Analyst Note
| Jenny Tsai |We maintain our narrow moat rating for New Oriental Education, or EDU, following first-half fiscal year 2021 results; we revised our fair value estimate to USD 202 from USD 203 per ADS. EDU reported second-quarter fiscal 2021 results with revenue of USD 887.7 million, up 13.1% year over year, which is in line with our expectation of USD 890 million. EDU's reported second-quarter fiscal 2021 gross margin of 48.9% was much weaker than our expectation of 54.5% and market consensus of 51.4% and the operating margin for the quarter was negative 3.6%, compared with 3.2% in the same period of the prior fiscal year.