At the end of the decade, Leju Holdings will be delisted from the United States

On April 17, 2014, Leju Holdings landed on the New York Stock Exchange

Delisting from the main board of the New York Stock Exchange does not mean that Leju Holdings has left the U.S. capital market.

Zhongfang Daily reporter Li Ye reported from Beijing

Nearly 10 years after landing on the New York Stock Exchange, Leju Holdings has gone from the highlight moment to the brink of delisting.

On April 11, Leju Holdings announced that the company received a notice from the New York Stock Exchange ("NYSE", hereinafter referred to as the "NYSE") that the NYSE regulators have decided to initiate the process to delist the company's American Depositary Shares ("ADS") from the NYSE. Trading in the company's shares has been suspended.

According to the announcement, Leju Holdings currently does not meet the requirements of Section 802.01B of the NYSE Listed Company Manual, because the company's total market capitalization is less than $50 million and shareholders' equity is less than $50 million within 30 trading days. The NYSE regulator made the decision to delist the Company's American Depositary Shares pursuant to Section 802.03 of the NYSE Listed Company Manual.

Leju Holdings was listed on the New York Stock Exchange on April 17, 2014 with an issue price of $10 per share. Over the course of 10 years, its stock price experienced a lot of ups and downs, and finally fell into a long decline. As of the close of trading on April 11, Leju Holdings' share price was $1.08 per share, corresponding to a total market capitalization of $14.92 million.

It is worth mentioning that the delisting from the main board of the New York Stock Exchange does not mean that Leju Holdings has left the U.S. capital market. According to the announcement, Leju Holdings is still a listed company in the United States in accordance with the relevant laws and regulations of the US Securities and Exchange Commission, and will be transferred to the over-the-counter trading market (OTC) for trading.

"Highlight reel moments"

As a well-known real estate service company in China, Leju Holdings has had many highlight moments along the way.

In 2008, at the time of the rapid rise of China's real estate industry, Sina split the real estate and home furnishing channels, and Sina Leju was born, which became the predecessor of Leju Holdings.

In October 2009, E-House (China) Holdings Co., Ltd. merged its CRIC information consulting business with Sina Leju to establish China Real Estate Information Group, which was successfully listed on NASDAQ in the United States. At the same time, Zhou Xin, CEO of E-House China, also officially entered the game and became a key figure in Leju.

Some media said that during the period of rapid development of real estate, half of the real estate companies in the real estate circle have worked closely with Leju led by Zhou Xin. At that time, Zhou Xin also boasted to "create the best online marketing platform and service platform in China's real estate industry".

In April 2012, Leju's parent company, E-House China, completed the merger with its subsidiary, China Real Estate Information Group, and Leju became a wholly-owned subsidiary of E-House China.

In March 2014, Tencent acquired a 15% stake in Leju Holdings for US$180 million and became a strategic partner of Leju Holdings.

On April 17, 2014, Leju Holdings officially landed on the New York Stock Exchange with an issue price of $10 per share.

According to the listing documents, Leju's revenue in 2013 was US$335 million, and its net profit was US$63 million in non-GAAP figures. The cash flow statement is more gratifying, and in 2013, Leju Holdings' operating net cash flow was about twice that of net profit. By the end of 2013, the total number of employees was 4,204.

On August 29, 2014, Leju's share price once stood at a high of $184 per share, about 18 times higher than the issue price.

The reporter noticed that Leju's stock price has also been positively correlated with its performance.

In the year of listing, Leju Holdings' performance rose sharply. For the full year of 2014, Leju Holdings' total revenue was US$496 million, up 48% year-on-year, and adjusted net profit attributable to Leju shareholders was US$90.7 million, up 44% year-on-year.

Difficulties in performance losses

However, only a year after the listing, Leju Holdings has shown a weak trend.

For the full year of 2015, Leju Holdings' total revenue was US$576 million, a year-on-year increase of 16%. Adjusted net profit attributable to Leju shareholders was $57.4 million, down 36.7% from the prior year.

Later, Leju Holdings entered a period of loss.

The reporter combed through the past annual reports of Leju Holdings and found that in the three years from 2016 ~ 2018, the net profit attributable to Leju shareholders of Leju Holdings generated losses of US$9.79 million, US$161 million and US$13.4805 million respectively.

