NEW ORIENTAL-S

EDU Q4 FY26 Quick Take: Q4 (Mar–May) results were solid, modestly above sell-side estimates and company guidance. On trend, buy-side sentiment appears more upbeat than the sell side. After several quarters of expectation resets, the market seems to have moved past the prior spell of guide-downs and misses, and back to EDU's earlier pattern of cautious guides with reliable execution that ultimately beats.

While study-abroad remains in a slow recovery near term and K12 demographics will be a headwind longer term, the fading drag from livestreaming (still on a low base), share gains in non-academic and adult English, plus improved sentiment and ongoing buybacks, should provide a floor through volatility. At yesterday's close, the $8.1bn market cap implies ~12.5x FY27 P/E; versus a ~15x sector median and the 2-year EPS CAGR outlook, the valuation does not look stretched.

Key takeaways:

1) Slight overall beat

Total revenue grew 23% YoY; we estimate a 6–7ppt FX tailwind. That implies organic growth of ~16%, up nearly 3ppt QoQ. For FY27, management guided revenue of $6.45–6.68bn (+14–18% YoY), also above expectations.

2) Core education up 20%+

(1) K12 new-format businesses grew 24.8% YoY, with a slight sequential acceleration. Since last Oct, issuance of quality-education training licenses has declined MoM, with a 0.2% drop each month in Mar–May. As a leading incumbent, EDU stands to benefit from a tighter competitive landscape.

(2) Study-abroad services continued to recover to +3.6% YoY in Q4. Despite ongoing intl headwinds (visa issuances still down YoY, though the decline narrowed), EDU offset gaps in traditional consulting and training by expanding IELTS/TOEFL prep from primarily college youth into teens, and by adding on-campus study-abroad advisory services.

(3) Adult English was strong at +29% YoY, and we estimate high-school subjects delivered a steady ~18% growth (to be confirmed on the call). Both benefited from supply contraction and rising industry concentration.

(4) Based on movements in non-controlling interests, Oriental Selection revenue likely grew close to 40%. With new brands, it appears to have emerged from the overhang that started around Aug 2024.

3) Shareholder returns still ~6%

The company previously announced a 3-year return program, committing at least 50% of net income to shareholders via dividends and buybacks. Of the up-to-$300mn buyback authorized in Oct 2025 for the following 12 months, $274mn had been executed as of Jul 28.

For FY27, EDU plans to continue with $300mn in dividends plus $200mn in buybacks. On an $8.1bn market cap at yesterday's close, that implies ~6% shareholder return, a mid-range level. $New Oriental EDU & Tech(EDU.US) $NEW ORIENTAL-S(09901.HK)

New Oriental Q3 FY26 First Take: Q3 results were solid, topping management’s typically cautious guide, while ex-FX growth moderated slightly QoQ. Within the mix, Oriental Selected likely came in better, and core education tracked in line.

Overall, the print was marginally above BBG expectations. Since the company’s preview over the past month, top houses have raised estimates, so the BBG consensus shown below is lagging; the actual result is basically inline.

1) Overall: Total revenue grew 20% YoY. FX tailwinds contributed 6–7ppt by Dolphin Research’s estimate, implying ~13% organic growth; sequentially roughly flat, though last year’s Q3 base was not high. Details to be confirmed on the call.

By segment, core education rose 14% YoY, while live e-com and other businesses were up an estimated ~60%. Oriental Selected’s new leadership is guiding the business out of the past two years’ turbulence by lifting the share of self-operated e-com to build core members and expanding culture-tourism sales on live platforms, re-accelerating growth.

2) Core education:

(1) K-12 new businesses grew 23% YoY and remain the main growth driver. Management has expressed confidence in 15%–20% growth for FY27; since Q4 last year, issuance of quality-education training licenses has slowed, suggesting marginal competition is unlikely to intensify, a clear positive for incumbent New Oriental.

(2) The overseas study segment is facing Intl environment headwinds. Consulting likely remains pressured, but test-prep grew 7%; overall flat to LSD growth.

(3) Adult English grew 14.5% YoY. High-school subjects are also tracking ~15% steady growth (to be confirmed on the call).

