(Yicai) Jan. 25 -- Shares of East Buy Holding tumbled after the livestream e-commerce site operator reported a 57 percent plunge in fiscal first-half profit from a year ago due to higher costs.

After sinking by as much as 13.1 percent in the morning trading session, East Buy [HKG: 1797] finished 8.3 percent down at HKD24.20 (USD3.07) a share in Hong Kong today, extending the stock’s decline to 17.5 percent since the end of last year.

Net profit was CNY249.2 million (USD34.8 million) in the six months ended Nov. 30, the Beijing-based firm said in an earnings report yesterday. Revenue jumped 34 percent to CNY2.8 billion (USD391.1 million).

Sales and marketing expenses at East Buy, a unit of China's New Oriental Education and Technology Group, surged 146 percent to CNY559.5 million, mainly due to higher staff costs for self-operated products and livestreaming business operations. Research and development costs jumped 57 percent to CNY75.5 million (USD10.5 million), while administration expenses surged 130 percent to CNY142.9 million. 

The gross merchandise value of East Buy's livestream e-commerce business grew 19 percent to CNY5.7 billion, while the number of followers of its live broadcast studio on Douyin, the Chinese version of Tiktok, jumped 30 percent to 45.8 million.

After China moved to restrict extracurricular education for children from kindergarten through 12th grade in 2021, East Buy, formerly known as Koolearn Technology Holding, abandoned its online tutoring business and moved into livestream e-commerce broadcasting.

Last month, East Buy said most shows by its top live-streamer Dong Yuhui were written by copywriters rather than Dong himself, sparking a backlash among his fans, who believed the company deliberately belittled his contribution to its operations.

East Buy recognized Dong's contribution and did not mistreat him, former Chief Executive Sun Dongxu said during a live-streamed event on Dec. 12. Dong's annual remuneration was more than the tens of millions of Chinese yuan speculated about in online reports, Sun added. 

But Sun's words, intended to appease Dong's fans, backfired, with his attitude further enraging them. East Buy said on Dec. 16 that its chairman would step in as chief executive, with Sun dismissed from the CEO and executive director posts.

Editor: Martin Kadiev