The market always amazes me in the short run. Here you have a management team that was astute enough to launch a mobile platform based real estate subsidiary, spin it off and have it turn into a juggernaut, and in the mean time retain a 75% interest in it whilst having a $500 Million+ cash balance. And the market rewards this astuteness with a negative $500 Million EV. All other things in the works (ie p2p (peer to peer) financial lending mobile platform, mobile financial services platform, real estate agency, etc) are worth Negative $500 Million.
Don't worry guys I think this gets repriced quickly.
This is most likely all about the China real estate market. So much fear has been spread by the media that investors are unwilling to crawl out of their holes and assign a reasonable value to them. Thats ok because this won't last.
Right now its a sum of parts play: the market is assigning a $0 valuation to the $500 Million net cash + agency + web businesses portion of EJ's business. Apparently $500 Million in net cash ain't worth much these days :)
Bought some EJ today. This discrepancy in valuations won't last. Either LEJU goes down (doubtful) or EJ goes up.
LEJU is now worth $2.2 Billion. EJ owns 75% of them. So that's worth $1.6 Billion. EJ has $500 Million in cash. Combine those two and you get $2.1 Billion. EJ's market cap is $1.6 Billion.
nice try. that's from a stock pumping website.
I'm a bull but I doubt that. I think it will be good. But the slowdown in real estate hasn't abated yet.
Not sure if you guys saw the post on Stocktwits showing all of the "pureplay" internet companies in China but LEJU is the cheapest by a lot...also the lowest revenue growth estimates.
Both SFUN & LEJU are trading at big discounts due to China property slowdown. This is the time to be buying these for the longer term, not selling them, regardless of who the big winner is because the market is enormous. So while August 20th is a near term concern (as is every earnings report), longer term the online real estate market could grow 20%+ for years before the majority of ad spending is done online.
That sucks you will miss out on a big run while waiting for "good news" a la bears waiting 5 years for the economy to show strength in the us
We've talked about it here before but it seems pretty clear to me that LEJU is going to be tough for SFUN to compete with going forward. Remember that Youtube video I talked about before (again, just google "china real estate leju youtube" and click on Videos then view the one that says "Reach Chinese real estate buyers for free...") that talks about the Tencent (i.e., WeChat) / LEJU / Zillow partnership. They basically say that whoever gets partnered up with WeChat will be the big winner. LEJU has an exclusive partnership with Zillow (yet to launch) and is owned in part by Tencent...so SFUN is stuck behind the 8 ball regarding mobile strategy which is where everything is heading. LEJU in my opinion deserves a much higher premium.
Just look at market caps:
SFUN is at $5.3 Billion (462 Million x $11.50)
LEJU is $1.7 Billion (133 Million x $12.7)
I think these two valuations swap, plus I think the Zillow exclusive partnership gives LEJU a ton of credibility. I think there is a lot more upside for people willing to sit through the gyrations.
Its all moving online and LEJU has WeChat, Weibo, Baidu, Sina, and soon to be Zillow all in their hip pocket. We may have to go through trials and tribulations now but the bigger picture is the trend is undeniably toward online.
Yeah who knows but the PR from mid July gives us a good glimpse at what the future of real estate looks like in China:
"Leju's mobile e-commerce platform 2.0 includes upgraded and new features from its mobile e-commerce 1.0 launched in March this year. The upgraded mobile e-commerce platform 2.0 consolidates all of Leju's mobile resources, including its collaborations with Weibo and Weixin, and its own Pocket Leju, and provides developers with three unique groups of mobile promotional tools, each leveraging the various features and user habits of these mobile applications for targeted information and services. The integrated mobile solutions include mobile media channels for obtaining market and project information using Weibo and Weixin public subscription accounts, mobile communications tools for communicating with sales agents and fellow customers based on Weixin and QQ chat groups, and mobile e-commerce platforms supported by Weibo and Weixin Sales Centers, the official public accounts that are operated by Leju. The new "Easy Home Plan" allows qualified homebuyers who are purchasing real estate units through Leju's e-commerce program with a discount coupon to obtain a bridge loan of up to 50% of the downpayment through Leju e-Loan. Leju e-Loan is a product offered through China's first online real estate financial services platform "Fang Jin Suo," which is jointly developed by E-House (China) Holdings Limited (NYSE: EJ) ("E-House") and SINA Corporation (SINA), and effectively helps homebuyers to enhance their purchasing power while increasing sales conversion rates.
"Leju is committed to providing more effective marketing products and services to our clients and continues to lead the way in developing innovative, value-added O2O products and services for home buyers and developers," said Mr. Geoffrey He, CEO of Leju. "Our 'Weixin Home Promotion' launched in June attracted over two million participants within two weeks, a strong demonstration of the power of.."
When things "settle down" you may be looking at $40. Two instances come to mind:
(1) I'm going to buy Z when I know housing is on the mend...ie not at $20 or $30 but at $100
(2) I'm going to buy stocks when I know the economy is doing better...ie at 1,800 S&P not at 1,200.
Did you look closely at the names of the companies pulling the listings? I just saw this on Stocktwits:
"Centaline Property Agency, Century 21 Real Estate and Shanghai Deovolente Realty". Go to the July 18 press release from LEJU:
"it has signed strategic agreements with over 100 secondary brokerage agencies in 17 key cities in China, including four secondary brokerage agency alliance groups in Hangzhou, Qingdao, Chongqing and Xi'an. The participating brokerage agencies include 5i5j, Centaline, Century 21 China Real Estate, Home Link, and My Top Home, among others. "
Can u name a profitable 50%+ growing company with a total addressable market of multiples higher than what is being penetrated trading at 15 times cy earnings estimates? This is barely in the 1st inning. Let's see where we are a few years from now.
On the zillow call they said the market is only 2% penetrated and they have been at it for how long? China's online real estate market is just getting going. LEJU has partnerships with all of the big players and still has tons of catalysts ahead of it. It will have wechat impact in q3/q4 and zillow launch.
Probably just have to be patient on this. The opportunity is enormous and I think they have a perfect strategy in partnering with BIDU and Tencent.