Tianfeng Securities released a research report, stating that New Oriental (09901) released its latest financial report. In FY24Q4 (March 1, 2024 to May 31, 2024), it generated a revenue of $1.14 billion, a YoY increase of 32.1%. The company's Non-GAAP operating profit in FY24Q4 was $0.04 billion, a YoY decrease of 53.8%, and Non-GAAP OPM was 3.2%, a YoY decrease of 5.9 pct. Its net profit was $0.03 billion, a YoY decrease of 6.9%, while Non-GAAP net profit attributable to shareholders was $0.04 billion, a YoY decrease of 40.5%, and Non-GAAP net profit margin was 3.2%, a YoY decrease of 4%.
The bank believes that the main reason for the YoY decrease in FY24Q4 profit is: 1) the company accelerated its investment to expand its educational space and newly integrated cultural and tourism business; 2) raised the salaries and rewards of management and employees; and 3) the short-term impact of East Buy Q4. As subsequent short-term factors disappear and the utilization rate and operational efficiency of branches improve, the pressure on profits may quickly ease.
The bank continues to be bullish on New Oriental's growth prospects as a leading education and training company. Short-term school investment and the one-time impact of East Buy are not hindering the company's long-term growth logic. Guidance on revenue and branch expansion still indicates bullish signals. With the improvement of utilization rate in the future, profits may be quickly released. Considering the one-time impact of the spin-off of its peer Hui, Q4 school opening and subsequent utilization rate climbing.
The bank adjusted its profit forecast, expecting the company's revenue in FY25-27 to be $5.2 billion, $6.4 billion, and $7.5 billion, respectively (compared to the previous values of $5.7 billion and $7.3 billion for FY25-26). The adjusted net profit attributable to shareholders is expected to be $0.56 billion, $0.77 billion, and $1.06 billion, respectively (compared to the previous values of $0.61 billion and $0.88 billion for FY25-26), with EPS of $0.3, $0.4, and $0.6 per share (compared to the previous values of $0.35 and $0.52 per share for FY25-26), corresponding to PEs of 18x, 13x, and 9x, respectively. Maintain a "buy" rating.