Fang Holdings Limited SFUN is expected to register 42.9% earnings per share growth in 2019.
A Look at the Positives
Fang Holdings’ multiple initiatives to strengthen its client base looks impressive. Apart from offering free trials for an unlimited time period, the company lures its free trial users with incentives to upgrade their free trial accounts to paid subscriptions to increase visibility. Also, the company attempts to retain its special listing customer base by updating them periodically about industry developments to help them manage brand management strategically.
We believe these efforts have kept the average number of paying subscribers in good shape. The average number of paying subscribers in 2018, 2017 and 2016 were 206,250, 265,649 and 211,280, respectively.
This business services company has been also undertaking several initiatives such as closure of the self-owned brokerage stores, effective cost control methods and other similar types to improve its operational efficiency.
The company has successfully managed to reduce its total operating expenses by reducing costs associated with advertisements, promotions and sales commission and deduction of staff costs. We believe these efforts will help the company keep its bottom line in good shape.
Further, the company continues to witness solid demand for its database and research services. This is evident from growth across other value-added services segment, which provides access to the company’s information database and industry-related research reports.
In 2018, revenues from other value-added services increased 22% year over year to $36.4 million. The figure represented 12% of total revenues in 2018 compared with 6.7% and 2.8% of total revenues, respectively, in 2017 and 2016.
Lower e-commerce services revenues, due to Fang Holdings’ reversion to a technology-driven platform model, are weighing on its top line. Seasonality in China’s real estate sector is also a concern. Stiff competition and stringent government regulations and tightening policies of the Chinese market act as a major hindrance to Fang Holding’s business. Despite these headwinds, we believe that the company has enough positives that justify the stock’s retention in investors’ portfolio.
Zacks Rank & Stocks to Consider
Fang Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, NV5 Global NVEE and FLEETCOR Technologies FLT. While Navigant Consulting sports a Zacks Rank #1, FLEETCOR and NV5 Global carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, FLEETCOR and NV5 Global is 13.5%, 15.4% and 20%, respectively.
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