Since BABA returned to Hong Kong for secondary listing on November 26th last year, Chinese stocks have set off a trend of secondary listing. After BABA, JD.com, NetEase, Inc, ZTO Express and other high-quality Chinese stocks accelerated their return, and companies such as Baidu, Inc., Trip.com and New Oriental Education & Technology Group were also on their way. These "exiled" overseas core assets finally give Hong Kong and mainland investors the opportunity to share the development dividend.

New Oriental Education & Technology Group will soon become the first education group to be listed in Hong Kong through a listing hearing on the Hong Kong Stock Exchange on the evening of October 23rd. The most established education group in China has taken the lead in secondary listing in Hong Kong, just as it first landed on the New York Stock Exchange and has always been at the forefront of industry development.

Next, we start from New Oriental Education & Technology Group's prospectus to analyze its fundamentals and investment value.

How did New Oriental Education & Technology Group become New Oriental Education & Technology Group?

New Oriental Education & Technology Group was founded in 1993. With a history of 27 years, we believe that it can be divided into three stages:

From 1993 to 2003, from its founding to becoming the absolute first in the service of studying abroad.Since the 1980s, the country has ushered in reform and opening up, the spring breeze of reform and opening up has blown all kinds of industries in China, and the education industry is no exception. With the improvement of people's living standards, the mode of studying abroad has gradually changed from being mainly public to studying abroad at one's own expense. The number of Chinese students studying abroad has shown an explosive growth, and the overseas training market is extremely hot. New Oriental Education & Technology Group has seized this wave of industry dividends. After ten years of development, the company has become a leader in the field of language training for overseas students.

From 2004 to 2015, the market pattern of studying abroad has been determined, and the strategic focus has shifted to K12 after-school tutoring.In 2004, New Oriental Education & Technology Group founded Bubble Children and began to enter the field of extracurricular tutoring in K12, dedicated to providing one-stop educational services for children aged 3 to 12. In 2008, New Oriental Education & Technology Group announced the establishment of YouNeng Middle School. Provide a full range of extracurricular tutoring services for junior and high school students between the ages of 12 and 18. Through the comprehensive layout of K12 for bubble children and YouNeng Middle School, New Oriental Education & Technology Group seized the tuyere of K12 after-school tutoring and quickly became a giant in the field of K12 training.

From 2016 to now, K12 offline training and online education go hand in hand.Online education has become a new wind. As early as 2005, New Oriental Education & Technology Group set up a professional online education website New Oriental Education & Technology Group online, and launched general tutoring in public courses for the postgraduate entrance examination. Since then, the main business has been extended to English, postgraduate entrance examination, overseas study examination and so on. In 2019, New Oriental Education & Technology Group vigorously promoted the OMO model and initially established a "dual platform strategy" based on "OMO education platform + pure online education platform" to realize the deep integration of offline and online business.

Throughout the development of New Oriental Education & Technology Group, it can be said that it has condensed the changes of Chinese education in the past three decades. New Oriental Education & Technology Group is the largest private education service provider in China in terms of total net revenue and the network of schools and learning centers in the fiscal year ended May 31, 2020.

After 27 years of development, New Oriental Education & Technology Group has become an all-round education group covering overseas study services, K12 after-class tutoring, online education, adult language training, research and publication of teaching materials, etc.

The Core competence of New Oriental Education & Technology Group

New Oriental Education & Technology Group's several successful "turns" is one of the reasons why he is still active at the top of private education today. Of course, this is only the result. If we take a closer look at the reasons, what we want to know is, what is New Oriental Education & Technology Group's core competitiveness? What makes this oldest training institution "old and strong"?

Combined with the development process of the company, we believe that, in addition to the consistent adherence to the nature of education, New Oriental Education & Technology Group mainly has three core competitiveness: brand advantage, talent advantage and management advantage.

1. Brand advantage

Brand can be said to be the most valuable quality of an educational institution. In the "wave of studying abroad" in China in the 1990s, New Oriental Education & Technology Group rapidly grew into a No.1 of overseas study guidance by virtue of first-mover advantages and high-quality service, and established the "national" brand of private education. From 2018 to 2020, New Oriental Education & Technology Group has been recognized as one of the "top 50 most valuable business service brands" by Brand Finance for three consecutive years, and is also the only education company on the list in China, which can confirm its brand value.

