Investment Rating - The investment rating for the company is "Buy" with a maintained rating for the next six months [1]. Core Insights - The company has achieved a GMV of over 3.6 billion yuan for its self-operated products in FY24H2, representing a year-on-year growth of 108% and a quarter-on-quarter growth of 74% [1]. - The company has launched over 400 self-operated products, with 80% being food and agricultural products, and over 100 products ranking in the top three on Douyin's product list [1]. - The overall positive feedback rate for self-operated products exceeds 95%, with a repurchase rate of 59% and over 25 million users for self-operated products [1]. - The company is expanding its self-operated product categories and has seen strong demand and excellent repurchase performance for several products [1]. - The self-operated app is becoming a core channel for sales, with over 90% of new products launched on the app since May, contributing to over 40% of the total GMV for popular products [1]. - The company plans to increase its Douyin accounts and live broadcasts, which may enhance overall GMV performance [1]. - The revenue forecasts for FY24-26 are 6.1 billion, 7.4 billion, and 9.1 billion yuan respectively, with adjusted net profits of 900 million, 1.04 billion, and 1.23 billion yuan, and corresponding EPS of 0.9, 1.0, and 1.2 yuan per share [1].

Investment Rating - The report assigns a Neutral rating to the company with a target price of HKD 13.40, indicating a potential upside of 3.4% from the current price of HKD 12.96 [1][2][17]. Core Views - The company is expected to face short-term profit uncertainty due to increased promotional efforts for self-operated products, which may lead to a decline in gross margin. However, profitability is anticipated to improve in the fourth quarter of the fiscal year 2024 as operations normalize post-strategic adjustments [1][7][11]. - The main account's GMV (Gross Merchandise Value) has faced challenges, with a decline in traffic growth and some GMV being diverted to other channels. The company is focusing on expanding its self-operated product offerings, which are projected to grow significantly in the coming years [1][11][23]. Summary by Sections Financial Forecast - For the fiscal year 2024, the company is projected to achieve revenues of RMB 6.557 billion, a year-on-year increase of 45%. The adjusted net profit is expected to be RMB 688 million, reflecting a 37% decrease compared to the previous fiscal year [2][9]. - The company anticipates a revenue growth of 13% in fiscal year 2025, reaching RMB 7.433 billion, with an adjusted net profit of RMB 836 million [2][9]. Multi-Channel Strategy - The company has established a multi-channel layout, including Douyin matrix accounts, Taobao live streaming, and its own app, which is expected to enhance GMV contributions from non-live sales channels [11][23]. - The self-operated product segment is rapidly expanding, with GMV expected to reach RMB 36 billion in the second half of fiscal year 2024, representing a year-on-year increase of 108% [11][23]. Valuation - The report suggests a reasonable price-to-earnings ratio of 16 times based on the company's growth potential and profitability structure, leading to a valuation of HKD 145 billion [1][16][17]. - The valuation reflects a premium compared to other MCN (Multi-Channel Network) institutions due to the company's better profit margins and business ceiling [1][16].

Core Insights - Dongfang Zhenxuan has launched a new "hourly delivery" service in collaboration with JD Logistics, initially targeting the Beijing market, with plans to expand to more cities in the future [1][6] - The service aims to leverage the brand's existing fan base and the personal charm of its young hosts to differentiate itself from competitors like Meituan and JD [3][4] - Despite initial enthusiasm, the sales performance of the hourly delivery service has shown a downward trend, raising questions about its long-term viability and profitability [4][6] Group 1: Business Strategy - The "hourly delivery" service is part of Dongfang Zhenxuan's broader strategy to diversify its business, which includes self-operated products and a membership-based e-commerce app [2][6] - The company has been exploring various business models since launching its live streaming service in late 2021, including expanding its product offerings and establishing multiple live streaming accounts [6][7] - The service is designed to provide a new sales channel for self-operated products and stimulate interest in the capital markets [6][10] Group 2: Market Performance - The first live broadcast for the hourly delivery service estimated sales of 5,000 to 7,500 yuan, with a total estimated sales range of 10,000 to 25,000 yuan over ten broadcasts [4][6] - The product offerings in the hourly delivery service have been criticized for lacking variety and not emphasizing time-sensitive items, which may limit its appeal [4][10] - The overall market for instant retail is growing rapidly, with an estimated market size of 5,042.86 billion yuan in 2022, expected to triple by 2025 [10][11] Group 3: Competitive Landscape - The instant retail market is highly competitive, with major players like Meituan and JD dominating the space, holding a combined market share of 75% [11] - Dongfang Zhenxuan's entry into the hourly delivery market comes at a time when competitors are already well-established, making it challenging to carve out a significant market share [10][11] - The effectiveness of Dongfang Zhenxuan's strategy will depend on its ability to leverage its existing user base and the unique appeal of its hosts to attract customers to the new service [3][10]

