China Fund News reporter Yao Bo
After the stamp duty was lowered and Hong Kong stocks rose, the market rebounded weakly and continued to fluctuate. The Hang Seng Index broke out of a U-shaped trend on October 26th, closing slightly lower by 0.24%, while the Hang Seng Technology Index successfully turned red in the late trading session, closing up 0.31%.
With the intensive release of the latest quarterly reports, some companies' stock prices have experienced significant fluctuations. Due to the development of new business and e-commerce live streaming, New Oriental's profits have increased by 1.5 times, and its intraday stock price has hit a new high in recent years against the market trend; Standard Chartered Bank's stock price plummeted due to a year-on-year decline in profits, and Li Ning, whose stock price plummeted by 20%, was also affected by its performance.
The Hong Kong stock market has not continued its upward trend. Bank of America Securities released a report stating that the Hong Kong government has lowered the stamp duty on stocks from 0.13% to 0.1%, which is within market expectations. We do not believe that a single reduction in stamp duty can continue to support market conditions, as the decrease in transaction costs is not caused by high transaction costs. We maintain the same forecast of daily transactions of HKD 105 billion and HKD 100 billion, respectively, this year and next. We expect the mainland to introduce more stimulus measures, Improve market atmosphere and help increase trading volume.
Against the trend and reaching a new high
With the help of performance, on October 26th, New Oriental S rose by over 10% and closed up 6.25%. The intraday stock price rose to a new high since 2021, and the net profit for the first fiscal quarter increased by 150.6% year-on-year.
New Oriental announced its financial results for the first quarter of the 2024 fiscal year as of August 31, 2023 yesterday, with a year-on-year increase of 47.7% in net revenue to $1.1 billion; Operating profit increased by 163.0% year-on-year to 205.1 million US dollars; Shareholders' attributable net profit increased by 150.6% year-on-year to $165.4 million.
In response, New Oriental explained that the increase in net revenue was mainly due to the group's new business with educational attributes, as well as the revenue increase driven by Eastern Selection's self operated products and live streaming e-commerce business.
At the same time, the number of schools and learning centers in New Oriental has also increased. As of August 31, 2023, the total number of schools and learning centers was 793, an increase of 45 compared to 748 as of May 31, 2023; Compared to the 706 rooms as of August 31, 2022, there has been an increase of 87 rooms.
Currently, New Oriental has spent approximately $200 million to repurchase approximately 6 million American depositary shares. On July 26, 2022, the board of directors of New Oriental authorized a share buyback plan, allowing the company to repurchase up to $400 million in American Depositary or Ordinary Shares from July 28, 2022 to May 31, 2023. The company's board of directors further authorized the extension of its share repurchase plan for 12 months until May 31, 2024. As of October 24, 2023, New Oriental has repurchased approximately 6 million American depositary shares in the public market, with a total value of approximately $193 million.
According to a research report released by CICC, New Oriental's revenue for the first quarter of the 2024 fiscal year reached $1.1 billion, a year-on-year increase of 48%, exceeding expectations. The adjusted operating profit reached $245 million, with an adjusted operating profit margin of 22.3%. The adjusted net profit reached $189 million, with an adjusted net profit margin of 17.2%, which exceeded expectations, mainly due to the release of operating leverage exceeding expectations.
CICC expects that after the peak summer season, the expansion pace of the company's teaching points may slow down, and the number of teaching points is expected to increase by 15% to 20% year-on-year throughout the year, with a stable increase in utilization rate. Looking forward to the whole year, CICC expects the company's revenue for the fiscal year 2024 to achieve a year-on-year growth of 30% in the US dollar range, and the adjusted operating profit margin is expected to improve by more than 4 percentage points year-on-year.
Standard Chartered plummeted
Standard Chartered Group disclosed at noon on October 26th that its latest quarterly basic profit before tax fell 2.2% year-on-year to $1.316 billion, falling short of market expectations. In the afternoon, Hong Kong stock prices plummeted by 11%, and investment banks lowered their stock target prices.
Haitong International pointed out that Standard Chartered's audited pre tax profit for the latest quarter decreased by 54.5% year-on-year, lower than the market's expected increase of 1.5%, mainly affected by the impairment of goodwill in China Bohai Bank. Standard Chartered's net interest margin in the third quarter increased by 20 basis points year-on-year to 1.63%, lower than the expected 1.72%.
Goldman Sachs released a research report stating that it has given Standard Chartered a "neutral" rating and lowered its earnings per share forecast for 2023-26 by 2% to 12%, with a target price of HKD 86 from HKD 90. The bank believes that although the management guidelines of Standard Chartered remain largely unchanged, due to weaker than expected third quarter profits and an increase in tax rate guidelines, it is expected that the stock price will have a negative reaction.