{"text":[[{"start":7.08,"text":"This article only represents the author's own views."}],[{"start":11.780000000000001,"text":"Just when the price war in China’s emerging instant commerce sector looked set to ease, yet another major player looks set to enter the space. That new challenge is coming from East Buy Holding Ltd. (1797.HK), which disclosed the initiative in its latest financial report on Wednesday for the first half of its fiscal year through last November."}],[{"start":37.22,"text":"The plan would throw East Buy into the thick of an ongoing turf battle between industry giants Alibaba (BABA.US; 9988.HK), JD.com (JD.US; 9618.HK) and Meituan (3690.HK) in the business of delivering goods to customers within as little as an hour of placing orders online."}],[{"start":67.1,"text":"While East Buy may not be as familiar to some as the other internet giants, the company has a strong pedigree as the former online arm of New Oriental Education (EDU.US; 9901.HK), which pioneered a Chinese after-school tutoring sector that became a huge money-spinning machine before being snuffed out in a government clampdown in 2021. While New Oriental shifted to education areas still allowed after the crackdown, such as study abroad consulting services, East Buy charted a completely new direction into e-commerce."}],[{"start":106.78,"text":"Both companies are the brainchildren of Yu Minhong, one of China’s most overlooked superstar entrepreneurs, who personally took the microphone and went before the cameras as one of East Buy’s first livestreaming hosts when it made its e-commerce shift."}],[{"start":124.18,"text":"The instant commerce initiative is the latest step in a long march for East Buy as it transforms into an online version of the hugely successful Costco (COST.US) and Walmart’s (WMT.US) Sam’s Club, which rely on private label products sold through a membership system."}],[{"start":142.13,"text":"East Buy is currently building up same-day delivery capabilities in its top 10 cities by order volumes, it disclosed in its latest financial report for the six months through last November, the first half of its fiscal year. That means customers in those cities who place orders before 10:30 a.m. can expect same-day delivery, while orders placed after that through 11 p.m. can receive their products by 3 p.m. the next day."}],[{"start":170.07999999999998,"text":"At the same time, the company said it plans to trial instant retail fulfillment capabilities in the top-tier cities of Beijing, Shanghai and Guangzhou. It added that it is currently building up a system of massive warehouses to underpin the instant commerce drive, including two commissioned last year and two more currently under construction. East Buy also plans to leverage New Oriental’s huge network of brick-and-mortar learning centers across China, and said it has deployed more than 40 vending machines nationwide and already achieved profitability from that initiative in some cities."}],[{"start":210.01999999999998,"text":"“We plan to gradually roll out this business, and will further expand its coverage in different scenarios including office buildings, residential communities and learning centers, so as to complement our offline exposure,” the company said."}],[{"start":225.95,"text":"East Buy didn’t specify if it would use its own drivers to deliver its instant commerce goods, or whether it might use one of the other companies. Streets of major Chinese cities have become increasingly congested with such deliverymen, including drivers from Meituan, JD.com, Alibaba’s Taobao and online grocer Dingdong (DDL.US). Adding to the congestion are another cohort of deliverymen from about a half dozen major logistics companies."}],[{"start":258.78999999999996,"text":"Investors applaud"}],[{"start":261.14,"text":"Investors were quite excited about East Buy’s latest report, which also included a return to profitability for the six-month period. The stock shot up 14.2% on Thursday after the report’s release, and rose another 8% in the Friday morning session. The shares are up about 50% over the last 52 weeks, and now trade at a rich price-to-sales (P/S) ratio of 5.4, roughly double the figure for Alibaba, and nearly quadruple the 1.52 for Costco."}],[{"start":295.07,"text":"The company certainly deserves kudos for coming back from such a devastating blow after the education crackdown of 2021. It also survived another major setback after it became embroiled in a major clash with its star livestreaming host, Dong Yuhui, who left the company in 2024, taking a big chunk of East Buy’s business with him."}],[{"start":317.9,"text":"Since then, Yu Minhong has learned the lessons of relying too heavily on individual livestreaming hosts, which are all the rage on China’s e-commerce scene right now. He has also learned a lesson from Sam’s Club and Costco in China, which have thrived even as many other brick-and-mortar supermarkets and other retailers are struggling."}],[{"start":338.92999999999995,"text":"Despite all the hype, the company’s actual financials were a bit less impressive. Its revenue for the six months to November rose just 5.7% year-on-year to 2.31 billion yuan ($332 million), though the rise would have been 17% excluding year-ago contributions from Dong Yuhui’s program."}],[{"start":363.71999999999997,"text":"The company also pointed out that growth for its private label business, which it sees as its primary focus going forward, rose 18.1% in the latest six-month period to 2 billion yuan from 1.7 billion yuan a year earlier. East Buy said that business provided about 53% of the company’s gross merchandise value (GMV) in the six months, up from around 40% in June, the latter figure based on data from Feigua."}],[{"start":396.10999999999996,"text":"Most of the company’s other metrics tell a story of improving profitability as it refines and scales up its private label business, and also lowers its costs as it moves past the Dong Yuhui conflict. All of that is reflected in its gross margin, which rose to 36.4% in the latest six-month period from 33.6% a year earlier. Those factors helped the company return to the black with a profit of 239 million yuan for the latest period, reversing a 97 million yuan loss a year earlier."}],[{"start":432.34,"text":"East Buy’s general direction looks quite positive, though it’s heading into tough terrain with its plan to challenge such giants as Alibaba, JD.com and Meituan in instant commerce. The stock itself also looks a bit overvalued on the hype about the company’s comeback and Yu Minhong’s star power, which could limit its near-term upside potential."}],[{"start":464.36999999999995,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1769762244_1330.mp3"}