Performance exceeded expectations: classroom utilization increased to promote gross profit margin

-Performance exceeding expectations:

Good for the next fiscal year 2014 earnings and the fiscal year 2015 outlook for the first fiscal quarter are more than expected. A good fourth-quarter revenue of 87 million dollars (up 46% from a year earlier) is expected to be 2% per cent higher than Wall Street analysts expect, according to Goldman Sachs Group analysts. Not in accordance with U.S. general accounting standards, a good future in the fourth quarter earnings per share of 0.24 U.S. dollars (up 118%), High Sheng Group analysts and Wall Street analysts expect an average of 0.05 U.S. dollars and 0.07 dollars respectively.

The good future is expected to be $85.9 million to $88.4 million trillion in the first quarter of fiscal year 2015, with a 42% per cent increase compared with the same period last year, and a higher-than-average forecast of 3% and 6% per cent for Wall Street analysts.

-Investment advice:

The number of registered students in the next 2014 fiscal year is more than 1 million, compared to the new Oriental in the 2007 fiscal year has reached this milestone, and then achieved a significant operating lever. In the fourth quarter, 9 learning centres (8 for small classes, 1 for one-to-one teaching) were opened in the future, and more than 190 classrooms were added to the existing teaching facilities. We note that a good future expansion plan is focused on cities outside Beijing and Shanghai, which contributed 40% of small-class business revenue in the fourth quarter, compared with 29% in the same period last year.

Despite the opening of a one-to-one teaching center in Xian, the future has further reduced the low-margin business model and is expected to show revenue in the 2015 fiscal year less than the small class teaching business.

The number of students enrolled in the fourth quarter rose 39% Year-on-year, mainly due to the revival of the Beijing market and the early arrival of the Chinese Lunar New Year. The price of a good future offline course is up 6% year-on-year. Good profit margins for the fourth quarter rose 5.8% from a year earlier, indicating continued improvement in classroom utilization and a shift in business portfolios towards High-margin small class teaching.

Good future management stressed that the company's strategy for fiscal year 2015 was to invest in the Internet and mobile technology to help improve students ' learning experience. In our view, primary and secondary school tutoring business model is relatively not affected by Internet disruption, but the Internet is actively deploying technology products to promote user loyalty and brand awareness.

We maintain a good future for fiscal year 2015 and 2016 and expect earnings per share for the fiscal year 2017. As a result, we will keep the target price for the next 12 months unchanged at 30 U.S. dollars, the basis of which is still 0.85 times times the peg value (the market surplus growth rate). We maintain a "buy" rating for future stocks unchanged.

-Risk: Cost inflation and regulatory measures.