What happened to EAST BUY?

On August 22, Yu Minhong meaningfully stated during the conference call for the 2025 financial report of EAST BUY that he was in the midst of a "storm."

In fact, it is not just Yu Minhong who is in the "storm."

Since July of this year, EAST BUY's stock price has unusually surged nearly fourfold, reaching a high of HKD 53.7 within the year. However, the "roller coaster" came unexpectedly: on August 19, EAST BUY first surged over 20%, then plummeted nearly 20%, with a daily fluctuation exceeding 45%, causing an uproar in the market.

As of the midday on August 28, the stock price situation of EAST BUY. Image/Wind

The release of the latest financial report on August 22 initiated a new round of decline for EAST BUY.

On August 25, EAST BUY's stock price fell 12.89% in a single day, and on the 26th, it dropped 11.2%, closing at HKD 28.08, nearly "halving" from HKD 53.7. From the peak on August 19 to the close on August 27, EAST BUY's market value evaporated by approximately HKD 27 billion (about RMB 24.8 billion).

What signals does the first annual report after Dong Yuhui's "solo flight" reveal?

Plunge

In January of this year, during the first performance meeting after the split from Hui Tong, Yu Minhong candidly stated, "After experiencing significant uncertainty, EAST BUY needs a recovery period."

A year after "breaking up" with Dong Yuhui, EAST BUY has not fully emerged from the aftermath in terms of performance. The significant decline in the company's revenue and net profit has been interpreted by the outside world as a notable pain of "de-Dong Yuhui-ization."

For the 2025 fiscal year (from June 1, 2024, to May 31, 2025), EAST BUY's continuing operations (self-operated products and live e-commerce business) reported revenues and GMV of RMB 4.4 billion and RMB 8.7 billion, respectively, with year-on-year declines of 32.7% and 39%. The decline in continuing operations for the mid-2025 fiscal year was only 9.3%, indicating that the annual performance decline is further expanding.

The company's profitability has been more significantly impacted by Dong Yuhui. In the 2025 fiscal year, EAST BUY's net profit from continuing operations was RMB 6.2 million, a staggering drop of 97.5% year-on-year.

EAST BUY stated that the revenue decline was mainly due to intensified competition in the live e-commerce industry and adjustments in the company's business strategy; while the net profit was affected by the financial impact of selling Hui Tong The biggest single factor causing the cliff-like drop is the 140 million yuan "severance pay" given to Dong Yuhui (reflected in administrative expenses, resulting in a year-on-year increase of 22.5% in this expense). Excluding the impact of Hui's departure, the company's net profit from continuing operations is 135 million yuan.

This financial report has made the market "panic"—on August 25 and 26, the stock price fell more than 10% for two consecutive days.

The issues reflected by the stock price are actually more complex. Financial commentator Guo Shiliang told China News Weekly that the doubling of the stock price of Dongfang Zhenxuan since July this year has deviated significantly from the fundamentals, and there may be multiple capital games behind it.

The "roller coaster" of Dongfang Zhenxuan's stock price with a fluctuation of up to 45% on August 19 is a vivid example. From the trading data, Dongfang Zhenxuan's turnover rate for the whole day reached 21.48%, setting a new high in nearly three years. On that day, the stock price experienced severe fluctuations, with a transaction volume of 9.385 billion Hong Kong dollars.

Of course, the fundamental issue behind the stock price crash still lies in the fundamentals; the growth reflected in Dongfang Zhenxuan's latest performance cannot keep up with the current stock price. In other words, Dongfang Zhenxuan is currently in a severely overvalued state. In terms of price-to-earnings ratio, as of August 27, Dongfang Zhenxuan's TTM price-to-earnings ratio exceeded 4500; compared to the retail industry, Walmart and Costco are around 35 and 55, respectively.

In Guo Shiliang's view, the stock price of Dongfang Zhenxuan reflects not only changes in fundamentals but also changes in market sentiment. Previously, the company's stock price experienced a certain rapid and inflated rise. Once market sentiment declines, enthusiasm wanes, or if there are difficulties in the reform and transformation process, it may affect market valuation pricing.

Image/Visual China

Dependence

To weather the storm, Dongfang Zhenxuan's essential option is to show the market clearer growth potential. The concerns in the market are quite obvious—without a phenomenon-level anchor like Dong Yuhui, can Dongfang Zhenxuan really succeed?

At least from the current financial report data, the traffic effect brought by top anchors is difficult to replace in the short term. By July 2024, the number of followers of Dongfang Zhenxuan's main account fell below 30 million, and to this day, the number of followers has not returned to 30 million.

As GMV plummets, the volume is also decreasing. In terms of the monthly ranking of sales on Douyin, Dongfang Zhenxuan's main account has already been left behind by Hui's account. According to data from Chanmama, from August last year to July this year, Dongfang Zhenxuan's main account only entered the top ten of the sales monthly ranking four times, while Hui's account has never fallen out of the top three As a response, even before Dong Yuhui's departure, EAST BUY had already "prepared for a rainy day" by implementing a strategy of rotating hosts and specialized accounts, launching segmented live streaming rooms for fresh produce, clothing, beauty products, and more, and increased operational efforts after Dong Yuhui's departure.

