Jinwu Financial News | According to BOC International Development Research Report, New Oriental (09901) will release results for the 3rd quarter of fiscal year 2024 on April 24 (Beijing time), with estimated revenue of US$1,088 billion, +44% year over year (RMB 7.78 billion, +50% year over year). The adjusted operating profit is estimated to be US$130 million and net profit of US$120 million. Compared with previous expectations, gross profit and operating profit margin were lowered by US$12 million, and the operating profit/net profit margin was reduced by 1 percentage point to 12%/11%. This was mainly affected by the downward trend in Oriental Selection's profit margin due to factors such as expansion, supply chain construction, and daily brand activity.
According to the bank, the K9 related literacy and learning machine business continued to grow rapidly, and the revenue contribution rose to 22%, an increase of 5 percentage points over the previous year. Oriental Selection's revenue growth accelerated, but profit margins may drop 4 percentage points to 16% year over year, offsetting New Oriental Education's profit margin optimization.
The bank raised its revenue forecast for the 2024/25 fiscal year by 1%, with an estimated compound revenue growth rate of 22%/26% for 2024-2026. Although profit margin optimization space may be affected by Oriental Selection in the short term, the main education industry is still growing healthily and steadily. Considering the increase in the industry's valuation center, the price-earnings ratio of the education business was raised 25 times in 2024, and Oriental Selection's valuation remained 20 times in 2024. By segment plus method (SOTP), the target price was raised to HK$94/120 (HK$75 EDUUS, originally HK$75)/ $96), maintaining the buy rating.