New Oriental "submits the paper", net profit of $293 million! Yu Minhong wins again.

The traffic business is a double-edged sword.

Therefore, in the matter of separating from Dong Yuhui, Yu Minhong's actions were both decisive and correct.

On October 23, New Oriental $New Oriental EDU & Tech(EDU.US) released its financial report for the first quarter of fiscal year 2025. The report showed that for the first quarter of fiscal year 2025 (from June 1, 2024, to August 31, 2024), the company's net revenue increased by 30.5% year-on-year to $1.435 billion; operating profit rose by 42.9% year-on-year to $293 million. New Oriental also stated that excluding the operating losses from the self-operated products and live-streaming e-commerce business of Oriental Selection, the operating profit increased by 58.4% year-on-year to $303 million.

Notably, this performance far exceeded pre-double reduction policy levels, marking the great success of New Oriental's diversified development path and the full recovery of its main business.

However, despite this explosive financial report, the market did not respond positively.

After the release of the financial report, both New Oriental's Hong Kong-listed shares and Oriental Selection fell, with Oriental Selection dropping by more than 9%.

Of course, this is not surprising. For New Oriental and Oriental Selection, the "troubles" brought by traffic gradually wore out Yu Minhong's patience, making the separation the best choice at the time.

This time, New Oriental released its first financial report since the separation from Dong Yuhui and Oriental Selection, and the operating losses were quickly amplified by market sentiment. Although New Oriental did not disclose the specific loss amount of Oriental Selection, the impact on the market was significant.

For Oriental Selection, only time can mitigate the effects of the separation from Dong Yuhui.

From the market's perspective, the impact of the separation from Dong Yuhui is indeed substantial. As is well known, for a live-streaming e-commerce company, a top influencer can account for up to 70-80% of revenue. Therefore, such companies typically revolve their activities around top influencers, but Oriental Selection's situation is different.

First, the company is publicly listed; second, Oriental Selection is not solely a live-streaming company—its main business was originally education and training, and it only became a live-streaming company after a transformation. In terms of corporate development strategy, Yu Minhong, the helmsman, tends to focus more on the education sector.

From a revenue perspective, after the recovery of the education and training business, Yu Minhong would naturally devote most of his energy to the main business. The "troubles" brought by traffic forced him to make a choice. Thus, re-emphasizing New Oriental while downplaying Oriental Selection became the optimal solution, as hinted in this financial report.

The financial report shows that New Oriental expects net revenue (excluding revenue from Oriental Selection's self-operated products and live-streaming e-commerce business) for the second quarter of fiscal year 2025 (from September 1, 2024, to November 30, 2024) to be between $851 million and $872 million, representing a year-on-year increase of 25% to 28%.

In other words, despite the operating losses at Oriental Selection, the impact on New Oriental's overall performance is minimal.

Regarding the growth in performance, Yu Minhong stated that he is pleased to start fiscal year 2025 with a steady revenue growth of 30.5%.

He also mentioned that with its rich educational resources, the company will continue to strive toward its long-term vision, balancing growth with stability and sustainability while improving profitability through enhanced service quality and operational efficiency.

Kan Jian Finance believes that although the loss of Dong Yuhui has caused significant fluctuations in Oriental Selection's business, New Oriental's overall fundamentals are improving. To avoid the impact of online controversies on the education and training business, the separation was the best choice. Moreover, with New Oriental's performance recovering and reaching new historical highs, its fundamentals will become even more stable.

For New Oriental, crisis and opportunity coexist. Before the double reduction policy, New Oriental had fallen behind TAL Education Group in the education and training business. However, after the double reduction, New Oriental not only surpassed TAL but did so by a significant margin. From this perspective, New Oriental has reconsolidated its leading position, making it relatively difficult for TAL to overtake it again. New Oriental executives stated that the company's education business maintained strong growth this quarter and expects its newly established cultural tourism business to contribute meaningful revenue in the future.