[EDU] New Oriental Education Thesis 2026: Post-Tutoring Pivot Drives Test Prep Tourism Capital Return

Key Takeaways

• EDU FY2025 (June year-end) revenue ~$5.30-5.55B (+22-28% YoY) with adj. EPS ~$2.40-2.85 ADR reflecting continued post-2021 Double Reduction policy pivot $5.30-5.55B aggregate Test Preparation + Overseas + Educational Materials + East Buy Livestreaming Tourism revenue ($3.3-3.5B aggregate Educational New Business + ~$1.0-1.2B aggregate Overseas Test Prep + ~$0.65-0.75B aggregate Education Materials + ~$0.35-0.40B aggregate East Buy Tourism + Livestreaming) under continued Founder + Executive Chairman Michael Yu since 1993 (~32-year founding tenure; selected primary post-1993 founding architect; selected post-July 2024 CEO transition to Stephen Yang).
• Post-2021 Double Reduction Pivot + Educational New Business Pipeline (~$3.3-3.5B revenue): ~$3.3-3.5B aggregate Educational New Business revenue (~62%+ revenue mix); selected primary post-July 2021 Double Reduction policy K-9 academic tutoring ban + selected post-2022 selected various aggregate K-9 Non-Academic Tutoring (Coding + STEM + Art + Drama + Sport) + selected various aggregate Adult Continuing Education + selected various aggregate Study Tour + Camp + selected various aggregate Smart Educational Hardware + ~85-90% aggregate gross margin; selected various aggregate ~80-85 aggregate cumulative China cities + selected various aggregate ~1.0-1.2M aggregate active students + ~+30-40% aggregate Educational New Business growth.
• Overseas Test Prep + Education Materials + East Buy Tourism + Livestreaming Pipeline: selected continued post-1993 selected various aggregate Overseas Test Preparation (TOEFL + IELTS + GRE + GMAT + SAT + ACT + selected various aggregate) + selected various aggregate Overseas Study Consulting (US + UK + Australia + Canada + selected various aggregate destinations) + selected various aggregate ~$1.0-1.2B aggregate Overseas Test Prep revenue (~22%+ aggregate revenue mix) + selected various aggregate ~$0.65-0.75B aggregate Education Materials revenue + selected continued post-2022 East Buy (~64%+ Hong Kong-listed subsidiary) Tourism + Livestreaming agriculture/food/lifestyle e-commerce ~$0.35-0.40B aggregate revenue (~7-8% revenue mix).
• Capital position + balance sheet: ~$1.00 aggregate annual ADR dividend (~40-45% aggregate payout ratio; ~2.0-2.5% aggregate dividend yield; selected post-FY2024 dividend reinstatement); ~$300-450M aggregate FY2025 buybacks; aggregate capital return ~$465-625M FY2025; net leverage ~negligible (selected ~debt-light + ~$4.5-5.0B aggregate cash + investments balance); investment-grade Baa3/BBB- credit rating; ~165-170M aggregate ADR-equivalent diluted shares (~1.65-1.70B aggregate Hong Kong-listed shares).
• FY2026 thesis catalysts: Educational New Business pivot pipeline (~$3.3-3.5B + Coding + STEM + Art + Drama + Sport + ~80-85 aggregate China cities + 1.0-1.2M active students) + Overseas Test Prep + Education Materials + East Buy Tourism + Livestreaming pipeline ($2.0-2.4B aggregate combined) + selected ~$4.5-5.0B aggregate cash treasury + selected ~32-year Michael Yu founding heritage governance.

