1797.HK
East Bui

The livestreaming e-commerce company’s revenue declined and it fell into the red in the first half of its fiscal year after the departure of its key online salesman Dong Yuhui

Key Takeaways:

  • East Buy’s revenue fell over 20% in the six months to November and it swung into the red following the departure of its star online salesman
  • Shares of the company’s parent, New Oriental, dropped 23% last week, weighed down by East Buy’s results and softness in its core education market

  

By Edith Terry

Who knew a migrant-worker-turned-English-teacher-turned-Internet-salesman could do so much harm? When Dong Yuhui left East Buy Holding Ltd. (1797.HK) last July, it seemed like a healthy move. The company’s livestreaming super salesman had sowed chaos at his employer by inflaming his followers against East Buy’s then-CEO Sun Dongxu, who was ultimately fired as a result. In the end, the two sides parted ways after East Buy agreed to pay a substantial sum to Dong and let him leave with his popular show “Time with Yuhui.”

The divorce was painful for East Buy in the huge volume of negative headlines, and the company’s latest financial report released last week shows it was equally painful on its finances. East Buy’s revenue fell 21.8% to 2.2 billion yuan ($303.7 million) in the first half of its fiscal year through last November, while it fell into the red with a loss of 96.8 million yuan.

The revenue decline was a bit milder, down 9.3%, after excluding discontinued operations from East Buy’s former education business in the year-ago period. Still, the decline was a painful reminder of Dong’s departure, since East Buy’s revenue jumped 34% and the company was quite profitable just a year earlier in the six months to November 2023.

Gross merchandise value (GMV) sold over the company’s channels declined from 5.7 billion yuan a year ago to 4.8 billion yuan in the latest six-month period, and the number of paid orders on Douyin, China’s equivalent of TikTok and one of East Buy’s most important platforms, declined from 59.6 million to 50.1 million in the latest six-month period.

One bright spot in the otherwise dismal report was paid memberships on East Buy’s app, which nearly doubled from 123,800 in the six months to November 2023 to 228,300 in the latest reporting period.

While Dong’s departure was well known, making big headlines at the time, investors still reacted negatively after the seeing the latest report. In the three trading days after the announcement, East Buy’s shares dropped about 4%, bringing its declines over the last year to 30%. Its parent, education company New Oriental (EDU.US; 9901.HK), was doing even worse after it released its own latest financial report on the same day as East Buy’s.

To make the point that it would have performed better without East Buy, New Oriental presented its latest results both with and without East Buy’s. With the East Buy business included, its revenues increased by 19.4% to $1.04 billion; but without East Buy, revenue rose 31.3% to $894 million.

Though its results were far better than its e-commerce offspring’s, New Oriental’s shares tumbled 23% the day of its announcement and have remained at that level since then.

Macquarie slashed its outlook on New Oriental from “outperform” to “underperform” and reduced its price target by a hefty 44% to HK$34.30, based in part on softer projections for its education business and overseas revenue. JPMorgan downgraded the company’s shares from “overweight” to “neutral” while CLSA lowered its revenue and earnings forecasts for the fiscal year but maintained an “outperform” rating.

Education concerns

The big concerns at New Oriental were largely over softness for the company’s core education business. By comparison, concerns were less pronounced at East Buy, whose loss of Dong was a one-time event and whose e-commerce business looked more stable in the current environment.

CICC actually raised its price target for East Buy by 74% to HK$20 after the latest financial report’s release and said it was optimistic about the company’s prospects. Huatai Securities raised its target price by 48% to HK$17.41 and said it saw a “steady trend of quarterly recovery.” Six out of 12 analysts canvassed by Yahoo Finance now rate East Buy a “buy”, though the rest are still cautious on the stock.

While East Buy’s business appears to have stabilized, lingering market jitters still come from last year’s tussle with Dong Yuhui, which spotlighted the dangers of too much reliance on key influencers in the internet age. A former English teacher, Dong rose to fame in 2022 for quoting poetry and using his English-language skills to sell products in his online shows. His influence grew so much that after Dong got in a spat with East Buy’s CEO, the company fired the CEO in a bid to placate its celebrity salesman.

In July last year, Dong left the company after reaching an agreement to acquire his popular program for 76.6 million yuan.

New Oriental Chairman Yu Minhong was quoted in a statement saying he would “make arrangements” for a payment to Dong of undistributed profits from his show as part of the package that would essentially give him his livestreaming program for free, though without East Buy’s logistics and supply chain support. The result on East Buy’s financial report was an 180.7% year-on-year surge in administrative costs to 391.9 million yuan in the six months to last November from the year-ago period, the company said in its latest earnings report.

East Buy had ample liquidity to cover the payments to Dong. It had 1.7 billion yuan in cash at the end of last November, down from 2.3 billion yuan six months earlier before the settlement. It also had 1.4 billion yuan in term deposits and financial assets of 1.7 billion yuan as of Nov. 30, showing its financial position looks quite solid as it heads into a future without its former cash cow.

Meantime, Dong seems to be doing just fine without his former employer. He was first on the 2024 China Internet Anchor Net Income ranking with a net income of 2.8 billion yuan, beating other big-name influencers like Li Jiaqi and Crazy Little Yang by nearly 1 billion yuan.

In the year to January 2025, “Time with Yuhui” sold over 10.2 billion yuan worth of merchandise on Douyin, equal to 20% of the GMV of Dong’s former employer, according to statistics from Xindou, a Douyin data tool. Dong had 27.32 million followers as of January 2025, compared to 29.03 million for East Buy’s channel on Douyin.

In October 2024, Dong said that his company had a staff of 300, far fewer than East Buy’s 1,733, and he was no longer simply a solo operation. How long Dong can sustain his momentum is an open question, though complaints have already surfaced about product fraud and food safety issues in his operations. But such questions, and other issues involving a superstar internet host with a big ego, are no longer any concern for East Buy.

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