3) Shareholder returns: Of the $300mn 1-year buyback announced last Oct., roughly half has been completed; at this pace it should be fully utilized by expiry. The $190mn dividend is being paid in two tranches as planned. On a $8.9bn mkt cap at yesterday’s close, the shareholder yield is ~5.5%, a solid mid-to-high level among U.S.-listed China ADRs. $New Oriental EDU & Tech(EDU.US) $NEW ORIENTAL-S(09901.HK)

The market today was truly surreal: Ganfeng Lithium, Mingming Hen Mang, and East Buy all surged collectively, like stepping hard on the accelerator, while Dazhong Public Utilities took a nosedive in the opposite direction. It can only be said that capital in the past two days went straight for concepts and liquidity. China Tourism Group Duty Free was extremely zen, not moving a muscle... Today was another day witnessing faith and missing out on the rally 🙈

EDU Q2 FY26 First Take: Results beat, led by a better‑than‑feared study‑abroad segment. The company also raised its FY26 revenue guide.

Test‑prep grew 4%. Consulting was undisclosed but likely softer, implying overall roughly flat YoY. Still, this is well above the market’s low‑single‑digit decline expectation.

New initiatives rebounded as expected, validating management’s prior comments on seasonality. Smaller players focus on winter/summer peaks; with Q2 in the fall semester, competitive intensity eased for EDU. However, enrollment growth kept decelerating, implying momentum likely won’t hold next quarter; learning devices also slowed slightly.

Management guided next‑quarter revenue growth in line with the Street. It raised the FY26 revenue guide to $5.3–5.5bn, implying +8–12% (was +5–10%).

A group‑wide cost‑out/efficiency program kicked off in Q4 FY25 (calendar Q2 2025) and was evident last quarter. Execution continued this quarter, with cuts concentrated in selling expenses; OPM expanded by nearly 400bps YoY.

The company paid the planned dividend and repurchased $86mn of shares this quarter. Under the previously announced $490mn shareholder‑return program, the implied yield vs. the current ~$9.0bn market cap is 5.4%, providing support during drawdowns. $New Oriental EDU & Tech(EDU.US) $NEW ORIENTAL-S(09901.HK)

New Oriental FY1Q26 Quick Interpretation: Overall, the third-quarter report is basically in line with expectations, including the revenue guidance for the fourth quarter. The guidance for the full year 2026 remains unchanged (revenue growth of 5%-10%), but the trends in various segments show mixed performance:

1. The two main positives in this financial report (shareholder returns, study abroad business) were already disclosed a month earlier at the preview meeting, reflected in the 20% increase during this period.

(1) Shareholder Returns: The "dividend floor" valuation that Dolphin Research has consistently mentioned has finally exceeded expectations. Last quarter, the company announced a new shareholder return plan to use 50% of the previous year's net profit for dividends or buybacks. In Q3, the company announced a plan for $190 million in dividends and $300 million in buybacks over the next year, totaling $490 million in shareholder returns.

The payout ratio reached 130% of the net profit attributable to the parent company for 2025, far exceeding the minimum baseline of 50%. Based on the market capitalization of nearly $8 billion on the day of the preview, the return rate reached 6% (currently 5%), which is indeed a good investment return in a rate-cutting cycle.

(2) Study Abroad Business: Due to geopolitical risks, study abroad is a business with cautious consensus expectations in the market, originally expected to decline by 5-10%. However, revenue in USD terms actually grew by 1-2% (1% for training, 2% for consulting). Even excluding the tailwind from USD depreciation, it shows a basically stable slight decline, which is much better than Dolphin Research's actual perception.

However, the hidden concerns about studying abroad have not dissipated. The resilience in the third quarter may be due to the substitution effect from non-US regions. But this often exists in the short term, and in the medium to long term, it is still closely related to geopolitical situations, with no substantial turnaround currently. Therefore, it is especially important to pay attention to the management's quantitative guidance on operations during the conference call.

2. New business performed poorly this quarter: Year-on-year growth was only 15%, compared to over 30% last quarter. According to institutional research, intensified competition from local institutions in some cities has had a short-term impact.

However, judging from the trend in the number of enrollments in non-academic courses and the number of learning device subscriptions (accelerating growth), the current performance should be temporary, and growth is expected to recover next quarter. For specific details and outlook, please refer to the conference call.

