The latest: Koolearn Technology Holding Ltd. (1797.HK) announced on Friday its revenue dropped 36.7% to 899 million yuan ($130 million) in its fiscal year ended May 31, with its net loss narrowing 67.8% to 534 million yuan.
Looking up: In the wake of a government crackdown, the company terminated its K-12 education-related business at the end of last year and focused on providing college test and overseas test preparation courses. Revenue from this business decreased by 5.7% year-over-year to 518 million yuan, a relatively modest decline compared to the much steeper fall in the company’s K-12 and pre-school education business.
Take Note: Koolearn’s livestreaming e-commerce segment, which was launched in December last year, only recorded revenue of approximately 24.6 million during the reporting period, accounting for less than 3% of its overall revenue.
Digging Deeper: Since ceasing its K-12 online training business last year following a government crackdown, Koolearn, the online education arm of New Oriental Education (EDU.US; 9901.HK), has been trying to transform to other businesses to survive. Under the leadership of Chairman Yu Minhong, the company opened a livestreaming e-commerce business to promote agricultural products in December, but initial sales were disappointing. That business has performed better with the company’s June launch of unique bilingual sales pitches by its anchors, many of them former teachers, drawing the attention of netizens. The number of fans of its platform surpassed 20 million by the end of June, with rapidly rising sales expected to generate significant revenue in Koolearn’s current fiscal year.
Market Reaction: Koolearn shares surged 15.5% in early trade on Monday, but then gave back most of that before closing up 5.3% at HK$22.80 at the midday break. The stock currently trades near the high end of its 52-week range.
Translation by Jony Ho
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