20250424-招银国际-Overseas-related_business_drags_revenue_growth_6页_1mb

报告摘要

New Oriental (EDU US) Summary

Core Content and Key Information

New Oriental, a major player in the education sector, reported its 3QFY25 results, indicating a net revenue decline of 2% YoY to US$1.18bn, or a growth of 21% YoY to US$1.04bn when excluding revenue from East Buy. This aligns with the company's guidance, but the non-GAAP net income fell by 14% YoY to US$113mn, slightly below the Bloomberg consensus estimate of US$120mn. The decline is primarily attributed to the deceleration in revenue growth of overseas-related businesses and investment in the tourism business.

Main Business Performance Highlights

Overseas-related businesses: Account for approximately 25% of total revenue, with YoY growth of 7% and 21% in 3QFY25, a notable slowdown from previous quarters (+21% and +31% in 2QFY25).
Domestic test prep revenue: Increased by 17% YoY, contributing around 3% of total revenue in 3QFY25.
New educational business initiatives: Grew by 35% YoY, representing 27% of total revenue in 3QFY25, with non-academic tutoring course enrolment up by 15% YoY to 408k.
Intelligent learning system and devices: Active paid users rose by 64% YoY to 309k.

For 4QFY25E, the company expects the following growth rates:

Overseas-related business: 8% YoY
Domestic test prep: 19% YoY
New educational initiatives: 30% YoY
High-school tutoring: 16% YoY

However, the overseas-related business is expected to further decelerate due to macroeconomic uncertainty and geopolitical tensions.

Financial Performance and Earnings Outlook

FY	Revenue (US$ mn)	YoY Growth (%)	Adjusted Net Profit (US$ mn)	EPS (Adjusted) (US$)	Consensus EPS (US$)	P/E (x)
FY23A	2,998	43.9	381.1	2.30	2.30	23.6
FY24A	4,314	-3.5	259	2.30	2.30	23.6
FY25E	4,816	11.7	431.4	2.67	2.98	17.9
FY26E	5,445	13.1	576.4	3.57	3.68	13.6
FY27E	6,039	10.9	763.5	4.73	4.56	10.6

The non-GAAP operating margin was 13.3% in 3QFY25, down 1.8ppt YoY, due to slower growth in high-margin overseas-related businesses and investment in the tourism sector. However, management anticipates margin expansion in 4QFY25E and FY26E through cost reduction initiatives and improved facility utilization.

Valuation and Target Price

The target price for New Oriental is US$76.00, down from US$80.00, reflecting revisions in earnings forecasts and pressure from overseas-related businesses.

SOTP Valuation:
- Educational & Consulting Business: Valued at US$13,140.4mn (97% of total valuation), based on a 28x FY25E PE, in line with the educational sector average.
- East Buy: Valued at US$220.4mn, using a 9x FY25E PE, consistent with the e-commerce sector average.
- Tourism and Others Business: Valued at US$197.4mn, using a 10x FY25E PE.

The total valuation is US$13,558.2mn, with a 10% holdco discount, resulting in an adjusted total valuation of US$12,202.4mn. The valuation per ADS is US$76.0.

Investment and Cost Management

New Oriental has accelerated its share repurchase program, with US$153mn spent from 20 Jan to 22 Apr 2025 (representing 2% of market cap). This is part of the company's efforts to improve shareholder value and manage costs.

Analyst Ratings and Recommendations

Ratings: The report recommends a BUY rating, maintaining the previous stance.
Potential Return: The BUY rating implies a potential return of over 15% over the next 12 months.
Current Price: US$44.09, with an up/downside of 72.4% based on the target price.

Analyst Certification and Disclosures

The research analyst certifies that the views expressed in the report reflect personal views and that no compensation was directly or indirectly tied to the report's content. The analyst also confirms that no trading was done in the stocks covered within 30 days prior to the report and will not trade within 3 business days after the report's release.

Risk and Disclaimer

The report is not an offer to buy or sell any securities. It is intended for major US institutional investors only and not for general distribution. CMBIGM does not provide tailored investment advice, and the value of investments is uncertain and subject to market fluctuations.

Conclusion

New Oriental is facing pressure from overseas-related businesses due to macroeconomic uncertainty and geopolitical tensions, leading to revenue deceleration and lower-than-expected earnings. However, the company is investing in AI tools to enhance student performance and improve operational efficiency. Share repurchases and cost management are expected to support long-term value creation. The valuation reflects sector averages, with a revised target price and earnings forecast indicating a conservative outlook for the next few years.