Chinese Portal FangDD Slashes Costs and Reshuffles C-Suite as Revenue Drops 79%

September 1, 2022
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The Chinese real estate marketplace company FangDD has announced its unaudited results for the first six months of 2022. The NASDAQ-listed company's results (highlighted below) reflect a tough climate for portal operators in China.

  • Revenue dropped 79% year-on-year to $21.6 million
  • Net loss was $28.7 million, a 21% improvement on last year's figure of $35 million
  • GMV was down 80% on the corresponding period to $1.7 billion

A company press release stressed that the reason for the decrease in revenue was that FangDD had pared down its expenses over the first six months of 2022 and cut ties with high-risk developers which made up most of its customer base. The company also slashed operating costs by 47% compared to 2021 and cut overall balance sheet liabilities by 23%.

Mr. Xi Zeng, Chairman and Chief Executive Officer of FangDD, commented, “In the first half of 2022, new property sales decreased by 28.9% year-over-year in China, which represents the largest decline in the recent two decades, and the real estate industry is exposed to accelerating risks of a sharp downward trend. With the relaxation of property market cooling measures, the market is expected to bottom out. In the first half of 2022, the Company continued to control risks and seek development to survive the market downturn.

Going forward, the Company will strengthen cooperation with high-quality developers, improve account-receivables management, and ensure healthy cash flow. At the same time, the Company will continue to explore the second growth curve in digitalization and asset services.”

In terms of operational metrics, FangDD saw GMV decrease over 80% compared with the first half of 2021 and agent numbers plummet 75% as the Chinese government's Covid-zero policy continues to exacerbate housing market problems.

C-suite shake-up to "improve FangDD’s core decision-making skills"

Along with its half-yearly results, FangDD also announced sweeping changes to its leadership:

  • Mr. Senlin Peng has been appointed as a director of the Company and a member of the Audit Committee, to succeed Mr. Ronald Cao.
  • Ms. Jiaorong Pan has stepped down as the Company’s Chief Financial Officer and assumed the role of the Chief Operating Officer.
  • Mr. Shuiying Chen has been promoted from within to serve as the Company’s Chief Financial Officer.
  • Mr. Jiancheng Li has resigned as the Company’s Chief Technology Officer.

“The renewed leadership and senior management team will bring a great breadth of perspectives, which will be instrumental in helping us successfully navigate the complex while volatile environment of the real estate industry,” said Mr. Xi Zeng, FangDD Chairman and CEO. “I am confident that these changes will improve FangDD’s core decision-making skills and accelerate the execution of our strategic priorities.”


Chinese portals struggling

FangDD is not the only portal company suffering in China. KE Holdings (Beike) recently saw GMV drop 48% and revenues drop 43% while has been forced off the NYSE and Tencent-backed Leju is expected to report similarly affected earnings in the next few weeks.

The country's largest developer, Evergrande almost defaulted on its debts last year and millions of investors have lost or are set to lose deposits on new build apartments as the demand for investment class real estate and cheap capital have created a bubble.

Although some are predicting that the Chinese real estate market will bottom out soon, the downturn has led to significant losses at Chinese real estate companies across the board.

FangDD was threatened with removal from the NASDAQ back in January and told to meet a minimum bid requirement. To do this, the company enacted a ratio change in its ADS (American Depository Shares representing Class A shares of a non-U.S. company) in June.

Despite this, and mysteriously sacking its Western auditor last month, the company's share price remains stapled to the floor currently trading at $1.85, down from highs of $233 in 2020.

September 1, 2022
Edmund got to know the world of portals and marketplaces working at Mitula Group (which became Lifull Connect after the buyout in 2018). He worked directly with hundreds of portals across the world in his role in the content department for three and a half years before transferring to the SEO department to understand the inner workings of listings sites. He joined Online Marketplaces as Head of Content in March 2020.

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