新东方：核心教育业务持续强劲势头

Investment Rating - Maintains a Buy rating with a revised target price of **$95.0** (previously$102.5) [2][3] Core Views - New Oriental's core education business continues to show strong momentum, with FY24 revenue growing 44% YoY to $4.314 billion and non-GAAP net income up 47$381.1 million [2] - The company's overseas test preparation and study consulting revenues grew 17.7% and 17.3% YoY, respectively, contributing approximately 11% and 15% of total revenue in 4QFY24 [2] - Domestic test preparation revenue increased 16.4% YoY, accounting for about 4% of total revenue in 4QFY24 [2] - New education initiatives grew 50.3% YoY, contributing approximately 20% of total revenue in 4QFY24 [2] - East Buy's revenue is expected to decline 20% YoY in FY25E to $741 million due to business adjustments [2] Business Performance and Outlook - For 1QFY25E, management guides total revenue growth of 31-34$1.255-1.284 billion, with OPM improving by 200 bps YoY [2] - The company expects overseas test preparation, overseas consulting, new education, and high school tutoring revenues to grow 25%, 15%, 50%, and 30% YoY, respectively, in FY25E [2] - Non-GAAP operating margin declined 5.9 percentage points YoY to 3.2% in 4QFY24, primarily due to capacity expansion and increased investments in live-streaming e-commerce [2] - The total number of schools and learning centers increased 37% YoY to 1,025 by the end of 4QFY24 [2] - Management expects capacity to grow 20-25% YoY in FY25E, with most new openings in cities with better unit economics [2] Financial Projections - FY25E revenue is projected at $5.267 billion, with non-GAAP net income of$571.7 million [3] - FY26E revenue is expected to reach $6.258 billion, with non-GAAP net income of$791.4 million [3] - Non-GAAP EPS for FY25E and FY26E is forecasted at $3.45 and$4.78, respectively [3] - Gross margin is expected to improve to 53.6% in FY25E and 54.8% in FY26E [6] - Operating margin is projected to increase to 11.1% in FY25E and 13.3% in FY26E [6] Valuation - The SOTP valuation method is used, with a 10% holdco discount, resulting in a target price of $95.0 per ADS [7] - Education and consulting business is valued at$89.9 (95% of total valuation), based on 30x FY25E PE [7] - East Buy is valued at $1.7 (2$3.3 (4% of total valuation), based on 15x FY25E PE [7] Industry Comparison - New Oriental's FY25E PE of 24.6x is higher than the education industry average of 22.4x, reflecting its strong leadership in China's education services market [7][9] - The company's FY25E PS of 2.2x is in line with the education industry average [9]