智通财经APP获悉，东方甄选(01797)早盘反弹逾5%，截至发稿，涨3.95%，报23.7港元，成交额1.46亿 港元。 2月27日上午，董宇辉的微博账号内容显示全部清空，再度引发舆论关注。有接近东方甄选人士向媒体 透露，这是个人行为。三眼查数据显示，在抖音1月直播达人带货榜上，与辉同行以单月8.89亿元的销 售额，超过了小杨哥和东方甄选，跃居第一位。 申万宏源(香港)指出，进入春节后销售淡季，东方甄选直播电商业务稳扎稳打。“小编”事件后头牌主播 董宇辉直播频道开播，GMV破亿，粉丝数破千万规模，成绩斐然，或成为公司又一增长点。看好公司 多主播，多平台直播，自营产品优先发展的思路。 ...

Core Insights - The 2023 live-streaming industry has seen significant controversies, highlighting the dual nature of traffic as both a boon and a bane for streamers [1] - Major incidents include false advertising claims against popular streamers, leading to fines and reputational damage [3][6] - The relationship between streamers and consumers is increasingly strained, with instances of arrogance from top streamers leading to backlash [8][9] Group 1: Industry Trends - The live-streaming sector has attracted numerous individuals aiming to become successful streamers, driven by the success stories of figures like "Crazy Little Yang" and "Xin Ba" [1] - The prevalence of false advertising has become a common issue, with multiple cases reported in 2023, indicating systemic problems within the industry [3][6] - The industry is evolving, with brands increasingly establishing their own live-streaming channels, reducing reliance on individual streamers [12] Group 2: Legal and Regulatory Environment - The live-streaming industry is facing heightened scrutiny and regulatory measures, focusing on advertising compliance and product quality [13] - Legal actions have been taken against streamers for false advertising, reflecting a growing emphasis on accountability within the sector [3][13] - Companies are encouraged to implement robust selection processes and training for streamers to enhance compliance awareness [13] Group 3: Consumer Relationships - The disconnect between streamers and their audience has been highlighted, with top streamers sometimes displaying a sense of superiority that alienates consumers [8][9] - Instances of streamers responding negatively to consumer feedback have led to significant backlash, resulting in loss of followers and brand trust [8][9] - The initial appeal of live-streaming as a direct consumer engagement tool is diminishing, necessitating a reevaluation of strategies to maintain consumer trust [12]

