Double reduction for one year. On July 27, Beijing time, education giant New Oriental released its unaudited financial reports for the fourth quarter and year ended May 31, 2022.

text/"Financial World" Weekly Chen Chang

Editor/Sun Yue

Double reduction for one year. On July 27, Beijing time, education giant New Oriental released its unaudited financial reports for the fourth quarter and year ended May 31, 2022.

financial report shows that the company's net profit attributable to ordinary shareholders for the whole year of fiscal year 2022 was -1.188 billion US dollars, a year-on-year decrease of 455.16%, and operating income was US$3.105 billion, a year-on-year decrease of 27.39%. Among them, the net profit attributable to ordinary shareholders in the fourth quarter was -189 million US dollars, a year-on-year decrease of 316.36%, and operating income was US$524 million, a year-on-year decrease of 56.76%.

New Oriental mentioned that in the fourth fiscal quarter of 2022 alone, its net income fell 56.8% year-on-year to US$524 million, mainly due to the suspension of K-9 academic extracurricular tutoring services.

While the performance was losing money, New Oriental's stock price rose instead. On the 28th, US stock New Oriental closed up 12.67% to US$29, Hong Kong stock New Oriental-S and New Oriental Online rose 9.86% and 16.43% respectively.

(Photo/New Oriental Financial Report)

Oriental selection function is unknown, but we will never give up

For the highly-watched "Oriental Selection", New Oriental mentioned it in its financial report in just one sentence, "This fiscal year, New Oriental established an e-commerce platform Oriental Selection to sell agricultural products and Other products. New Oriental has also begun to pilot live broadcast activities on some famous short video social platforms such as Douyin . Oriental Selection has made significant progress and has been widely recognized by tens of millions of subscribers and members. "

In addition, in the conference call after the financial report, New Oriental executives said that the success of Oriental Selection has greatly helped New Oriental's own education business transformation and also brought considerable financial returns.

Since New Oriental's 2022 fiscal year cycle is from June 1, 2021 to May 31, 2022, although Oriental Selection was established at the end of the year, the real situation became popular only in June this year, so the specific operating data is not reflected and it is more reasonable. It is expected that more will be revealed in the financial report in the next quarter.

Oriental Selection is an e-commerce platform under New Oriental Online. Grey Dolphin data shows that it has achieved a single-day increase of 300W+ fans and a sales of 4000W+. However, the hot situation returned to cool down. " Finance World " observed that since July, fans have stabilized on the basis of 2,000W+, with daily increase of fans ranging from tens of thousands to hundreds of thousands, and sales on the 28th were 1,015.3W. This seems to indicate that it is not too early to make a conclusion on the performance of Dongfang.

(Oriental Selection live broadcast trend, picture/Grey Dolphin data)

In the exchange between "Financial World" weekly and industry insiders, most people believe that Oriental Selection's out-of-circle is inseparable from Douyin's support. Chen Qi, a well-known financial author, said that the previous top anchors faded out one after another. Douyin needs to seize the gap in Taobao and Kuaishou's top anchors' shortage, and overtake, and use the shortest time to support a new top anchor to replace Luo Yonghao . Oriental Selection took advantage of the trend and "out of the circle".

Founder and Chief Analyst Gao Dongxu, founder and chief analyst of China Entertainment Think Tank, analyzed why Oriental Selection is the "Son of God" from three aspects: people, goods and places.

is first of all, and Oriental Selection anchor and teacher Yu Minhong personally took the initiative to open up a live broadcast method of knowledge payment and knowledge dissemination, giving everyone a refreshing feeling, and it is easy to get support from Douyin when traffic is scarce;

is secondly, the books and other products sold in Oriental Selection have New Oriental's endorsement . Agricultural products have seized the dividends of macro policies for rural revitalization;

Again, from the perspective of the field, Oriental Selection, Dong Yuhui, and Dong Yuhui's personal fans are all rising, which is equivalent to taking over the traffic given by the huge platform. This is the result that Douyin really wants to see, so he is more willing to output more traffic to these accounts.

But Gao Dongxu also said that the platform's support for such anchors or accounts will continue to track and change. There are still many things that the operation team of the live broadcast room needs to think about and prepare in the future.After all, "objectively speaking, the platform is still very utilitarian, and it still needs to use core traffic to anchor rooms and accounts with strong monetization capabilities."

is certain that in the future, New Oriental's investment in Oriental selection will only increase and not decrease.

"Financial World" Weekly observed a detail that on the official website of New Oriental, the "online e-commerce sector" has been listed as one of the New Oriental King's career modules together with " Quality Education ", "International Education", "Adult and Vocational Education", and "Education Services and Support".

