Earnings preview: Fang Holdings may bounce back in Q2 on housing recovery

Fang Holdings Ltd. (NYSE: SFUN), which operates as a real estate internet portal in China, is currently going through a rough patch, with the stock trading at an all-time low amid downbeat investor sentiment. The company is set to publish second-quarter results on Friday at 6:30 AM ET.

It is expected that the property listing platform will come up with positive results, after incurring losses in the trailing two quarters. Since the first quarter, the Chinese real estate market has been emerging from the slump – with the leading property developers recording an increase in contracted sales. It is something that adds to Fang’s recovery prospects as it’s financial health is closely linked to the trends in the housing market.

China Index Spin-off

An important factor that could strengthen Fang’s finances is the separation of real estate service firm China Index Holdings (CIH) in the second quarter. The spin-off, which eased the strain on the company’s cash flow significantly, might help it return to profitability and to maintain the momentum going forward.

Also read: Momo reports better-than-expected Q2 results

However, investor sentiment continues to be bearish and the stock was battered by the recent selloff. Since China’s housing sector is largely insulated from the trade-related tensions, the recent escalation of the tariff war with the US will not have any significant impact on Fang’s operations. That makes the stock an attractive investment option, considering its low price and the ongoing market recovery.

What to Expect

Market watchers have predicted that the company will report earnings of $0.04 per share for the June-quarter. Though the estimate is below last year’s levels, it might set the tone for long-term recovery.  Meanwhile, revenues are seen falling about 7% to $69.3 million in the second quarter.

Looking Back

The company reported a loss of $0.03 per ADS for the first quarter, marking a slight deterioration from the year-ago quarter when it posted nil earnings. Revenues dropped 20% annually to $51.89 million, hurt mainly by softness in the demand for listing and e-commerce services.

Related: Fang Holdings Q1 2019 Earnings Call Transcript

Earlier this month, Fang Holdings’ stock slipped to an all-time low and is currently trading below $2. The value of the shares plunged 89% in the past twelve months and 75% since the beginning of the year.

We’re on Flipboard! Follow us to receive the latest stock market, earnings, and financial news at your fingertips