What led to Fangdd Network Group Ltd – ADR (NASDAQ: DUO) stock rise

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Fangdd Network Group Ltd – ADR (NASDAQ: DUO), a Chinese online real estate broker backed by FountainVest Partners, stock surged 10.54% on December 17th, 2019 (Source: Google finance). The company has recently posted better-than-expected financial results for the third quarter and delivered the net income that has tripled year-over-year. The company had raised $78 million via a downsized U.S. IPO in November in an offering of 6 million American depositary shares. The deal was underwritten by Morgan Stanley & Co. LLC, UBS Securities LLC, China Int’l Capital Corp. Hong Kong Securities Ltd. and AMTD Global Markets Ltd.

Meanwhile, the company has reported the revenue of $132.6 million in the trimester through September, at a 72% increase from the same period last year, driven by the strong growth of the Company’s base commission revenues from transactions. Net income rose 205% to $11.2 million, or 14 cents per fully-diluted American depositary share. In the third quarter, Fangdd’s number of active agents on its platform grew 26% year-over-year to 226,800. The number of agents who have completed closed loop transactions on Fangdd’s marketplace rose 135% to 20,700 and closed-loop GMV on FangDD.com was up 75%, at $7.2 billion worth of transactions.

Moreover, the cost of revenue in the third quarter of 2019 rose 69.2% to RMB749.1 million (US$104.8 million) from RMB442.6 million in the corresponding period of 2018, mainly due to an increase in commission fees payable to agents for the services they rendered, which was in line with the increased commission from transactions resulting from the growth of the business. Gross profit in the third quarter of 2019 grew 82.7 % to RMB198.8 million (US$27.8 million) from RMB108.8 million in the corresponding period of 2018. Gross margin stood at 21% in the third quarter of 2019 compared to the corresponding period of 2018. Income from operations has increased to RMB76.8 million (US$10.7 million) in the third quarter of 2019, compared to RMB21.4 million in the corresponding period of 2018. At the end of September 30, 2019, the Company had generated the cash and cash equivalents, restricted cash, and short-term investments of RMB764.0 million (US$106.9 million). For the third quarter of 2019, net cash provided by operating activities was RMB35.6 million (US$5.0 million).

For the fourth quarter, the company expects to generate revenue in the range of between 900 million yuan to 950 million yuan.

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