Financial Performance - Total revenue for the six months ended November 30, 2023, was RMB 2,795,046, representing a 34.4% increase from RMB 2,080,073 in the same period of 2022[8]. - Profit before tax decreased by 49.9% to RMB 378,128 from RMB 755,294 year-on-year[8]. - Net profit for the period was RMB 249,191, down 57.4% compared to RMB 585,293 in the previous year[8]. - Basic earnings per share decreased by 56.9% to RMB 0.25 from RMB 0.58[8]. - Adjusted profit for the period was RMB 508,500, a decrease of 15.4% from RMB 600,995[8]. - Total net revenue increased by 34.4% from RMB 2.08 billion to RMB 2.8 billion for the six months ended November 30, 2023[18]. - Revenue from self-operated products and live e-commerce grew by 36.6% from RMB 1.77 billion to RMB 2.41 billion during the same period[18]. - Adjusted net profit for the reporting period was RMB 508.5 million, compared to RMB 601.0 million in the first half of the 2023 fiscal year[18]. - Gross profit increased by 11.4% from RMB 982.5 million to RMB 1.1 billion, while gross margin decreased from 47.2% to 39.1%[40]. - The net profit decreased from RMB 5,853 million to RMB 2,492 million for the six months ended November 30, 2023[53]. - The company reported a total profit of RMB 249,191,000 for the six months ended November 30, 2023, compared to RMB 585,293,000 for the same period in 2022, reflecting a decline of 57.5%[165]. Revenue Sources - Gross Merchandise Value (GMV) reached RMB 5.7 billion, up from RMB 4.8 billion in the previous year[15]. - Revenue from online education services for students was RMB 365,742 thousand, up from RMB 295,103 thousand, indicating a growth of 23.8%[148]. - The university education segment's revenue increased by 23.9% from RMB 295.1 million to RMB 365.7 million, despite a decrease in paid student numbers from 315,000 to 225,000[38]. - Revenue from institutional clients decreased by 6.2% from RMB 19.2 million to RMB 18.0 million due to business adjustments in this segment[39]. - Revenue from self-operated products and live e-commerce customers reached RMB 2,411,323 thousand, up from RMB 1,765,803 thousand, reflecting a growth of 36.5%[148]. - The majority of GMV came from Douyin, with a total of 59.6 million paid orders for third-party and self-operated products during the same period[25]. Operational Changes - The company continues to focus on enhancing its live e-commerce platform and expanding its product offerings, including self-operated agricultural products[11]. - The company aims to promote high-quality products and improve supply chain efficiency to contribute to rural revitalization in China[11]. - The company is focused on becoming a pure self-operated and live e-commerce operator following the sale of its education business, aiming to consolidate resources for further growth[26]. - The company plans to enhance supply chain management and expand product categories to meet diverse consumer needs[31]. - Future strategies include developing high-cost performance products and expanding the SKU range to adapt to conservative market trends[30]. - The company aims to improve user experience through new technology development and better quality control from raw materials to finished products[32]. - The company will implement price insurance for both self-operated and third-party products to enhance customer service experience[33]. Expenses and Costs - The total revenue cost rose by 55.0% from RMB 1.1 billion to RMB 1.7 billion, primarily due to increased inventory and transportation costs associated with business growth[40]. - Sales and marketing expenses surged by 145.6% from RMB 2,278 million to RMB 5,595 million, mainly due to increased employee costs for self-operated products and live streaming business operations[46]. - Research and development expenses increased by 56.5% from RMB 483 million to RMB 755 million, driven by investments in internet technology systems and applications for proprietary brands and live e-commerce[49]. - Administrative expenses rose by 129.6% from RMB 623 million to RMB 1,429 million, primarily due to increased share-based compensation expenses[50]. - The total revenue cost for the university education segment increased by 5.4% from RMB 776 million for the six months ended November 30, 2022, to RMB 818 million for the six months ended November 30, 2023[43]. Shareholder Information - Major shareholder New Oriental holds 557,160,500 shares, representing approximately 54.89% of the company's equity as of November 30, 2023[81]. - The ownership structure includes significant stakes held by key executives, with Yu Minhong holding approximately 12.0% of the shares through controlled entities[76]. - The company has adopted three share plans, with 30,000 new shares granted under the 2023 plan, accounting for approximately 0.00% of the company's issued share capital[82]. - The company has a maximum share issuance limit of 10% of the issued shares as of the 2023 plan adoption date, equating to 101,351,871 shares[95]. - The company did not declare an interim dividend for the reporting period, consistent with the previous year[117]. Corporate Governance - The company has established an audit committee to oversee financial reporting and internal control systems[112]. - The company plans to continue monitoring and reviewing its corporate governance practices[110]. - The company has complied with all applicable code provisions of the corporate governance code during the reporting period[109]. Cash and Assets - As of November 30, 2023, the company's cash and cash equivalents amounted to RMB 1.3 billion, up from RMB 1.2 billion and RMB 793.7 million on May 31, 2023, and November 30, 2022, respectively[58]. - The company reported a cash and cash equivalents balance of RMB 1,345,039 as of November 30, 2023, compared to RMB 1,165,137 at the end of the previous reporting period[133]. - Total assets amounted to RMB 4,358,941, an increase from RMB 3,436,916 as of May 31, 2023[133]. - Inventory increased significantly to RMB 359,754,000 as of November 30, 2023, compared to RMB 140,952,000 as of May 31, 2023, an increase of 155.5%[173]. Employee Information - Total employee compensation expenses for the six months ended November 30, 2023, amounted to RMB 624.8 million, representing a year-on-year increase of 167.7% from RMB 233.4 million in the same period of 2022[65]. - The total number of full-time employees increased to 1,785 as of November 30, 2023, compared to 1,260 a year earlier, while part-time employees rose to 720 from 410[65]. Future Plans - The company plans to continue expanding its live e-commerce and online education services to enhance revenue growth and market presence[140].

