NEW ORIENTAL EDUCATION & TECHNOLOGY GROUP INC.

Investor Relations Plan

AA Worldwide

ABOUT AA WORLDWIDE

North America

East Asia

Global Communication

Stakeholder Engagement

Business Strategy

Branding & Positioning

Corporate Advisory & Market Entry

Executive & Board Communication

Financial Communication

Internal Communication

International Markets Consulting

Business Solutions

CLIENT OVERVIEW

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

(SEC, New Oriental Prospectus, 2004)

CURRENT LANDSCAPE

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

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.”

STOCK PRICE

Strengths• Most recognized private education

brand in China• Impressive increase on profits

brought by lower-tier city expansion• Variety of programs and the steady

growing students enrollment

Weakness• Dilemma: High quality education V.S.

Revenue/Stakeholders.• Lack of shareholders’ diversity• CEO’s negative comments about New

Oriental’s IPO • Higher expectation of employees• Lack of effective communications with

U.S. market

Opportunities:• No substantiating evidence to

support the allegation against New Oriental found

• Carson Block’s retreatment bolstered EDU’s stock

• Upgraded by Ella Ji, Analyst from Oppenheimer

Threats:• SEC sued Big 4 China Office• Seven companies have filed the lawsuits

against New Oriental • Differentiations on the market environments.• North America’s sensitivity on the VIE• Lack active public appearances of the executive

people of New Oriental.• Competitors with smaller scale and more

specific target audiences

SWOT ANALYSIS

STRATEGIC IMPLICATION

• 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 

INVESTOR RELATIONS PLAN

AA Worldwide

GOALS

Performance Variables:

• Revenue growth

• Earnings growth

• Return on investment

• Cash flow

• Balance sheet strength

• Dividend yield

• Liquidity

Perception Variables:

• Management credibility

• Corporate reputation

• Customer loyalty

• Brand image

• Employee commitment

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]

 

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

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.

Shareholder Base Analysis

Share Ownership Status by Sept. 2012

From New Oriental Annual Report

The Biggest Shareholder

INVESTOR RESEARCH

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 RESEARCH

Shareholder Base Analysis

INVESTOR RESEARCH

• 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

Shareholder Base Analysis

INVESTOR RESEARCH

• 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 Peer Analysis

INVESTOR RESEARCH

• 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)

ANNUAL REPORT1) Advise in the development of the annual report’s theme and content2) Provide graphic designer and production vendor recommendations3) Make sure the report is appropriately converted for the website4) Draft the shareholders’ letter and work with the company’s internal

resources on any narrative that accompanies the letter.

REPORTING

1) Assist on quarterly earnings release and script2) Work on pre-earnings key-messages document

QUARTERLY EARNINGS

INVESTOR WEBSITE UPDATES

INVESTOR TARGETING

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

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 CONFERENCES

INVESTOR TARGETING

INVESTOR DAY

INVESTOR TARGETING

2012 Shareholder Meeting

Meeting in Hong Kong

Open forum to discuss company affairs

2013 Investors Day

Meeting in Hong Kong; Hosting Webcast/Podcast meeting

Various sessions

INVESTOR DAY

INVESTOR TARGETING

Sample AgendaMorning 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

ROADSHOW

INVESTOR TARGETING

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 meetingGather feedback from investors.

CRISIS MANAGEMENT

INVESTOR TARGETING

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.

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

TIMELINE

TIMELINE

Investor Day

Investor-approaching Event

Proposed Non-deal Roadshow

Proposed Report Release Day

STAFFING

STAFFING

Carole Zhou

Managing Director

Gracie Zheng

Managing Director

Yingling Jiang

Managing Director

Oujia Wang

Senior Vice President

Jason Xia

Vice President

BUDGETIndustry/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

*flight fare is not included

Total: $410,000BUDGET

AA Worldwide

QUESTIONS & COMMETS?

THANK YOU!