12/26/2023 0 Comments FangddD DUO shares rose 21.7% to $0.9367 in pre-market trading after dropping 11% on Wednesday. KTRA shares gained 33.1% to $3.98 in pre-market trading after the company secured $2.0 million National Institutes of Health SBIR grant to support clinical development of REM-001. Eco Wave Power Global AB W WAVE shares surged 123% to $3.48 in pre-market trading after dropping over 8% on Wednesday. Given management’s forward guidance and the current state of the industry, I’m Neutral on the stock at its current level of around $8.25 per share. In other industries in China, these intense price competition conditions have been able to last for years, sucking the profits out of the industry in the process. While I favor management’s focus on providing its SaaS offerings to small and medium-sized agencies looking to increase their operating efficiencies, I’m more skeptical of the length of the cutthroat competition in the industry, which management sees as lasting a short period. However, the firm believes it can continue to increase its agent base and property listings, as it sees the high competition from subsidies on other platforms lasting one to two quarters. Looking ahead, management expects Q4 results to be somewhat negative due to its decision not to offer subsidies. Operating expenses grew by 38.4%, a result of a sharp increase in general & administrative expenses from an increased headcount and provisions for bad debts. In response, management has avoided the price competition game and focus on providing its agency digitizing SaaS offerings to small- and medium-sized agencies to help them better compete in highly fragmented and competitive markets.Īs to its financial results, Q3 revenue was a decrease of 13.6% year-over-year while cost of revenue also decreased, by 16.3% compared to the same quarter in 2019. However, subsidy competition between real estate transaction platforms has become high as platforms compete on price to gain market share among agents. So, management sees an opportunity in ‘aggregating capable agents’ as a future source of growth for the firm. In its last earnings call, covering Q3 2020’s results, management highlighted the changing regulatory environment in China, which is forcing new construction property developers to more actively use agents to facilitate transactions. Source: Simply Wall Street Valuation Metricsīelow is a table of relevant capitalization and valuation figures for the company:Īs a reference, a relevant public comparable to DUO would be U.S.-based Redfin ( RDFN) shown below is a comparison of their primary valuation metrics: market’s growth of 21.3 percent, as the chart below indicates: Interactive Media and Services index’ rise of 36.3 percent and the overall U.S. In the past 12 months, DUO’s stock price has dropped 43.4 percent vs. Operating income by quarter has been highly variable but positive in Q3 2020, as the chart shows here:Įarnings per share (Diluted) have generally mirrored operating income, with a positive result in Q3 2020: Gross profit by quarter has produced a similar trajectory: Topline revenue by quarter has varied but rebounded from a five-quarter low in Q1 2020 due to the Covid-19 pandemic Shenzhen World Union Properties Consultancy Co. Major firms that operate in the Chinese real estate market include: The main factors driving forecast market growth are the large population of the country, the accelerating urbanization process, rising household disposable income as well as continued economic growth. Management is headed by co-founder, Director, CEO and Chairman Yi Duan, who graduated from the China Europe Business School prior to co-founding Fangdd.īelow is an overview graphic of the company’s business model, which seeks to provide a range of value-add services to agents, agencies, and other real estate service providers:Īccording to a 2019 market research report by IBIS World, the real estate agent market in China reached a total revenue of $32 billion in 2019, growing at an annual growth rate of 5.2% between 20. Shenzhen, China-based Fangdd was founded in 2011 to improve the workflow of real estate agents through an online-to-offline real estate platform that enables brokers to add their listings. I’m Neutral on the stock at around $8.25 per share until we learn more about the effects of the price war on its results in the coming quarters. The industry is experiencing severe price competition which will result in lower revenues to DUO over an undetermined length of time. The firm operates an integrated portal for a variety of real estate services in China. Fangdd Network Group ( NASDAQ: DUO) went public in November 2019, raising $78 million from the sale of ADSs.
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