New Oriental announced last night that its board of directors has approved the expansion of its share buyback plan. According to the announcement, New Oriental will increase the total amount of the share buyback plan from $400 million to $700 million, with the validity period extended to May 31, 2025.

On the evening of the announcement of the buyback plan, New Oriental's US stocks rose significantly, with a gain of 13.38% and a market value of $12.248 billion. Other education stocks also rose sharply, with Gaotu up more than 8% and TAL Education up more than 5%.

On the morning of August 7, New Oriental's Hong Kong stocks opened more than 13% higher, but then quickly fell back. As of now, the increase has narrowed to 3%, with a reported price of HKD 54.1; Hong Kong education stocks rose, with Siasun Robot Education up more than 15%, Cambridge Education up more than 10%, and China East Education and New Higher Education Group followed suit.

Splurging $700 million to buy back stocks.

According to New Oriental's announcement on the evening of August 6, the company's board of directors has approved adjustments to the share buyback plan.

According to the adjustment, the total value of stocks authorized for repurchase by the company under the buyback plan has increased from $400 million to $700 million, and the validity period of the expanded buyback plan has been extended to May 31, 2025.

As of the date of the above announcement, the company has repurchased approximately $330 million worth of American depositary shares.

New Oriental currently has sufficient funds for share buybacks. The latest financial report shows that as of May 31, 2024, New Oriental held $1.389 billion in cash and cash equivalents. In addition, the company has nearly $1.5 billion in time deposits and $2.07 billion in short-term investments.

According to a New Oriental official, the main reason for expanding the buyback plan is that the company has great confidence in itself and hopes that investors will have confidence as well.

"The company will consider using a portion of the repurchased equity for employee incentives in the future." the official revealed, adding that New Oriental basically issues a portion of its equity incentives every few years.

In addition, New Oriental will hold a board meeting on August 19 to consider and propose a special dividend.

Strong growth in education business.

Prior to this, New Oriental released its 2024 half-year report, showing a significant increase in revenue.

The company's total revenue in the first half of the 2024 fiscal year was $1.97 billion, up 42% compared to the first half of the 2023 fiscal year's $1.38 billion. This growth was mainly due to the revenue growth of New Oriental's new education business as well as the revenue growth of Eastbuy's own brand products and live e-commerce business.

New Oriental's financial report for the fourth quarter of the 2024 fiscal year ending on May 31, 2024 shows that the financial quarter's revenue growth of the new education business was 50.3%, with rapid momentum.

Behind the financial report, Yu Minhong is also quietly expanding: as of the end of May, New Oriental had a total of 1,025 schools and learning centers nationwide, an increase of 277 compared to the previous year, and offline teaching points are expected to expand by 20%-25%.

Yu Minhong also revealed on the financial report conference call that in the fourth quarter of 2024, New Oriental's overseas exam preparation and study abroad consulting businesses grew by about 17.7% and 17.3% year-on-year respectively, and non-academic tutoring courses were available in approximately 60 cities, attracting about 875,000 students to enroll.

In addition, other listed education companies have also successively released performance pre-announcement positive news.

Xueda Education expects to achieve a net profit of RMB 1.3 billion to RMB 1.85 billion in the first half of 2024, an increase of 46.32% to 108.23% year-on-year, and basic earnings per share are expected to be between RMB 1.0645 and RMB 1.5148.

Scholar Education expects its revenue in the first half of 2024 to reach RMB 380 million, a year-on-year increase of 51.2% from the same period last year. At the same time, the expected net profit attributable to shareholders will be no less than RMB 80 million, an increase of 86.5% year-on-year.

Fenbi is expected to have revenue of no less than 1.61 billion RMB in the first half of 2024; net profit of no less than 0.255 billion RMB, a year-on-year growth rate of more than 212.9%.

The industry's prosperity is expected to continue.

On the policy level, the recent release of the "Opinions of the State Council on Promoting the High-quality Development of Service Consumption" has injected new vitality into the education and training institutions, giving hope to this once highly scrutinized industry to regain its vitality.

The market generally holds a positive attitude towards the comments about the education and training sector in the "Opinions".

Citic securities believes that the release of this policy provides policy support for the education and training industry. Under this guidance, the education and training industry may usher in new development opportunities. In the education sector, citic securities particularly mentioned professional education and non-disciplinary training in two directions. They believe that the policy may provide financial support for the development of informatized vocational education and high quality vocational education, while continuing to support the development of private vocational education. Non-disciplinary training institutions mentioned in the "Opinions" are seen as a direction of industry development to improve service quality for the public demand. Citic securities believes that non-disciplinary training, as a beneficial supplement, has not changed its position and the pattern of supply and demand is expected to continue.

Sealand securities pointed out that affected by the policy and business environment in the past three years, the education industry has gradually completed its structural adjustment. From 2023, the industry growth has been recovering. Whether it is nationwide brand institutions, regional education and training institutions or online institutions, they have actively adapted to the new environment and requirements, showing good trends in revenue and profit.