FY24Q2 revenue of US$870 million increased 36%, and non-GAAP net profit of US$50 million increased 183% of the FY24Q2 (23/9/1-11/30) Group revenue of US$870 million, an increase of 36%, or about RMB 6.2 billion, driven by new education businesses and Oriental e-commerce. Considering the depreciation of RMB, we expect the RMB caliber to grow even faster.
FY24Q3 revenue guidance was US$1.07 to 1.09 billion, up 42-45% from the same period, or higher in RMB.
FY24Q2's net profit to mother was US$0.3 billion, and non-GAAP net profit of US$50 million increased by 183%, or approximately RMB 360 million; FY24Q2's non-GAAP OPM was 5.9%, up 3.3 pct; and non-GAAP NPM was 5.8%, up 3 pcts.
FY24H1 Group's revenue of US$1.97 billion increased 42%, net profit of US$195 million increased 193%, and non-GAAP revenue of US$240 million increased 136%. The company's various business lines are fully blossoming, and the growth in scale is expected to continue to drive an increase in profitability.
As of the end of the FY24H1 quarter, New Oriental's deferred revenue was 1.65 billion US dollars, an increase of 44%; the total amount of cash and equivalents, term deposits, and short-term investments was 4.8 billion US dollars; and FY24Q2's net operating cash flow was 300 million US dollars.
New businesses have maintained high growth, traditional business demand is still strong. Teaching outlets continue to expand, FY24Q2's new business revenue also increased 68%, including 790,000 Q2 registrants for non-subject courses, an increase of 65%; 180,000 active paying users of intelligent learning systems and equipment increased 68%; and the retention rate of new business users continued to increase, along with improved product and service quality, and increased student satisfaction.
In terms of traditional business, demand for terminals is still strong. FY24Q2 companies' overseas exam preparation revenue also increased by 47%, overseas consulting increased by 32%, and exam preparation for adults and college students also increased by 43%.
The number of outlets continued to expand. As of the end of November, the total number of company schools and learning centers was 843 (including 83 schools), an increase of 50 from the end of August, an increase of 135 over the previous year; network expansion may have accelerated slightly, sending a positive signal.
We believe that the current education and training industry policy is stabilizing. Under strong demand, leading institutions still have a lot of room for growth. At the same time, profitability is rapidly recovering, and we are firmly optimistic about the current education and training cycle.
Raise profit forecasts and maintain “buy” ratings
We continue to be optimistic that in the context of clearing the supply side of education and training institutions and releasing backlog demand, New Oriental's market share will further increase. The expansion of outlets shows confidence in business growth, and new businesses such as non-subject training continue to grow rapidly; in addition, after experiencing the Oriental selection storm, the new accounts have gradually returned to a steady state, and new accounts have performed brilliantly; new cultural tourism businesses are gradually being launched, with good potential for growth.
Considering the company's performance this quarter, we raised our profit forecast. We expect the company's FY24-26 revenue to be US$45, 57,7.3 billion (US$4.2 billion and US$5.3 billion before FY24-25, respectively), and net profit to mother of US$4.5, 6.0, and 790 million US dollars (pre-FY24-25 values were US$4.0 and 520 million, respectively), and the corresponding EPS would be $0.27, 0.36, and $0.48 per share (previous value of FY24-25 was $0.24 and $0.32 per share, respectively). 32, 24, 18x
Risk warning: risks such as enrollment falling short of expectations; new business development falling short of expectations; under-expectations for college students and adults; and changes in high school subject training policies.