New Oriental Core region continued weak loss-making business transfer Tenkau

The new Oriental Education Technology Group, a bellwether of China's education and Training institutions (hereinafter referred to as New Oriental), has produced a quarterly report on both operating and net profit losses. In the second quarter of the 2013 fiscal year ended November 30, 2012, the new Oriental, despite net revenue growth of 30.4% to 165.9 million U.S. dollars, operates at a loss of 26.9 million dollars and a net loss of 15.8 million dollars. Li Ying wanted, a U.S. stock analyst, told the Daily economic news reporter that the main reason for this quarter's losses was the weakness of the most lucrative businesses and regions in New Oriental, while the fast-growing regions (two or three-line cities) and (K12, VIP) were weaker in their business profitability. New Oriental's last quarterly net loss was the fourth quarter of fiscal year 2007. For a few years later, the resurgence of net profit losses, pointing to the new Oriental's most lucrative business and region. As the most lucrative school in New Oriental, the campuses of New Oriental Beijing and Shanghai continued to be weak in the quarter, with revenue growth of only 20%, while net profit fell by more than 50%. New Oriental, the most lucrative study abroad, its trainees decreased by 7%. For the outstanding performance of the Beijing-Shanghai campus, the new Oriental CFO Shedong has said that the main problem in the Beijing market is to improve the utilization rate, I believe it can be quickly improved, and Shanghai faces income growth and profitability of two issues, the solution will take about 3 years. In this quarter, the fastest growing region of the new Oriental is the two or three-line city, with revenues rising 40% per cent year-on-year. Also noteworthy is that the second quarter of new Oriental revenue growth fastest business is K12 and VIP. Among them, the K12 of the total number of training trainees 14% year-on-year growth, revenue growth 50%;VIP trainees year-on-year growth of 25% more than 25100 people, revenue growth of 38% more than 62 million U.S. dollars. According to the industry, the new Oriental's most lucrative study abroad business profit performance, which makes the new Oriental in the K12 business does not have to bear a high profit index. In the past, the new Oriental earnings, study abroad business to "sprint" profit, K12 business to "sprint" revenue. But with the market competition and consumer demand changes, the new Oriental in the business of a single big situation began to change, the market has an inflection point, and for this change, the new Oriental did not keep up. In Li Ying wanted's view, the cost-cost pressures brought about by the rapid expansion of the new Oriental period also affected net profits. In the past 4 quarters, the new Oriental Net Teaching Center 217, the current quarter to increase the learning center of the capital expenditure of 16.2 million U.S. dollars, expansion in the drive to increase revenue growth at the same time to bring enormous cost pressure on the company. In addition, the quarter's new Oriental administration costs rose 62.1% year-on-year, and the revenue share soared to 46.86%. Some people in the industry worry that the profit margin is difficult to improve the situation, the new Oriental to increase the burden of profits fell on the K12 business, but the next year or two, the new Oriental profit margins will not be too good performance.