Maintain an increase in holdings rating. In view of the company's undefined business model and retained overseas expectations, the adjusted net profit for FY2024-26 from non-GAAP was maintained at $996/10.93/1,291 billion yuan, maintaining an increase in holdings rating.
Brief description of the incident: On January 31, 2024, Oriental Selection and New Oriental issued a joint announcement. Oriental Selection Board and New Oriental Board of Directors have each approved the termination of the early subscription agreement. New Oriental and Yu Minhong have each promised to purchase a total of HK$700 million worth of Oriental Selection shares on the Stock Exchange at market prices. Among them, New Oriental has promised to buy Oriental Selection shares with a total value of HK$660 million, which will be held by New Oriental Benefit after purchase; and Yu Minhong has promised to buy Oriental Selection shares with a total value of HK$40 million. A corporation that will be controlled by Yu Minhong or his company after purchase Benefiting from holding, the share purchase will be carried out gradually over a period of 6 to 12 months from the announcement date.
The increase in shareholding shows the confidence of the Group and management, and supports market expectations. ① Considering the company's current relatively abundant cash flow situation, the company believes that selling the education business to the Group and receiving 1.5 billion yuan in cash is not the main purpose of this subscription; ② Through direct purchase of shares between the Group and Yu Minhong as an alternative, it maintains the dominant position in the selection and does not dilute the shareholders' holdings of other shareholders. Furthermore, it is also aimed at further enhancing the liquidity of the company's shares on the Stock Exchange and at the same time further stabilizing market expectations.
The company's positioning is still being explored and requires continued attention to marginal catalysis. ① The market is very divided on the company's positioning as an MCN, retail, and product company. At this stage, the model is still uncertain. Organizational capacity and supply chain stability are gradually being consolidated and explored, and brand power is still being built; ② “Walking with Hui” and Oriental Cultural Tourism are both exploring new models. The group level provides ground support and staffing, and the selection mainly plays a role as a sales channel. Compared with the relationship between content supply and government and enterprise, the monetization capacity is more worthy of attention; ③ The company opens up overseas team recruitment, including content operation managers, business managers, and TikTok overseas stores Operations and other positions, combined with the anchor's language advantage and TikTok's increased demand for monetization, may become an important catalyst for the next phase of exploring overseas routes.
Risk warning: risk of worsening transaction structure, increased competition, cross-platform cooperation falling short of expectations