HK Stock Market Move | NEW ORIENTAL-S (09901) rebounds more than 3%, EAST BUY drags down company performance. JP Morgan said the management's guidance is reasonable but difficult to boost confidence.

New Oriental-S (09901) rebounded more than 3%, as of the time of publication, it rose 2.26% to HK$36.2, with a turnover of HK$485 million. In terms of news, on the evening of January 21, New Oriental released its financial report for the mid-term of fiscal year 2025. In the second quarter, New Oriental achieved a net revenue of 1.039 billion US dollars, an increase of 19.4% year-on-year; excluding the self-owned products of EAST BUY and live e-commerce business, the core education business achieved a net revenue of 894 million US dollars, an increase of 31.3% year-on-year. For the third quarter, New Oriental's revenue guidance is approximately 1.01 billion to 1.03 billion US dollars, an increase of 18%-21% year-on-year, significantly lower than the market's estimate of 1.32 billion US dollars. J.P. Morgan issued a report stating that given the company's conservative guidance as usual, the guidance itself is acceptable, and the market may not react so strongly. However, based on details from performance conference calls, it is believed that the erosion of operating profit margins is inevitable, possibly declining by 100 to 150 basis points annually, which may offset most of the revenue growth and lead to a significant slowdown in operating profit growth in the third quarter. In addition, the management's lack of confidence in achieving the annual revenue growth target of 30% is also unable to activate market confidence.