Recovering China Property Market Doesn't Help Fang's Stock

Fang might be beginning to regain some lost revenue amid the recovering China property market, but its stock still remains weak.

Author: Belinda Zhou   

The stock in Fang Holdings Ltd. (NYSE: SFUN) slipped 5% intraday Thursday after the company reported poor financial performance in the first quarter. 

The Beijing-based online real state portal said that revenue in the three months through March was $17.3 million, up 9% year-over-year. Net loss hit $39.1 million in the first quarter, or 41 cents per share, in contrast to a net income of $13.4 million, or 14 cents per share, for the same period in the previous year. 

"Our leads generation services remain a strong growth contributor to our core business," Jian Liu, the chief executive officer of Fang, said in the statement. 

The company saw a 30% increase in revenue from marketing services, totaling $17.3 million in the first quarter. The revenue from leads generation services, which is a marketing promotion program, jumped 89% to $7.5 million in the first quarter.

Fewer people paid for listing their houses on the platform in the first quarter, sending revenue from listing services down 16% year-over-year to $10.2 million.

"For the coming quarters we look forward to continuing our focus on new initiatives such as live broadcastings, online exhibitions, and VR live streams to better service our customers," Liu added.

The company said it anticipates a positive net income for the year 2020, but didn't offer a revenue estimate. 

Fang added Changming Yan, who is experienced in the mineral resource sector, to the board, and announced the resignation of Hong Qin.

The real estate internet portal owns 74 offices across China and its website and database cover 665 cities in the country. Its stock price, however, has declined over 95% in the past two years from $25.7 per share on June 4, 2018.

China's property industry is struggling to recover, with sales by floor area down 19% in the first four months according to data from the National Bureau of Statistics in May. In the first four months of 2020, the real estate investment in China fell 3.3% from a year earlier amid the coronavirus epidemic.

Super cities in China had a better May, where property developers sold 20% more transaction area in May than in April. Beijing sold 495,400 square meters, up 43% from the previous month, and with an increase of 12% year-over-year. 

1.2 million square meters and 749,000 square meters were sold in Shanghai and Guangzhou, respectively, increasing 22% and 14% month-over-month.

Shares in Fang were trading at $1.21 per share, down 5% midday Thursday.

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