At yesterday's close, New Oriental Hong Kong stocks fell all the way from hk$51 at the opening price to 30.2 Hong Kong dollars at the closing price, a decline of 40.61%. In addition to the debut, that is, the peak, it also fell to the shareholders doubting life. Fortunately, there are many difficult brothers and sisters in New Oriental, and the good future of the US stock market fell by 70.76%, and the high way fell by 63.26%... I have to sigh: the limit on the rise and fall of big A shares is really the welfare of investors! Is the opportunity to bottom out education stocks come?
Glancing at the stock price trend of New Oriental in the past year, I found that yesterday's decline was only a drizzle. On February 19, New Oriental's closing price was 151.5 Hong Kong dollars, but now it is only 30.2 Hong Kong dollars. In just 5 months, it has shrunk by 80%, which can be said to be a waist cut after the waist chop, what a tragic word.
Buffett said: Others are afraid of my greed, others are greedy, I am afraid. Can we copy New Oriental now? It depends on its strength. Next, we will analyze New Oriental from the five aspects of cash, operation, profitability, financial structure, and solvency to see if we can read a big bottom.
The figure below shows the data and scores for each of its abilities, each with 100 points and a total score of 500.
<h1 class="pgc-h-arrow-right" data-track="41" >01 Cash capacity: 85 points</h1>
The rich man is the great master, and his voice must be three points older. For a company, if there is no money for one or two years, it can still stand up, but if it is short of money for three or five years, even if it does not close the door, it must drink the northwest wind. Does New Oriental have any money?
It cannot be described as having money, but should be used as a fighter jet in the local tycoon. While its cash reserves have been declining year by year since 2017, they could reach as high as 53.7% until the lowest in 2020. More than half of the company is cash and its equivalents, which is not called having money, what is rich?
Not only is there money, but the ability to print money is also good. Although in the past four or five years, its cash flow allowability ratio has been declining year by year, the lowest level has reached 338.4%. The money earned is more than 3 times that spent, which is enough to use it, and there is no need to ask grandpa and grandma to borrow it.
However, New Oriental's cash flow ratio not only began to decline from 2017, but also peaked at only 52%. The money earned each year accounts for just over half of short-term debt, and efforts must be made to strengthen it. As for the cash reinvestment ratio, the minimum is 20%, which is enough.
Cash capacity is given 85 points.
<h1 class="pgc-h-arrow-right" data-track="47" >02 Operating capacity: 70 points</h1>
It is useless to have money, but there must be talent. If there is no Yu Minhong, will there still be New Oriental? Management's ability to operate can even determine the survival of a company.
In terms of the use of the company's assets, New Oriental's total asset turnover rate is from 0.64 times a year to 0.72 times a year. Although the fluctuations are not very large, the management can not even do business once a year using the company's assets. This shows that the management's use of funds is relatively inefficient, and the company is quite cash-burning.
However, its ability to collect accounts is very strong. New Oriental's accounts receivable turnover days have never exceeded one day, which is a business model of "one hand to pay, one hand to deliver". This is also in line with our common sense, the education industry is the first to collect money, then training. This means that it does not have the risk of bad debts.
As for how well are educational services selling? New Oriental is also very good. Its inventory turnover days have not only been shortened year by year from 2017, but also from 14.4 days to 7 days, which has been shortened by half. The service cycle is short, but at the same time, it is also very hard. The most feared thing is that this kind of person is better than you, but he still works harder than you.
Operational capacity is given 70 points.
<h1 class="pgc-h-arrow-right" data-track="53" >03 Profitability: 70 points</h1>
Say a thousand ways and ten thousand, the company has to make money. Otherwise, what about the employee's eating, drinking, and sleeping? If you don't pay something, you want people to work, which is a fool's dream. What about the profitability of New Oriental?
Judging by its shareholder returns, it's still pretty good. Although from 2017 to 2018, the rate of return decreased year by year, but in 2020 stopped the decline and began to rise. Not only that, but at the lowest level, it was 11%. Invest 1 yuan, can have a return of 0.11 yuan, but also acceptable.
What is even more outstanding is the gross profit margin of New Oriental, which has been stable at about 56% in the past two or three years. Not only is the profit margin large, but it is also very stable. What is even more gratifying is that its operating profit margin has stabilized at about 10% in recent years, and it has long-term stable profitability, which is very good.
However, it must focus on improving its ability to resist risks. Because in the past four or five years, its operating margin of safety rate is only 25% when it is high, and 18% when it is low. Operating profit accounts for at most a quarter of gross profit. When you encounter an industry black swan, it will be very uncomfortable.
Profitability is given a score of 70.
<h1 class="pgc-h-arrow-right" data-track="59" >04 Financial structure: 80 points</h1>
The tall buildings rise from the ground, but this has a prerequisite: the foundation must be reinforced concrete, not tofu slag. For a company, the financial structure is the most important foundation, that is, to grasp the ratio between shareholder contributions and external debt. More is not good, less is not good, the best ratio is 1:1.
Is new oriental foundation solid? Yes. Although on the whole, its debt level has increased year by year in the past four or five years, and it owes more and more debts, but between 41% and 57%, it is OK. Because this means that its own funds are 43% to 59%, and the two are closer to the golden ratio.
Not only is the financial structure well controlled, but there is no problem with the source of long-term funds. Although it has dropped sharply from 721% in 2017 to 139% in 2020, it can be described as a three-thousand-foot flow, but the lowest 139% is also enough. The money can be not much, just enough.
The financial structure is given a score of 80.
<h1 class="pgc-h-arrow-right" data-track="64" >05 Solvency: 90 points</h1>
Why should a company value its own solvency? One is because doing business is to know how to borrow other people's money to make money, and the other is because there are too many black swans in the capital market, and a little carelessness will fall into financial difficulties. If you can borrow life-saving money at this time, you may be able to come back to life.
In terms of current ratio, New Oriental is going down year by year, just like its stock price during this time. Not only that, but at its peak it was only 193%, and its current assets were at most nearly twice that of short-term debt. A little weaker, not to mention, but also more and more indisputable.
However, its quick ratio is not bad. Although it has fallen all the way from 191% in 2017 to 150% in 2020, the decline is huge and can reach the standard, which is good. And its cash reserves are abundant, enabling it to pay off all short-term debts immediately.
Solvency is given 90 points.
New Oriental score: 395, excellent rate: 79%.
<h1 class="pgc-h-arrow-right" data-track="70" > in summary</h1>
Whether it is comprehensive ability or individual ability, New Oriental has performed well. But that only means it has value, it doesn't mean it has investment value. The relationship between the two is like "house and house price", the house looks very tall, but the house price is ridiculously expensive, and it is not worth buying. New Oriental is a good company, but there is no good price, and it is not worth starting.
Enjoy the bucket of noodles ~ hungry can not lift the pen ~
@Dream Investment#Earnings##New Oriental##港股新东方跌幅扩大至50% #