智通财经APP获悉，东方甄选(01797)午后涨超6%，截至发稿，涨5.57%，报24.65港元，成交额7974.62万港元。 华安证券指出，东方甄选持续扩宽产品种类，自营产品的数量为264个，FY24H1公司实现GMV 57亿元；同时，公司积极探索出海路线，2024年1月公司发布TikTok海外店铺运营等岗位，有望打开长期成长空间。此外，公司拟将旗下教育业务以15亿元人民币对价出售给控股股东新东方。出售完成后，东方甄选不再营运在线教育业务，将成为纯粹的自营及直播电商运营商，在线线下融合教育由母公司专注运营。出售教育业务后，东方甄选在手现金将进一步充实，为公司电商业务的持续增长提供坚实的资金保障。 中信建投表示，展望后续，24财年上半年，公司加大自营品促销力度且董宇辉旗下的“与辉同行”抖音直播间从24年1月9日单独直播以来带货表现突出，有望支撑营收增长；预计12月开始的自营品折扣力度加大或将拖累24财年第三季度利润率，“与辉同行”抖音直播间有望贡献业绩增量；中长期看，围绕流量和产品双引擎发力，APP会员制有望深化自营品战略。 ...

Core Viewpoint - The live e-commerce industry in 2023 has faced significant turmoil, with top streamers experiencing a series of controversies and public backlash, indicating a challenging environment for both platforms and influencers [1][2]. Group 1: Issues Faced by Top Streamers - Li Jiaqi, a leading figure in live commerce, faced severe backlash after controversial comments during a live stream, leading to a significant decline in his reputation [3][5]. - Other prominent streamers like Xinba and Crazy Little Yang have also encountered controversies, including negative remarks and product quality issues, contributing to a tumultuous year for the industry [1][12]. - Xinba has been involved in multiple scandals, including being banned from Douyin and making controversial statements about pre-packaged food for children, which have drawn public ire [2][12]. Group 2: Industry Dynamics and Conflicts - The live commerce sector is characterized by complex relationships and conflicts among top streamers, platforms, and brands, making it difficult for the industry to stabilize [17][25]. - Platforms are wary of the dominance of super streamers, as it undermines their control and bargaining power, leading to a push for a more balanced ecosystem [19][25]. - Despite the push for "de-headification," the industry continues to see the emergence of new conflicts, with brands often caught in the middle of disputes between streamers and platforms [25][26]. Group 3: Financial Performance and Market Trends - In 2023, top streamers like Crazy Little Yang and Xinba reported annual incomes of 3.2123 billion and 3.0553 billion yuan respectively, highlighting the lucrative nature of the industry despite ongoing controversies [26][27]. - The emergence of new influencers and the potential for international expansion, particularly into markets like TikTok, suggests that the competition will remain fierce in the coming years [28][32]. - The industry is witnessing a shift towards marketing and advertising revenue, with some companies focusing on training for overseas markets rather than direct sales [32].

Group 1: Movie Promotion and Reception - The movie "Red Carpet Mr." directed by Ning Hao and starring Andy Lau will be released on February 10, coinciding with the Lunar New Year [1] - During a live stream, 300,000 tickets for the movie were sold out within 10 minutes, indicating strong demand [1] - The film portrays the absurdities of the entertainment industry through the story of a Hong Kong superstar trying to win an award [1] Group 2: Controversy Over Plagiarism - On the same day, a controversy arose regarding the "With Hui Together" live stream being accused of large-scale plagiarism by a popular Douyin influencer [2] - The influencer claimed that the content presented by the live stream host was similar to their own previous work, leading to significant public discussion [2] - The host responded by stating that any similarities were unintentional and invited communication regarding the issue [2] Group 3: Insights on Short Video Impact - During the live stream, discussions included the impact of short videos on public discourse, highlighting issues like misinformation and the overwhelming noise in online discussions [3] - This commentary was perceived as a subtle response to the plagiarism allegations, emphasizing the challenges of maintaining factual integrity in the digital age [3] Group 4: Financial Developments of Oriental Selection - On January 31, Oriental Selection and New Oriental announced a commitment to purchase a total of HKD 700 million worth of shares in Oriental Selection [4] - New Oriental will buy shares worth HKD 660 million, while founder Yu Minhong will purchase HKD 40 million worth of shares, enhancing liquidity for existing shareholders [4] - The board believes that the current share price does not accurately reflect the company's value, especially after a recent sale of its education business for RMB 1.5 billion [4] Group 5: Stock Performance - As of January 31, Oriental Selection's stock closed at HKD 23 per share, marking a 6.24% increase, and opened higher the following day [5] - Despite the recent recovery, the stock has declined nearly two-thirds from its peak of HKD 65 per share a year ago [5]

