New Oriental Education & Technology Group, a New York-listed Chinese tutoring firm, recorded net income of $150.8 million for the first quarter of its 2021 fiscal year, down from $203.2 million a year prior.

The Beijing-based company reported net revenue for the quarter ending 31 August, 2020 of $986.4 million, down from $1.07 billion reported for the first quarter of its 2020 fiscal year.

Total student enrolments in academic subjects tutoring and test-preparation courses increased by 13.5% year-on-year to 2.96 million in Q1 2021. And the total number of schools and learning centres was 1,472 at the end of August, an increase of 211 from 1,261 a year earlier. The company also has 112 schools.

New Oriental’s share price is up 34% year-to-date, trading at $170.93 at the time of publication.

New Oriental’s chairman Michael Yu said: “The Covid-19 outbreak continues to raise hurdles for businesses across the globe, and inevitably affects our business operations and financial condition for the first quarter of fiscal year 2021. However, we are pleased to report a set of encouraging results. Net revenue for the first quarter was down 8% year-over-year, which is better than what we guided in the previous quarter. The slight decrease was mainly due to the delayed enrolment for summer and autumn classes and the shortening of summer holiday in many major cities by one to two weeks this year, as well as the delayed resumption of offline operation in certain cities, such as Beijing. 

“As the pandemic gradually fades in China, positive signs of recovery have started to emerge across our business lines with a significant jump in student enrolments. Our key growth driver, the K12 all-subjects after-school tutoring business, achieved year-over-year revenue growth of approximately 8%. The U-Can middle and high school all-subjects after-school tutoring business grew by approximately 9%, while our POP Kids programme recorded a growth of approximately 4%. Overseas-related businesses, continued to face the most difficult challenges due to the cancellation of overseas exams and restrictions on travel. The overseas test preparation business and the overseas consulting and study tour business declined by approximately 51% and 31% respectively.

“Most of the schools in China have resumed face-to face classes since the end of September, hence we have also gradually resumed our offline operation in all cities that we operate in, including Beijing. We are glad to have seen significant pick-up in the year-over-year trend of student enrolments and cash proceeds from students for the autumn semester, which is a positive sign of recovery.

“Looking ahead, we believe that our financial performance will bottom out starting from the second fiscal quarter.”

In August, it was reported that New Oriental would pursue a $1 billion dual listing in Hong Kong amid a move to tighten restrictions around the accounting practices of US-listed Chinese companies.

Earlier in the year, New Oriental said it would raise $300 million of debt via Hong Kong’s bourse, rather than through the New York Stock Exchange, where its American depositary shares are listed.

Date published: 13 October 2020

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