External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

New Oriental Education & Techn / Equity Bottom-Up

<ul><li>New Oriental announced 2QFY25 results on 21 Jan: net revenue was up by 19% YoY to US$1,039mn (+31% YoY if excluding revenue from East Buy), in line with our/consensus estimate; non-GAAP net income declined by 29% YoY to US$36mn, below our/consensus estimate of US$43/45mn, primarily due to the impact of East Buy adjustment and investment in tourism business.</li><li>For 3QFY25E, management guided net revenue (excluding revenue from East Buy) to grow by 18-21% YoY to US$1.01-1.03bn, also below our expectation as macro uncertainty impacts the high-end businesses and competition intensifies.</li><li>That said, management noted that New Oriental is still gaining market share. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

New Oriental announced 2QFY25 results on 21 Jan: net revenue was up by 19% YoY to US$1,039mn (+31% YoY if excluding revenue from East Buy), in line with our/consensus estimate; non-GAAP net income declined by 29% YoY to US$36mn, below our/consensus estimate of US$43/45mn, primarily due to the impact of East Buy adjustment and investment in tourism business.For 3QFY25E, management guided net revenue (excluding revenue from East Buy) to grow by 18-21% YoY to US$1.01-1.03bn, also below our expectation as macro uncertainty impacts the high-end businesses and competition intensifies.That said, management noted that New Oriental is still gaining market share. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

New Oriental (EDU US) - Macro Uncertainty to Impact Revenue Growth and Margin Outlook

<ul><li>New Oriental announced 1QFY25 results on 23 Oct: net revenue grew by 30.5% YoY to US$1,435mn (or +33.5% YoY if excluding East Buy revenue), in line with our/consensus estimate of US$1,396mn/1,442mn; non-GAAP net income grew by 39.8% YoY to US$265mn, largely in line with our/consensus estimate of US$256/258mn, driven by enhanced operating margin of core educational business. Looking into 2QFY25E, management expects total net revenue (excluding revenue from East Buy) to grow by 25-28% YoY to US$851-872mn, decelerating due to the seasonality effect and macro impact on certain highASP businesses.</li><li>Nonetheless, management expects revenue growth to reaccelerate in 3Q/4Q and full-year revenue growth to remain at c.+30% YoY in FY25E (excl. East Buy).</li><li>We lower FY25 total revenue/non-GAAP earnings forecasts by 1.0/9.6% respectively, as the soft consumption sentiment affects overseas-related and high-end 1v1 tutoring businesses. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

New Oriental announced 1QFY25 results on 23 Oct: net revenue grew by 30.5% YoY to US$1,435mn (or +33.5% YoY if excluding East Buy revenue), in line with our/consensus estimate of US$1,396mn/1,442mn; non-GAAP net income grew by 39.8% YoY to US$265mn, largely in line with our/consensus estimate of US$256/258mn, driven by enhanced operating margin of core educational business. Looking into 2QFY25E, management expects total net revenue (excluding revenue from East Buy) to grow by 25-28% YoY to US$851-872mn, decelerating due to the seasonality effect and macro impact on certain highASP businesses.Nonetheless, management expects revenue growth to reaccelerate in 3Q/4Q and full-year revenue growth to remain at c.+30% YoY in FY25E (excl. East Buy).We lower FY25 total revenue/non-GAAP earnings forecasts by 1.0/9.6% respectively, as the soft consumption sentiment affects overseas-related and high-end 1v1 tutoring businesses. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

New Oriental (EDU US) - Soft Consumption Weighs on Demand for High-ASP Businesses

Analyst

Steve

China Beststudy Education Group / Equity Bottom-Up

<ul>
<li>China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. </li>
<li>Even though <a href="https://www.smartkarma.com/entities/new-oriental-education-techn-cc88998e-fe0d-4a03-b544-f3e9836b06a2" target="_blank" data-smartkarma-citation="entities:531:1" rel="noopener">New Oriental Education &amp; Techn (EDU US)</a> had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.</li>
<li>My sector top pick is <a href="https://www.smartkarma.com/entities/china-beststudy-education-group" target="_blank" data-smartkarma-citation="entities:40632:1" rel="noopener">China Beststudy Education Group (3978 HK)</a>, as valuation is lower and growth is higher, though it has a much smaller market cap..</li>
</ul>


China after-school tutoring remains one of the most attractive and visible sectors in the next 2-3 years time frame. 
Even though New Oriental Education &amp; Techn (EDU US) had some hiccups in FY3Q24 results, they were mainly due to factors not related to the core after-school tutoring business.
My sector top pick is China Beststudy Education Group (3978 HK), as valuation is lower and growth is higher, though it has a much smaller market cap..


China After-School Tutoring:  Still In The Early Innings; Prefer China Beststudy Over EDU

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-beststudy-education-group" target="_blank" data-smartkarma-citation="entities:40632:1" rel="noopener">China Beststudy Education Group (3978 HK)</a> is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area. </li>
<li>The company is trading at 5x forward PE (2024), and I expect earnings to grow &gt;100% in 2024 off of a low base, and &gt;30% in 2025.  </li>
<li>I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU's current 20x.</li>
</ul>



China Beststudy Education Group (3978 HK) is a Chinese K12 tutoring company with the majority of the learning centers in the Greater Bay Area. 
The company is trading at 5x forward PE (2024), and I expect earnings to grow &gt;100% in 2024 off of a low base, and &gt;30% in 2025.  
I believe a forward PE of 10x is reasonable and conservative, which is at a discount to the market leader EDU's current 20x.


China Beststudy Education (3978 HK):  A Darkhorse Stock In The China Tutoring Sector

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

China

New Oriental Education & Technology Group, Inc. offers educational services. The Company offers foreign language training, test preparation courses for admissions and assessment tests in the United States, the PRC and Commonwealth countries, primary and secondary school education, and other services. New Oriental Education & Technology Group also operates software development.

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New Oriental Education & Techn (EDU US)

New Oriental (EDU US) - Macro Uncertainty to Impact Revenue Growth and Margin Outlook

New Oriental announced 2QFY25 results on 21 Jan: net revenue was up by 19% YoY to US$1,039mn (+31% YoY if excluding revenue from East Buy)

CMB International

New Oriental (EDU US) - Soft Consumption Weighs on Demand for High-ASP Businesses

We lower FY25 total revenue/non-GAAP earnings forecasts by 1.0/9.6% respectively, as the soft consumption sentiment affects overseas-related and...

CMB International

China After-School Tutoring: Still In The Early Innings; Prefer China Beststudy Over EDU

China Beststudy Education (3978 HK) is up 15% today on good volume on the back of raised guidance for FY24 by management. The stock has more than...

Steve

China Beststudy Education (3978 HK): A Darkhorse Stock In The China Tutoring Sector

High conviction pick in a very attractive sector with policy tailwind now. Volume starting to pick up indicating more investor interest. Still...

Steve

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

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