live streaming, traffic is king.
Recently, the "breakup" between Dong Yuhui and Oriental Selection has caused a stir on the Internet. For a time, criticism and praise have not only hijacked Yu Minhong, but also Dong Yuhui.
Under this torrent of public opinion, it is actually not a good thing for both parties.
In fact, since the beginning of the year, Oriental Selection has started to divest from Hui Peer, and the two parties have also agreed on the time for the divestment.
In Yu Minhong’s open letter, he also mentioned that would be launched around March. He and Dong Yuhui met and discussed many times. The consensus between the two was that the complex external and internal environment we are currently facing will not only plunge the company’s operations into Difficulties also cause harm to the long-term development of individuals and companies. Therefore, in order to ensure better development of Hehui Peer and avoid business conflicts and public disputes, he discussed with Dong Yuhui and decided to operate Hehui Peer alone after the end of the fiscal year.
It can be seen that Dong Yuhui's departure is almost a destined ending.
Yu Minhong said that he was very sorry for the divestment of Hehui Peer, but based on the reality faced by Oriental Selection, this result is inevitable and even beneficial to the development of the company.
In order to get rid of the previous stereotypes created by the public, Yu Minhong spent 76.5855 million yuan out of his own pocket to buy 100% of the shares of Yonghui and gave it to Dong Yuhui. Not only that, he also helped Dong Yuhui onto his horse and gave him a ride. In addition to transferring the 140 million yuan remaining in the account of Yinghui to Dong Yuhui, according to the previous agreement, Dong Yuhui can receive 50% of the net profit of Yinghui. In other words, 50% has been allocated to Yuhui, and the remaining 140 million yuan was also allocated to Dong Yuhui's account.
With these two funds, Hui Pingping will no longer be trapped in its independent operations. After completing the above preparation, I originally thought that this friendly "breakup" would be well received by the outside world. But unexpectedly, this behavior angered many small and medium-sized shareholders of Oriental Selection. The reason was that it failed to balance the interests of small and medium-sized shareholders, which caused the stock price of Oriental Selection to plummet.
Regarding the market's reaction, Yu Minhong also had his own grievances. He said, "In the past three months, my image has suffered huge losses due to Internet violence. There are endless comments about my conspiracy, attacks, and abuse of employees on the Internet. It seems that I He has become the most vicious capitalist and boss in the world.”
Obviously, as the leader of a group, Yu Minhong has thought carefully. But he obviously has insufficient knowledge about the field of live streaming. Of course, it was not just the conflict with Dong Yuhui that prompted Yu Minhong and the board of directors of Oriental Selection to make the decision to divest Hui Peer. But because from beginning to end, his biggest trump card has never been Dong Yuhui, but his foundation - education and training.
Traffic troubles
The explosion of Oriental Selection is a small probability event, and Dong Yuhui is indispensable.
But neither Oriental Selection nor Yu Minhong played this card well. Since the "Little Composition" incident, the balance of public opinion has begun to tilt.
saved Dongfang Selection, which eventually became their biggest "trouble". Yu Minhong has been working on how to balance the relationship between Dong Yuhui and Oriental Selection and how to solve the problem of relying on external platform traffic, but has never given an optimal solution.
First of all, regarding the issue of external traffic, Oriental Selection quickly launched its own app, but it is obvious that live broadcast depends on the platform. This is an indisputable fact.
Secondly, faced with the problem of Dong Yuhui’s dominance, Oriental Selection is cultivating new anchors such as Lele, Tianquan, Chaofeng, Daqi, etc. in the live broadcast room, while tentatively “removing Dong”. This is also a stupid move. In the end, the "removal of directors" led to the complete externalization of internal conflicts.
At this point, Dong Yuhui and Oriental Selection are increasingly separated.
Originally, as a listed company, it was a basic requirement not to rely on a single major customer or individual. However, as a live broadcast listed company, the implementation was different. Yu Minhong obviously didn't realize that the double-edged sword of traffic is completely from the same source.
After many actions, Yu Minhong’s behavior completely annoyed Dong Yuhui fans. And he and Dongfang Selection were completely on the opposite side of Dong Yuhui.
Therefore, although Oriental Selection’s performance is improving, its stock price is also being searched again and again, and it is falling more and more.
Faced with the dilemma of Oriental Selection, Yu Minhong once seriously reflected on it. He said, "This uncertainty can be seen from the company's stock price. The stock price should have risen, but instead fell. This is the stock market's reaction to the uncertainty of Oriental Selection. Any action taken by the company, including my own, is in a dilemma. A series of strategic plans cannot be implemented. Once there is a move, there will be a violent response, even if I make an announcement, appear in front of the camera, or go on a personal trip to post a video. Some people will come to scold me. This has caused Dongfang Selection, as an online sales company, to increase its GMV on the surface, but in fact it faces many difficulties. "What's even worse is that this kind of traffic business eventually escalates to targeting individuals. .
