New Oriental Shows Why Education Pays 新东方告诉你为何教育会有回报

By newsdoug on July 20, 2011

New Orient banks on China's love of learning China’s education services firms may not be as high-profile as big names like Baidu (Nasdaq: BIDU) or Geely (HKEx: 165), but industry leader New Oriental Education (NYSE: EDU) is showing it can be equally profitable and notch enviable growth that would make many of the big boys jealous. While high inflation may be eroding Chinese consumer appetite for many discretionary items, education for themselves and their children is clearly not one of those, as evidenced by New Oriental’s latest results which saw its revenue rise nearly 60 percent and net income more than double for its fiscal quarter through the end of May. (company announcement) It forecast more modest revenue growth of about 35 percent in the important summer holiday quarter, though many Chinese firms are famous for low-balling such forecasts so they can surprise to the upside if their business does well. As a final piece of good news — and relative rarity for Chinese New York-listed companies these days — New Oriental announced a 4-for-1 stock split, a nod to the fact that its stock has doubled over the last two years and now trades near its all-time high. The company’s price-to-earnings ratio is a bit rich at more than 50 times, but its strong prospects seem to at least partly justify that high figure if it can really keep its profit growing at such a staggering rate. Given the ultra-competitiveness of China’s education system and the fact that everyone — from the wealthiest to the most average citizen — is willing to spend big bucks to educate their kids, I’d say the prospects look good for industry leaders like New Oriental and TAL Education (NYSE: XRS) for at least the next few years.

Bottom line: New Oriental and other education services firms still have lots of room for growth, feeding on Chinese desire to improve themselves and their children through extra study.

中国的教育服务公司可能没有百度<BIDU.O>或吉利<0175.HK>等公司那麽高调，但行业领跑者新东方<EDU.N>却在证明，教育服务业也同样可以赚钱，实现令知名大公司都艳羡不已的增长。虽然高通胀可能令中国消费者不再愿意在许多非必需品上花钱，但对於他们自己和他们的孩子来说，教育却不在此列。新东方最新财报表明，公司第四季营收增长近60%，净利润增长了一倍多。该公司并预计，暑期这一季度营收将增长35%。还有一条好消息是，在纽约上市的新东方宣布股票1拆4计划，这说明过去两年里，其股价翻倍，并且目前其股价接近历史高点。新东方的市盈率高於50倍，如果新东方能保持现有的利润增速，其强劲的前景似乎至少可以解释为何这一数字会如此之高。考虑到中国竞争激烈的教育体制，以及全民都愿为孩子进行教育投资，我觉得新东方和学而思教育集团<XRS.N>等行业领头羊至少在未来几年的前景是很光明的。

一句话：鉴於中国人愿意为自己和孩子充电进行投资，新东方和其他教育服务公司还有很大增长空间。

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