行内1QFY26结果；提升盈利能力和股东回报

Inline 1QFY26 results; enhancing profitabilityand shareholder return Target PriceUS$76.00(Previous TPUS$70.00)Up/Downside29.8%Current PriceUS$58.56 New Orientalreported 1QFY26 financialresults:net revenue was up by 6% YoYto US$1.52bn, in line withBloombergconsensus estimate; non-GAAPoperatingincomewas upby11% YoY to US$336mn, 4% ahead of consensus estimate,mainlydue to the enhanced operational efficiency and disciplined capacityexpansion.For 2QFY26E,managementguidednet revenue to grow by 9-12%YoY to US$1.13bn-1.16bn, with growth reaccelerating thanks to thenotablerevenue growth accelerationoftheK-12 business.Meanwhile, the companymaintains its full-year revenue guidance ofUS$5.15-5.39bn (+5-10% YoY) inFY26E.Weraise ourFY26-28E total revenueforecastby 2-3% in view of thesolidK-12 business,and lift our SOTP-derived target price to US$76.0(previous: US$70.0). Maintain BUY on resilient revenuegrowthoutlook andattractiveshareholder return(c.5% of market cap). China Internet Saiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hk Wentao LU, CFAluwentao@cmbi.com.hk Inline 1QFY26 results.Overseastest prepandoverseas study consultingbusinessescontinued to face pressure amid macro uncertainty,withrevenue growth decelerating to +1% YoY and +2% YoYrespectivelyin1QFY26. Domestic test prep revenue grew by 14% YoY in 1QFY26. Neweducational business initiativesrevenue was up by 15% YoY in 1QFY26,thanks to the solid growth of non-academic tutoring course enrolment(+10% YoY) and theactive paid users of intelligent learning system(+40%YoY). The company’s newly launchedAI-poweredintelligentlearningdevicefurther improves the study experience, whichhas drivensolid growth of thepaid users of intelligent learning devices. Besides, the company applies AItoenhance its internaloperationalefficiency, supporting margin expansion. Ye TAO, CFAfranktao@cmbi.com.hk Joanna Ma(852) 37618838joannama@cmbi.com.hk Stock Data Expect revenuegrowth to reaccelerate in 2QFY26E.For 2QFY26E,managementnotedthe meaningful revenue growthaccelerationof the K-12business despite intense competition, primarily attributable to the enhancedretention rate andimprovedproduct quality. For 2QFY26E, we forecastdomestic test prep foradults/new educational initiatives/high-school tutoringrevenue to increase by 13%/12%/21% YoY respectively, but overseas-relatedbusiness revenue to decrease by 5%YoY amid macro andgeopolitical uncertainties. Improving efficiency andshareholderreturn.Non-GAAP OPM rose by1pptYoY to 22%in 1QFY26,mainly thanks to the company’s costoptimizationeffort. Non-GAAP G&A expenses were down by 1% YoY toUS$351mnin 1QFY26.Looking ahead,management will continue tobalance revenuegrowthandprofitability. We expect non-GAAP OPM toexpand by 2ppt YoY to 5% in 2QFY26E. Toimplementits share return plan,the company alsoannounceda cash dividend of US$1.2 per ADS (totalamount of US$190mn) and a new 12-month sharerepurchaseprogram ofUS$300mn, which together representc.5% of its market capas of 28 Oct. Source: FactSet Business forecasts update and valuation Valuation 1) US$73.0for the educational and consulting business (96% of total valuation), based on26x FY26E PE, which ison par with the educationalsector average. 2) US$2.0for East Buy (3% of total valuation), based on12x FY26E PE, which ison parwiththee-commercesector average. 3) US$1.0for the Tourism and others business (1% of total valuation),based on 10x FY26EPE, which is a discount to other OTA platforms(16x)giventhatits tourism businessremains at early development stage. Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in thisreport: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered inthis research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of theHongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies coveredin this report. CMBIGM RatingsBUY : Stock with potential return of over 15% over next 12 months: Stock withpotential return of +15% to-10% over next 12 months: Stock with potential loss of over 10% over next 12 months: Stock is not rated byCMBIGM HOLDSELLNOT RATED :Industry expected to outperform the relevant br