On the evening of July 25th, $EAST BUY (01797.HK)$it was announced that their well-known anchor Dong Yuhui resigned effective immediately. At the same time, the company will sell its subsidiary and Huitongxing (Beijing) Technology Co., Ltd. to Dong Yuhui for the price of 76.585 million yuan.

Today, the stock price of East Buy opened significantly lower. As of press time, it has fallen more than 26% and is reported at HKD 9.11.

In June 2022, Dongfang Zhenxuan's live broadcast room became popular, especially with the broadcaster Dong Yuhui being favored by fans. Under the leadership of Dong Yuhui and other anchors, Dongfang Zhenxuan's live-sales revenue has been rising steadily for two years. However, the continuous turbulence caused by Dongfang Zhenxuan's daily operation management and Dong Yuhui's treatment issues has persisted.

In December 2023, the "Little Composition" incident broke out in Dongfang Zhenxuan, and fans raised questions about the company's management issues and Dong Yuhui's treatment in Dongfang Zhenxuan.

As public opinion continued to ferment, on December 16, 2023, Dongfang Zhenxuan announced that Yu Minhong will concurrently serve as CEO of Dongfang Zhenxuan, and dismissed Dong Xu, CEO of Dongfang Zhenxuan. At that time, Dong Yuhui stated that he had never mentioned leaving Dongfang Zhenxuan. Yu Minhong promised to improve the development space of the company's broadcasters.

On December 18, 2023, Yu Minhong announced the appointment of Dong Yuhui as the assistant to the Chairman of the Board of Directors of New Oriental Education & Technology Group and Vice President of New Oriental Culture & Tourism Group. Yu Minhong stated that Dong Yuhui would establish an independent studio to conduct cultural tourism and other businesses. The newly established studio account belongs to Dong Yuhui.

On December 22, 2023, Dong Yuhui set up With Hui Tongxing (Beijing) Technology Co., Ltd., and he served as the executive director and general manager of the company. Since then, Dong Yuhui has been independently selling products in the With Hui Tongxing's Douyin live broadcast room, and the controversy surrounding Dongfang Zhenxuan has come to an end. However, Dong Yuhui did not stay in Dongfang Zhenxuan in the end.

On July 25, Dong Yuhui and Yu Minhong separately released open letters, revealing more details and responding to many concerns from the public.

1. Dong Yuhui resigned due to career aspirations, and will acquire 100% equity of With Hui Tongxing.

According to Dongfang Zhenxuan's announcement, after friendly consultations, Dong Yuhui decided to leave Dongfang Zhenxuan. Dong Yuhui's departure was due to his career aspirations, his commitment to other pursuits and personal time arrangements, and it took effect on July 25, 2024. Dongfang Zhenxuan's Beijing New Oriental Xuncheng Network Technology Co., Ltd., Dong Yuhui, and With Hui Tongxing have signed an agreement, and Dong Yuhui will purchase 100% equity of With Hui Tongxing for approximately RMB 76.59 million.

2. The purchase price of over RMB 76 million will be paid in two installments, and Dong Yuhui claims to have the ability to pay the salaries and rent of With Hui Tongxing.

According to the announcement, Dongfang Zhenxuan and With Hui Tongxing will make every effort to complete the sale within six months. Dong Yuhui will pay the transaction price in two installments. Within 30 business days from the date of the sales agreement, he will pay RMB 38.292 million, and within 10 business days after the completion of the sale, he will pay the remaining RMB 38.292 million.

On July 25, Dong Yuhui stated in the open letter that Yu Minhong had arranged for the equity purchase payment that he needed to buy With Hui Tongxing in accordance with the provisions of the listed company's rules and articles of association. Yu Minhong said that Dong Yuhui's money to buy the company had already been arranged, and the company was given to Dong Yuhui.

Dong Yuhui stated that With Hui Tongxing will have the ability to maintain future business operations as well as expenditure costs such as rent and employee salaries for a period of time.

3. In March this year, Yu Minhong had already communicated with Dong Yuhui about selling 100% of With Hui Tongxing's equity.

Yu Minhong mentioned in the open letter that around March, he had met with Dong Yuhui many times, and the two of them constantly discussed the development plan going forward. Yu Minhong stated that they both felt that the complex external and internal environments they faced would not only make the company's operations fall into difficulties but would also cause harm to the personal and long-term development of both parties. To ensure that With Hui Tongxing has a better development stage, and to avoid business conflicts and public opinion disputes, they finally decided that after the end of the fiscal year (May 31), Yu Minhong would request the board of directors to agree to transfer 100% of With Hui Tongxing's equity to Dong Yuhui himself.

4. Dong Yuhui's income comes from cash + equity, and he can allocate half of With Hui Tongxing's net profit.

According to Yu Minhong's open letter, after Dongfang Zhenxuan's board of directors discussed and agreed, no matter how With Hui Tongxing was doing, Dong Yuhui would be given an attractive minimum income (cash + equity) to show recognition of Dong Yuhui's value. In order to ensure that Dong Yuhui can design the future of With Hui Tongxing according to his own wishes, the company's board of directors did not make any requirements for the income of With Hui Tongxing. Yu Minhong also promised that in addition to receiving all the minimum income, if With Hui Tongxing generates income, Dong Yuhui can continue to receive half of the net profit of the company.

5. All the remaining undistributed profits of With Hui Tongxing will be distributed to Dong Yuhui.

According to the announcement from East Buy, in addition to fully paying the benefits and compensation promised to Dong Yuhui, Yu Minhong has sought approval from the board of directors to distribute all remaining undistributed surplus profits with Dong Yuhui, as a gratitude and appreciation for Dong's contributions. In addition, in order to maintain the normal operation of East Buy, the company will provide the independently developed information system to Dong Yuhui for free.

