New Oriental Shares Soar 8% on Strong Revenue, Student Enrollment

China’s education reported a strong fourth fiscal quarter, though its income has declined from the same period of last year.

Author: Belinda Zhou   

New Oriental Education & Technology Group Inc. (NYSE: EDU) announced a 20 percent revenue increase and strong student enrollment in the fourth fiscal quarter, sending its stock 8 percent higher in early trading Tuesday to $106.25 per share.

The company, China's largest provider of private education services, said its revenue reached $842.9 million in the fourth quarter ended May, up 20 percent from the corresponding period of 2018. The improvement was fueled by a 34 percent increase in student enrollments, specifically, K-12 after-school tutoring courses, which reached 2.8 million, according to the report.

"We are delighted to conclude the fiscal year 2019 with continued robust growth on the top line as well as improvement in operating margin,"  Minhong Yu, the executive chairman of New Oriental, said in a statement.

The company saw a year-over-year decrease of 34 percent in net income to $43.2 million, or 27 cents per American depositary share. 

New Oriental reported a loss from a long-term investment of $29 million, as well as a provision for income tax of $30 million, nearly double from a year ago.

For the full fiscal year 2019 through May, New Oriental reported revenue of $3.1 billion, representing a 27 percent increase from 2018. Net income reached $238.1 million, down 20 percent from the preceding year.

Looking ahead, the company said it expects revenue in the first quarter of the fiscal year 2020 to be between $1.05 billion and $1.08 billion, representing a year-over-year increase of between 22 and 25 percent.

"As we enter the fiscal year 2020, we will continue to leverage our online and offline integrated education system across all business lines, and improve efficiency by using standardized, modularized and systemized operating process," Zhihui Yang, the chief financial officer of New Oriental, said.