Not long ago, the account "Oriental Selection Personal Care and Beauty" was launched in the live broadcast matrix of the Oriental Selection live broadcast room, and was later renamed "Oriental Selection Beautiful Life". The products sold include paper drawers, bath towels, beauty mirrors, body lotion , sanitary napkins, etc. As of now, the live broadcast room has started more than 20 live broadcasts with goods, with 676,000 fans.

also circulated a recruitment screenshot on the Internet saying that it is recruiting TikTok anchors. The screenshot said that the position is for the European and American markets, and the working hours are required to be between 8 pm and 8 am in Beijing time, and live broadcasts are about 6 hours a day. This time, it is considered that New Oriental is entering overseas live broadcasts to sell goods, and was later denied by New Oriental.

cannot deny that on the recruitment website, New Oriental is recruiting full-time live broadcast anchors and a large number of live broadcast operators. The former requires no less than 4 hours of online live broadcast every day to promote products and increase product sales, while the latter is responsible for live broadcast field control, hot event planning, and live broadcast sales work coordination.

Yu Minhong also publicly stated in his personal public account "Lao Yu Gossip" that he called the live broadcast economy the third revolution in business. The first time is a hypermarket, the second time is e-commerce, and the third time is live streaming to sell goods. "Products require sales channels. I found that the most effective sales channels are not only about finding agents, but also about live streaming and selling goods."

How will New Oriental go next?

excludes the influence of Oriental selection. What are the results of New Oriental’s other transformations?

Open the official website and you can see that without K12, New Oriental's business scope includes but is not limited to: college students' IELTS preparation, TOEFL exam, undergraduate study abroad planning, adult education including teacher qualification certificate, certified public accountant , computer certificate, translation exam, etc.

financial report quoted Yu Minhong as saying: "In the 2022 fiscal year, overseas exam preparation and study abroad consulting business increased by and 16% year-on-year respectively. Our domestic exam preparation business for adults and college students increased by about 30% year-on-year, setting a record high. At the same time, the various new businesses we launched earlier this year have achieved gratifying results."

He further elaborated that the non-academic tutoring business was launched in more than 50 cities, the same as the intelligent learning systems and devices adopted and tested in about 60 cities. Other businesses, including study tours and research camps, textbooks and digital intelligent learning solutions, and exam preparation courses designed for students with college diplomas to earn bachelor's degree , have made significant progress. "I believe these new businesses will generate considerable revenue from the next fiscal year," Yu Minhong said optimistically.

The intelligent learning system mentioned by Yu Minhong refers to the "OK Smart Teaching Large Screen" launched by OK Smart Education, a subsidiary of New Oriental in May this year. The current scenario of OK smart teaching large screen is more for schools, supporting content digitization and learning dataization. It borrows technologies such as AI, the Internet of Things and VR/AR to integrate data capture, learning situation analysis, intelligent recommendation, and intelligent correction functions. Different from traditional large screens that only support teaching demonstrations, the product is positioned as "platform + application + terminal", rather than just hardware.

is more likely to be a smart hardware product in C-end. New Oriental and Tmall Ghost have released the "New Oriental Online Dictionary Pen" and the "OK Smart Learning Machine" known as the "independent learning tool".

"OK Smart Learning Machine" official introduction said, "It is better to use OK Smart Learning Machine to take pictures of homework with the OK Smart Learning Machine. After the AI ​​data diagnosis, you can immediately help the child find out the weak knowledge points behind it and play the role of checking for omissions and filling in the gaps in homework. Learning the weak points will essentially solve the homework problem."Learning machine can also accurately match AI courseware for children based on every weakness to learn; based on dynamic learning data, plan suitable learning paths for children; let children learn accurately, practice targetedly, and solve learning problems independently.

(New Oriental "OK Smart Learning Machine", picture/New Oriental official website)

When the double reduction policy was first implemented, some netizens suggested that New Oriental could teach foreigners to learn Chinese. This is reflected in the recruitment situation. "Financial World" weekly found that New Oriental is recruiting part-time Chinese teachers (overseas Chinese) with monthly salary RMB 5,000-7,000/month, responsible for teaching Chinese language for overseas Chinese children aged 4-15. There is also a course consultant (overseas project), with a monthly salary of 8-13K, responsible for the sales of New Oriental's overseas Chinese courses, providing customers with professional course system explanations through phone and WeChat, etc.

Although many businesses are blooming, the profitability of the financial report in the next quarter is still worrying. New Oriental expects the total net income of the first quarter of fiscal year 2023 (June 1, 2022 to August 31, 2022) will be between US$641.3 million and US$680.6 million, a year-on-year decrease of 51% to 48%.

Back to the short video and live broadcast business, Gao Dongxu also made some targeted suggestions.

"New Oriental's advantage lies in its teachers. Suitable teachers can appear on the screen. Unsuitable teachers can try to use virtual images to explore virtual or digital live broadcasts; companies can also use accumulated training resources and content resources to try to combine with games and animations to develop some interactive online education products; last point, New Oriental has a strong audience, short video or film and television, or cooperate with institutions and content companies to create offline scenes related to books, etc., and integrating online content and entities may be a choice direction. ”