FangDD Full Year Financial Results for 2023: Net Losses Shrink as Revenues Rise

Chinese portal FangDD has released its full-year financial results for 2023, with optimism despite China's slow recovery post-pandemic.

Highlights include:

• Full-year revenues rose 16% year-on-year, from 246 million Yuan in 2022 to 285 million Yuan (USD 40 million) in 2023
• Gross profit margin in 2023 increased to 14.5% (10.1% in 2022)
• Net losses shrunk from 240 million Yuan in 2022 to 93 million Yuan in 2023
• However, revenues are 70% lower than they were in 2021 (942,380 Yuan, or $130M)

FangDD outlined a slight recovery in China's real estate market as a driver of improved performance for the firm. A quote from an SEC filing said:

"Our revenue in 2023 increased by 15.9% to RMB285.0 million (US$40.1 million) from RMB245.9 million in 2022. The increase was attributable to various factors, including modest stimulation in the Chinese real estate market spurred by a series of preferential policies, such as greater access to credit and funding for real estate developers, mortgage interest rate cuts and lower down payments for home buyers, and relaxed restrictions on secondhand housing sales and purchases.

"In addition, our growth was supported by strategic decisions such as discontinuing business partnerships with high credit risk developers to mitigate losses and focusing on developers with strong credit profiles to sustain our property transaction services.

"We also actively explored opportunities in other digitalization services for real estate transactions."

The fall of the Chinese economy is of major concern domestically and internationally and FangDD is no exception. Shares in the Chinese giant were worth 3,500 USD at the turn of 2020, but the onset of the pandemic and its ongoing fallout have caused a steady decline ever since.

For context, share prices in FangDD almost doubled to just 0.75 USD in March after the firm outlined a new-look strategy that will emphasise real estate stock asset services in 2024. But the excitement was short-lived and share prices have returned to a sluggish 0.38 USD today.

FangDD has made no secret of this and is adjusting its business strategy to rely less on property transactions, sending out a warning that losses may increase as the business enacts this change:

"We may also incur significant losses in the future for a number of reasons, including possible changes in general economic conditions and regulatory environment, the continued downturn status of China’s real estate market, the heightened credit risks of developers, as well as other risks described in this annual report, and we may encounter unforeseen expenses, difficulties, complications and delays in generating revenues or profitability.

"We are continuing to control and reduce costs in the daily operation."

Meanwhile, FangDD retains cash reserves of RMB 143.9 million (US$20.3 million), but liabilities are more than triple that amount at RMB549.7 million (US$77.4 million).