Maintain new Oriental stock (nyse:edu) Neutral rating

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

Event：

The new independent brand online education platform "100 Education" (100.com) was released yesterday. The platform includes 100 educational clients, course content, and 100 education websites, and the current website includes TOEFL (toefl.100.com) and IELTS (ielts.100.com) information and courses. With an average charge of 3000 yuan for intensive classes, 100 education will introduce intensive English classes permanently free of charge, and will be awarded a bonus of 100 yuan for trainees who complete the course.

Analysis：

Offline training institutions revenue mainly from two products for students: 1 learning materials, 2 teacher counseling. The free model of the gathering era will lead to the "non-intermediation" of content delivery, which will weaken the ability of online coaching to raise prices, and will lead to a scramble by training institutions to improve service quality. Both trends will affect industry profits.

We believe that the free education platform for the age of Reunion has little impact on students under 12 years of age because they rarely use online educational platforms. On the contrary, the impact on adults is greater. In view of the good future and major education focus on the 12-year-old group, I believe that the two companies are better off than the new Oriental.

After a 24-hour launch of the new platform, 3,300 students chose TOEFL and IELTS courses. New Oriental 50% 's revenue comes from overseas and domestic preparation training, as well as comprehensive English training. We believe that this part of the business will be affected by free online content.

To this end, we will be the new Oriental 2014 to 2017 ASP (average sales price) of the annual composite growth rate is expected to be reduced from 13% to 10%, to the fiscal year 2014 to 2016 of the diluted earnings per share expected to be lowered by 7%.

Valuation: We continue to maintain the "neutral" rating of the new Oriental stock, bringing the target share price from 30 US dollars to $27.50.