New Oriental Education & Technology Group Inc.

New Oriental Education & Technology Group Inc. Annual Review – Investor Summary

Hey there! Let’s break down how New Oriental (known for test prep, language courses, and online education) performed this past year. Think of this as a chat over coffee about whether this company deserves a spot in your portfolio.

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1. What They Do & This Year’s Performance

New Oriental is a major player in Chinese education, offering exam prep, language learning, and skills like coding. After China’s 2021 crackdown on for-profit tutoring (which devastated their core business), they’ve pivoted to non-academic courses, tech gadgets, and even livestream sales (think: selling farm produce and books on platforms like TikTok). They’re not back to pre-crisis levels, but they’re adapting creatively.

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2. Financial Highlights: Back in the Green

• Revenue jumped ~30% this year (rebounding from a disastrous 2022).
• Profits returned! Net income hit ~$200 million vs. a loss last year.
• Key drivers: Cost-cutting (closing unprofitable schools), new products (smart learning tablets), and livestream sales.
• Verdict: Growing again, but slower than pre-regulation days.

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3. Wins vs. Challenges

Wins ✅

• Successfully pivoted to non-academic courses (art, coding, camps).
• Livestream sales became a surprise revenue stream.
• Overseas test prep (for students studying abroad) rebounded.

Challenges ❌

• Still rebuilding trust post-2021 tutoring ban.
• New ventures (gadgets, livestream sales) aren’t yet major profit drivers.
• Enrollment risks: Need to attract students without heavy discounts, which could squeeze profits.

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4. Financial Health: Safe and Stable

• Cash stockpile: ~$4 billion (a massive safety net).
• Debt: Minimal.
• Confidence move: Spent $400 million buying back shares, signaling they believe the stock is undervalued.

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5. Top Risks to Watch

• Regulatory surprises: China could suddenly classify their tech products (like learning tablets) as “tutoring tools,” forcing restructuring or fines.
• Livestream sales hype: If this trend fades, a chunk of their growth disappears.
• Brand reputation: Their success hinges on the “New Oriental” name. Any quality issues or scandals could hurt enrollments.

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6. Competition Check

• TAL Education (main rival): Also pivoting, but New Oriental’s livestream edge gives them an advantage.
• Smaller players: Struggling more with post-crackdown recovery. New Oriental’s brand and cash reserves keep them ahead.

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7. Leadership & Strategy

• Leadership: Founder Michael Yu remains at the helm—no major changes.
• New motto: “Education + tech + lifestyle products.” Less reliance on traditional tutoring, more on diversified income streams.

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8. What’s Next?

• Vocational training: Expanding into job-skills courses.
• Global growth: More test prep for students heading abroad.
• AI experiments: Developing tech tools for personalized learning.

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9. Market Trends

• China’s shrinking birth rate: Fewer kids long-term = smaller education market.
• Tech demand: Parents still want high-quality learning tools (good for their gadgets).
• Regulatory calm… for now: No new crackdowns, but investor nerves remain.

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TL;DR for Investors

New Oriental is bouncing back with smart pivots and a fortress-like cash reserve. While not the high-flyer it once was, it’s now stable, profitable, and experimenting with new revenue streams.

Key takeaways:

• ✅ Strengths: Financial stability, diversified income, strong brand.
• ⚠️ Risks: Regulatory landmines, reliance on trends like livestream sales.
• 🎯 Investment case: A moderate-risk play for believers in their reinvention. Avoid if regulatory uncertainty spooks you.

Final thought: Worth a closer look if you’re comfortable with China’s unpredictable regulations and want a company that’s proven it can adapt. Keep an eye on their next livestream numbers!

Let me know if you want to dive deeper into any of this! ☕️