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New Oriental Education & Technology Group Inc ADR EDU

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

EDU Expects Recovery in Second-Half Fiscal 2021 Onward

Jenny Tsai Senior Equity Analyst

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.

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Company Profile

Business Description

EDU, founded in 1993, is the largest well-established one-stop shopping private educational services provider in China. EDU has had over 52.8 million student enrollments, including about 8.4 million enrollments in fiscal 2019. As of third-quarter fiscal 2020, EDU had a network of 1,416 learning centers, including 99 schools, 12 bookstores and access to a national network of online and offline bookstores through 160 third-party distributors and over 38,400 highly qualified teachers in 86 cities. EDU offers a diversified portfolio of educational programs, services and products to students in different age groups, including K-12 after-school tutoring for major academic subjects, overseas and domestic test preparations, nonacademic languages and services in vocational training, and so on.

Contact
No. 6 Hai Dian Zhong Street, Haidian District
Beijing, 100080, Cayman Islands
T +86 1060908000
Sector Consumer Defensive
Industry Education & Training Services
Most Recent Earnings Nov 30, 2020
Fiscal Year End May 31, 2021
Stock Type
Employees 81,127