Equity Analysis /
China

CN : New Oriental Education - Pandemic rebound won’t affect the robust recovery

    Lei Yang
    Lei Yang

    Research Analyst

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    CGS-CIMB
    24 January 2021
    Published byCGS-CIMB

    Management expects 3Q FY5/21F revenue growth to accelerate to 19–24% yoy, even factoring in the pandemic rebound in some cities and late spring semester impacts. We expect some pressure on the OPM in 3Q FY5/21, given intensifying online education competition, but we expect the OPM to return to yoy expansion in FY5/22F. In FY5/22F, we expect revenue growth to be over 30% with full margin recovery. The OMO model currently contributes 3–4% of total revenue, and management expects it to contribute 10% in FY5/22F. Reiterate Add with a new DCF-based TP of US$192.