On January 21, East Selection Holdings Co., Ltd. (East Selection) announced that the company incurred a net loss of 96.503 million yuan (RMB) in continuous business operations from June to November 2024, compared to a net profit of 160 million yuan in the same period in 2023.
During the June to November 2024 period, East Selection generated operating income of approximately 2.187 billion yuan, a year-on-year decrease of 9.32%. The net loss from continuous operations during this period amounted to 96.503 million yuan. The company’s total GMV (Gross Merchandise Volume) for the half-year financial report was 4.8 billion yuan, down from 5.7 billion yuan in the same period last year.
According to a report by Beijing Business Daily on January 22, Yu Minhong, the founder of New Oriental, mentioned during the 2025 East Selection shareholder conference call that the decline in GMV at East Selection was manageable despite some setbacks experienced by the company from June to October last year.
East Selection is a new live streaming e-commerce platform launched by New Oriental.
Reported by Huaxia Times on January 23, the departure of top anchor Dong Yuhui from East Selection still has a negative impact on performance. Excluding the financial impact of Dong Yuhui’s departure, the net profit from continuous operations during the reporting period was 32.7 million yuan.
Jiang Han, a senior researcher at Pangu Think Tank, stated, “The duration of the performance slump will depend on various factors, such as whether East Selection can quickly find a replacement for Dong Yuhui’s influential figure, the company’s ability for business recovery, and the speed of market strategy adjustments.”
Following the release of the financial reports, both New Oriental-S and East Selection’s Hong Kong stocks experienced significant declines in the morning session. According to reports by Caixin on January 22, New Oriental’s stock price dropped over 31%, and East Selection fell nearly 10%. By the end of the day, New Oriental-S had dropped by 24.2% and East Selection by 2.35%.
Due to performance guidance falling short of expectations, several institutions downgraded their ratings for New Oriental.
Reported by China Securities Journal, international rating agencies JPMorgan and Morgan Stanley issued reports stating that they downgraded New Oriental’s rating from “Buy” to “Neutral” or “In line with the Market.”
JPMorgan explained that New Oriental’s core revenue guidance for the third quarter of the 2025 fiscal year is expected to grow by 23%, below market expectations and a slowdown from the second quarter. Lacking confidence in achieving the full-year 30% revenue growth target, the company’s rating was adjusted from “Buy” to “Neutral,” with its ADR target price lowered to $50.
Morgan Stanley believes that New Oriental’s guidance for the third quarter of the 2025 fiscal year is weak and uncertainty for the future has increased. They lowered their profit forecasts for New Oriental by 18% for the 2025 fiscal year and 17% for the 2026 fiscal year, primarily due to a decrease in core operating profit margins and the impact of overseas and travel businesses. The target price for New Oriental was reduced from $83 to $52, with the rating adjusted from “Buy” to “In line with the Market.”
Guotai Junan International, on the other hand, maintained a “Neutral” rating for East Selection.