Tencent’s Koolearn play teaches financial savvy

New Oriental Education & Technology

22/06/2022 05:49

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    HONG KONG, June 22 (Reuters Breakingviews) - Tencent
 0700.HK  is providing a textbook example of how to bide your
time and sell high. Last week the Chinese tech giant pocketed
$92 million after selling most of its 9% stake https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.scmp.com%2Ftech%2Fbig-tech%2Farticle%2F3182477%2Ftencent-trims-stake-koolearn-new-orientals-live-streaming-unit-new&data=05%7C01%7CThomas.Shum%40thomsonreuters.com%7C573cf351d57c4a53b62408da5409a13f%7C62ccb8646a1a4b5d8e1c397dec1a8258%7C0%7C0%7C637914697581841319%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=r1tIi9xzfxyk%2BXkKmTEpQWjwTIcAri1t84iNppLMX2w%3D&reserved=0
 in Koolearn Technology  1797.HK , the online services unit of
China’s largest English tutoring company New Oriental  EDU.N 
 9901.HK . That was right as the stock skyrocketed six-fold in
days after the viral success of its livestreaming e-commerce
venture during China’s second-largest shopping extravaganza.
 urn:newsml:reuters.com:*:nL4N2Y80O2
    The WeChat operator held onto its stake even as shares
plummeted nearly 70% last year from the 2019 listing after
China’s private-tutoring crackdown. Selling now looks smart.
Last week’s jump implied Koolearn’s livestreaming studio would
be able to sustain 1.3 million daily orders and 80 million daily
active users, according to Haitong Securities analysts, a tough
act to pull off in a competitive market. There’s also key-man
risk in Chinese live-streaming: top stars who may have either
committed tax fraud or flouted vague political red lines have
disappeared off the screens. Tencent has timed its move just
right. (By Yawen Chen)
    
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 (Editing by Antony Currie and Thomas Shum)
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