Yamato: Giving a “buy” rating to New Oriental-S (09901), overseas business restructuring supports profit margin expansion

The Zhitong Finance App learned that Daiwa released a research report saying that New Oriental-S (09901) performed steadily in the fourth quarter of fiscal year 2026 at the end of May, with revenue and adjusted operating profit being 5% and 7% higher than market expectations, respectively. Management expects revenue growth of 14% to 18% year over year for the 2027 fiscal year, and the median guideline is about 5% higher than market expectations. Yamato currently gives New Oriental a “buy” rating.

Looking ahead to the 2027 fiscal year, Daiwa expects that with the completion of overseas business restructuring, the fixed cost base will be reduced, which will support the structural expansion of profit margins. Furthermore, the increase in the profit contribution of Oriental Selection (01797), the increase in AI-driven efficiency, cost management measures, and the operating leverage of the education business and Oriental Selection may all drive profit margins and help New Oriental achieve the goal of increasing the mid-term operating margin to ten percent.

According to Yamato, although the decline in the birth rate is a long-term structural risk, management believes that this will make future parents more picky about the quality of education and help industry leaders such as New Oriental seize more market share.