Yu Minhong probably didn’t expect that the inspirational persona he had accumulated for many years would eventually begin to collapse due to an inconspicuous “little composition” incident.
Of course, in business, whether it is Dong Yuhui or Yu Minhong, they must ultimately come back to performance.
html On July 26, the day after the news of Dong Yuhui's solo career was released, the stock price of Hong Kong shareholder Fang Selection once fell by more than 27% during the session, and closed by more than 23%. Such a sharp drop caused dissatisfaction among small and medium-sized shareholders. In addition to the plummeting stock price, the future performance of Oriental Selection is what we really need to worry about in the future. Of course, Yu Minhong obviously had his own considerations when facing the Oriental Selection after the separation of Walking with Fai.What really prompted Yu Minhong to make the decisive decision to was actually the rapid return of blood from New Oriental Group, and this card was his biggest trump card.
Yu Minhong’s biggest trump card
Compared with live broadcast companies, education companies are obviously more certain.
On July 31, New Oriental released its unaudited financial results for the fourth fiscal quarter and fiscal year ended May 31, 2024. The financial report shows that in the fourth fiscal quarter of 2024, New Oriental's total net income increased by 32.1% year-on-year to US$1.1367 billion; operating income was US$10.5 million, a year-on-year decrease of 78.1%; net profit attributable to shareholders fell by 6.9% year-on-year to US$27 million. Performance increases revenue but does not increase profits.
In fiscal year 2024, New Oriental New Oriental's net income was US$4.3136 billion, a year-on-year increase of 43.9%; operating income was US$350.4 million, a year-on-year increase of 84.4%; attributable net profit was US$309.6 million, a year-on-year increase of 74.6%.
In the financial report conference call, New Oriental Chairman Yu Minhong said that in the fourth fiscal quarter of 2024, New Oriental’s overseas test preparation and study abroad consulting business grew by approximately 17.7% and 17.3% respectively year-on-year. Domestic exam preparation business targeting adults and college students increased by about 16.4% compared with the same period last year. 's new education business plans to increase revenue by 50.3% year-on-year in this fiscal quarter. Non-academic tutoring courses are provided in approximately 60 cities, attracting approximately 875,000 student enrollments.
New Oriental CEO Zhou Chenggang said that as New Oriental's main education business achieves sustainable growth, the company continues to allocate resources to online and offline teaching systems and apply new technologies to improve education and product quality. Since Oriental Selection launched its first private-label product in April 2022, more than 400 SKUs have been developed and launched in two years, and the product line has expanded from agricultural, food and beverage products to various product categories.
The financial report shows that as of the end of the reporting period, New Oriental had cash and cash equivalents of US$1.3894 billion, time deposits of US$1.4894 billion and short-term investments of US$2.0656 billion. According to statistics from
, the current market value of New Oriental's Hong Kong stock market is HK$77.87 billion; the market value of the US stock market is US$9.921 billion, approximately HK$77.45 billion.
It is worth noting that as of the end of May, the total number of New Oriental schools and learning centers nationwide was 1,025, an increase of 277 year-on-year and an increase of 114 month-on-month.
It is not difficult to see from the above data that Yu Minhong, who has always been cautious, has quietly begun to accelerate expansion in the field of education and actively opened schools. And this is the biggest confidence and trump card that Yu Minhong dares to cut with Dong Yuhui.
Recently, UBS released a report saying that after the reorganization of Oriental Selection, New Oriental has generally returned to the pure education field, providing rare bottom-up growth visibility and can withstand macro uncertainty.
UBS believes that New Oriental’s fourth-quarter fiscal 2024 performance and revenue are in line with expectations, but gross profit margin is lower than expected, mainly due to one-time factors, including costs related to Dong Yuhui’s resignation, and one-time bonuses for educational staff that exceed budget . The bank lowered New Oriental's target price from $109 to $103.6 and maintained a "buy" rating.
Oriental Securities released a research report stating that New Oriental’s revenue will continue to grow rapidly, and it is expected to focus on the main line of education in the future. The agency believes that the supervision of the education and training industry has gradually stabilized, small and medium-sized institutions have been cleared, and leading compliance institutions have benefited as a whole. Therefore, New Oriental is given a corresponding target price of HK$59.20 and maintains a "buy" rating.
CITIC Securities also released a research report saying that the expected impact of the divestment of Hui Peer will be limited, and the main business of education will remain prosperous. The agency believes that for New Oriental, since the profit ratio of Oriental Selection is low and is still gradually decreasing, the overall impact is limited. Considering the high prosperity of New Oriental's education business and the low valuation corresponding to the company's current price, it is recommended to seize the callback and actively allocate.
In addition, BoCom International also released a research report that although its profit margin in the fourth quarter of fiscal year 2024 was lower than expected, the expansion of teaching points is steadily advancing. Therefore, New Oriental's "buy" rating is maintained.
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