[ET Net News Agency, 24 April 2025] The US Treasury Secretary Bessent has denied reports
from foreign media regarding discussions at the White House. Hong Kong stocks are showing
a profit-taking mentality around the 20-day moving average (approximately 21,940),
alongside a sell-off in both JD.com (09618) and Meituan (03690). The Hang Seng Index
reported 21,805, down 267 points or 1.2%, slipping below 22,000, with a mainboard turnover
exceeding HKD 122.2 billion. The Hang Seng China Enterprises Index stood at 8,013, down
102 points or 1.3%. The Hang Seng Tech Index was at 4,946, down 102 points or 2%.

"Wong Wai Ho: The Hang Seng Index is currently filling the gap from the significant drop"

Wong Wai Ho, the First Vice President of the Yan Yun Family Office (HK) Limited, told ET
Net News Agency that it cannot yet be said that US-China relations are improving; rather,
there is a potential shift in the tariff war that increases the likelihood of
negotiations. He noted that changing expectations regarding tariffs have positively
impacted the investment market, with the US dollar, US bond yields, and gold recently
declining, leading to rebounds in both US and Hong Kong stocks. This rebound is expected
to fill the gap from the Hang Seng Index's drop of over 3,000 points, aiming for around
22,600 points, which is also close to the 50-day moving average (approximately 22,799
points).
For investors who have yet to enter the market, Wong suggested waiting for the Hang Seng
Index to pull back to around 21,400 to 21,500 before entering, focusing on domestic
consumption sectors and avoiding export-related stocks. He cautioned that investors should
remain vigilant due to the unpredictable nature of policies and the potential for a
financial war, including the delisting of Chinese companies, indicating that the broader
direction of US-China relations has not changed.

"New Oriental's future profitability is unlikely to see significant improvement"

New Oriental (09901) announced that for the third quarter ending 28 February 2025, net
profit attributable to shareholders was USD 87.25 million, a year-on-year increase of
0.1%; adjusted net profit was USD 113 million, down 14.3%; and adjusted basic net profit
per ADS was USD 0.70. Third-quarter net revenue was USD 1.183 billion, a year-on-year
decrease of 2%. Excluding revenue from East Buy (01797) and its live e-commerce business,
net revenue increased by 21% year-on-year to USD 1.038 billion.
New Oriental expects that for the fourth quarter of fiscal year 2025, net revenue
(excluding revenue from East Buy's self-operated products and live e-commerce) will
increase by 10% to 13% year-on-year, with revenue growth in RMB expected to be between 12%
and 15%.
Although New Oriental's adjusted net profit fell by 14% year-on-year, it still managed
to rise after opening 3.5% lower, reaching a peak of 6.2% during the morning session. Wong
noted that due to the drag from overseas business, major banks have generally lowered
their earnings expectations for New Oriental. However, some figures exceeded market
expectations, such as the anticipated 15% growth in fourth-quarter revenue, which has
boosted the stock price. Additionally, the current stock price is at a low level,
indicating a technical rebound trend.
Wong admitted his view on New Oriental is relatively neutral. On one hand, overseas
business continues to be pressured under local protectionism; on the other hand, while
domestic policies are no longer tightening, the likelihood of returning to past high
growth rates in domestic business is low, leading to stable growth. Therefore, significant
improvements in profitability are unlikely, limiting the impact on valuations.
In terms of core education business, New Oriental's new education segment saw a
year-on-year growth of 35%, with domestic adult education up 17% and cultural tourism
business up 85%. Wong pointed out that this substantial growth relies on a low base from
the previous year, and it will take at least two more quarters of upward trends to
positively influence profit expectations.
Regarding fourth-quarter earnings guidance, Wong stated that New Oriental anticipates
considerable revenue growth, but the rate of net profit growth remains a concern for
investors.
For current investors, Wong advised that if the stock price rebounds to the 50-day
moving average (around HKD 37.60) and faces resistance, indicating it cannot break through
the downward channel, they should consider exiting. However, if the stock breaks through,
the target could be HKD 40.