NEW YORK (TheStreet) -- Shares of Qunar Cayman Islands (QUNR) were gaining 5.4% to $50.31 Friday morning after the travel company priced and downsized its public offering of American Depositary Shares.
Qunar priced the 6,526,316 ADSs in its public offering at $47.50 an ADS. The company previously announced it would offer 8 million ADSs in the public offering. The underwriters of the offering have a 30-day option to buy up to an additional 315,790 ADSs.
Each ADS in the offering represents three Class B ordinary shares of Qunar.
The company said it plans to use the proceeds from the offering for general corporate purposes which include the acquisition of new users. Qunar may also use part of the proceeds to acquire "complementary businesses, products, services, or technologies," though it noted it hasn't yet entered into any agreements of commitments for specific acquisitions.
TheStreet Ratings team rates QUNAR CAYMAN ISLANDS -ADR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate QUNAR CAYMAN ISLANDS -ADR (QUNR) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet & Catalog Retail industry. The net income has significantly decreased by 434.3% when compared to the same quarter one year ago, falling from -$20.20 million to -$107.92 million.
- QUNAR CAYMAN ISLANDS -ADR has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, QUNAR CAYMAN ISLANDS -ADR reported poor results of -$2.53 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings (-$1.38 versus -$2.53).
- The gross profit margin for QUNAR CAYMAN ISLANDS -ADR is currently very high, coming in at 77.27%. Regardless of QUNR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, QUNR's net profit margin of -130.04% significantly underperformed when compared to the industry average.
- Compared to its closing price of one year ago, QUNR's share price has jumped by 87.51%, exceeding the performance of the broader market during that same time frame. Regarding the future course of this stock, we feel that the risks involved in investing in QUNR do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- QUNR's very impressive revenue growth greatly exceeded the industry average of 19.0%. Since the same quarter one year prior, revenues leaped by 95.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- You can view the full analysis from the report here: QUNR Ratings Report