Huachuang Securities comments on New Oriental FY25Q2 performance: Q2 revenue meets expectations, still optimistic about K12 prosperity

Huachuang Securities released a research report stating that they are optimistic about the long-term prospects of the education and training industry and New Oriental's competitive advantage. Currently, New Oriental's capacity expansion and operational situation are improving, and they expect further profit improvement after the new outlets ramp up; however, in the short term, the company's overseas business is affected to some extent, and the overseas business has a high profit margin, which has a certain drag on profits. Therefore, the firm has lowered its earnings forecast, expecting the company's FY25-27 operating revenues to be USD 4.959 billion, USD 5.884 billion, and USD 6.9 billion, representing year-on-year growth of 15%, 19%, and 17%, respectively; adjusted net profit attributable to the parent company is expected to be USD 487 million, USD 671 million, and USD 705 million, representing year-on-year growth of 25%, 38%, and 5%. Using the SOTP valuation method for analysis, the total corresponding target market value is HKD 97.2 billion, corresponding to a target price of HKD 59, maintaining a "Buy" rating