Daiwa released a research report, maintaining a 'buy' rating on New Oriental-S (09901), lowering revenue forecast for the 2025-26 fiscal year by 3-5%, and lowering earnings per share forecast for the 2025 fiscal year by 2%, due to lower expected commodity trade volume (GMV) of Eastbuy, with a target price of HKD 78.
The report pointed out that New Oriental announced its Q4 performance for fiscal year 2024, with non-GAAP operating margin lower than market expectations by 47%, which is disappointing. This is primarily due to the expenses of Eastbuy and the group's expansion being faster than expected, as well as one-off compensation. The group expects revenue to increase by 31-34% YoY and a 200-basis-point expansion in operating margin in Q1 2025, higher than the bank's expectations. The group also accelerated its share buyback, buying back shares worth $0.1 billion in Q4 of fiscal year 2024.