China’s Shenzhou Rent-a-Car Changes in the US

After a long “winter” period, China’s stock market will seem to open again. Prior to the Lunar New Year, Shenzhou Rent-A-Car submitted a listing application to the US Securities Regulatory Commission. This was the first Chinese company to submit a listing application to the SEC after the SEC amended the filing rules.

According to the prospectus, there are currently about 26,000 cars in China. However, because car rental is a heavy asset business model, the company “burns money” at a rapid rate. According to statistics, the company’s net losses for the first nine months of 2009, 2010, and 2011 were 3.2 million yuan and 43.3 million yuan respectively. And 117.6 million yuan, not only in the past three years the company has not been able to achieve profitability, but the loss is still increasing year by year. Shenzhou Car Rental stated that "the funds raised by the IPO will be used to repay debts and purchase vehicles."

After the potato online market in August last year, there was no Chinese-funded company listed in the United States. Thunder, Shanda Literature, and Handle Net had successively closed hands and postponed the IPO schedule. This time, Shenzhou Rent-A-Car submitted a listing application to the SEC. Some analysts pointed out that if Shenzhou Car Rental can successfully land on the U.S. capital market, it will undoubtedly bring confidence to the companies that will be listed in the United States. The “window” to the U.S. listing is also Will open again. It should be said that the Shenzhou Car Rental IPO reflects the increasingly urgent funding needs of the heavy-asset industry of car leasing in the context of high-speed expansion and fierce competition. It also shows that Chinese companies’ optimism of bottoming out of overseas capital markets is beginning to rebound.

However, according to statistics, of the 254 Chinese-funded companies listed on the US market as of the end of 2011, only 16 companies had achieved positive gains throughout the year, while the remaining 238 companies ended in decline, with more than half of them falling. The stock price of the company has fallen by more than 50%, and the share prices of 39 companies have fallen by over 80%. The Chinese concept stock fell sharply in the second half of last year, and its “culprit” was Surabaya. Since the beginning of 2011, Surabaya began to short the China High Speed ​​Channel. In 2011, the concept stocks in China were hit by successive ones. Subsequently, Lishui accused Jiahan Forestry of committing financial fraud and four-time disruption of Focus Media, and it has become a target of all Chinese concept shareholders.

However, it is strange that, recently, the attitude of the drowning organization to China’s concept stocks has also changed 180 degrees. Recently, the founder of Surabaya has publicly stated that although it is only the tip of the iceberg of China's concept stocks, it is trying to find Chinese stocks that can do more. But this time the big change, is it because of the previous "short" compensation? Or think that at the moment you can dip the bottom of the stocks? Regarding the position of Surabaya, some analysts believe that the “long” information shows that the above institutions recognize the outstanding Chinese concept stocks, and also reminds investors that the general downturn of China’s concept stocks was “wrongful”. At the same time, the position of Lishui is undoubtedly a good news for China's stocks.

With the overall improvement of the U.S. capital market and the gradual recovery of investor confidence in China's stocks, it is expected that the situation of the 2012 medium-term stocks will improve and will not continue to be short. However, some industry insiders have expressed their opinion on Surabaya's position that the short-selling is no longer appropriate. From the perspective of short-selling power, the Nasdaq China Index has fallen 40 times since it was consigned to Chinese concept stocks in May last year. %. In addition, as many as 29 Chinese concept companies have withdrawn from the US main board market, and 48 companies have been warned of suspension or delisting, and six companies have been suspended from stock prices. At present, the general stocks in the trading state have suffered market sell-off. According to the statistics at the end of last year, of the approximately 240 medium-to-medium share options, nearly 70% of the company’s share price has fallen by more than 50%, while the Nasdaq index has only fallen by 1.8% during the same period. Judging from the fierce competition, the founder of Xiangxi has made it clear that most of the agencies that have done so far in the United States in the past few years have similar models, and that the competition among the players has led to fierce competition in the industry.

I checked the information, mainly involved in more than 20 agencies in the aerial stocks, including Surabaya, Xiangxi, OLP and so on. Doing aerial stocks has formed a clear industry chain in the United States that focuses on research institutions, hedge funds, and law firms. On June 21 last year, the Securities and Exchange Commission stated that it is considering introducing more stringent regulatory measures to increase the threshold for foreign companies to list in the United States through reverse mergers. In November last year, the SEC formally approved the new rules for reverse mergers. Therefore, it can be imagined that the Surabaya company has tossed out more shares in the stocks, probably because of the fierce competition of the "shorting" companies. It may also be due to the fact that the SEC has already stepped up supervision of the Chinese concept stocks listed in the United States.

However, there are also analysts who are more cautious. The famous angel investor Xue Manzi once pointed out that the investment amount will drop sharply in the first half of 2012, and the Chinese concept stock will not recover in a short time. If we look at the general trend of the US market, the current situation is not very good. From a long-term perspective, the value of China's stocks has not been underestimated. It is worth noting that the current change of face does not mean that the headhunters such as Drowned Water have already announced their complete withdrawal. We should understand that short-sell institutions such as drowning water are generally short-term and short-term, and their views can only provide short- and medium-term reference, plus the market. The trust of Chinese companies cannot be quickly restored in the short term. It is not easy for Chinese concept stocks to return to the end of 2010. (Hao Jie, commentator on the economy of "The World Company")