New Oriental's "Returning Home Plan" Marks Strategic Shift Towards East Buy ...

BEIJING, February 27 (TMTPOST)—In a bid to rejuvenate its workforce and foster the growth of its emerging businesses, New Oriental recently reintroduced the "Returning Home Plan." This initiative, which aims to rehire former employees, particularly those who left the company during the pandemic, has garnered attention amid speculations and misinterpretations.

The phrase "Long time no see, missed you much, welcome back home" echoes across New Oriental's official website, where the company extends a warm welcome to its past employees through the "Returning Home Plan." Earlier, star live-streamer Dong Yuhui, the founder, expressed his anticipation of their return during a livestreaming session, saying, "When New Oriental is doing well, I really want them (former employees) to come back."

On February 19, the Xi'an branch of New Oriental took to WeChat to announce a recruitment drive, urging those who had left during the pandemic to rejoin the company. This kickstarted a new phase of the "Returning Home Plan," with an expanded focus on talent acquisition across various roles, including teaching positions in quality education, junior and senior high school subjects. Notably, the plan has also included positions in cultural tourism, such as cultural tourism anchoring, live streaming operations, consulting, short video operations, and video directing.

As the news circulated, it fueled speculations about a potential resurgence in the extracurricular training sector, driven by the recent release of the draft regulations on extracurricular tutorial management by the Ministry of Education. Online discussions hinted at the possibility of a renewed era for educational institutions.

In response to these rumors, New Oriental released an official statement on Monday, clarifying the purpose of the "Returning Home Plan" and dispelling misconceptions. The company emphasized that the plan, first introduced in August 2022, primarily caters to the needs of emerging businesses like East Buy and New Oriental Cultural Tourism. Importantly, it is unrelated to the recently proposed draft regulations on extracurricular training.

The unveiling of the plan aligns with New Oriental's ongoing transformation efforts. In December 2021, the company launched the live streaming e-commerce platform "East Buy." By June 2022, Dong gained popularity as East Buy successfully ventured into live commerce and self-operated products. The subsequent initiation of the "Returning Home Plan" appears to complement these strategic moves.

As East Buy's live streaming business flourished, the team witnessed an increase in new customers and repeat rates, leading to a substantial expansion. According to East Buy's 2024 mid-year report, as of November 30, 2023, the total number of personnel in the self-operated products and live e-commerce team reached 1,587.

Furthermore, since the fourth quarter of 2023, New Oriental has been actively recruiting in multiple cities, including Beijing, Shanghai, and Suzhou, for various roles spanning product development, cultural route design, cultural tourism anchoring, and content editing. The company has also expanded its business footprint by establishing subsidiaries under New Oriental Cultural Tourism in Guizhou, Beijing, Tianjin, Chongqing, Xi'an, Sichuan, among other locations.

Stocks in the education sector experienced a fluctuating yet upward trajectory on Monday, with the Wind Education Index (886040.WI) reporting a 3.06% rise. Notably, since February 6, the education index has seen nine consecutive trading days of gains, accumulating a total increase of over 26% since the beginning of the year.

Analysts attribute this positive trend to the release of the draft regulations on extracurricular training. Sub-indices within the education sector, including online education, K-12 education, and vocational education, all showed continuous upward movement.

On February 8, the Ministry of Education released the "Draft Regulations on the Administration of Extracurricular Training Institutions" for public consultation. The draft covers various aspects, such as the implementation of subject-based extracurricular training for compulsory education stage students, which should be subject to government-guided pricing. The specific fee management methods will be formulated by the provincial government. Fees for other extracurricular training programs should be registered with the authority.

In response to the release of this draft, China Galaxy Securities said that the regulatory framework for China's education and training industry is relatively complete. The boundaries and framework for the standardized development of the industry are clear, providing high visibility into policy stability. This is expected to dispel concerns in the market regarding policy risks in the education sector and potentially increase the sector's valuation.

Considering that the new regulations no longer include high school within the regulatory scope and categorize training into subject and non-subject areas, the institution believes that education companies focusing on K9 character education and high school-level training will benefit significantly from the current strong demand and optimized supply trends in the industry.

Guosen Securities believes that this draft combines two years of grassroots practical experience and represents the first administrative regulation specifically for extracurricular training. It continues the "double reduction" policy aimed at reducing the burden of subject-based training for compulsory education.

The regulatory intensity remains relatively consistent and does not show signs of tightening. Additionally, the detailed management regulations for different categories encourage the transformation efforts of leading education and training institutions, providing a clear direction for the industry's future development.

Wanlian Securities also pointed out in their research report that the publication of the draft further defines and clarifies the management of extracurricular training. The increased clarity in industry regulations promotes compliance, and the crackdown on illegal activities becomes more apparent. The education sector is expected to benefit from favorable policies, making it worthwhile to continuously monitor high-quality leading companies.

Regarding specific investment directions, Huaxi Securities' research report indicates that the education sector remains a relatively certain investment direction. Both vocational education and technology-driven education are considered favorable prospects in the medium to long term.