FY22Q4 performance overview: as of the end of May 22, the company's revenue for the fourth quarter of fiscal 22 was-56.8% to $520 million, gross profit rose 0.5% to 52.7%, operating profit loss was $110 million, and return profit was-$190 million. In fiscal year 2022, the company's revenue-27.4% to $3.11 billion, gross profit down 8.9% to 43.5%, operating profit loss of $980 million, parent profit loss of $1.19 billion. At the end of fiscal year 22, the company's deferred income-$51.6 to $930 million and net cash of $4.13 billion, the company plans to spend $400 million on buybacks in fiscal year 23. Q1 in fiscal year 23 (June-August 22), the company expects its sales revenue to be $6.40-680 million, down 48-51% from a year earlier, and Q1 is expected to start making a profit in fiscal 23.

Business adjustment completed: the huge loss in fiscal year 22 is mainly due to the drastic adjustment of the company's business after the double reduction policy, such as divestiture of K9 business, closure of stores, dismissal of compensation employees, etc., most of these adjustments have been completed. As of the fourth quarter of fiscal 22, the company closed 103 to 744 stores.

Start of the new business structure in fiscal year 23: the new fiscal year will be the adjusted business structure, including:

1. The original overseas training business (including overseas exam preparation and consulting), the business of preparing for exams abroad in fiscal year 22 increased by 6%, and the business of consulting abroad increased by 16% compared with the same period last year (in US dollars). 2. High school business, the original high school business remains in operation in the cities where it is allowed according to the local education and training supervision policies. 3. The domestic exam preparation business of college students, the income of this part of the business is + 30% in fiscal year 22. 4. Non-disciplinary training is carried out in more than 50 cities, intelligent learning systems and equipment are adopted and tested in nearly 60 cities, the top 10 cities contribute 60% of their income, student feedback is positive, and the retention rate continues to rise. will become an important growth engine for the development of the company in the future. In addition, the company's travel and research camp is carried out in more than 50 cities. 5. New Oriental Education & Technology Group online (e-commerce live broadcast) and other new businesses, the company holds about 56% stake in New Oriental Education & Technology Group online, and the number of fans selected by Oriental has reached 23.43 million, making it one of the Douyin head delivery platforms, which is expected to bring considerable revenue for the company's fiscal year 23.

Target price of US $41.30 / HK $32.40, maintain buy rating: the company still has the New Oriental Education & Technology Group brand, 90% of the senior management team retention, nearly 700 + outlets and 50, 000 employees, at a time of business development and stock price downturn, the company began buyback plus equity incentives. We expect the company's revenue in fiscal year 23 to reach 160-17 billion yuan, which is about 60% of the revenue in fiscal year 21 (before double reduction). We expect the company to make a profit from fiscal year 23, and the profit margin and cash flow will continue to grow in the future. We use DCF to estimate that wacc12%, will continue to grow by 2%, maintaining the company's target price of US $41.30 / HK $38.3 and giving it a buy rating.