The company released FY24Q3 financial report
FY24Q3 (November 2023-February 24) revenue of $1.2 billion, up 60%; OP (operating profit) of $110 million, up 71%; non-GAAP OP of $140 million, up 60%; net profit to mother of $87 million, up 6.8%; non-GAAP net profit of $100 million, up 10%; FY24q3non-GAAP OPM 11.7%, FY23q3non-GAAP OPM 11.7%.
FY24Q1-3 (June 2023-February 24) revenue of $3.2 billion, up 49%; OP $340 million, up 139%; non-GAAP OP of $4.4 billion, up 117%; net profit to mother of $280 million, up 91%; non-GAAP net profit of US$340 million, up 75%; FY24q1-3non-GAAP OPM 13.7%; FY23q1-3non-GAAP OPM 9.4%.
As of February 29, 2024, the total number of schools and learning centres was 911, an increase of 68 compared with 843 as of November 30, 2023, and an increase of 199 compared with 712 as of February 28, 2023. As of February 29, 2024, the total number of schools was 81.
Preparation for the FY24Q3 overseas exam and overseas consultation continued to grow strongly, with increases of about 52.6% and 25.7% respectively; at the same time, domestic exam preparation services for adults and college students also increased by about 53.2%.
Revenue from the new education business also increased by 72.7%; of these, non-subject tutoring was launched in nearly 60 cities, with 355,000 registrations; intelligent learning systems and devices were also used in about 60 cities, and the number of active paying users reached 188,000 during the fiscal season.
In addition to strong growth, New Oriental is unswervingly committed to improving the quality of teaching and providing students with a rich learning experience, which at the same time has led to a continuous increase in customer retention. New Oriental is confident that with its excellent brand advantages and rich educational resources, it has the ability to seize various market opportunities now and in the future.
This quarter, New Oriental continued to expand teaching space and steadily improve profitability in cities with growth potential and higher utilization rates of facilities. To support the strong recovery of remaining businesses and the rapid development of new education businesses, New Oriental continues to invest resources to develop OMO and apply new technology to improve the quality of education and products.
Furthermore, it continues to invest in the development of “Oriental Selection” to strengthen the development of its own products and expand into different channels to attract a larger customer base with high-quality products and innovative live streaming content. While “Oriental Selection” continues to develop, it is also implementing comprehensive initiatives, including strengthening the supply chain system to better control food safety and product quality, expanding product types and increasing SKUs, and striving to provide high-quality and value-for-money products.” The education business benefited from strong revenue growth, as well as improvements in facility utilization and teaching resources. OP continued to record significant growth in the FY24Q3 fiscal quarter, continuing its positive development in the previous few quarters. The company recorded a net operating cash flow of approximately US$110 million in the FY24Q3 fiscal quarter. As of the end of the FY24Q3 fiscal quarter, total cash and cash equivalents, time deposits and short-term investments totaled approximately US$4.8 billion.
The company expects net revenue in RMB to grow between 34% and 37% in FY2024Q4.
Adjust profit forecasts to maintain “buy” ratings
Due to the company's rapid addition of outlets and operating scale effects, and considering the new school climbing, employee incentives, and FY24Q3 fiscal quarter OPM performance; future increases in full capacity will drive profit improvement; we slightly lowered FY24 and raised FY25 and FY26 performance forecasts; we expect FY24-26's revenue to be 4.5 billion US dollars, 5.7 billion US dollars, and 7.3 billion US dollars respectively; FY24-26's non-GAAP net profit to mother is US$420 million, US$610 million, and 100 million US dollars (FY24-8.8), respectively 26. The previous value was US$450 million, US$600 million, and US$790 million respectively); FY24-26's EPS was $0.21, $0.35, and $0.52, respectively, and FY24-26's PE was 41xPE, 25xPE, and 17xPE, respectively.
Risk warning: risks such as falling short of expectations in enrollment; falling short of expectations in new business development; falling short of expectations for college students and adults; and changes in high school subject training policies.