Days Hao Capital reiterated new Oriental buy rating

Summary: View the latest quotes Beijing time July 18 Evening news, investment company Days Hao Capital (t.h.capital) today issued an investment report, reiterated the new Oriental stock (nyse:edu) Buy rating, while maintaining a 29 dollar target share price unchanged. The following is a summary of the report: Check the latest quotes

Beijing Time July 18 Evening news, investment company Days Hao Capital (t.h.capital) issued an investment report today, reiterated the new Oriental stock (nyse:edu) "buy" rating, while maintaining a 29 dollar target share price unchanged.

The following is a summary of the contents of the report:

New Oriental will be released in the U.S. Eastern Time July 22 before the opening of the U.S. stock market in the first quarter of 2014 fiscal year. We believe that, thanks to the rise in course prices, the new Oriental quarter revenue will be at least the same as Wall Street expectations, or even slightly above Wall Street expectations. But New Oriental's first-quarter guideline for fiscal year 2015 was expected to be relatively sluggish, as our data showed relatively low enrollment in the quarter. But in the long run, New Oriental will win market share. We expect the new Oriental revenue to rebound in the second half of fiscal year 2015, when New Oriental will open a new teaching center. In addition, collaboration with major Internet service providers in the field of online education will help new Oriental to win more students in the absence of an entity teaching center. To this end, we reaffirm the new Oriental stock "buy" rating, while maintaining a 29 dollar target share price unchanged.

Course price promotion drives revenue growth in the quarter: Our data show that the total number of students in the fourth quarter of new Oriental fully enrolled and opened courses grew 17.4% year-on-year, and the average sales price for all courses grew by 27.1% per cent year-on-year. We believe that this will push the new Oriental quarter revenue to reach Wall Street's expected $281.6 million trillion, an increase of 17.5% per cent, or even slightly higher than that forecast. At the same time, earnings per share will also be higher than Wall Street's expected $0.17 trillion.

The summer course slump led to a relative downturn in the first quarter of fiscal year 2015: Our data showed that the number of courses offered by New Oriental in the first quarter accounted for 66% of the total, compared with 31.6% for the same period a year earlier. The total number of students enrolled in fully registered and open courses fell 30.4% per cent year-on-year, compared with 65.9% for the same period a year earlier. Given the dismal performance of the 1.5-month period after the first quarter, we think the first-quarter results of the new Oriental are not expected to be strong. Wall Street expects New Oriental's first-quarter revenue to reach $463.4 million trillion, an increase of 19.2% per cent year-on-year. We believe that this expectation is too optimistic. We expect to reach 436.2 million dollars, up 12% year-on-year.

Valuation: We reaffirm the "buy" rating of the new Oriental stock, while maintaining the 29 dollar target share price unchanged. (Li Ming)