Incidents:
The company issued an interim results announcement (for the six months ended November 30, 2023). During the reporting period, the company achieved total revenue of 2,795 billion yuan, an increase of 34.4% over the previous year. Adjusted net profit was $509 million, a year-on-year decrease of 15.4%.
Focusing on providing consumers with a high-quality experience, the self-operated products and live e-commerce business continues to grow. The company continues to follow the “customer-centered” long-term development strategy and is committed to providing users with high-quality content and product services. During the reporting period, the total GMV of all sales channels of the company reached 5.7 billion yuan, an increase of 18.8% over the same period last year. The company will continue to cultivate supply chain and multi-channel development strategies to provide consumers with excellent products:
1) Supply chain capacity continues to improve: benefiting from the scale advantages of some popular products, sales of some individual products have reached a high level in the industry; the number of self-operated products has exceeded 264 during the reporting period 2) The multi-channel strategy continues to advance: the company continues to promote multiple platforms to cover a wider range of user groups and launch live streaming channels on Taobao, WeChat applets and free apps 3) Overseas markets are expected to bring new growth: The company is beginning to explore overseas markets to provide high-quality products and services to users in a wider range of regions, and is also expected to bring a new growth curve to the company? The company responds positively to organizational management issues. Team stability is expected to improve. In December of last year, a series of public opinions caused by a storm of essays had a certain impact on the company's image. The company level promptly responded and dealt with accordingly. In addition to organizational structure adjustments, adjustments were also made to the anchors' remuneration. According to data disclosed in the semi-annual report, share compensation expenses during the reporting period were 246 million yuan, a significant increase from 28.71 million in the same period last year. After the organizational structure and salary adjustments, we believe that the stability of the Oriental selection team is expected to improve.
Profit Forecasts, Valuations, and Ratings
According to the interim results announcement disclosed by the company, we expect the company's revenue for the 2024-2026 fiscal year to be $55.83/65.38/7.845 billion yuan respectively (the original forecast value was 68.54/93.43/11.706 billion yuan), with year-on-year growth rates of 24%/17%/20%, respectively, and adjusted net profit of 10.11/11.57/1.344 billion yuan (predicted original value of 1.342/18.72/2.52 billion yuan), respectively. . Considering that the company is still growing and the premium brought by the New Oriental brand, we gave the company 25 times PE for FY2024 (based on adjusted net profit for FY24), then the company's value was 25.3 billion yuan/HK$27.8 billion (the exchange rate was 0.90,866), and the target price was 24.87 yuan/HK$27.37, which was adjusted to a “gain” rating.
Risk warning: risk of GMV falling short of expectations, risk of anchor instability, policy risk caused by inappropriate words and actions in the live broadcast