FAST NEWS: New Oriental boosts East Buy stake for fourth time this year

The Latest: New Oriental (EDU.US; 9901.HK) purchased 1 million shares of its East Buy Holding Ltd. (1797.HK) subsidiary for an average price of HK$17.39 on April 24, according to a new Hong Kong Stock Exchange filing.

Looking Up: With the latest purchase, New Oriental has now boosted its stake in East Buy four times this year, increasing its holding from 54.98% to 57.04%.

Take Note: New Oriental’s average share price for the latest purchase was HK$17.39, which means it has already lost 2.1% on the investment, based on East Buy’s latest price midway through the Friday trading day.

Digging Deeper: Since ceasing its K-12 online tutoring business last year following a government crackdown, East Buy has transformed from an education company into a livestream e-commerce platform. To more clearly delineate its business lines, the company sold its residual tutoring operations to its education-focused parent, New Oriental, and has focused on selling private-label products and livestreaming. The company’s average daily gross merchandise value (GMV) and daily volume of viewers showed signs of decline last year, prompting it to try to move away from its reliance on short video app Douyin and shift to the Taobao e-commerce platform and live broadcasts on its own app.

Market Reaction: East Buy shares rose on Friday to close up 6.6% at HK$17.02 by the midday break. They now trade at the lower end of their 52-week range

Translation by A. Au

To subscribe to Bamboo Works weekly free newsletter, click here