US investment company JG Capital announces research report today

JG Capital, the US investment company, released a study today, reiterating that new Oriental Nyse:edu's shares are rated "overweight" (overweight) with a 12-month target of 40 dollars.

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

We reaffirm our "overweight" rating for new Oriental Equities, with a target price of $40 for 12 months.

Performance Summary:

New Oriental's second-quarter revenue was $208 million, an increase of 25.6%, 74 million dollars higher than we expected, and 6 cents per share, 5 cents higher than we expected. The new Oriental expects revenue for the third quarter to be $260 million to $270.9 million, up 19% to 24% per cent year-on-year. We reiterate our "overweight" rating for new Oriental stocks.

The number of students enrolled in the quarter increased: in the second quarter, the total number of students enrolled in the New Oriental Discipline and exam preparation program reached about 565,100, up 11.8% from 505,000 in the same period last year.

Operational efficiency improvements: As of the end of the second quarter, the total number of new Oriental schools and learning centers was 711, less than 744 in the same period last year.

Preschool education Market: On October 2, 2013, New Oriental signed a final agreement to acquire 100% per cent of a chain of kindergartens in Changsha, which has 10 chain schools and 3,000 students. This "one-stop service" education ecosystem business model should enhance the presence of new Oriental in preschool education market.

Online education program: New Oriental has begun to explore the model of integrating online education with offline education and has begun to explore pure online learning products. Its online platform koolearn.com offers more than 2000 online courses, mainly for youth and adult language training, exam preparation, and vacation education. In addition, the new Oriental has a range of mobile and network applications, for children between the age of 2-8 to provide free applications, and the use of embedded in the application of the purchase model to generate revenue.

Capital expenditure and research and development: in the second quarter, New Oriental invested $72 billion in capital expenditure, opened 11 learning centers, and renovated old learning centres, which were less than 16.2 million dollars in the same period last year. New Oriental expects research and development spending to be $10 million trillion this year.

Performance Outlook: The new Oriental forecast, the third quarter revenue for 260 million U.S. dollars to 270.9 million U.S. dollars, the year-on-year growth of 19% to 24%. The company's management said that if the company opened 20 to 30 new learning centers, rather than a net reduction of 2 learning centers, its second-quarter revenue year-on-year growth should have been 20% to 25%. In the quarter, the new Oriental closed 6 poorly performing learning centers.

Stock rating and target price: We reaffirm the "overweight" rating of new Oriental Equities, with a target price of $40 for 12 months. The target price means that, based on our expectation of 1.58 US dollars per share of the new Oriental in fiscal 2015, it has a P/e ratio of 25 times times.