Company Background

New Oriental Education & Technology Group, Inc. (NYSE: EDU; HKEX: 9901) is the largest specialty private Education + Test Preparation + Educational Materials + Tourism company in China, founded 1993 as New Oriental School by Michael Yu in Beijing China (32-year heritage; selected pioneer China private Education + Test Preparation specialty). Selected post-September 2006 NYSE IPO ($160M aggregate IPO proceeds September 2006); selected post-November 2020 HKEX dual primary listing (~$1.0B+ aggregate HKEX dual listing November 2020); selected post-July 2021 Chinese government Double Reduction policy K-9 academic tutoring ban (selected primary post-July 2021 ~85%+ aggregate revenue collapse + selected various aggregate K-9 academic tutoring ban + selected various aggregate restructuring); selected post-2022 East Buy (~64%+ Hong Kong-listed subsidiary) Tourism + Livestreaming agricultural product e-commerce pivot launch; selected post-2022 Educational New Business launch (Coding + STEM + Art + Drama + Sport non-academic K-9 tutoring + Adult Continuing Education + Study Tour + Camp); selected post-July 2024 Stephen Yang CEO appointment (Founder Michael Yu retains Executive Chairman); HQ Beijing China; ~50,000-55,000 employees globally; selected ~80-85 aggregate cumulative China cities aggregate Educational + Test Preparation + East Buy footprint.

EDU operates 1 primary business: Education + Test Preparation + Educational Materials + East Buy Tourism + Livestreaming ~100% revenue. Educational New Business revenue 62%+ revenue mix ($3.3-3.5B; selected primary post-2022 Coding + STEM + Art + Drama + Sport + Adult Continuing Education + Study Tour + Camp + Smart Educational Hardware). Overseas Test Preparation revenue 22%+ revenue mix ($1.0-1.2B; selected primary TOEFL + IELTS + GRE + GMAT + SAT + ACT + Overseas Study Consulting). Education Materials revenue 12-14% revenue mix ($0.65-0.75B). East Buy Tourism + Livestreaming revenue 7-8% revenue mix ($0.35-0.40B; selected primary post-2022 East Buy Hong Kong-listed subsidiary). Geographic mix: China ~99%+ + selected various aggregate international ~1%.

Capital position: ~$1.00 aggregate annual ADR dividend (~40-45% aggregate payout ratio; ~2.0-2.5% aggregate dividend yield; selected post-FY2024 dividend reinstatement); ~$300-450M aggregate FY2025 buybacks; aggregate capital return ~$465-625M FY2025; net leverage ~negligible (selected ~debt-light + ~$4.5-5.0B aggregate cash + investments balance); investment-grade Baa3/BBB- credit rating; ~165-170M aggregate ADR-equivalent diluted shares.

Post-2021 Double Reduction Pivot + Educational New Business Pipeline (~$3.3-3.5B Revenue)

The Post-2021 Double Reduction Pivot + Educational New Business pipeline is EDU's foundation thesis: ~$3.3-3.5B aggregate Educational New Business revenue (~62%+ revenue mix) + selected primary post-July 2021 Double Reduction policy K-9 academic tutoring ban + selected post-2022 selected various aggregate K-9 Non-Academic Tutoring (Coding + STEM + Art + Drama + Sport) + selected various aggregate Adult Continuing Education + selected various aggregate Study Tour + Camp + selected various aggregate Smart Educational Hardware + ~85-90% aggregate gross margin; selected various aggregate ~80-85 aggregate cumulative China cities + selected various aggregate ~1.0-1.2M aggregate active students + ~+30-40% aggregate Educational New Business growth. Selected primary EDU platform: post-July 2021 Double Reduction pivot + Educational New Business + ~80-85 aggregate China cities footprint.

FY2025 Educational New Business dynamics ($3.3-3.5B aggregate revenue): selected continued post-2024 ~+30-40% aggregate Educational New Business revenue growth (post-2021 Double Reduction pivot + selected various aggregate Coding + STEM + Art + Drama + Sport non-academic K-9 + Adult Continuing Education + Study Tour + Camp continued ramp) + ~$3.3-3.5B aggregate Educational New Business revenue + selected various aggregate ~80-85 aggregate cumulative China cities + selected various aggregate ~1.0-1.2M aggregate active students. Selected post-2024 ~$1.20-1.85 incremental annual ADR EPS contribution as Educational New Business pivot drives incremental margin (post-July 2021 Double Reduction pivot + post-2022 ramp + post-FY2024 dividend reinstatement).

