China Index Holdings Limited

CIH reported Q2 2022 total revenue of RMB110.2 million, down 27.8% from RMB152.7 million a year ago. SaaS/information and analytics revenue was RMB63.4 million, down 14.4%, and marketplace revenue was RMB46.8 million, down 40.4%. Cost of revenues was RMB19.5 million, down 31.8%; operating expenses were RMB45.7 million, down 12.1%; operating income was RMB45 million, down 37.6%; income tax expense was RMB25.3 million, up 152.4%; and net income was RMB21.2 million, down 68.6%. For the first half, revenue was RMB228.7 million, down 20.1%, and net income was RMB63.1 million, down 49.1%. Management said 2022 annual revenue is expected to record a double-digit decrease year over year, but gave no quarterly or full-year profit guidance.

Yu Huang emphasized that CIH’s data products are more essential to customers than marketplace services, especially when market conditions are changing. She said the company’s core advantage is combining data with analytics tools that track the market from land sales through new development and secondary market transactions. Her tone was cautiously optimistic: the property market is in an adjustment phase, but she believes demand for data remains and the company is less exposed because it is concentrated in first- and second-tier cities.

The prepared financial update highlighted pressure across the business, with Q2 revenue down 27.8% and net income down 68.6%, while cost of revenues fell 31.8% and operating expenses fell 12.1%. For the first half, revenue declined 20.1% and net income declined 49.1%, and management tied the weaker results to broad macro and real estate market challenges. On taxes, management said the increase in income tax expense reflected a decision to exchange into USD this year in preparation for potential USD expenses. On cash/working capital, management said collection times are lengthening due to market adjustment, but most products and services are prepaid or paid in advance, which they said lowers bad-debt risk.

Analysts pressed management on why SaaS revenue rose sequentially while marketplace revenue fell, how to gauge recovery in the Chinese real estate market, whether the company could regain compliance with the minimum bid-price requirement, and whether accounts receivable were a concern. Management said data is a fundamental need for market participants, explained that it tracks land sales, auctions, development, and secondary-market transactions to monitor the market, and said the business is relatively less affected because it focuses on first- and second-tier cities. On the stock-price issue, management said it is actively monitoring the situation and is considering a reverse stock split among other options. On accounts receivable, it said collection is slower but bad-debt risk is low because most revenue is prepaid. Management also said there has been no new response from General Atlantic on the prior going-private proposal, though the board discussed it at the time.