However, this still could not prevent the successive departures of top influencers. In June of this year, following Dong Yuhui, EAST BUY's top influencer Dondon (Wang Ruodun) also announced his departure. His regular "EAST BUY Beautiful Life Live Room" once had over 4 million followers, making it the hottest specialized live streaming room outside of EAST BUY's main account.

For EAST BUY, the concerns do not stop there. More "invisible" than dependence on influencers is dependence on the platform.

In January of this year, Yu Minhong revealed that 60%-70% of EAST BUY's sales revenue relied on the Douyin platform. He even stated, "This is not a normal business model for an independent listed company."

Since 2023, EAST BUY has shown a clear "independent" attitude, moving from Douyin to Taobao, launching its own app and paid membership system. Yu Minhong also emphasized multiple times during this earnings call that EAST BUY's main task is to increase the activity, registration, and membership numbers of the app.

However, EAST BUY's membership growth faces bottlenecks. Since the launch of the 199 yuan/year paid membership system in October 2023, the number of paid members on the EAST BUY app had maintained rapid growth. As of May 31, 2025, the number of paid subscriptions reached 264,300.

However, the growth rate of paid memberships has significantly slowed. In the 2025 fiscal year, the EAST BUY app added 65,700 paid members throughout the year, while in the second half of the 2024 fiscal year alone, it added 74,800 members.

Additionally, the total GMV of EAST BUY's self-operated products and live e-commerce business in the 2025 fiscal year was 8.7 billion yuan. The proportion from the EAST BUY app increased from 8.4% in the 2024 fiscal year to 15.7%, but the proportion remains relatively low.

Patience

It is undeniable that EAST BUY is still striving to enhance its growth potential.

From the outside perspective, EAST BUY wants to tell the story of "online Sam's Club"—replacing the influencer logic with self-operated products.

As of May 31, 2025, EAST BUY has launched a total of 732 self-operated products, compared to 488 in the same period last year. The categories of self-operated products have also significantly expanded from the initial fresh food and snacks, now including daily consumer goods, food, and household items.

Based on this strategy and actions, the increase in self-operated products and gross profit margin has become a highlight in EAST BUY's data for the 2025 fiscal year. In the 2025 fiscal year, the proportion of self-operated products in total GMV increased from 40% in the 2024 fiscal year to 43.8%, with total revenue from self-operated products reaching 3.5 billion yuan, and the gross profit margin of continuing operations rising from 25.9% to 32%.

However, while the increase in the proportion of self-operated products and overall gross profit margin can be presented, it is not necessarily a positive factor. After all, in absolute terms, the GMV of self-operated products also decreased by about 33%, and the increase in proportion is partly due to a more significant reduction in the overall scale; In addition, although the gross profit margin during the reporting period has improved, the 32% figure still falls short of the peak level of 38.2% in the fiscal year 2023.

Moreover, the improvement in gross profit margin is based on "cost-cutting" measures. In the fiscal year 2025, the number of employees at EAST BUY decreased by 482, a year-on-year reduction of about 25%, and total salary expenses decreased by 17.6% year-on-year. Yu Minhong stated in January 2025: "Although the company's business volume has not significantly decreased, and even some workloads have increased, layoffs were still implemented."

It is important to note that transformation is not easy, and greater challenges lie ahead.

According to Bao Yuezhong, chairman of Baum Enterprise Management Consulting Co., Ltd. and an expert in the retail industry, EAST BUY faces a series of channel challenges—high dependence on external platforms, lack of its own product system, and lagging omnichannel transformation, as well as the need to break through the bottleneck of its own brand transformation.

Bao Yuezhong pointed out to China Newsweek that the core logic of the retail industry lies in product and category management systems. In recent years, frequent problems in the supermarket industry are essentially due to loopholes at the product level, and building a complete category management system requires long-term accumulation.

In terms of building its own brand, EAST BUY is constrained by factors such as time and experience, and there are certain deficiencies in supply chain depth, SKU breadth, and infrastructure, with many product lines being newly established. Although it has made many attempts with self-operated products, it has not formed a very distinct feature.

At the beginning of 2024, EAST BUY's self-operated Wuchang rice was questioned by "counterfeiters" for "not matching the origin," and Ecuadorian white shrimp was questioned for "abnormal testing indicators," which sparked widespread discussion on social media. Although EAST BUY quickly presented third-party testing reports to prove compliance, some users still have doubts about the quality of its products.

"EAST BUY, whether it is Yu Minhong or the company itself, lacks retail genes and has never been involved in mature product system construction. Against the backdrop of deep transformation in large retail, the shortcomings of its product system will only become more apparent, and the difficulty of subsequent construction may become even more daunting," said Bao Yuezhong.

Whether EAST BUY can truly grow into "online Sam's Club" will be key to calming this "storm."

Author of this article: Yu Shengmei, Source: China Newsweek, Original title: "Continuous Plunge, What Happened to EAST BUY?" Risk Warning and Disclaimer

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