Incidents:
New Oriental released its FY2024Q4 quarterly report. From March to March 2024, the company's net revenue was 1.137 billion/ +32.1%, operating profit 10.53 million/ -78.1%, net profit to mother 26.97 million/ -6.9%; non-GAAP operating profit 36.32 million/ -53.8%; non-GAAP net profit of 36.93 million/ -40.5%; revenue side Exceeded the previous guideline's upper limit of $11.02 to $1.127 billion. The estimated net revenue for FY2025Q1 (excluding Dongfang Select's proprietary live e-commerce business) is 12.5-1.28 billion US dollars/+31-34%.
Comment:
The new education business maintained a high growth rate. By business, overseas examinations and overseas consultations also increased by 17.7% and 17.3%, domestic examinations and training services for adults and college students also increased by 16.4%, and new education services also increased by 50.3%.
Revenue growth during the peak summer season is a guide to continuing the boom expectations of the main education industry.
The accelerated expansion of the education business, integrated investment in the cultural tourism business, and the increase in remuneration and rewards have an impact on short-term profit margins. After short-term disturbances are eliminated, the profitability of the main business is expected to recover steadily. The company's comprehensive gross profit margin was 52.3% /-2 pct; sales expense ratio 18.3% /+1 pct, management expense ratio 33.0% /+1 pct; non-GAAP operating margin 3.2% /-6 pct, non-GAAP net profit margin 3.2% /-4 pct.
The expansion of offline outlets is accelerating, and operating data is showing a high increase in cash. By the end of the FY2024Q4 quarter, the number of company schools and learning centers had reached 1,025 units/+37% YoY, a net increase of 114, and FY2024Q1/FY2024Q2/FY2024Q3, a net increase of 36/45/50/68, respectively. The number of non-subject tutoring registrants is 0.875 million/ +39%, intelligent learning systems and devices are used in about 60 cities, and active paying users are 0.188 million/ +90%.
Investment advice: Policies and regulations are gradually being clarified and refined, and New Oriental's advantages as an industry leader are highlighted in the current supply and demand pattern. Considering the continued restoration of traditional businesses and the accelerated growth of new businesses, FY2025-FY2027 is estimated to have net profit of 0.49/0.615/0.765 billion dollars and non-GAAP operating profit of 0.638/0.827/1.045 billion US dollars, maintaining the “buy” rating.
Risk warning: macroeconomic fluctuations and increased market competition.