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New Oriental Education & Technology Group Inc Ordinary Shares 09901

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Stock XHKG Rating as of
HKD 67.70 +0.40 (0.59%)
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Company Report

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New Oriental's Current Growth Momentum Unlikely to Maintain

Cheng Wang

After terminating its K-9 academic tutoring in 2021, New Oriental identified a few new business initiatives, such as nonacademic tutoring and intelligent learning systems and devices, etc. We are positive on these initiatives given New Oriental’s expertise in after-school tutoring and curriculum development. The new businesses accounted for only about 17% of revenue in fiscal 2023 but growth is robust. We project 30% revenue contribution by fiscal 2028.

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Price vs Fair Value

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09901 is trading within a range we consider fairly valued.
Price
HKD 67.30
Fair Value
HKD 79.00
Uncertainty
Very High
1-Star Price
HKD 29.00
5-Star Price
HKD 71.00
Economic Moat
Vcjzg
Capital Allocation
Pkyqwyxx

Bulls Say, Bears Say

Bulls

The margin trend of New Oriental's new businesses is better than expected.

Bears

High school academic after-school tutoring as a for-profit business carries very high policy risk.

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Trading Information

Previous Close Price
HKD 67.30
Day Range
HKD 66.80–68.40
52-Week Range
HKD 28.25–77.05
Bid/Ask
HKD 67.70 / HKD 67.80
Market Cap
HKD 112.05 Bil
Volume/Avg
2.6 Mil / 3.6 Mil

Key Statistics

Price/Earnings (Normalized)
36.74
Price/Sales
4.03
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
1.34%

Company Profile

New Oriental is a leading private education provider in China. K-9 academic after-school tutoring used to account for 50%-60% of New Oriental’s revenue before the regulatory crackdown in 2021. After terminating its K-9 academic after-school tutoring business, New Oriental has identified a few new initiatives such as nonacademic tutoring and intelligent learning systems and devices. The remaining businesses include high school academic after-school tutoring and overseas-related test preparation and consulting business. It also owns 55% of East Buy (HKG: 01797), a market leader in livestreaming e-commerce.
Sector
Consumer Defensive
Industry
Education & Training Services
Stock Style Box
Large Growth
Total Number of Employees
50,438
Website
https://www.neworiental.org

Competitors

Valuation

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Metric
09901
00667
TAL
Price/Earnings (Normalized)
 36.7448.72115.67
Price/Book Value
 3.750.812.00
Price/Sales
 4.031.155.26
Price/Cash Flow
 7.357.3824.21
Price/Earnings
09901
00667
TAL

Financial Strength

Metric
09901
00667
TAL
Quick Ratio
 1.681.572.80
Current Ratio
 1.871.703.22
Interest Coverage
 —3.47—
Quick Ratio
09901
00667
TAL

Profitability

Metric
09901
00667
TAL
Return on Assets (Normalized)
 6.13%2.79%0.51%
Return on Equity (Normalized)
 10.72%4.68%0.65%
Return on Invested Capital (Normalized)
 9.06%4.13%−1.55%
Return on Assets
09901
00667
TAL
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Education & Training Services Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
NWOEF
New Oriental Education & Technology Group Inc Ordinary Shares—Myd$14.2 Bil
EDU
New Oriental Education & Technology Group Inc ADRVdrlnwnfJzpmq$14.2 Bil
TAL
TAL Education Group ADRSwmlLvff$7.4 Bil
LOPE
Grand Canyon Education Inc—Fbzrlk$3.9 Bil
GHC
Graham Holdings CoHlfgyfnRvyjq$3.2 Bil
IDPUF
IDP Education Ltd—Ktyzm$2.9 Bil
LRN
Stride Inc—Gcfr$2.5 Bil
STRA
Strategic Education IncNnxwvvkwbXfbc$2.4 Bil
LAUR
Laureate Education Inc Shs—Wvckt$2.2 Bil
COUR
Coursera Inc—Skrf$1.9 Bil

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