Goldman Sachs: Chinese Vehicle E-Commerce Platform Uxin Should Be Profitable By 2020

Uxin Ltd (ADR) UXIN, a Chinese e-commerce platform for used cars, won over a sell-side bull Thursday, with Goldman Sachs identifying three key strengths in the company.

The Analyst

Analyst Ronald Keung initiated coverage of Uxin shares with a Buy rating and 12-month price target of $9.70.

The Thesis

Uxin operates a 2B platform as well as 2C platforms, and combines a scalable online platform for car sellers and buyers with an offline infrastructure and nationwide delivery network, Keung said in the Thursday initation note.

Total transaction volume was 634,000 in 2017, the analyst said. 

Intense competition necessitates higher spending by Uxin on sales and marketing, Keung said, adding that he expects the company to turn profitable by 2020 if its execution and market share consolidation continue in a "non-winner-takes-all market." 

"We expect Uxin will remain at the wheel of the fast-growing used car market, leveraging an online-offline model that loops in both dealers and consumers," the analyst said. 

The following are Uxin's key strengths, Keung said: 

• Market leadership and redefining the used car transaction experience.
• An integrated online and offline approach.
• Uxin's technology and data analytics approach.

Goldman Sachs expects Uxin to report revenue growth of 67 percent year-over-year to 619 billion yuan in its second-quarter print, helped by 38-percent volume growth to 202,000. The sell-side firm forecast gross merchandise volume of 13.7 billion.

Uxin is set to release quarterly results Wednesday, Aug. 22 before the open.

The Price Action

Uxin shares were rising 6.56 percent to $5.60 at the time of publication. 

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