Strong brand power is the guarantee to quickly gain the trust of users and establish user connections. New Oriental Education & Technology Group continues to lay out new areas, such as K12, small languages, online education, etc., and even to form today's education "aircraft carrier", thanks to a strong brand.

two。 Talent advantage

The second is the advantage of talents, no matter how strong the architecture is inseparable from people. New Oriental Education & Technology Group is known as the "Whampoa military Academy" in the field of education. Luo Yonghao, Xu Xiaoping, Zhang Jindong and Sha Yunlong all came from New Oriental Education & Technology Group. New Oriental Education & Technology Group can be said to be the place where the sea accepts all rivers and rivers.

New Oriental Education & Technology Group's attractiveness to talents on the one hand comes from its sound training system and career development plan, on the other hand, it is due to competitive and motivational remuneration. New Oriental Education & Technology Group advocates famous teachers, but does not rely on famous teachers, because he has a strong training system and growth soil for famous teachers.

3. Management advantage

The management team represented by Yu Minhong, founder of New Oriental Education & Technology Group, has rich experience in the private education industry. In the management of the company, New Oriental Education & Technology Group also advocated the principle of "democracy", did not engage in "arbitrary", and made concerted efforts to make the company avoid many holes in the process of development and growth.

New Oriental Education & Technology Group's democratic management is not separate, but based on a unified value, that is, the principle of the best interests of customers. Under a unified value, the company's decision-making will not be shaken by personal likes and dislikes and personal interests.

Of course, in addition to these three core competencies, New Oriental Education & Technology Group also derived many competitive advantages, which together constitute the cornerstone of New Oriental Education & Technology Group's everlasting prosperity.

The acceleration of OMO strategy

OMO, or Online-Merge-Offline, means deep integration of online and offline. This concept is not a new concept, the early double-division education can be regarded as an OMO model.

In September this year, New Oriental Education & Technology Group made public his latest development strategy for the first time: "dual platform, dual engine, dual support." "the dual platform here refers to the OMO education platform and the pure online education platform, which shows the high strategic position of OMO education. New Oriental Education & Technology Group, as the forerunner of the OMO model, also gives it more meaning, which is actually equivalent to OMO 2.0.

In the past, online and offline integration was limited to a certain link, such as putting the marketing of offline institutions online, or putting online pre-class preview and after-class tutoring in teaching. New Oriental Education & Technology Group's OMO model is in-depth from marketing to trading to teaching, as well as teacher training, parent interaction and other links. The OMO system based on big data analysis and artificial intelligence can improve teaching quality, optimize learning experience and improve operational efficiency.

In this year's epidemic, offline training was inevitably hit. New Oriental Education & Technology Group firmly pursued the OMO model, effectively hedging the impact of shrinking offline demand. In the latest FY2021Q1 report, New Oriental Education & Technology Group invested $39 million to improve and maintain the OMO ecosystem and launched OMO courses in about 20 cities to enable his business to recover quickly after the epidemic.

It can be said that New Oriental Education & Technology Group's OMO model has basically run smoothly, and it can be predicted that the OMO model will be applied to more cities next, providing an increment for the growth of enrollment in the post-epidemic era.

Sound financial position

As of May 31, 2020, New Oriental Education & Technology Group has operated 104 schools, 1361 learning centers, 12 bookstores and online learning platforms in 91 cities across the country, with a total of more than 55.4 million students. As a leader in the education and training industry, New Oriental Education & Technology Group has maintained steady revenue growth in recent financial years, from US $2.447 billion in FY2018 to US $3.579 billion in FY2020, with a compound annual growth rate of 20.9%.

Gross profit also grows steadily with the size of the company, and the gross profit margin is stable at more than 50%.

The company's profitability is outstanding, and the net profit attributed to the parent company has increased from $296 million in FY2018 to $413 million in FY2020, with a compound annual growth rate of 18.1%. FY2020's annual return net profit rose 73.6 per cent compared with the previous year.

Steady revenue, stable profits, as well as New Oriental Education & Technology Group OMO model and online business, New Oriental Education & Technology Group in the epidemic to maintain the overall performance stability. Revenue for the three months ended Aug. 31, 2020 was $986 million, a slight decrease compared with the same period last year, mainly because overseas exam preparation business was affected by overseas outbreaks. In fact, Kmuri 12 AST has seen double-digit growth in student attendance in the quarter, reflecting the company's rapid recovery from the effects of the epidemic.

The end.

New Oriental Education & Technology Group's share price has more than tripled since 2019, and New Oriental Education & Technology Group continues to widen his boundaries outside his original business. It turns out that Elephant can also dance.

According to the prospectus, New Oriental Education & Technology Group's most important role in this fund-raising is to continue innovation and technology investment as well as to improve the OMO system, which shows the strategic position of OMO. The second listing, for New Oriental Education & Technology Group, seems to set out again, and OMO is the booster engine to dance again.