Broad-based growth drives 1Q beat – New Oriental delivered strong 1QFY27 results, with revenue rising 23.1% YoY to US$1.87bn and adjusted operating profit grew 21.2% YoY to US$407mn. Growth was broad-based across segments. Overseas test preparation and study consulting revenue rose approximately 8% and 7% YoY, respectively; adult and university student business revenue increased 22%; and new education initiatives (i.e. non‑academic tutoring, intelligent learning hardware & software) grew approximately 25%. Its subsidiary East Buy also expanded rapidly under both online and offline operation, expected to accelerate in 2Q. However, its increasing revenue contribution has diluted consolidated margins, as e-commerce carries lower margins than the seasonally more profitable education business.

Conservative FY27 guidance despite accelerating momentum – Mgt maintained FY27 revenue guidance of US$6.45–6.68bn, implying 14–18% YoY growth, but expects 2Q growth to exceed the 23.1% recorded in 1Q, partly driven by faster growth at East Buy.  It is expecting FY27 revenue to grow above 5% for overseas businesses in US-dollar terms, approximately 15% for high school business, around 20% or higher for university student business, and close to 20% for new education initiatives. Learning-center capacity is planned to expand by 10–15%, supporting future growth, while higher utilization and cost discipline should drive margin improvement across individual businesses.

FY27 dividend in schedule – The company plans to pay FY27 dividend of US$0.20 per ordinary share, or US$2.00 per ADS, in two instalments, totaling ~US$300mn. The first instalment has a record date of 18 November 2026, with payments are expected in early December. The company has also completed its US$300mn FY26 buyback and received authorization to repurchase up to US$200mn of shares over the next 12 months. The company is holding cash and cash equivalents of US$1.76bn, around a quarter of its market capitalization.

Our view:​ 

We view the unchanged FY27 guidance as conservative, given strong 1Q growth and an expected acceleration in 2Q, creating potential for full-year revenue to exceed guidance. East Buy’s expansion may constrain group margin growth, but improving utilization and cost efficiency should support education profitability. The stock is currently trading at 11.8x FY27E P/E. (Amelia Deng)