[Changjiang Social Services] New Oriental 26Q4 Performance Review & Education Investment Views Update Recommendation

English summary

New Oriental: Core education business grows strongly, revenue and profit guidance optimistic. In FY26Q4, New Oriental achieved net revenue of $1.530B and Non-GAAP operating profit of $110M, up 34.7% YoY, corresponding to a Non-GAAP operating margin of 7.2%, up 0.6pct YoY. For FY2026 full year, net revenue was $5.661B, up 15.5% YoY; Non-GAAP operating margin improved by 1.7pct to 13.0%. Management expects FY2027 revenue to grow 14%-18% YoY, possibly exceeding expectations; K-12 revenue is expected to grow about 20%, with Q1 growth potentially higher. The company saved approximately $100M in costs in FY2026, and in FY2027 will continue cost reduction through organizational adjustments, lower marketing expense ratio, and AI efficiency gains, with savings expected to exceed the prior year. Revenue growth, utilization improvement, and expense optimization are expected to jointly drive margin improvement. Industry: New Oriental's results further validate strong demand in the education training industry.