Great news: the numbers are finally starting to pour in. I just mentioned New Oriental Education & Technology Group, Inc. (NYSE/EDU) in a previous column. As evidence of the strength of the Chinese economy, consider for a moment the following numbers.
The company reported that, in its third quarter of fiscal 2007 ended February 28, 2007, its revenues grew 51% over the comparable quarter to approximately $33.0 million.
New Oriental Education cited that its growth was mostly due to an increase in the number of student enrollments in language training and test preparation courses. Total student enrollments in these areas in the third quarter grew by eight percent to approximately 199,100, up from 184,400 students in the comparable quarter.
Net income for the quarter was an impressive $8.4 million, representing a 544% over net income generated in the third quarter of fiscal 2006. In my mind, this is exceptional profitability given sales total sales of $33.0 million.
The company finished the quarter with a whopping $443.4 million in cash after completing a recent financing.
Now EDU has the resources and the long-term staying power to become an even bigger player in private education in China. What a great company.
As I mentioned before, there’s a lot of good news already priced into this stock. The price target of $50.00 per share should be an easy one after these results. Still, I do think this that stock will continue to tick higher over the next several quarters. Despite its valuation, investors still like the idea of a well establish Chinese company teaching English to Chinese people.
One of the best things to happen to our domestic stock market was the listing of this company’s shares. If the current success of Chinese listings on American exchanges continues, we should get to consider all kinds of exciting investment opportunities over the next few years.