Commentator Jia Yunke
On October 23, New Oriental (HK09901, previous closing price of HKD 50.05, Hong Kong stock market value of HKD 3.432 billion) released its financial report for the first quarter of fiscal year 2025 (June 1 to August 31, 2024), showing strong revenue and profit growth, but also exposing operating losses in the Oriental Selection (HK01797, previous closing price of HKD 15.56, Hong Kong stock market value of HKD 16.151 billion) business. This is the first quarterly report of New Oriental after Dong Yuhui's departure, which has become the focus of market attention.
According to the financial report, New Oriental's net revenue reached $1.435 billion, a year-on-year increase of 30.5%; The operating profit was 293 million US dollars, a year-on-year increase of 42.9%. This growth is mainly due to the company's strong performance in the education business, including significant growth in overseas exam preparation and consulting services. However, in contrast, the operation of Dongfang Zhenxuan has incurred losses, and the business is facing challenges of repositioning and adjustment after experiencing changes in core personnel. Dong Yuhui, as a former core anchor of Dongfang Zhenxuan, played an important role in promoting the growth of the business. His departure undoubtedly had an impact on Dongfang Zhenxuan's market performance.
Despite the challenges faced by Oriental Selection, the release of the financial report still reflects the gradual recovery of New Oriental after the "double reduction" policy, and its education business revenue has significantly exceeded the level before the policy implementation. This phenomenon indicates that New Oriental has to some extent resolved the impact of Dong Yuhui's resignation on the overall operation of the company by balancing diversified businesses. Although Dongfang Zhenxuan incurred losses, the overall revenue and profit of New Oriental demonstrate the stability of its core education business, especially after excluding Dongfang Zhenxuan, the company's revenue and profit growth have been even stronger (up 33.5% and 58.4% respectively).
New Oriental disclosed its financial performance after excluding Dongfang Selection in its financial report, and the transparency of this strategy may be to convey its determination and confidence in future business adjustments to the market. The high growth potential of the cultural and tourism business undoubtedly opens up new market space for New Oriental, which is also one of the company's strategic transformations in the face of current market challenges. The statements of executives indicate that New Oriental hopes to achieve balance in diversified business development, especially in revenue sources outside of the education sector.
However, the fierce competition in the live streaming e-commerce industry and the operating losses of Dongfang Zhenxuan indicate that New Oriental's layout in this field requires more in-depth market analysis and consumer insights. Relying solely on celebrity anchors to drive business growth is not enough, and there may be other risks. Enterprises need to explore more stable and sustainable development models. In the future, if New Oriental can adjust its operational strategy and optimize its product structure, it may be able to regain market share in the live streaming e-commerce field.
Overall, New Oriental's financial report provides a positive signal for its recovery in the education industry, but also exposes new challenges. Facing business restructuring and market changes, balancing the risks and benefits of various businesses while maintaining growth will be the key to New Oriental's future success.