CICC: upgrade the rating of New Oriental to "outperform the industry", and raise the target price to $28

The bank pointed out that the current market value of New Oriental $New Oriental(EDU.US)$ was lower than its cash on hand, which failed to reflect the value of its existing or new business. Therefore, it upgraded its rating to "outperform the industry", and suggested that it should pay attention to the recovery of the continuous profitability of its business and the development of new business.

CICC expects that the company will focus on the development of new businesses and the recovery of existing businesses in fiscal 2023. It is estimated that existing businesses will contribute about 65% to 70% of revenue in fiscal 2023, while new businesses and New Oriental online $EAST BUY(01797.HK)$ platform will contribute the remaining 30% to 35%.

Considering the smooth development of new business and the increase of New Oriental online revenue contribution, the revenue forecast for fiscal year 2023 is raised to $2.17 billion, and the revenue is expected to reach $2.41 billion in fiscal year 2024. CICC predicts that the net profit of 2023 and 2024 fiscal years will reach US $49 million and US $179 million under non GAAP, and the target price of US stocks will be raised to US $28.