On July 31st, New Oriental released its fourth quarter and annual financial report for the year ended May 31st, 2024. According to the financial report, in the fourth quarter of fiscal year 2024, New Oriental achieved a net revenue of 1.137 billion US dollars, a year-on-year increase of 32.1%; The net profit attributable to New Oriental shareholders was 26.97 million US dollars, a year-on-year decrease of 6.9%.
For the full fiscal year 2024, New Oriental achieved a net revenue of $4.314 billion, a year-on-year increase of 43.9%; The net profit attributable to New Oriental shareholders was 310 million US dollars, a year-on-year increase of 74.6%.
After the opening on August 1st, the stock price of New Oriental S (09901. HK) fell more than 17% during trading. As of press time, it fell 12.42% to HKD 47.95.
At the earnings conference call, the independent incident with Hui peers was not frequently mentioned. Yang Zhihui, CEO and CFO of New Oriental, revealed that this decision was made cautiously after considerable transparent communication with Dong Yuhui. Some costs and expenses related to Hui peers will occur in the fourth quarter of this fiscal year and the upcoming first quarter.
The financial report shows that the operating costs and expenses for the fourth quarter of fiscal year 2024 were $1.126 billion, an increase of 38.6% year-on-year. The main reason for the increase is the continuous growth of Dongfang Zhenxuan's self operated products and live streaming e-commerce business, as well as the increase in related costs and expenses brought about by the accelerated expansion of teaching space.
As of May 31, 2024, the total number of New Oriental schools and learning centers was 1025, an increase of 114 compared to 911 as of February 29, 2024. As of May 31, 2024, the total number of New Oriental schools is 81.
In its financial report, New Oriental expects its net revenue for the first quarter of fiscal year 2025 (June 1, 2024 to August 31, 2024) (excluding Dongfang Zhenxuan's self operated product live streaming e-commerce business) to reach between $1.2547 billion and $1.2835 billion, a year-on-year increase of 31% to 34%.
At the earnings conference call, Yang Zhihui, the CEO and CFO of New Oriental, mentioned the independence of his peers. "This decision was made cautiously after considerable transparent communication with Dong Yuhui. He has always been our beloved colleague and has driven the important growth of New Oriental. We extend our sincerest greetings to his new enterprise. The company will continue to devote itself wholeheartedly to creating a stable and healthy growth path for the platform
Regarding whether to provide compensation to Dong Yuhui, Yang Zhihui also revealed that some costs and expenses related to his peers will occur in the fourth quarter of this fiscal year and the upcoming first quarter, and the specific amount will be announced at the next conference call.
It is worth mentioning that during the earnings conference call, analysts also asked about the regulatory environment for education and training. In response, a New Oriental executive said, "I don't think the regulation has changed. As a leader in the education industry, we have followed the regulations as always in the past three years. Looking ahead, we expect the regulatory environment to stabilize next year or even the year after
After New Oriental released its financial report, Goldman Sachs released a research report stating that it maintains its "buy" rating, lowers its group revenue forecast for 2025-2027 by 6%, and lowers its target price from HKD 86 to HKD 81.
UBS released a report stating that New Oriental's performance and revenue for the fourth quarter of fiscal year 2024 met expectations, but its gross profit margin was lower than expected, mainly due to one-time factors, including costs related to Dong Yuhui's resignation and one-time bonuses for education personnel exceeding budget. UBS believes that since the restructuring of Oriental Selection, New Oriental has largely returned to the pure education sector, providing rare bottom-up growth visibility that can withstand macro uncertainty. The bank has lowered its target price for New Oriental from $109 to $103.6, maintaining a 'buy' rating.