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Following July 31, the share price of Oriental Selection surged again. On August 2, the share price of Oriental Selection surged by 16% during the trading session, and the increase was more than 14% as of press time.

On July 26, affected by the news of Dong Yuhui's resignation and the divestiture of Yuhui Tongxing, the share price of Dongfang Zhenxuan plummeted and hit a staged low. Recently, the share price of Dongfang Zhenxuan has rebounded significantly. In the past four trading days, the share price of Dongfang Zhenxuan has rebounded by nearly 25%.

However, the recent stock price trend of New Oriental, the parent company of Oriental Selection, is completely opposite to that of Oriental Selection. On August 1, New Oriental's Hong Kong stock price fluctuated sharply during the trading session and closed down nearly 8%. On August 2, New Oriental fell by more than 7%.

New Oriental disclosed its latest financial report on July 31. The fourth quarter financial report for fiscal year 2024 ending May 31, 2024 showed that New Oriental's net revenue for the quarter reached US$1.137 billion, a year-on-year increase of 32.1%.

However, New Oriental mentioned that due to the growth of Oriental Selection-related businesses, the increase in related costs and expenses brought about by the accelerated expansion of teaching space, coupled with the company's increase in management and employee salary rewards and other factors, the company's profits declined.

In this fiscal quarter, New Oriental's operating profit fell 78.1% year-on-year to US$10.5 million, and net profit attributable to shareholders fell 6.9% year-on-year to US$27 million.

New Oriental Executive President and Chief Financial Officer Yang Zhihui said that these are short-term impacts on operating profit margins, and it is expected that with the continued improvement of facility utilization and operating efficiency, the profit pressure of the company's education business will be reduced in the next fiscal year.

New Oriental held a earnings conference call on the evening of July 31. During the call, an analyst asked about the costs and expenses the company paid to Dong Yuhui and used the term "one-time compensation." This expression was misunderstood by some as a one-time severance pay New Oriental gave Dong Yuhui in order to dismiss him.

At noon on August 2, New Oriental issued a clarification statement saying that the separation of Yuhui Tongxing from Oriental Selection was the result of friendly consultations and consensus reached between the two parties, and there was no dismissal.

The company has arranged to pay all the profits of "Yihui Xingxing" since its establishment and all the funds related to the equity transfer of "Yihui Xingxing" to Mr. Dong Yuhui. This is a support for the future development of Mr. Dong Yuhui and "Yihui Xingxing" rather than severance pay.

In a recent research report, Bocom International evaluated the impact of the sale of Yuhui Tongxing on New Oriental. The research report mentioned that the separation of Yuhui Tongxing will still affect New Oriental's overall operating profit margin in the first quarter of fiscal year 2025 (June to August 2025), which may decrease by 3 percentage points year-on-year. However, excluding Oriental Selection, the company's operating profit margin is expected to increase by 2 percentage points year-on-year to 19%.

Regarding the impact of the sale of Yuhui Tongxing on Oriental Selection, the research report of Bocom International also mentioned that the sale will have a negative impact on Oriental Selection's short-term GMV and profits, but Yu Minhong will devote more energy to the daily operations of Oriental Selection and strengthen the management of negative issues. It is believed that after public opinion is calmed down, the company can return to normal operations.

The research report also mentioned that in the future, we may see closer platform cooperation, matrix expansion, diversified content, and strengthened strategic collaboration with New Oriental Group. In the future, we should pay attention to Oriental Selection's own brand and multi-channel construction. If GMV continues to be stable, the company's business will gradually resume stable operation.

Editor: Peng Bo

Proofreader: Peng Qihua