Key Takeaways:
- Changjiu Holdings, a subsidiary of Changjiu Group, has been expanding its revenues in recent years but profits have been volatile, falling nearly 27% in the first half of this year despite higher turnover
- Aside from vehicle monitoring, the firm manages dealership operations on behalf of 75 clients but only one of them is unrelated to its parent company
By Fai Pui
In China, vehicle tracking services help to keep the wheels of the car market turning.
Here’s how it works. Many Chinese consumers buy their cars at dealerships, which often depend on loans from banks and finance companies to pay for their automotive stock. The lenders treat the cars as collateral and are keen to avoid the risk of the assets being damaged or stolen. The solution is to pay a third-party company to monitor the pledged vehicles.
Changjiu Holdings Ltd., China’s largest provider of such services in the automobile distribution sector, passed a listing hearing last Friday at its second attempt and is now heading for an IPO on the Hong Kong Stock Exchange.
The company first applied in May this year under the name “Changjiu Digital Technology Ltd”, but the bid lapsed when the prospectus expired. The company dropped the tech label and renamed itself Changjiu Holdings before refiling in November, mindful perhaps that investors have been wary of the tech sector after a stock price plunge in recent years.
The name “Changjiu” may ring a bell for some readers. Another firm in the same family, Beijing Changjiu Logistics Corp. (603569.SH), listed its shares in Shanghai in 2016. When the stock surged 2.5 times, the couple who founded the parent company, Changjiu Group, were propelled onto the “Hurun China Rich List” after their fortune soared by 18 billion yuan ($2.54 billion).
But seven years on it would be hard for Bo Shijiu and Li Guiping to recreate that success, given concern about the weak overall market ...