3. Continued strict control of costs and expenses: Core operating profit for the third quarter was $311 million, with an operating profit margin of 20.4%, flat year-on-year. From a Non-GAAP perspective excluding stock-based compensation, the profit margin improved by 1 point year-on-year. The company stated that it will continue to control costs to ensure profitability.

New Oriental 4Q25FY Quick Interpretation: The major pitfall in this performance lies in the guidance, including revenue guidance for the next quarter and the entire fiscal year 2026, both weaker than market expectations, possibly due to the management's cautious conservatism.

This time, there is no separate guidance for education revenue, so the extent of the drag from e-commerce still needs to be explained by the management in terms of detailed business conditions.

However, in the short term, it will undoubtedly hit market confidence again. The only consolation is that the progress in cost reduction, efficiency improvement, and increasing shareholder returns has exceeded expectations. As with the feeling from the last quarter, although New Oriental's current valuation is not high, until the fundamental concerns are resolved, we can only look at the valuation opportunities of the 'dividend bottom'.

1. Guidance 'bomb': Current performance exceeds guidance and expectations. However, management's revenue growth guidance for 1Q26 and the entire year 2026 is below expectations—next quarter growth rate of 2-5%, and nearly 5-10% growth for the year, while the market still expects a normal increase of over 10%.

2. Where are the concerns?: Since the total revenue expectation is given this time, it is difficult to clearly determine which specific area has issues. Dolphin Research speculates that it is mainly study abroad and live-streaming e-commerce.

Dolphin Research has always been conservative about e-commerce expectations, and both 4Q25 and 1Q26 are still in the pain period of the year-on-year base after Dong Yuhui's breakup (down 30%), with Q4 performance also below expectations.

We are mainly concerned about the study abroad business (which has a greater impact on the group's valuation in our model).

This quarter's study abroad performance (test preparation growth rate of 15%, consulting growth rate of 8%) is actually not as bad as we expected. But after tariffs, escalation of confrontation, and visa approval slowdown, all have suppressed the demand for studying in the United States. Consulting demand often leads test preparation, indicating short-term future pressure on study abroad business demand.

3. Other businesses temporarily stable: Other businesses, apart from the above, are performing normally for now. However, it is worth noting that the growth rate of enrollment in quality training has significantly declined again, possibly due to the impact of holiday misalignment, so the growth this season mainly relies on the increase in customer unit price.

4. Efficiency improvement within the group: Q4 profitability performance, after excluding the impact of goodwill impairment, is actually slightly above expectations, with a Non-GAAP operating profit margin of 6.6%, an increase of 3 percentage points year-on-year. Last quarter, management also made statements about improving input efficiency and optimizing cost expenditures. $NEW ORIENTAL-S(09901.HK)$New Oriental EDU & Tech(EDU.US)

$New Oriental EDU & Tech(EDU.US) Quick Interpretation of 3Q25FY: The performance of 3Q25, corresponding to the peak season from December 2024 to February 2025, generally met expectations. Last month, the company had already guided the market to lower expectations (Bloomberg consensus expectations were somewhat lagging). However, during this round of trade war tensions, the study abroad business, which accounts for nearly a quarter of revenue, faced direct impact, exacerbating the slowdown in demand. Therefore, for this quarter's performance, the focus is mainly on management's guidance for the next quarter.

The reality is that management's guidance for Q4 core learning business revenue is weak, with an expected year-on-year growth of 10-13% (12%-15% growth in RMB terms), falling short of market expectations (most institutions had expected 11-12 billion in late March, with year-on-year growth exceeding 25%). The high institutional expectations were partly due to the low base last year and partly because they did not anticipate the unusually intense tariff confrontation. Although no breakdown was provided, Dolphin Research estimates that the pressure on the study abroad business was the main factor. Generally, test preparation demand precedes study abroad consulting services, and Q3 test preparation revenue growth had already slowed to 7%, indicating that study abroad demand has continued to slow since the beginning of the year.

Other businesses also experienced varying degrees of slowdown. Apart from new businesses, which remain relatively buoyant (slowing naturally to 35% on a high base), high school subject tutoring and adult English (college test preparation) growth also slowed to around 15%-17%.

For specific outlooks on segmented businesses and whether the pace of capacity expansion will be significantly adjusted amid increasing revenue growth pressure, you can pay attention to the upcoming earnings call.