New Oriental Education & Technology (EDU) saw its stock soar by 6.52% in pre-market trading on Monday, fueled by a combination of positive analyst sentiment and a newly announced shareholder return plan. The surge comes amid a broader rally in Chinese ADRs, reflecting renewed investor confidence in the Chinese education sector and the overall economy.

Daiwa Securities, in a recent research report, expressed strong confidence in New Oriental's business stability. The firm highlighted improvements in key areas, including an enhanced K-9 autumn student retention rate and stabilization of the overseas exam preparation business. These positive trends led Daiwa to raise its revenue forecasts for New Oriental's FY2026-2028 by 1% to 2% and increase earnings per share projections by 0.2% to 5%. Consequently, Daiwa reiterated its "Buy" rating on the stock and raised the target price from HK$43 to HK$49, further boosting investor optimism.

Adding to the positive momentum, New Oriental announced plans to return at least 50% of the previous fiscal year's net profit to shareholders through dividend distributions or share buybacks, starting from FY2026. Analysts at Daiwa believe this shareholder return ratio could potentially be much higher, possibly reaching high double-digit percentages or even exceeding 100%. This commitment to shareholder value is viewed as a key catalyst for the stock's pre-market rally. The surge in New Oriental's stock also aligns with a broader uptick in Chinese ADRs, following recent data showing a rebound in China's industrial profits, which has eased concerns over corporate earnings pressure in the world's second-largest economy.