It isn't hard to confirm that New Oriental's summer training programs are being cancelled left and right due to weak demand. They publish a list of courses weeks in advance for open registration, and if you call to check on availability, you'll find many closed sessions, combined sessions that were previously separate, etc. The only strength appears to be in TOEFL prep, as far as I can tell.
The good news for EDU is that all test prep and study abroad oriented education companies in China are having a rough time right now. New Oriental's "harvest the market" strategy couldn't have come at a worse time. The good news for EDU longs is that you might have another few weeks to get out while the stock remains relatively strong--it looks like most of the shortfalls will hit in Q3, not Q2. Plus, given the emphasis on short term price strength, I wouldn't be surprised if they don't bring up the decline in enrollments for the summer on their next earnings call--they will likely try to put a floor under the selling pressure that is inevitable by approving another tiny buyback or initiating a tiny dividend. The growth of EDU is over, there is substanital risk to the business, management "doesn't know what to do", the Chinese economy is decelerating, and just about every day a new competitor comes into the market to challenge New Oriental. Possible to see New Oriental in the low teens by this time next year if my analysis is accurate.
Couldn't agree more, and I work for this sham outfit. Management is clueless and quality of actual 'learning' is pitiful. I do language test prep training. The local "teachers" can't even speak or write in the target language- how can students get anything out of that? Worse yet, management has no inkling of it, much less any desire to improve such an astounding shortfall. I sold yesterday at 22.81.. Its nothing but a dividend trap at this point, with ex-date approaching 4 September. I'd expect a suckers rise to that date... then volatility from thereon.
Finally someone making sense on this board! Thanks for sharing your insights. I have also seen some writing samples from "consultants" that work to help Chinese gain entry into colleges abroad. In addition to ghost writing personal statements for students, they also are written in poor, illogical English! As far as I can observe, enrollments are still weak, teachers are finding it harder to get hours. Next quarterly report has to be awful...