Jinwu Financial News | According to Shen Wan Hongyuan Research Report, New Oriental (09901) announced results for the third quarter of FY24 (3QFY24, 2023.12-2024.2), with revenue of US$1.27 billion, up 60.1% year on year, and non-GAAP net profit of US$105 million, up 9.8% year on year. Revenue exceeded expectations, and its high growth continued to be driven by the literacy training business and study abroad business.
According to the bank, because the company further increased the speed of network expansion, the company's operating profit margin remained flat year-on-year due to preemptive costs such as rent and hiring additional teachers. However, the bank believes that with multiple quarterly reports achieving a high increase in the non-disciplinary literacy training business, the market will focus on the company's growth, so the profit margin pressure brought about by preemptive costs and expenses under capacity expansion will no longer hinder the company's valuation increase.
Due to accelerated capacity expansion, the bank raised the company's 24/25/26 revenue to US$4.21 billion, US$5.42 billion, and US$7.04 billion (the original forecast was US$4 billion, US$5.22 billion and US$6.72 billion). The bank maintained profit forecasts for the 24/25/26 fiscal year of $482 million, $664 million, and $869 million. Maintain the target price of 110.81 US dollars under the SOTP valuation, corresponding to a 43.8% increase in the current price, and maintain the purchase rating.