FY2026 catalyst: continued Educational New Business pivot pipeline + ~$1.20-1.85 incremental annual ADR EPS contribution under continued Stephen Yang CEO + Michael Yu Executive Chairman leadership (~32-year founding heritage). Selected aggregate ~$4.0-4.5B aggregate Educational New Business revenue + selected various ~+25-35% aggregate growth + selected various aggregate ~85-95 aggregate cumulative China cities + selected various aggregate ~1.2-1.5M aggregate active students + selected various aggregate Coding + STEM + Art + Drama + Sport + Adult Continuing Education continued ramp. Risks: TAL Education (TAL) + GoTu Tech + Yuanfudao + Zuoyebang + Boxiang Education + selected various aggregate China private education competitive displacement + selected various aggregate Chinese government Double Reduction policy continued enforcement + selected various aggregate K-9 Non-Academic Tutoring regulatory cycle considerations.

Overseas Test Prep + Education Materials + East Buy Tourism + Livestreaming Pipeline

The Overseas Test Prep + Education Materials + East Buy Tourism + Livestreaming pipeline is EDU's primary growth thesis: selected continued post-1993 selected various aggregate Overseas Test Preparation (TOEFL + IELTS + GRE + GMAT + SAT + ACT + selected various aggregate) + selected various aggregate Overseas Study Consulting (US + UK + Australia + Canada + selected various aggregate destinations) + selected various aggregate ~$1.0-1.2B aggregate Overseas Test Prep revenue (~22%+ aggregate revenue mix) + selected various aggregate ~$0.65-0.75B aggregate Education Materials revenue + selected continued post-2022 East Buy (~64%+ Hong Kong-listed subsidiary) Tourism + Livestreaming agriculture/food/lifestyle e-commerce ~$0.35-0.40B aggregate revenue (~7-8% revenue mix).

FY2025 Overseas Test Prep + East Buy dynamics: selected primary post-1993 Overseas Test Preparation (TOEFL + IELTS + GRE + GMAT + SAT + ACT) + selected various aggregate ~$1.0-1.2B aggregate Overseas Test Prep revenue + selected various aggregate $0.65-0.75B aggregate Education Materials revenue + selected continued post-2022 East Buy Tourism + Livestreaming ($0.35-0.40B aggregate revenue + ~64%+ Hong Kong-listed subsidiary). Selected post-2024 ~$0.75-1.20 incremental annual ADR EPS contribution as Overseas Test Prep + Education Materials + East Buy pipeline drives incremental margin.

FY2026 catalyst: continued Overseas Test Prep + Education Materials + East Buy Tourism + Livestreaming pipeline + ~$0.75-1.20 incremental ADR EPS contribution. Selected aggregate ~$1.05-1.30B aggregate Overseas Test Prep revenue + selected various aggregate ~$0.70-0.80B aggregate Education Materials revenue + selected various aggregate ~$0.40-0.50B aggregate East Buy Tourism + Livestreaming revenue + selected various aggregate post-2022 East Buy continued evolution (Tourism + Livestreaming agriculture/food/lifestyle e-commerce). Risks: Education First (EF) + IDP Education + Cambly + Wall Street English + selected various aggregate Overseas Test Preparation competitive displacement + selected various aggregate Chinese students overseas demand cycle considerations + selected various aggregate post-2022 East Buy Tourism + Livestreaming volatility considerations + selected various aggregate Chinese RMB currency considerations.

Capital Position + Balance Sheet

Capital position + balance sheet: ~$1.00 aggregate annual ADR dividend (~40-45% aggregate payout ratio; ~2.0-2.5% aggregate dividend yield; selected post-FY2024 dividend reinstatement) + ~$300-450M aggregate FY2025 buybacks + aggregate capital return ~$465-625M FY2025 + net leverage ~negligible (selected ~debt-light + ~$4.5-5.0B aggregate cash + investments balance) + investment-grade Baa3/BBB- credit rating + ~165-170M aggregate ADR-equivalent diluted shares.

FY2026 catalyst: continued ~$465-700M aggregate annual capital return + selected continued ~2.0-2.5% aggregate dividend yield + selected continued ~$1.00-1.20 aggregate annual ADR dividend + selected continued ~negligible net leverage + selected various aggregate ~$300-500M aggregate annual buybacks + selected various aggregate ~$4.5-5.0B aggregate cash treasury. Selected ~40-45% aggregate payout ratio + selected ~$4.5-5.0B aggregate cash + selected investment-grade Baa3/BBB- credit rating support continued capital return + Educational New Business + Overseas Test Prep + East Buy expansion + tuck-in M&A capacity.

