On April 26th, Hong Kong stocks rose rapidly at the beginning of the trading session, with the Hang Seng Index expanding to 1.6% and the Hang Seng Technology Index rising by 2.68%. Energy, technology, and securities stocks strengthened. Among them, New Oriental (9901. HK) rose 3.62% to HKD 64.45, while Oriental Selection (1797. HK) rose 4.26% to HKD 16.64.
Yesterday, the US stock market closed at $13.35, up 8.89%, with a total market value of $8.524 billion; New Oriental (EDU. N) closed at $79.64, up 3.32%, with a total market value of $13.181 billion. On the news side, TAL released its unaudited financial reports for the fourth quarter and full year of the 2024 fiscal year as of February 29, 2024 on the 25th.
According to the financial report, as of February 29, 2024, TAL's revenue was 1.49 billion US dollars, a year-on-year increase of 46.2% compared to the same period last year of 1.1 billion US dollars; Operating loss of 69 million US dollars, a year-on-year decrease of 23.7%; Non US accounting standard operating profit (excluding equity incentive expenses) was $19.6 million, compared to $18 million in the same period last year; The net loss attributable to TAL was $3.573 million, compared to $136 million in the same period last year.
Among them, as of the fourth quarter of February 29, 2024, TAL's revenue was $430 million, a year-on-year increase of 59.7% from $269 million in the same period last year; The operating loss was 11 million US dollars, compared to 44 million US dollars in the same period last year, a year-on-year decrease of 75.1%; The non US accounting standard operating profit (excluding equity incentive expenses) was $9.44 million, compared to $18 million in the same period last year; The net profit attributable to TAL was 28 million US dollars, while the net loss attributable to TAL in the same period last year was 39 million US dollars.
In terms of specific performance, according to statistics from Bank of Communications International, on the one hand, in terms of learning services, TAL Education's revenue from quality education accounted for over 40% of the total revenue in the quarter, mainly benefiting from Peiyou's high double-digit growth offline, and the expansion speed of offline teaching points was faster than expected by institutions; High school income has accelerated year-on-year, accounting for nearly 20% of income. Secondly, in the field of content solutions, growth is mainly driven by sales of learning machines. In the fourth quarter, the sales of TAL Learning Machine were about 100000 units, better than the previously expected 80000 units. Among them, the proportion of new models exceeded 50%, and the unit price increased by 40%, which is one of the main factors driving the company's revenue to exceed market expectations.
After the "double reduction" policy, all education companies have made business adjustments. Nowadays, Good Future and New Oriental are also showing different development directions. According to Wu Jincao, the industry chief of Dongwu Securities listed companies, there are significant differences between TAL and New Oriental in terms of business, management mechanisms, and development strategies.
In terms of financial performance, after the "double reduction" policy, based on the latest quarterly revenue data, New Oriental's revenue was 1.207 billion US dollars, and TAL's revenue was 430 million US dollars. In terms of fiscal revenue, New Oriental's revenue dropped from $4.2 billion to around $3 billion after the "double reduction" policy. In the fiscal year 2021, TAL Education's revenue was similar to that of New Oriental, but in 2023, its revenue dropped to around $1 billion.
In terms of specific influencing factors, Wu Jincao stated that Dongfang Zhenxuan accounts for about 20% of New Oriental's revenue, and the impact is more on the recovery of New Oriental's own education business. According to the financial report, after the "double reduction" policy, New Oriental's financial disclosure method has been changed to the business name of "study abroad and consulting business", accounting for about 20% of its revenue. The second part is mainly focused on high school student training, accounting for about 20%. Secondly, there are quality courses with a fast growth rate and a proportion of over 20%. Finally, it's the live streaming e-commerce platform Dongfang Selection.
However, after the epidemic and "double reduction", TAL Education did not have a particularly clear latest disclosure method. As stated by TAL Education CFO Peng Zhuangzhuang during the financial report conference call, the company will continue to focus on further improving its mature business, continuing to adhere to high-quality standards for offline and online learning products and services. It is expected that various learning service projects will continue to be the largest source of income in the new fiscal year, and the company will continue to invest in artificial intelligence.
On the analysis of the reasons for the development of different paths, Wu Jincao stated that the education and training policy is not to prevent the industry from running education and training, but to strictly regulate the business of promoting young children to primary and junior high schools. Although the financial report of TAL Education did not disclose specific business segments, through research and calculation, it can be seen that before the epidemic, the proportion of this part of New Oriental's business was less than 20%, while other high school, overseas, adult, vocational education and other sectors were not significantly affected. However, the proportion of TAL Education's early childhood and early childhood education and early childhood education was very high.
Therefore, Wu Jincao stated that the "double reduction" policy has a greater impact on TAL, but for New Oriental, it is not as severe as imagined by the outside world. There is a difference in the degree of recovery between the two companies after the epidemic, which is related to their respective basic businesses and development strategies.
Before the policy was introduced, New Oriental did not adopt a "big opening and big closing" market strategy, and timely adjusted its business after receiving relevant information. At present, compared to its business segments, New Oriental presents a more diverse business arrangement. At the same time, fundamentally, Wu Jincao believes that New Oriental is a consumer company, while TAL is closer to a technology company, which also makes the two sides have different business ideas.
The latest financial report data from New Oriental shows that although the investment in Dongfang Zhenxuan's live streaming e-commerce business has to some extent affected the net profit data, the overall revenue has surged, even exceeding historical data. In addition to its education business, TAL Education has invested heavily in the field of artificial intelligence technology. CTO of TAL Group, Tian Mi, previously stated, "AI has brought an opportunity to redefine smart education, and big model technology has truly made it possible to achieve large-scale personalized teaching."
However, due to the fact that artificial intelligence still has a long way to go before it can truly achieve cost reduction and efficiency improvement, TAL Education's revenue mainly relies on its education business. According to the International Research Report of Bank of Communications, in the fiscal year 2025, TAL Education may expand its quality education programs by more than 30%, with an expected annual revenue growth of over 60%. Driven by the year-on-year increase in learning machine prices and leading industry shipments, it is expected that learning machine related revenue will increase by over 80%, driving the company's overall revenue to increase by 37% to $2 billion, an increase of 3% from previous expectations.