91.11 as of press date.
2. Focus on the financial report
1. Sound performance and healthy growth prospects
Guided by its time-tested strategy of "optimizing the market", New Oriental Education & Technology Group has steadily promoted its expansion in cities with strong growth potential. The company reported last quarter that total net income in the second quarter of fiscal 2018 increased by 36.9% year-on-year. The steady income growth was mainly due to a 43 per cent year-on-year increase in enrollment.
Speed up the construction of its learning center network
New Oriental Education & Technology Group is currently entering a period of rapid expansion, especially seeing the market potential of K12, which will continue to expand in the future. New Oriental Education & Technology Group expects total net income in the third quarter of fiscal 2018 to be between $59.11 billion and $604.2 million, up 35-38 per cent from a year earlier.
Robust earnings per share growth andReturn on net assets
The company's profit for fiscal 2018 is expected to grow by 15.5% compared with the same period last year. Revenue for fiscal year 2019 is expected to grow by 35.2%. Meanwhile, the company's sales are expected to grow by 32.8% this year and 30.9% next year.In addition, New Oriental Education & Technology Group has a stable long-term (3-5 years) expected earnings per share growth rate of 31.8%, higher than the industry average of 16.9%.New Oriental Education & Technology Group's return on equity (ROE) in the last 12 months shows its growth potential. In the past 12 months, ROE was 16.2%.
2. Innovation and progress
Deep Application of artificial Intelligence
At the beginning of 2018, Yu Minhong wrote "using AI and deep learning to further improve the effectiveness, efficiency and standardization of education" in his New year's resolution. He believes that technology + education must be the effect of 1: 1 > 2, and artificial intelligence can also promote the universal development of global educational resources. In addition, New Oriental Education & Technology Group also plans to invest 1.5 billion yuan in technology + education and family education to further promote the upgrading of education and the development of educational science and technology.
Third, risk tips
Last quarterThe net profit was halved
New Oriental Education & Technology Group reported on January 23 that net income for the second quarter of fiscal 2018 was $467 million, up 36.9% from a year earlier, while net profit was $4.279 million, down 58.7% from a year earlier. On the day of the announcement, the company's share price fell by more than 8%.It is worth noting that the company's operating losses as well as operating costs and expenses have increased significantly.In the second quarter of fiscal 2018, it reported an operating loss of $13.1 million, compared with a profit of $200000 in the same period last fiscal year. In terms of operating costs and expenses, it rose 40.8% year-on-year, or about $480 million.
Fierce competition for new business
New Oriental Education & Technology Group, who started with overseas study examination training, has continuously stepped up his efforts to enter the field of K12 education in recent years, and the revenue of this business has become the company's main revenue, as New Oriental Education & Technology Group's core business. Behind betting on K12 education is New Oriental Education & Technology Group's slowing revenue growth in the overseas study abroad examination business. In fact, a number of giants are cutting the market cake in the K12 field.TAL Education Group added K12 education and led Dada English $100m in round C financing. In addition, EF Children's English, Excellence Education and other enterprises are also involved in the K12 field from different angles.
Brain drain problem
Public data show that Hu Min, former president of New Oriental Education & Technology Group, founded the New Waterway International Education Group after leaving office; Chen Xiangdong, former chief executive of New Oriental Education & Technology Group Group, founded who to learn from after leaving; and Wei Xiaoliang, who once served as assistant to the future president of New Oriental Education & Technology Group, founded Zhijie Network after leaving office. Executive turnover not only has a certain impact on New Oriental Education & Technology Group's operation, but also takes away certain resources, and has a certain competitive relationship with the original enterprise in business, which indirectly weakens the competitiveness of New Oriental Education & Technology Group's business. (editor / Yang Weiyi)