Financial Performance - Total revenue for the six months ended November 30, 2023, was RMB 2,795,046, representing a 34.4% increase compared to RMB 2,080,073 for the same period in 2022[5]. - Profit before tax decreased by 49.9% to RMB 378,128 from RMB 755,294 year-on-year[5]. - The company reported a net profit of RMB 249,191, down 57.4% from RMB 585,293 in the previous year[5]. - The adjusted profit for the period was RMB 508,500, a decrease of 15.4% from RMB 600,995 in the same period last year[5]. - Total revenue increased by 34.4% from RMB 2.08 billion for the six months ended November 30, 2022, to RMB 2.8 billion for the six months ended November 30, 2023[26]. - Net profit decreased from RMB 585.3 million for the six months ended November 30, 2022, to RMB 249.2 million for the six months ended November 30, 2023[40]. - Basic earnings per share decreased to RMB 0.25 from RMB 0.58, indicating a decline of 56.9%[1]. Revenue Breakdown - Revenue from self-operated products and live e-commerce rose by 36.6% from RMB 1.77 billion to RMB 2.41 billion during the same period[11]. - University education segment revenue rose by 23.9% from RMB 295.1 million to RMB 365.7 million, despite a decrease in paid student numbers from 315,000 to 225,000[28]. - Revenue from institutional clients decreased by 6.2% from RMB 19.2 million to RMB 18.0 million due to business adjustments[29]. - Revenue from self-operated products and live e-commerce customers was RMB 2,411,323 thousand, up from RMB 1,765,803 thousand, showing a growth of 36.5%[83]. Cost and Expenses - Total revenue cost increased by 55.0% from RMB 1.1 billion to RMB 1.7 billion, primarily due to increased inventory and transportation costs[30]. - Gross profit rose by 11.4% from RMB 982.5 million to RMB 1.1 billion, while gross margin decreased from 47.2% to 39.1%[30]. - Sales and marketing expenses surged by 145.6% from RMB 227.8 million to RMB 559.5 million, driven by increased staffing costs for self-operated products and live e-commerce operations[35]. - R&D expenses increased by 56.5% from RMB 48.3 million for the six months ended November 30, 2022, to RMB 75.5 million for the six months ended November 30, 2023, primarily due to investments in internet technology systems and applications for proprietary brands and live e-commerce[36]. - Administrative expenses rose by 129.6% from RMB 62.3 million for the six months ended November 30, 2022, to RMB 142.9 million for the six months ended November 30, 2023, mainly due to increased share-based payment expenses[37]. Operational Highlights - The Gross Merchandise Volume (GMV) reached RMB 5.7 billion, up from RMB 4.8 billion year-on-year[8]. - The number of followers on Douyin increased to 45.8 million, compared to 35.2 million in the previous year[8]. - The number of paid orders on Douyin decreased to 59.6 million from 70.2 million year-on-year[8]. - The average spending per paid student in the university education segment increased from RMB 1,058 to RMB 1,944, despite a decrease in the number of paid students from 315,000 to 225,000[9]. - The company continues to focus on expanding its live e-commerce platform and enhancing customer experience through innovative live streaming activities[6]. Strategic Initiatives - The company announced plans to sell its education business, which is expected to be approved at a special shareholder meeting on January 18, 2024[9]. - The company announced plans to sell its entire education business to its parent company, New Oriental, to focus on self-operated and live e-commerce operations[18]. - The company plans to enhance its supply chain management and expand its product offerings, with over 264 self-operated products currently available[17]. - The company has established a membership program to improve customer service and increase customer retention[15]. - The company is focusing on a multi-platform strategy to broaden its user base and enhance brand awareness[19]. Financial Position - Cash and cash equivalents amounted to RMB 1.3 billion as of November 30, 2023, up from RMB 793.7 million as of November 30, 2022[45]. - The debt-to-asset ratio was 30.3% as of November 30, 2023, compared to 27.8% as of November 30, 2022[46]. - Total current assets as of November 30, 2023, were RMB 4,358,941 thousand, compared to RMB 3,436,916 thousand as of May 31, 2023, indicating a growth of 26.8%[75]. - Total equity increased to RMB 3,305,059 thousand from RMB 2,803,808 thousand, reflecting a growth of 17.8%[76]. - The company reported a significant increase in inventory, which rose to RMB 359,754 thousand from RMB 140,952 thousand, a growth of 155.5%[75]. Governance and Compliance - The audit committee reviewed the unaudited condensed consolidated financial statements for the six months ended November 30, 2023[60]. - The company has complied with all applicable corporate governance code provisions during the reporting period[58]. - The company has established a nomination committee and a remuneration committee in addition to the audit committee[61].