One of the most successful, less volatile U.S.-listed Chinese stocks has been New Oriental Education & Technology Group, Inc. (NYSE/EDU). Written about many times in this column, this business has all the right characteristics to be an outstanding wealth creator.
New Oriental Education in the business of selling education in China. This pure-play Chinese company sells a range of educational services, targeting youngsters and adults with full primary and middle school education, as well as English language training and a variety of other courses for adults. The company publishes all kinds of educational material, provides online courses of study, and operates private schools throughout the country.
Founded in 1993, this company now boasts over three million student enrolments. Over 800,000 new student enrolments occurred in 2005. Currently, New Oriental Education operates a network of over 37 schools, 149 learning centers, and 13 New Oriental bookstores, employing over 1,700 teachers in 24 cities. The company’s online network currently also boasts some two million registered users.
In its latest quarter, the second fiscal quarter of 2008 ended November 30, 2007, New Oriental Education’s revenues grew 42% to almost thirty-three million dollars.
Net income was more modest, coming in at $2.0 million, but this did represent a 77% gain over net income generated in the comparable quarter.
For the first half of fiscal 2008, the company’s revenues grew a similar 43% to over a hundred and fifteen million dollars.
Net income for this period came to an impressive thirty-six and a half million dollars, representing a gain of fifty-six million dollars.
New Oriental Education finished the latest quarter with two- hundred and forty-seven million dollars in cash and without any debt.
This stock is worthy of analysis because it is one of those rare stocks that really creates a lot of wealth for stockholders. The last year for this company has been a sweet one, and now the business is beginning to slow.
I’m always on the lookout for another EDU. You just can’t argue with the fundamentals.