Fangdd Network Group Ltd – ADR (NASDAQ: DUO) stock crashes despite decent results

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Fangdd Network Group Ltd – ADR (NASDAQ: DUO) stock fell 18.42% on 2nd April, 2020 (Source: Google finance) even though the company in the fourth quarter of FY 19 has reported 50% rise in the revenues to RMB1,047.2 million (US$150.4 million) year on year on the back of the Company’s ongoing efforts to attract more real estate sellers and agents to its marketplace, which enabled the Company to facilitate a higher commission-based GMV and grow its revenue in turn. The company has delivered Non-GAAP net income in the fourth quarter of 2019 of RMB54.9 million (US$7.9 million) compared to RMB40.1 million in the same period of 2018.

As of December 31, 2019, the company had over 2,500 new development projects for sale listed on the platform, which is significant more than what the company had in the end of the previous quarter. In the fourth quarter, the company had made strong strategic alliances with dozens of top-tier real estate developers. These partnership allowed the company to add properties to the listings from some of the most populated cities in China, which led to increase the quarterly listings of new development projects on the company’s platform by 25% on a sequential basis.

At the end of December, 2019, the Company had cash and cash equivalents, restricted cash, and short-term investments of RMB1,345.4 million (US$193.3 million), short-term bank borrowings of RMB490 million (US$70.4 million), as well as un-utilized bank facilities of RMB285.0 million (US$40.9 million).

For the first quarter of 2020, the Company projects its revenue to be in the range of RMB270 million and RMB300 million. Due to the early Lunar New Year holiday and the outbreak of COVID-19 in China, the number of effective working days for Chinese real estate agents in the first quarter of 2020 was reduced to about 30% of the working days in the same period of 2019.

Meanwhile, the company on March 31, 2020, has appointed Ms. Jiaorong Pan, who is the Company’s Chief Financial Officer, as one of the Company’s directors. The Company’s board of directors currently comprised of nine members, three of which are independent directors.

On the other hand, in the fourth quarter, Fangdd had celebrated its public offering in New York. The company, which was backed by Vision Knight Capital’s David Zhe Wei, had raised $78 million in an offering of 6 million ADSs.

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