The Zhitong Finance App learned that BOC International released a research report stating that the target price of the New Oriental-S (09901) was lowered to HK$89 without considering Oriental Selection (01797), corresponding to the price-earnings ratio of 33 and 27 times in FY2024/25 and 48% profit growth in FY2025, maintaining a “buy” rating. Due to increased investment in Oriental Selection, the Group's operating margin forecast was lowered from 14% and to 12.8%.
The bank indicated that it raised revenue by 4% and 24% for the 2024/25 fiscal year, driven by Oriental Selection and the volume of cultural tourism revenue. After the quarterly results were released, the stock price closed down 14%, mainly affected by short-term pressure on profit margins. The current price corresponds to 20 times the price-earnings ratio of the education business. The bank believes that demand for education and training and the company's business performance are still steady. It is expected that education revenue will increase by 30% in fiscal year 2025, and profit margins will continue to be optimized. In addition, New Oriental's revenue for the third fiscal quarter of fiscal year 2024 was 1.2 billion US dollars, an annual increase of 60%, compared with the bank's expected growth rate of 44%, mainly driven by the growth of new education businesses and Oriental Select's own operations. The adjusted net profit to mother was US$105 million, lower than the bank's estimate of US$120 million.