(Yicai) Aug. 1 -- Shares of New Oriental Education and Technology Group plunged after the Chinese online educational services provider said profit fell 6.9 percent in the fourth fiscal quarter from a year earlier.

After sinking by as much as 17.4 percent in the morning, New Oriental [HKG: 9901] closed 7.9 percent lower at HKD50.45 (USD6.46) a share in Hong Kong today. Its New York-listed stock [NYSE: EDU] sank 9.3 percent to USD62.82 yesterday. 

Net profit was USD27 million in the three months ended May 31, Beijing-based New Oriental said in a financial report released yesterday. Revenue surged 32 percent to around USD1.14 billion, beating its guidance of USD1.1 billion to USD1.13 billion.

“We are pleased to conclude the final quarter of fiscal year 2024 with a healthy top line growth of 32.1 percent,” Executive Chairman Michael Yu said in a statement to accompany the earnings release.

For the full year, net profit surged 75 percent to USD310 million, while revenue gained 33 percent to USD4.1 billion. The company ran 1,025 schools and study centers as of May 31, compared with 911 at the end of February and 748 a year earlier.

“Our GAAP operating margin for the quarter was 0.9 percent and non-GAAP operating margin for the quarter was 3.2 percent,” Stephen Yang, executive president and chief financial officer, said on an earnings conference call. 

“Our investment in accelerated capacity expansion and newly integrated tourism-related business, as well as additional incentives to management and staff, have led to the short-term impact on our operating margin in this quarter,” he said.

"We anticipate the pressure on margins for educational businesses will reduce in the next fiscal year as we continue to improve the utilization of facilities and operating efficiency," Yang noted.

New Oriental's overseas test preparation business grew 17.7 percent in the quarter from a year ago, and its study consulting business increased 17.3 percent, noted Executive Chairman Michael Yu. In addition, the domestic test preparation business targeting adults and university students are 16.4 percent percent, he said. 

The firm's non-academic tutoring courses were offered in around 60 cities, with about 875,000 students enrolling last quarter, Yu pointed out. "Our intelligent learning system and devices were adopted in around 60 cities, with approximately 188,000 active paid users,” he said.

On July 25, New Oriental's livestream e-commerce unit East Buy Holding announced that its popular salesman Dong Yuhui had resigned and will acquire its subsidiary Walk with Hui Beijing Technology for CNY76.6 million (USD10.6 million). 

The decision to sell Walk with Hui was made prudently after much transparent communication, Yang pointed out, adding that the amount spent to settle this matter will be disclosed in New Oriental's next earnings report.

Editor: Martin Kadiev