Key Core Metrics

• FY2025 (June year-end) revenue ~$5.30-5.55B (+22-28% YoY) vs $4.31B FY2024; adj. EPS ~$2.40-2.85 ADR
• 1 segment: Education + Test Preparation + Educational Materials + East Buy Tourism + Livestreaming ~100%
• Structure: Educational New Business ~62%+ ($3.3-3.5B) + Overseas Test Preparation ~22%+ ($1.0-1.2B) + Education Materials ~12-14% ($0.65-0.75B) + East Buy Tourism + Livestreaming ~7-8% ($0.35-0.40B)
• Geographic mix: China ~99%+ + selected various aggregate international ~1%
• Educational New Business: post-2022 Coding + STEM + Art + Drama + Sport + Adult Continuing Education + Study Tour + Camp + Smart Educational Hardware
• ~80-85 aggregate cumulative China cities; ~1.0-1.2M aggregate active students
• Overseas Test Preparation: TOEFL + IELTS + GRE + GMAT + SAT + ACT + Overseas Study Consulting
• East Buy: ~64%+ Hong Kong-listed subsidiary Tourism + Livestreaming agriculture/food/lifestyle e-commerce
• Net leverage ~negligible (~debt-light); ~$4.5-5.0B aggregate cash + investments balance
• ~165-170M aggregate ADR-equivalent diluted shares
• ADR dividend ~$1.00 annual (~40-45% payout; ~2.0-2.5% yield; post-FY2024 reinstatement)
• ~$300-450M aggregate FY2025 buybacks
• ~$465-625M total capital return FY2025
• Investment-grade Baa3/BBB- credit rating

Market Evaluation

EDU FY2026 market evaluation: at ~$45-65 ADR share price + ~165-170M aggregate ADR-equivalent diluted shares = ~$8-11B market cap; ~$1.00 aggregate annual ADR dividend + ~2.0-2.5% aggregate dividend yield. Selected primary EDU peers: TAL Education (TAL, ~$5-7B Mcap; China private education) + Gaotu Techedu (GOTU, ~$1-2B) + Yuanfudao (private) + Zuoyebang (private) + Boxiang Education + Education First (EF, private) + IDP Education (Australian) + Cambly + Wall Street English + selected various aggregate global Education + Test Preparation companies. Selected EDU ~17-22x P/E + selected ~10-13x EV/EBITDA + selected ~2.0-2.5% dividend yield + selected aggregate ~$6.0-6.6B aggregate FY2026 revenue + selected aggregate ~$3.0-3.6 aggregate FY2026 ADR EPS + selected aggregate ~$465-700M aggregate FY2026 capital return + selected aggregate Educational New Business + Overseas Test Prep + East Buy pipeline. FY2026 base case: ~$6.0-6.6B aggregate revenue + ~$3.0-3.6 adj. ADR EPS + ~$465-700M aggregate capital return. Bull case: Educational New Business growth acceleration + post-2021 Double Reduction pivot + post-2022 East Buy Tourism + Livestreaming continued growth + Overseas Test Prep + Chinese students overseas demand recovery + Chinese RMB appreciation drives ~$6.3-6.9B aggregate revenue + ~$3.3-4.0 ADR EPS. Bear case: TAL Education + Gaotu Techedu + Yuanfudao + Zuoyebang + Boxiang + Education First + IDP Education + Cambly competitive intensification + Chinese government Double Reduction policy continued enforcement + K-9 Non-Academic Tutoring regulatory cycle considerations + post-2022 East Buy Tourism + Livestreaming volatility considerations + Chinese RMB depreciation considerations + post-July 2024 Stephen Yang CEO transition + Michael Yu Executive Chairman + Founder governance considerations drives ~$5.30-5.80B revenue + ~$2.40-2.85 ADR EPS. The thesis depends on Educational New Business pivot + Overseas Test Prep + East Buy Tourism + Livestreaming pipeline + ~$4.5-5.0B aggregate cash treasury + ~32-year Michael Yu founding heritage governance.