Hello incredible people of the inter-webs! Ashley's back! Wow. I am overwhelmed with all of the feedback and love on these IPO articles. Thank you for taking the time out of your day to read them, it means a lot for sure. But I haven't just received feedback! I have also had tons of requests come in from traders just like you. And you know I can't pass up the opportunity to learn more, grow as a human, and hopefully provide some tasty trade set ups to enrich the lives of others. I don't have a particular order to these but today I wanted to start with the baby IPO, UXIN. (Shoutout to Robert Falco for the request!)
Uxin is a particularly interesting company. The more that I read the more that I am intrigued by it. Popularly know as Uxin, full name Youxinpai, is an online used car company in China, based in Beijing. It was founded in 2011 so relatively speaking, it is one of the "younger" IPO's coming from China that we have talked about. Let's jump in further to the "used car" description because this doesn't fully encompass all of the things that Uxin is capable of. Youxinpai's company is almost split into two parts: customer and business. On the customer side, often referred to as Uxin Used Car, Uxin resembles a sort of Carvana/Cars.com/CarGurus kind of vibe. They are able to make car recommendations, provide financing, delivery, insurance referrals, title transfers, and warranty services! As far as I know though, none of the above companies do any sort of business with business buyers! Uxin's B2B (business to business) model, Uxin Auction helps companies source vehicles and "optimize their turnover and facilitate cross regional transaction." This crossover into the business world has great potential for this car giant!
The used car market in China is an extremely under utilized tier of the automobile areas. China is well known for having one of the most robust New Car markets but a very underdeveloped Used car space. According to the South China Morning Post, "most consumers are still first-time buyers and prefer to own new vehicles fresh off the production line." Which makes sense, the generations before this current one had less access to cars, especially in the rural areas of the country, which is another big gap that Uxin is trying to bridge. In 2017, 12.4 million used cars were bought and sold in China in an increase of 19.3 from the previous year. Which is a huge number if you think about it. That's almost 20% from the year before. I don't see this trend slowing down. The E-Commerce aspect of this company has a hand over physical dealerships in that many of the buyers are coming from smaller cities that don't have access to these dealerships. Plus they tend to be young as the larger cities are more expensive to live in.
Uxin is currently considered China's largest used car dealer but does have several competitors because of the rise in popularity of the second-hand car market (seen above), but as far as I have researched none of them come even close to the size of Uxin. Most notably listed as their closest rivals are Renrenche and Guazi. Renrenche has also sued Guazi in the past for unfair competition. The competitors will not go quietly into the night however, as they create partnerships between other large companies to further their brand. Uxin will need to consider strategic partnerships to help keep their name at the forefront of the people minds. None of Uxin's competitors are traded on the stock market either.
The company generates revenue primarily through fees for transaction facilitation and auto loan facilitation services. "Its total revenues of RMB 1951.4 million (US $298.6 million), represents a 136.7% increase from 2016." Hey, growth is good! It booked a net loss of RMB 2,747.8 million (US$420.5 million) in 2017, compared to a RMB 1,392.9 million loss in 2016." This is a 97.27% increase from the year before. Which can be expected, as a company grows, so does it's operating costs, especially in a young business. I believe as the company matures Uxin will start to see these losses decrease as profits increase. It's just to new to see that yet.
There are only a few candles to look over. Here's one way of viewing it.
Then the question would be, would it form a double bottom?
As with most IPO'S it's still very early. The good news is, this one is certainly cheap, which might provide opportunities for portfolios of all sizes to gain on a move. At some point, we can expect a massive pop on this one. And that's what Jerremy and I will be keeping our eye on and I'm sure we will all see him review this one soon, in one of the afternoon stock reviews.
Alright my friends! That marks the end of our adventure. Thanks for going on this ride with me. I am super excited about the upcoming IPO's I am working on over the next couple of weeks! If you have any requests don't hesitate to send them my way!
"Be kind to unkind people â€“ they need it the most." Unknown