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(Hsu Shumin / tr. by Phil Newell)
On the day of the announcement of the third quarter report of New Oriental 2024, Yu Minhong was driving around Xizang.
Starting from April 10, he began a 20-day self-driving trip to Xizang, following the 317 Sichuan-Tibet North Line, the 219 New Tibet Line and the 219 Inspection Line.
This trip is not simply to enjoy the scenery of Xizang, the highlight is to promote the brand of literature and travel of New Oriental.
On the way, Yu Minhong live broadcast, interviews, selling goods, not a single piece of work was left behind. The live broadcast is even stronger than ever.
Since last year, the New Oriental layout of cultural travel business, the degree of attention can be seen. Yu Minhong even shouted the slogan, "New Oriental Literature Travel will be listed separately, becoming the third listed company under the New Oriental Group."
However, back to the third quarterly report of the 2024 fiscal year (as of February 29, 2024), the old line of New Oriental Education is growing rapidly, and the specific revenue level of the literature and travel business has not yet been seen.
At present, New Oriental has been faced with the problem of cost growth brought about by Oriental selection and self-management, and its profit margin is on the decline.
The input cost of literature and travel business is not low, and it is also faced with the problem of long return cycle.
Capital markets are not satisfied with New Oriental's performance, which fell nearly 14% as of April 25, when U. S. stocks closed. On the same day, the decline in Oriental selection expanded by more than 10% to 15%.Playtoearncryptogamesonios.7 Hong Kong dollars hit its lowest level since July 2022.
01
Enter the Bureau of Culture Travel
"the chairman asked for 20 days off to drive Xizang" and "drive 3 million luxury cars". Yu Minhong's self-driving trip to Xizang earned enough topic.
I'm afraid it wasn't on a whim. Some netizens commented that it is no coincidence that Yu Minhong set out to travel Xizang. In fact, it is to shape the brand of literature and travel for New Oriental and continue to operate the enterprise by means of flow.
"self-driving trip becomes a live trip", which continues to be discussed on the Internet. Yu Minhong started live broadcasts, interviews, and even sold goods with the theme of "Yu your colleague-walking into Xizang".
And compared with the past, Yu Minhong's live broadcast of Xizang's self-driving tour is stronger. For example, from April 13 to 15, Yu Minhong conducted 10 live broadcasts in Qamdo, promoted nearly 20 places of interest and received more than 200 million exposures.
For many days, Yu Minhong updated the video on social media about the scenery around Xizang.
With a self-driving tour of Xizang as the focus, Yu Minhong tried to win the brand awareness of New Oriental Literature Travel.
It can also be seen that Yu Minhong attaches great importance to the New Oriental Literature Brigade.
As early as last February, New East convenience has already started to launch the "Oriental selection to see the World" Douyin account. Subsequently, cultural travel companies were set up all over the country.
This year, New Oriental actively carried out strategic cooperation with local governments and officially launched the brand "New Oriental Literature Brigade".
According to reports, the New Oriental Culture and Travel Group will provide cultural travel products, such as cultural travel, parent-child travel, domestic studies, international study, and camp education, for adults, teenagers, and parent-child groups. In the future, it will also have a layout in cultural and creative IP, hotel groups, cooperation in scenic spots, rural revitalization, and recreation and accommodation.
Yu Minhong has high hopes for the New Oriental Literature and Culture Brigade. Some time ago, in an interview with Phoenix News, Yu Minhong pointed out that "New Oriental Literature Travel will be listed separately, becoming the third listed company under the New Oriental Group."
He also mentioned that the cultural brigade has expanded from the department to the group size, and the cultural brigade team has continued to use the original education team, and there is no possibility of loss.
The goal is ambitious and it is not easy to implement.
Before that, New Oriental Literature Travel had been questioned because of its "overpricing". For example, Zhejiang Branch has successively produced dozens of deep tour lines with pricing ranging from 3999 yuan to 5999 yuan.
And New Oriental's earlier development of literature and tourism is clearly aimed at the middle-aged and elderly market, but the market is facing competition from offline low-cost tour groups. For the New Oriental Literature Brigade on the main attack line, it is difficult to get through the upstream and downstream and fall off the line.
New Oriental Literature Brigade is expanding its plate.
According to Tianyan, Beijing New Oriental Literature and Tourism was founded in July 2023, with a registered capital of 1 billion yuan, 100% owned by New Oriental Education and Technology Group, chairman of Yu Minhong, and Yang Zhihui as director and manager.
The company invests in two enterprises, namely New Oriental (Jiangsu) Culture Travel Investment and Beijing New Oriental Walkade International Education Travel. Among them, Beijing New Oriental Walkade International Education Travel has 62 foreign companies, distributed in more than 20 provinces, including Henan, Fujian, Jiangsu, Chongqing, Hebei and so on.
The latest one is Changdu New Oriental Culture and Media Co., Ltd., which was established on April 25, 2024, just after Yu Minhong's trip to Changdu.
On the other hand, the new headquarters of the New Oriental Culture Travel Group was officially unveiled on April 26.
02
A decline in profit margin
In February this year, at the "New Oriental New Literature Brigade Ecological Industry Development Conference", the management revealed that the New Oriental Literature Brigade achieved an annual income of 330 million yuan in 2023.
But New Oriental Literature Brigade may invest more than income.
New Oriental, as a novice, mainly depends on suppliers, and the business cost brought by the use of supply chain is higher.
