New Oriental Education & Technology Group Inc. is China’s largest private educational services provider, founded in 1993, focusing on language training and test preparations. The company faces challenges including SEC investigations and allegations of inflated cash balances, leading to stock price volatility despite strong growth in its lower-tier cities. The investor relations plan aims to improve market perception and transparency while enhancing engagement with diverse stakeholders and analysts.

1. NEW ORIENTAL EDUCATION &
TECHNOLOGY GROUP INC.
Investor Relations Plan
AA Worldwide

2. ABOUT
AA WORLDWIDE
Stakeholder
Engagement  Financial Communication
 Internal Communication
Global Business  International Markets Consulting
Communication Strategy
 Corporate Advisory & Market Entry
North  Executive & Board Communication
America  Branding & Positioning
East Asia  Business Solutions

3. New Oriental Educational & Technology Group Inc.
[“New Oriental”]
• Founded: 1993 by Michael Yu,who is also current CEO
• Largest provider of private educational services in China
• Primarily of English and other foreign language trainings, test
preparations and primary & secondary school educations.
• 2.4 Million enrollments in fiscal year 2012
• IPO: September 7th, 2006
• NYSE: EDU
• IPO Price: $15
CLIENT OVERVIEW

4. (SEC, New Oriental Prospectus, 2004)
CLIENT OVERVIEW

5. External:
The Securities and Exchange Commission, Dec.3, 2012
“…today began administrative proceedings against the China affiliates of each of the Big Four accounting firms and
another large U.S. accounting firm for refusing to produce audit work papers and other documents related to China-
based companies under investigation by the SEC for potential accounting fraud against U.S. investors.”
Carson Block, Founder and Research Director of Muddy Waters LLC.
“New Oriental inflated its cash balances to gain approval from its auditors”.(July, 2012)
“I lost interest in betting against Chinese stocks and speculated that the government is protecting fraudulent companies
in an interview” –on Bloomberg Television (Nov.27, 2012)
Reshma Kapadia, Emerging Markets Columnist and Blogger, Barron‟s (Oct.31, 2012)
“China‟s New Oriental Education‟s (EDU) fiscal first quarter sales missed the company‟s previous guidance and its profit
missed some analysts‟ expectations as margins disappointed due to the private education firm‟s continued expansion.
The stock, which is down 6% in morning trading, has been hit in recent months by an SEC probe over its accounting
and allegations by short seller Muddy Waters.”
Jin Yoon, Analyst, Nomura
“After aggressive expansion into lower-tier cities, the company now plans to shift its focus to raise the utilization rate of
existing learning centers, which we think should benefit the bottom line in the medium to long term.”
Ella Ji, Analyst at Oppenheimer & Co., New York. (Nov.29, 2012)
“It would be a very big relief for New Oriental investors to see Muddy Waters getting out of China. A big overhang just
removed itself. This shows that very likely Muddy Waters doesn‟t really have any more evidence.”
New Oriental Education & Technology Group surged 20 percent in November, the best performance in three months.
The company‟s American depositary receipts (ADRs) climbed to a four-month high of $20.96 on Nov. 29.
CURRENT LANDSCAPE

6. Internal:
New Oriental Education and Technology Group Inc., Yahoo!Finance, (Dec.6, 2012)
Clarification on market activity: In view of the continued market activity in the co's ADS, EDU would like to clarify that even
though the co's independent auditor is Deloitte Touche Tohmatsu CPA, the co is not the Deloitte Touche Tohmatsu client
referred to by the U.S. Securities and Exchange Commission in its proceedings initiated against the five accounting firms in
China.
New Oriental Education and Technology Group Inc., PRNewswire, (Sep.30, 2012)
“…the „Special Committee‟ has completed its review of certain allegations raised in a report issued by Muddy Waters on July
18, 2012 and has found no significant evidence to support these allegations.”
Michael Yu, New Oriental‟s Chairman and Chief Executive Officer (Oct.29, 2012)
“We are pleased to start our 2013 fiscal year with continued steady top-line growth, driven by our tremendous growth beyond
tier-one cities. Revenue from these cities grew an impressive 35% as we were able to ramp up utilization quickly and
efficiently. The rapid expansion of our learning-center network, however, had a negative impact on the bottom line, which was
exacerbated by the weak performance of our Beijing and Shanghai schools and substantial expenses and diversion of
management attention as a result of the SEC investigation and Muddy Waters‟ unfounded allegations against us.”
“We feel exonerated and vindicated by the findings of the Special Committee refuting and discrediting Muddy Waters‟
allegations. We hope to put this matter behind us and focus on running our business and improving the profitability of our
operations through increasing learning center utilization and strict headcount and expense controls.”
Louis Hsieh, New Oriental‟s President and Chief Financial Officer (Oct.29, 2012)
“We are pleased to see continued strong growth across our key business lines, with revenue from both our overseas test
preparation programs and K-12 all-subjects after-school tutoring programs growing over 30% this quarter. Our Vision
Overseas Study Consulting business also continued to outperform, with year-over-year gross revenue growth of
approximately 55% in the quarter.”
CURRENT LANDSCAPE

