Oriental Selection (formerly listed name: New Oriental**) used to be a leader in online K12 education and training, and successfully entered the Hong Kong Stock Exchange in March 2019. However, the turn of fate changed drastically under the promulgation of the "double reduction policy" in July 2021, when the company divested the preschool education &K9 business, retained only the university and institutional business, and explored the path of transformation amid twists and turns. Finally, in June 2022, Dongfang Selection emerged on the Douyin platform with its unique "knowledge delivery" model and became famous overnight. On the day of 618, its GMV soared to 69.8 million yuan, and then the GMV level became more and more stable. In FY2023H1, the company achieved 20The revenue of 800 million yuan increased by 263% year-on-year (of which the e-commerce business of universities and institutions accounted for 14%, 1% and 85% respectively). The net profit attributable to the parent company reached 5900 million yuan, a year-on-year increase of 208%;Adjusted net income was 60 billion yuan, a year-on-year increase of 244%. All this shows that the live broadcast e-commerce business model has been recognized and verified by the market. Tianshi: At that time, the over-the-top anchors were absent (Li Jiaqi, Wei Ya, and Simba were all off the air), and a large amount of traffic urgently needed to be undertaken by high-quality content;Douyin's "interest e-commerce" strategy coincides with the positioning of Dongfang Selection Knowledge Delivery.
Geographical advantage: vs**&Xiaohongshu&Kuaishou&WeChat**Account, Douyin traffic distribution model gives new anchors the opportunity to compete on the same stage with the stock head.
Renhe: After the transformation of e-commerce, the original brand recognition (New Oriental & Yu Minhong is a household name) and the anchor team (the transformation of existing famous teachers & novel knowledge delivery model) can be reused.
2022.6.8-2023.1.20, the stock price has exceeded 17 times from the bottom, and the unique empowerment of GMV hub & education gene in the same period is the core driver of this round. At the end of January 2023, the stock price took a sharp turn, in addition to the downturn in the prosperity of Hong Kong stocks, due to the combined impact of the pullback of GMV sales, the stability of the core team (rumors of Dong Yuhui's resignation), senior management** and quality problems (fake wild shrimp incident).
At present, the suppression of investment sentiment by the management** and wild shrimp incident has been fully released among the above factors, and then the issuance of equity incentives has alleviated the market's concerns about the stability of the management teamThe second is to obtain incremental traffic shares for new anchors and new forms, and reduce dependence on original anchors.
The traffic contribution rate of new anchors and new forms has increased, and the traffic contribution rate of Dunton and Yoyo has increased from 40%-70% in June 2022 to 100%-200%.The number of celebrity guests in the GMV ** live broadcast reached 3-4 times the average of the month.
The layout of agricultural product sequence & cross-track account drives the GMV upward, the agricultural product sequence account (master account + self-operated + see the world) has stable barriers, the competitive environment is mild and the online rate is low, and the GMV hub has the ability to rise steadilyBeautiful Life is a successful sample of cross-track incubation, with an average daily GMV of 8 million in May (3 million at the beginning of the year), with a high short-term growth, and the long-term competition pattern is not as good as that of the agricultural product track, and the growth sustainability needs to be tracked.
The traffic explosion logic of Dongfang Selection has been fulfilled, and the core focus of the market is that with the blessing of brand building capabilities, the main account GMV proves its own stability + the new live broadcast matrix contributes to the increment. In May, the daily GMV of agricultural product serial accounts returned to the level of 25 million, and the volume of beautiful life gradually increased, that is, the stickiness of users in the existing live broadcast room was confirmed, the matrix of new live broadcast accounts tended to be perfect, and the profit margin is expected to continue to improve under the increase in the proportion of self-operated products. Based on the above judgment, it is estimated that the company's adjusted net profit attributable to the parent company (plus back equity incentive expenses) in the 2023-2025 fiscal year will be 959/12.11/14.5.3 billion yuan, a year-on-year growth rate of 7722%/26.3%/19.9% and 0 EPS95/1.19/1.43 yuan, corresponding to PE valuation of 31 24 20x, comprehensive absolute valuation and relative valuation, 6-12 months reasonable target price of 3872-41.10 Hong Kong dollars (corresponding to a 24-year PE valuation of 29-31x), which is 19 compared with the latest ** price1%-26.5%** space.