New Oriental-S fell more than 8% in the morning, and Dong Yuhui resigned from Oriental Selection. The agency said that the e-commerce business has limited drag.
1min read New Oriental-S (09901) fell more than 8% in the morning, and as of the time of writing, it was down 6.96% at HK$53.5, with a turnover of HK$28.23 million.
On the news, Orient Select announced that it would sell its subsidiaries to Dong Yuhui, for RMB76.58 million. The statement said that with Mr. Dong leaving the group, the group would no longer be able to operate the target company. After that, the group would continue to operate and expand its self-owned products and live-streaming e-commerce business under the "Orient Select" brand.
SWMHYS pointed out that New Oriental's subsidiary Orient Select had personnel changes, and the top streamer Dong Yuhui left. Since New Oriental owns 57.04% of Orient Select, the revenue contribution of Orient Select to New Oriental in FY2022 and FY2023 would decrease by US$250 million and US$320 million respectively. The drag on the e-commerce business is limited. The brokerage believes that in the context of continuous high growth in the education business and a strong momentum of capacity expansion, the market will focus on the company's growth potential. Therefore, the pressure on the gross margin brought by the pre-position of the cost and expense under the capacity expansion will no longer restrain the valuation improvement of the company.