New Oriental Education & Technology: Solid FY4Q16 Results; FY1Q17 Promotions May Benefit the Whole Year; Maintain Buy and Raise PT to $52

  • Date: Jul 22, 2016
  • Industry:Education
  • Company:EDU
  • Partial Report:Name: EDU FY4Q16 Review 07212016_FC.pdf - Size: 0.4M - Free Download
  • New Oriental Education & Technology: Solid FY4Q16 Results; FY1Q17 Promotions May Benefit the Whole Year; Maintain Buy and Raise PT to $52

EDU reported strong FY4Q16 top line results of 20.1% Y/Y, which beat consensus
expectation, and EPS came in a penny below the Street after about 7% RMB
depreciation. For FY1Q17, the company guided revenue in USD terms below
consensus due to the RMB depreciation. While FY1Q17 is a weak quarter, it is the
most important quarter for the full year growth; therefore the company is
aggressively doing promotions to recruit new students, which has already resulted
in about 200K enrollments from the summer classes. From last year’s experience,
we believe the promotion can benefit the rest of the year with a high retention rate
of about 50%. As we believe EDU’s fundamentals and outlook are strong, we
reiterate our Buy rating and raise our price target to $52.00.

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