On January 17, New Oriental Online Technology Holdings Co., Ltd. (hereinafter referred to as "New Oriental Online", stock code: 1797.HK) HK) officially released its results for the first half of fiscal 2023 (June 1 to November 30, 2022), which is also the first time that Oriental Selection has disclosed detailed financial results since its release in June 2022.
According to the financial report, New Oriental Online's revenue in the first half of fiscal 2023 was 2.08 billion yuan, a year-on-year increase of 262.7%; Net profit for the period increased by 207.6% to RMB585 million, turning losses into profits, compared with a loss of RMB544 million in the same period last year. The company said that the rapid growth of the company in the reporting period was mainly due to the company's strategic transformation from focusing on online education to self-operated products and live streaming e-commerce.
The data shows that Oriental Selection of self-operated agricultural products and live streaming e-commerce business have achieved great performance growth. During the reporting period, Oriental Selection GMV exceeded 4.8 billion yuan, and the total number of orders for Douyin reached 70.2 million. Oriental has selected more than 60 kinds of self-operated agricultural products, bringing more than 1 billion yuan in revenue, including different flavors of black pork grilled sausages, South American prawns, Wuchang rice, blueberry puree and other popular products.
In addition, the Oriental Selection Douyin matrix account has reached 38 million fans, and a total of 6 live broadcast accounts have been opened to form a live broadcast matrix. In terms of stock prices, from June 9, 2022 to January 18, 2023, New Oriental Online rose by about 13 times, and the total market value climbed to about HK $62.580 billion (equivalent to about RMB 54.163 billion), which not only far exceeded the pre-"double reduction", but also exceeded the latest market value of its parent company New Oriental of HK $53.700 billion.
Regarding the performance of Oriental Selection, Chinese food industry analyst Zhu Danpeng told Time Finance: "Oriental Selection should be the most successful case of transformation in the three-year epidemic. Overall, first, it reaps the consumption dividends brought by the epidemic; Second, use its own brand effectiveness to carry out a new transformation; Third, it is also an attempt to be carried out in the future in the integrity of the industrial chain, the opening of upstream and downstream ecosystems, and the field of private domain traffic after a small test. ”
Regarding next year's performance expectations, IPG China Chief Economist Bai Wenxi told Time Finance: "Oriental Selection's business innovation ability, market expansion and grasp of demand, and business ability to follow the trend can be described as excellent. However, everything has the law of diminishing marginal effects, and it remains to be seen whether the performance of Oriental Selection will continue to maintain substantial growth and corresponding growth rate next year with the increase of categories and SKUs. ”
Time Finance contacted New Oriental Online about next year's performance expectations, but as of press time, no reply was received.
Or renamed "Oriental Selection"
New Oriental Online established Oriental Selection on December 28, 2021, officially entering live streaming e-commerce. According to the financial report, as of May 31, 2022, the total revenue of New Oriental Online Live E-commerce Division was only 24.6 million yuan. After the Oriental Selection became popular, the volume has changed dramatically.
On January 5, New Oriental Online announced that the board of directors recommended to change the company's English name from "Koolearn Technology Holding Limited" to "East Buy Holding Limited" and the company's dual foreign name from "New Oriental Online Technology Holdings Limited" to "Oriental Selection Holdings Limited".
In the announcement, Yu Minhong, chairman of the board of New Oriental Online, said that the company has recognized the shift in focus to live streaming e-commerce and the long-term growth potential that this area can bring.
In addition, the announcement also disclosed that shareholders need to pass a special resolution at the extraordinary general meeting of shareholders held on January 31 to approve the proposed change of the company's name before it can take effect.
Regarding the name change, TF Securities believes that the abbreviation of New Oriental Online Securities is also expected to complete the subsequent change, releasing many positive signals: on the one hand, it is clear and firm in the business direction, and New Oriental Online is firm in the brand e-commerce path and clear development path in the post-double reduction era. On the other hand, highlight the original intention and highlights of the business. Different from MCN, Oriental Selection is a brand-based agricultural product technology and cultural communication company; Among them, Oriental selection is an important external symbol, which needs to continue to strengthen and establish a wider market awareness, and through the name change, it can be better communicated to the outside world and establish a personality.
A number of brokerages are optimistic
For the financial report for the first half of fiscal year 2023 released by New Oriental Online, a number of securities companies issued research reports expressed optimism.
Everbright Securities released a research report saying that the proportion of the company's university education and institutional customer income declined, and self-operated products and live streaming e-commerce became the most important sources of income. New Oriental's online live broadcast e-commerce business directly benefited from the recovery of the epidemic, the steady improvement of data, the new live broadcast room to see the world brought humanistic attributes, high-trust location live broadcast new upgrades, continuous innovation in marketing activities, and location plans in Yunnan and other places. The company continues to prove its profitability, optimistic about the subsequent GMV and net profit growth potential, and raised the company's net profit forecast attributable to the parent in fiscal 2023, 2024 and 2025 fiscal years by 1.114 billion yuan, 1.620 billion yuan and 2.085 billion yuan respectively. It is optimistic about the establishment of self-operated consumer goods brands, the business model has long-term vitality, the performance growth is expected to be maintained, and the "buy" rating is maintained.
Shenwan Hongyuan (Hong Kong) released a research report saying that the impact of "double reduction" on the company has been fully cleared, and with high-quality live broadcast content, the gradual improvement of the supply chain and the increase in the unit price of customers after the expansion of SKUs, Oriental selection and sub-live broadcast rooms are expected to maintain high growth. At the same time, employment difficulties stimulate the demand for academic qualifications, which in turn drives the demand for examination and training to pick up, and it is expected that New Oriental's online college student business is expected to stabilize and recover.
Shenwan Hongyuan (Hong Kong) also said that the forecast of the company's net profit attributable to the parent was raised from 1.01 billion yuan, 1.3 billion yuan and 1.56 billion yuan in fiscal 2023, 1.3 billion yuan and 1.56 billion yuan in fiscal 2023, 2024 and 2025 to 1.138 billion yuan, 1.384 billion yuan and 1.593 billion yuan respectively, corresponding to earnings per share of 1.04, 1.27 and 1.46 yuan. Through the SOTP valuation, under the neutral assumption (17 times PS for the live streaming e-commerce business and 15 times PE for the college student business), the target enterprise value of New Oriental Online is HK$74.9 billion, corresponding to the target price of HK$74.38.
CITIC Securities Research Report believes that Oriental Selection fully demonstrated its strong growth potential within half a year after becoming popular, and showed excellent results in the proportion of self-operated products, matrix number construction, team training, supply chain construction and other aspects, based on the company's deepening competitiveness, excellent team capabilities and the long-term vision of management, optimistic about the long-term development prospects of Oriental Selection gradually scaling and branding. Based on the current traffic situation and prudent assumptions, the company's core profit forecast for fiscal 2023, fiscal 2024 and fiscal 2025 is 890 million yuan, 1.22 billion yuan and 1.66 billion yuan, respectively. (Beijing Time Finance Xiang Yu)