7. STOCK PRICE

8. Weakness
Strengths • Dilemma: High quality education V.S.
• Most recognized private education
Revenue/Stakeholders.
brand in China
• Lack of shareholders‟ diversity
• Impressive increase on profits
• CEO‟s negative comments about New
brought by lower-tier city expansion
Oriental‟s IPO
• Variety of programs and the steady
• Higher expectation of employees
growing students enrollment
• Lack of effective communications with
U.S. market
Threats:
Opportunities: • SEC sued Big 4 China Office
• No substantiating evidence to • Seven companies have filed the lawsuits against
support the allegation against New Oriental
New Oriental found • Differentiations on the market environments.
• Carson Block‟s retreatment • North America‟s sensitivity on the VIE
• Lack active public appearances of the executive
bolstered EDU‟s stock people of New Oriental.
• Upgraded by Ella Ji, Analyst from • Competitors with smaller scale and more
Oppenheimer specific target audiences
SWOT ANALYSIS

9. • Increasing the diversity of shareholders
• Financial communication trainings are needed for CEO
and other executives
• Conducting more proactive outreaches to U.S. analysts
and well-known financial media
• Dealing with lawsuits appropriately and keeping
communications with shareholders.
• Stay consistent with U.S. financial market regulations
and be cooperated with SEC's investigation
STRATEGIC

10. INVESTOR RELATIONS PLAN
AA Worldwide

11. GOALS
 Create Fair Market Value For New Oriental To Make Sure Its
Current Stock Price Accurately Reflect The True Value Of
The Company.
[Stock Price]= [Performance] + [Perception]
Performance Variables: Perception Variables:
• Revenue growth • Management credibility
• Earnings growth • Corporate reputation
• Return on investment • Customer loyalty
• Cash flow • Brand image
• Balance sheet strength • Employee commitment
• Dividend yield
• Liquidity

12. BENCHMARK
 Valuation benchmarks: value of New Oriental reflected in the stock market
• Market capitalization
• Operating profit margin
• Forecasted long-term growth rate
• Cost of capital
• Liquidity benchmarks: liquidity for New Oriental‟s shares
 Liquidity benchmarks: Liquidity for New Oriental’s shares
The ability to covert asset to cash quickly
• Average daily trading volume
• Spread or point differential between the bid and ask price
• New Oriental‟s volume and spread compared to other companies with similar market
capitalization and similar number of shares

13. ROI:
MEASURING THE RETURNS
Improve New Oriental’s Performance And Tarnished Reputation
 Most Direct Measure: Stock Price ($17.28)
 Other Measures:
• Interviews: Mainstream media, buy side, sell side, industry
analysts, portfolio managers
• Perceptions of company’s strategies and management team
• Measures what management is communicating & how it’s received
• Analyze and report the client’s feedback.

14. Shareholder Base Analysis
The Biggest
Shareholder
Share Ownership Status by Sept. 2012
From New Oriental Annual Report
INVESTOR
RESEARC

15. Shareholder Base Analysis
Who Is Tigerstep:
• 100% owned by its president and CEO – Bamei Li
• Bamei Li is Michael Yu‟s mother, a traditional
Chinese housewife
INVESTOR
RESEARC

16. Shareholder Base Analysis
• In July 2012, New Oriental restructured its VIE
 Beijing New Oriental Education & Technology Co. Ltd
• Michael Yu purchased shares from 10 former shareholders
• He 100% owned the VIE
• He said it‟s because these shareholders no longer worked in New Oriental
SEC investigated the VIE, and New Oriental’s stock
price dropped 35%
VIE Concern on Chinese Corporation:
Jack(Yun) Ma and Alibaba
INVESTOR
RESEARC

17. Shareholder Base Analysis
• Public‟s Doubt:
 Michael Yu still fully controls New Oriental?
 Transparency?
 Will New Oriental plan to go private as many former oversea-listed Chinese
firms did?
To resolve all these doubts and gain the street’s
confidence, it’s important for New Oriental to seek
more diverse investors and take more proactive
communications with stakeholders
INVESTOR
RESEARC

