GLONGHUI, August 2 | China Merchants Securities released a report stating that New Oriental's revenue for the fourth quarter of fiscal year 2024 increased 32% year-on-year, in line with expectations; the non-GAAP operating margin was 3.2%, 3 percentage points lower than market expectations, mainly due to increased investment and one-time expenses related to the Dongfang Selection spin-off and the Huitong incident. The bank believes that the spin-off with Hui is only a short-term impact, and suggests that it should focus on the strong prospects of the core education business and the trend of expanding profit margins. New Oriental management maintained an offline expansion rate of 20% to 25% for FY2025. The bank believes that steady offline expansion will lay a solid foundation for revenue growth in the education business. It is expected that the revenue of the education business will increase by 33% and 30% year-on-year in the first quarter of fiscal year 2025 and fiscal year 2025, respectively. The bank maintained its forecast of 21% year-on-year revenue growth for the 2025 and 2026 fiscal years, but due to the negative impact of the spin-off with Hui, the non-GAAP net profit forecast was lowered by 12% and 11% to 0.537 billion and 0.71 billion US dollars, which meant a year-on-year increase of 41% and 32%. In the bank's forecast for New Oriental, Oriental's non-GAAP net profit accounted for about 7% and 6%. The bank lowered its target price from HK$84 to HK$75, maintaining an “plus” rating, and believes that strong growth in its core education business is stable.