The main concern is that an escalating and prolonged trade war could have a material impact on the Chinese economy, which would hurt an economically-sensitive business like car sales.
As for the IPO, UXIN cut the deal size to 25 mln ADS (each ADS represents 3 ordinary shares) from 38.0 mln, with the IPO pricing at $9 versus the $10.50-$12.50 expected price range. In all, the deal raised $225 mln in gross proceeds, almost 50% less than it had anticipated.
The lead underwriters on the deal were JP Morgan, Cowen, Leerink Partners, and BMO Capital. Shares opened for trading earlier this morning on the Nasdaq at an opening price of $10.40; the stock's price dropped to $9.15 within five minutes of trade.
UXIN is the largest used car e-commerce platform in China. Uxin makes it possible for consumers to buy cars from dealers and for dealers to purchase cars from other dealers and consumers through an online and offline platform. The company says its approach has transformed used car commerce in China. Its platform allows sellers to reach a broad audience and ensures that users have access to an extensive nationwide selection of used cars. Its offline infrastructure allows Uxin to provide transaction-enabling services such as inspection, title transfer, and delivery of vehicles, etc.
Its platform consists of: 1) Uxin Used Car, its 2C business catering to consumer buyers, which provides consumers with customized car recommendations, financing, title transfer, delivery, insurance referral, warranty and other related services; and 2) Uxin Auction, its 2B business catering to business buyers, which helps businesses source vehicles, optimize their turnover, and facilitate cross-regional transactions.
Uxin currently has a nationwide network of over 670 service centers across more than 270 cities that provide services at each step of the transaction cycle. This physical presence helps to cement its relationship with customers. Its title transfer service handles a potentially complex and time-consuming process for buyers, and its warranty program provides consumers with comprehensive after-sale protection.
China is the world's second largest automotive market and is forecasted to become the largest automotive market by 2023. There are approximately 185 mln car PARC (registered cars) in China, compared with 275 mln car PARC in the US. Despite the scale of China's car PARC, the low car ownership rate and a large population indicate significant room for continued growth.
Total used car transaction volume in China reached 12.4 mln in 2017. The ratio of China's used car sales to new car sales by volume was 0.5 in 2017, significantly lower than the 2.4 seen in the U.S. Used car transaction volume in China is expected to grow rapidly at a CAGR of 19% from 12.4 mln in 2017 to 29.6 mln by 2022.
Taking a quick look at the financials, the company is not yet profitable. Revenue in 2017 jumped 137% to US$298.6 mln. In 1Q18, revenue jumped 93% year/year to US$103.3 mln.