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Market Update | Hong Kong educational stocks continue their strong performance from yesterday, with New Oriental's two-day cumulative increase of approximately 20%. The education industry is experiencing marginal policy improvements, and AI + education is
Minsheng Securities believes that the education Industry is experiencing a "three-dimensional resonance" of policy marginal improvements, industry supply clearing, and industry demand release, making valuation advantages increasingly significant.
NEW ORIENTAL-S (09901.HK): Profit margin in the Education Business rebounds, and normalized buybacks may boost valuation.
Investment highlights: We expect New Oriental's revenue for Q4 FY25 to be 1.186 billion USD, a year-on-year increase of 4.4%. Among this, the education Business (including cultural tourism) is projected to generate 1.034 billion USD in revenue, a year-on-year increase of 13.3%. Other Business (
In "Large Action", CICC: New Oriental (09901.HK) continues to digest the pressure of core Business growth, with improving profitability.
CICC published a research report indicating that the growth pressure on NEW ORIENTAL-S (09901.HK) (EDU.US) core Business continues to be digested, with improved profitability. It is expected that by the end of May 2025, the quarterly revenue will grow 5% year-on-year to 1.197 billion USD; Non-GAAP operating profit is expected to be 38.06 million USD, corresponding to a Non-GAAP operating profit margin of 3.2%, remaining flat year-on-year. Excluding EAST BUY (01797.HK), CICC estimates that the revenue of NEW ORIENTAL's core Business will grow 13% year-on-year to 1.037 billion USD, broadly in line with the company's previous guidance.
Hong Kong education stocks have further increased, with NEW ORIENTAL-S rising over 9% and EDVANTAGE GROUP rising nearly 5%.
On June 25, Gelonghui reported that Hong Kong education stocks further expanded their gains, with NEW ORIENTAL-S and DADI EDU rising over 9%, BESTSTUDY EDU and TIANLI INT HLDG rising over 7%, QINGDAO HLDGS and VIRSCEND EDU rising over 5%, EDVANTAGE GROUP rising nearly 5%, and LEADER EDU rising over 3%. Six departments including the central bank stated that Financial Institutions are encouraged to provide loans for sectors such as education.
J.P. Morgan Upgrades New Oriental(EDU.US) to Buy Rating, Raises Target Price to $62
China Merchants has maintained the Target Price of $63 for New Oriental (EDU.US) and keeps the Buy rating.
China Merchants published a research report, predicting that New Oriental (09901.HK)(EDU.US) will have a year-on-year revenue increase of 5% to 1.2 billion USD in the fourth quarter of fiscal year 2025, with core education business revenue growing by 13% year-on-year, in line with the guidance previously issued by the company. The report mentioned that due to the robust growth of the K12 business and the capacity expansion plan, it is Bullish on the company's revenue growth and profit margin expansion prospects for fiscal year 2026. The report stated that New Oriental had exhausted its 0.7 billion USD stock repurchase quota by the end of April, and it is expected that the company may announce a new shareholder return plan by the end of July, which could be through dividends or stocks.