Affected by this, Leju's share price has also entered a downward channel.

Until the release of the annual reports in 2019 and 2020, the performance of turning losses into profits once again made the share price of Leju Holdings rebound.

According to the annual report, the net profit attributable to Leju shareholders of Leju Holdings in 2019 was US$11.522 million, and the net profit attributable to Leju shareholders of Leju Holdings in 2020 was US$19.3 million. In 2020~2021, the share price of Leju Holdings rose from about $20 per share at the beginning of 2020 to $69.6 per share.

This did not last long. In 2021, Leju Holdings ushered in a loss again, this time with a net profit loss of $150 million attributable to Leju shareholders. During this period, the share price of Leju Holdings fell rapidly.

In response to this situation, Geoffrey He, CEO of Leju, said that in the second half of 2021, China's real estate industry experienced a sharp decline, and many developers faced severe operational challenges, which had a direct and negative impact on Leju's online advertising and e-commerce business. The deterioration of the credit profile of some property developers will also adversely affect the company's performance, resulting in further losses.

The pressure doesn't stop there.

As the parent company of Leju, the debt crisis of E-House China has also had a certain impact on Leju Holdings.

In April 2022, E-House China issued an announcement frankly admitting that there was a default on its overseas debts. Since then, E-House China has promoted debt restructuring on the one hand, and has continued to sell assets on the other.

In its 2023 annual report, E-House China admitted that as the largest service provider in the industry, E-House's business has been "negatively affected by this ongoing and unprecedented industry recession". According to the 2023 annual report, E-House China incurred a loss of RMB1.525 billion, net current liabilities and net liabilities of RMB8.426 billion and RMB6.5623 billion, respectively.

The issue of developer collection is considered to be the biggest contributor to this situation. As of mid-2021, E-House China's accounts receivable was 7.434 billion yuan, of which about 3.5 billion yuan ~ 4 billion yuan were receivables involving Evergrande, accounting for about 50% of the total accounts receivable.

Say goodbye to the "glorious days"

In January this year, a number of old employees of Leju Holdings posted their badges and said "goodbye" in the circle of friends, which was once regarded as "Leju disbandment".

However, Leju's explanation for this is that the business model has been changed from the original direct sales model to the city partner + franchise system, that is, Leju and the city partners and franchisees invest funds in proportion, and the operating income generated by the two parties will be divided according to the agreed proportion.

In the process of "switching" between the two models, the companies and institutions in various places under the direct sales model will gradually stop operating, and the original staff will also terminate the contract one after another under the premise of safety. At the same time, new companies will be established in accordance with the city partner + franchise model, and these new companies will reorganize their teams according to the actual needs of their business, and the new teams will include employees in the original team who meet the business capacity requirements of the new company, and the two parties will re-sign the employment contract.

The "switching" of the business model may also mean saying goodbye to the "glorious years" of the past. In the future, Leju still faces many challenges.

On April 11, Leju Holdings announced that the regulators of the New York Stock Exchange have decided to initiate the process to delist the company's American depositary shares from the New York Stock Exchange.

The reporter noted that the delisting from the main board of the New York Stock Exchange does not mean that Leju Holdings has left the U.S. capital market. According to the announcement, Leju Holdings is still a listed company in the United States in accordance with the relevant laws and regulations of the US Securities and Exchange Commission, and will be transferred to the over-the-counter trading market (OTC) for trading.

OTC, as another active market in the U.S. stock market in addition to the New York Stock Exchange and NASDAQ, was once the preferred solution for small and medium-sized enterprises to land in the U.S. stock market because of its short listing cycle and low listing requirements.

After Luckin was delisted from the NASDAQ, it also switched to the OTC market. Since then, Luckin shares have risen on two legs and are now trading at $24.88 per share, up from 46% of its offering price on the Nasdaq.

"Based on the present, facing the problem, squatting, adjusting, and moving forward, it is a strategic choice that we have to make, and facing the future, we must not only find a way to live, but also find a new path and new strength for sustainable development. In February this year, He Yinyu, CEO of Leju Holding Group, wrote in a speech to Leju people.

Leju's capital story is not over.