18. Investor Peer Analysis
• Identify fundamental and generalist investors who have a predilection to
buy the stock
• Pre-qualify firms to identify the most appropriate investor
• Its peers: Ambow Education (AMBO), Tal Education Group
(XRS), Xueda Education Group (XUE), and ChinaCast (CAST)
INVESTOR
RESEARC

19. ANNUAL REPORT
1) Advise in the development of the annual report‟s theme and content
2) Provide graphic designer and production vendor recommendations
3) Make sure the report is appropriately converted for the website
4) Draft the shareholders‟ letter and work with the company‟s internal
resources on any narrative that accompanies the letter.
QUARTERLY EARNINGS
1) Assist on quarterly earnings release and script
2) Work on pre-earnings key-messages document
REPORTING

20. INVESTOR WEBSITE UPDATES
1) Convey a compelling investment proposition
 Incorporate „why invest‟ section to IR website
 Detail background and context in current „corporate profile‟
section
 Provide „Objectives‟, „Mission Statement‟ and „Strategy‟ section.
2) Provide content in formats that engage investors
 Make reports available in a variety of formats
 Use image, charts, graphs and scorecards to visualize the
company‟s performance
 Aids to Sort and Search Information- e.g. selector
3) Be accessible and offer multiple ways to stay connected
 Improve „Contact Us‟ pages
INVESTOR
TARGETING

21. INVESTOR CONFERENCES
Use investor chart/database (e.g. Thomson Reuters) to
target the appropriate investor conferences
For example:
• Smid Cap Conference, J.P. Morgan, New York
• Credit Suisse Annual Small & Mid Cap Conference, New York
INVESTOR
TARGETING

22. INVESTOR DAY
2012 Shareholder 2013 Investors Day
Meeting
Meeting in Hong
Meeting in Hong Kong Kong; Hosting
Webcast/Podcast
meeting
Open forum to discuss
company affairs Various sessions
INVESTOR
TARGETING

23. INVESTOR DAY
Sample Agenda
Morning Session
•Company Overview and Strategy – Michael Yu (CEO)
•Financial Overview – Louis Hsieh (CFO)
•Innovation and Future – Chenggang Zhou (Sr. EVP)
•Question & Answer
Afternoon Session
•Open Forum
•Key Message and Closing – Xiaodong Chen (Sr. EP)
# Date: Nov. 2013 ( New Oriental usually publicize its Annual Report in Oct.)
# Hand out Agenda and Investor Kit (Including Fact-sheet / Annual Report / Q1 2013
Earnings Release) beforehand
INVESTOR
TARGETING

24. ROADSHOW
 Continue to target new near-term buyers and conduct road show in top
investment cities (NYC, London, Boston, and San Francisco) following the
quarterly results.
 Continue to target long-term investors and hold company visits outside of the
reporting season
 Leverage and arrange management‟s travel schedule to accommodate one
on one meetings with pre-qualified investor targets
 Conduct new research prior to every roadshow.
 Email meeting participants presentation at least 24 hours prior to the meeting
 Gather feedback from investors.
INVESTOR
TARGETING

25. CRISIS MANAGEMENT
Crediblity Transparency Dialogue
 Compile an extensive „play book‟ (a crisis plan) for every scenario-
clarify what constitutes a crisis, identify the key people who can be
given authority from the top level to deal with crisis, and establish
what their roles are in a crisis.
 Continually examine and update their crisis plan to ensure all
stakeholders have been addressed and that an efficient and
actionable chain of command is in place(During the crisis)
 Assist on presentation and media training
 Incorporate social media platforms in Crisis preparedness plans to
maintain control of the corporate message during a crisis and
minimize wide-spread negativity.
INVESTOR
TARGETING

26. INTERNAL ENGAGEMENT
 Emphasize on engagement of China management team
 Assist on quarterly board report and valuation analytics
 Provide specific advice on a given corporate action
 Train and support to in house IR staff
INVESTOR
TARGETING

27. TIMELINE
Investor Day
Investor-approaching
Event
Proposed Non-deal
Roadshow
Proposed Report
Release Day
TIMELINE

28. STAFFING
Carole Gracie Yingling Oujia Wang Jason Xia
Zhou Zheng Jiang
Managing Managing Managing Senior Vice Vice
Director Director Director President President
STAFFING

29. BUDGET
Industry/peer Group Analysis $20,000
Quarterly Earnings, Annual Report $150,000
Investor Website Updates $5,000
Approach Investors Conference $30,000*
Investor Day $50,000
Investor Targeting $30,000
Non-deal Roadshows $80,000*
Crisis Preparation $10,000
Internal Engagement $8,000
Press Release $25,000
Social Media $2,000
Total: $410,000
*flight fare is not included BUDGET

30. QUESTIONS & COMMETS?
THANK YOU!
AA Worldwide