Yu Minhong: East Buy will further cooperate closely with New Oriental

Regarding the management issues of East Buy after Dong Yuhui's resignation, Yu Minhong stated that in the future, East Buy and New Oriental Group will further cooperate closely to form a more perfect business cooperation model and promote better and faster development for both parties.

East Buy's stock price continues to fall, and it will not exceed 0.5 billion yuan for share buyback.

After East Buy went public in June 2022, its stock price continued to rise. However, since 2023, East Buy's stock price has been continuously declining. On the evening of July 25th, East Buy announced the share buyback plan, planning to repurchase no more than 0.5 billion yuan of company shares in the future. Yu Minhong also stated that the company will continue to enhance shareholder value through share buybacks and other means.

Dong Yuhui and his team have multiple "Dong Yuhui" trademarks.

Although Dong Yuhui's resignation caused a stir, on the evening of July 25th, all matrices under East Buy were broadcasting normally, and Dong Yuhui's account was also broadcasting normally.

At 8:30 pm, the number of simultaneous online users in East Buy's main broadcast room was about 0.03 million, while the number of simultaneous online users in Dong Yuhui's account exceeded 0.1 million.

Dong Yuhui's most recent live broadcast in Dong Yuhui's account was at 8 pm on July 24th, when he interviewed the crew of "Decoded" in the live broadcast room. The guests in this live broadcast include the original author of "Decoded" Ma Jia, director and screenwriter Chen Sicheng, and actor Liu Haoran. On July 21st, Dong Yuhui and his team held a live broadcast in the new office.

According to data from Chansomama, East Buy's main account ranked 13th in Douyin's live streaming and sales list this month, while Dong Yuhui's account ranked second in sales. Currently, East Buy's main account has about 29.87 million fans, while Dong Yuhui's account has about 21.52 million fans.

Business information shows that Dong Yuhui's account is currently applying for multiple trademarks under his name, including "Dong Yuhui's account Yueshanhe," "Dong Yuhui's account Powanjuan," and "Dong Yuhui's account Kanshanhe." Earlier, multiple trademarks such as Dong Yuhui, Fang Lian Ge, and Fang Laoshi in multiple categories have been transferred from Peking Orient Technology Co., Ltd. (a subsidiary of Peking Orient Group) to Dong Yuhui's account.

Taking the "Dong Yuhui" trademark as an example, according to Tianyancha's information, Peking Orient Technology Co., Ltd. applied for multiple trademarks including class 25 (clothing, hats and shoes), class 41 (education and entertainment), and class 32 (beer and beverages) on June 24, 2022, and obtained them on June 14, 2023. In March of this year, Peking Orient Technology Co., Ltd. successively transferred these core trademarks to Dong Yuhui's account.

East Buy's explosion in two years timeline.

December 28, 2021: New Oriental announced its live streaming sales platform East Buy on its official WeChat account, and the founder of the company, Yu Minhong, conducted the first live broadcast sales of agricultural products, marking the beginning of New Oriental's layout in live streaming e-commerce.

June 2022: East Buy's bilingual live streaming sales went viral, and East Buy's account gained more than 10 million fans in one week. In the 8 live broadcasts from June 11th to 17th, the average sales volume of East Buy reached 29.63 million yuan.

Late 2022 to January 2023: East Buy's stock price soared, with a maximum increase of more than 1700% in the range, and East Buy's market cap exceeded its parent company New Oriental.

January 5, 2023: Hong Kong New Oriental Online announced that it plans to change its name from New Oriental Online Technology Holdings Ltd. to East Buy Holdings Ltd.

January 17, 2023: East Buy released its financial report, with a total revenue of 2.08 billion yuan in the first half of 2023 fiscal year (June 1st to November 30th, 2022), an increase of 262.7% compared with the same period in 2022 fiscal year, and a pre-tax profit of 0.76 billion yuan.

April 11, 2023: East Buy announced that it awarded 30.459 million shares to 154 qualified participants (grantees) as stock rewards. According to the closing price of East Buy on that day at 29 HKD, the total value of this stock reward was approximately 0.883 billion HKD.

October 17, 2023: East Buy launched a paid membership model on its own East Buy APP, priced at 199 yuan/year. On the morning of October 17th, East Buy's stock price rose more than 6% at one point.

On November 21, 2023, East Buy announced that it will sell its education business to its parent company New Oriental and focus on live e-commerce.

In December 2023, the 'Small Essay' incident broke out in East Buy. Sun Dongxu was dismissed, Yu Minhong took over as CEO and Chairman of the Board of Directors of East Buy. Dong Yuhui was appointed as the cultural assistant to the Chairman of the Board of Directors of New Oriental Education & Technology Group and concurrently as Vice President of New Oriental Culture & Tourism Group.

On December 22, 2023, he founded Yu Hui Tongxing (Beijing) Technology Co., Ltd. (hereinafter referred to as Yu Hui Tongxing). Dong Yuhui served as the company's executive director and general manager. Since then, Dong Yuhui has independently carried out live sales in the 'Yu Hui Tongxing' Douyin live streaming room.

In June 2024, due to Yu Minhong's statement in the live streaming room that 'East Buy is messed up', East Buy's stock price continued to fall. In the early morning of June 7, Yu Minhong released an apology statement through his personal Douyin account on this matter.

On July 25, 2024, East Buy announced Dong Yuhui's resignation.

Editor/new