As Yu Minhong said to the outside world, "the industry is very special and the cost is high." If consumers take into account the ratio of performance to price, it is impossible to buy high-value services, so we do cultural travel is to do middle-and high-end, "
There are many people in the culture and tourism industry, but very few of them are really successful. High investment and long return cycle have caused many enterprises to retreat.
And New Oriental, which is eager to find the third way, is also crossing the river by feeling the stones.
At present, the New Oriental Literature Brigade has not made much contribution to its performance.
The specific revenue of the travel business has not been disclosed in the third quarterly report of fiscal year 2024.
The key to its growth is still in the old line of New Oriental-education. In the third quarter of fiscal year 2024, New Oriental had net revenue of $1.207 billion, up 60.1 per cent from a year earlier, while net profit attributable to shareholders was $87.2 million, up 6.8 per cent from a year earlier.
In the financial report, New Oriental attributed the growth to the increase in revenue driven by the company's new educational business, Oriental selection of proprietary products and live e-commerce business.
In particular, non-disciplinary training, new smart hardware business, and traditional overseas training programs have all achieved growth. Among them, exams abroad increased by 52.6 percent, students studying abroad increased by 25.7 percent, and college examinations increased by 53.2 percent.
"all the new education businesses have achieved remarkable results this quarter, with revenue up 72.7 per cent year-on-year," Mr Yu said. "
Shen Wanhongyuan's research report also focuses on the education business. It maintains the "buy" rating of New Oriental, saying that the market will focus on the growth of the company when there is a high growth in non-disciplinary literacy training in several quarterly reports. as a result, the profit margin pressure brought about by the cost front under capacity expansion will no longer hinder the company's valuation.
But in addition, the performance of New Oriental has shown signs of "increasing income without increasing profits".
New Oriental's gross profit margin fell to 46.6% in the third quarter of fiscal 2024, down 4.4 percentage points from 51% in the same period last year.
The financial report revealed that the operating cost of New Oriental in the third quarter was $640 million, an increase of 74.5% over the same period last year, and these increases have exceeded revenue growth.
In terms of costs, the rise in New Oriental is also more obvious. In the third quarter of fiscal 2024, sales expenses were US $160 million, up 57% year-on-year, and administrative expenses were US $288 million, up 33.6% from the same period last year.
In terms of debt, at the end of the third quarter of 2024, New Oriental's debt was $3.039 billion, compared with $2.288 billion in the same period last year, an increase of 32.82% over the same period last year. At the end of this period, the debt ratio of New Oriental was 42.28%, compared with 37.11% in the same period last year.
02
Behind the "de-glow"
The rapid growth of the old education industry of New Oriental has opened up a new road for cultural brigade, and many people question whether live e-commerce will be ignored again.
In the past two years, the explosive selection of the East has gradually fallen into a "bottleneck period."
And to a certain extent, it has affected the profit level of New Oriental. New Oriental's third quarter of fiscal year 2024 showed that operating costs and expenses were US $1.0939 billion, an increase of 59.1% over the same period last year, mainly due to the increase in costs and expenses related to Oriental's selection of proprietary products and live e-commerce business.
Profit margins have been declining since the Oriental selection increased its proprietary investment. According to the interim report of Oriental selection for fiscal year 2024, its net interest rate has fallen to 9.6 per cent from 27.2 per cent in the middle of 2023.
In the middle of fiscal year 2024, the total revenue of Oriental selection was 2.795 billion yuan, up 34.4% from the same period last year, and the net profit was 249 million yuan, down 57.4% from the same period last year.
After the popularity of Oriental selection in 2022, it fell into Dong Yuhui's "small composition" storm in 2023 and was pushed to the forefront of the wind and waves many times.
The market has also found that Dongfang's selection performance is highly dependent on Dong Yuhui. The influence of Dong Yuhui's personal IP can be seen in the "small composition" storm. At that time, Oriental selection Douyin Live account lost more than one million fans, and Oriental selection share price fell immediately.
After some adjustment, the Oriental selection is eager to "de-Dong Yu Huihua."
Although Yu Minhong set up a personal studio for Dong Yuhui to "go with Hui", the Oriental selection still failed to tear up the "Dong Yuhui label".
The influence of IP, the primary anchor, continues to expand, which is accompanied by risks for New Oriental.
For example, Dong Yuhui's every move will be magnified, and then affect the operation of the enterprise. In February this year, there was an uproar when Dong Yuhui emptied Weibo. Before that, the topic of Dong Yuhui refusing to talk about underwear in the studio was hotly discussed by netizens, and Weibo was read more than 300 million times.
On March 15 this year, the East selected the live broadcast room to sell farmed shrimp as wild shrimp, and Dong Yuhui, the first brother of Douyin, overturned the car with the goods.
As mentioned in the e-commerce article, once the selection team makes mistakes and there are all kinds of problems in the sales process, the anchorman's personal reputation will plummet and be eaten back by the traffic.
With the enhancement of the appeal of the primary anchorman IP, enterprises are facing increased costs and risks, which can not be ignored.
Yu Minhong is also conscious of strengthening his personal IP influence.
Xizang's self-driving trip, Yu Minhong created a lot of momentum. "Yu you go together" and "Yu Hui go together", the two not only complement each other but also compete with each other.
Yu Minhong also wants to prove his ability to carry goods.
No wonder netizens said that maybe when Yu Minhong's Yu starts to walk with you, it will be the real day of "de-Huihua".