New Oriental Education: student enrollment +43%, revenue +36.9%
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New Oriental Education: student enrollment +43%, revenue +36.9%

New Oriental Education and Technology Group Inc., the largest private education provider in China, announced its results for the second quarter of fiscal 2018 last week. The company reported what can only be described as stellar growth: student enrollments rose by 43% and revenue rose by 36.9%, both reported against the previous year. The company also increased the number of schools and learning centers under its remit to 940, by November 30. That’s an increase of 151 against November 30 2017.

New Oriental’s share price has almost doubled over the past year

graph 0129 new oriental

SOURCE: Yahoo Finance

New Oriental’s executive chairman, Michael Minhong Yu, made the following comment to the press: "We continued to see strong momentum in our key business units for the second quarter of fiscal year 2018 and achieved an accelerated revenue growth of 36.9% year-over-year, exceeding our initial expectation once again. It is also encouraging to see our deferred revenue balance recorded US$1,137.3 million at the end of the quarter, up 48.7% year-over-year.

The solid top line growth is mainly driven by student enrollments. Our K-12 all-subjects after-school tutoring business growth was augmented in the second quarter with revenue up approximately 47% and enrollment up approximately 52% year-over-year. Moreover, our U-Can middle and high school all-subjects after-school tutoring business achieved revenue growth of approximately 45% and the revenue of POP Kids program rose approximately 51% year-over-year."

The company’s chief financial officer, Stephen Zhihui Yang, also spoke to the press, highlighting the relative successes of the quarter. Adding to comments by the rest of the management team, he said: "Despite the fact that the second quarter is traditionally the slowest quarter in the year, we still managed to improve the utilization of facilities compared with last quarter. This helps to lessen the pressure on margins as we continued the investment in capacity expansion and as expected we are on the right track to recover from the impact on the margins in the previous quarter.

Disclosure

Dominion holds New Oriental Education and Technology Group Inc. in its Global Trends Luxury Fund.


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