[On January 17, 2020, Eggshell Apartments was successfully listed on the New York Stock Exchange (NYSE), becoming the first Chinese stock to be listed on the NYSE in 2020 under the stock code “DNK”, with Gao Jing as the founder. At that time, according to a report by Ariadne Consulting, eggshell apartments had become one of the largest shared living space platforms in China, ranking first in the industry in terms of growth rate].
On the evening of April 6, the New York Stock Exchange (NYSE) announced that the staff of its regulatory arm, NYSE Regulation, had decided to initiate proceedings to list the long-stay apartment operator (DNK.N) from the NYSE and the immediate suspension of trading in the ADSs of Eggshell Apartments.
Only 445 days have passed between the listing and the announcement of the suspension. During these 445 days, in addition to the failure to comply with the NYSE regulations, the company has also been exposed to many risky incidents such as corporate breach of trust, platform mines, and executive departures, and has been frequently featured in hot searches due to dissatisfied users’ feedback.
What eggshell apartments left for users and capital market investors is still a mess of chicken feathers.
445 days in NYSE
According to public information, Eggshell Apartments is a mid-to-high-end apartment brand under Purple Wutong (Beijing) Asset Management Co. It is committed to transforming the traditional housing industry with the Internet, with product forms covering shared apartments and whole-rent apartments.
On January 17, 2020, Eggshell Apartments was successfully listed on the New York Stock Exchange (NYSE), becoming the first Chinese stock to be listed on the NYSE in 2020 with the stock code “DNK”. According to a report by Ariadne Consulting, Eggshell Apartments has become one of the largest shared living space platforms in China, ranking first in the industry in terms of growth rate.
According to SkyEye’s research, eggshell apartments had experienced seven major financing rounds before going public, with investors including Pleasant Capital, Tiger Global Management, Ant Financial Services, Chunhua Capital, CMC Capital, Banyan Tree Capital and many other familiar institutions.
The reporter checked the published information on the change of shareholders’ shareholding and found that Liu Erhai of Pleasant Capital was already “retreating” three months after the listing of Eggshell Apartments.
From the perspective of eggshell’s share price trend, it has not been able to give investors a satisfactory return.
On the first day of listing, the share price did not break, but it did not rise, and after a small rise to $13.9 per share, it started the road of “falling”.
At the beginning of 2020, the epidemic that swept through the city brought a lot of impact to long term rental apartments, including eggshell apartments, youkai, nest guest, fitshang, hima and other long term rental apartment platforms, and the share price of eggshell apartments also fell to $1.27 per share, down 90.6% from the first day of issuance, and the market value shrinkage made investors cry “unbearable”. “.
In January 2021, Eggshell Apartments was listed as a disqualified issuer for failing to file its 2020 semi-annual report (6-K) on schedule, in violation of the NYSE’s requirements for “quantitative/qualitative continuing listing standards or late filing of annual or interim reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934”. The issuer was classified as a disqualified issuer.
On March 15, pursuant to Rule 802.01D of the NYSE Listed Company Manual, NYSE Regulation suspended trading in Eggshell’s ADSs. Today, NYSE Regulation has determined that Eggshell Apartments is no longer suitable for continued listing.
As of press time, eggshells shares are trading at $2.37 per share.
Landlords and tenants are having a hard time
Judging from the financial data, eggshell apartments have been in a state of not making ends meet, and the delisting seems to have been foreshadowed.
From 2018 to 2019, while eggshell apartments’ operating income more than doubled year-over-year, operating expenses nearly tripled and net losses grew from 1.366 billion yuan to 3.435 billion yuan. In its 2019 annual report, Eggshell Apartments said that a large number of the company’s funding sources include advances from financial institutions related to rental financing as well as user advances, with rental loans accounting for more than half of the total.
In 2020, the loss of eggshell apartments intensified, with a net profit loss of 1.23 billion yuan in the first quarter alone, almost equal to the full-year loss in 2018, and the gearing ratio has risen to 97.06%. from 2017 to the end of the first quarter of 2020, the accumulated loss of eggshell apartments was 6.303 billion yuan.
In December 2020, it was revealed in the media that the listing information of eggshell apartment App had been taken down, and the search for 13 cities in Beijing, Shanghai, Shenzhen, Hangzhou, Tianjin, Wuhan, Nanjing, Guangzhou, Chengdu, Suzhou, Wuxi, Chongqing and Xi’an showed no listing information. The home page of the app only shows the functions of owner’s self-service termination, tenant’s independent termination and self-service termination instructions.
In addition, there are frequent rumors of “closing down and running away” and executive departures on the Internet, and there are also cases of tenants being disconnected from the Internet and having their gas disconnected, or being forcibly evicted by landlords because they cannot pay their landlords’ rent on time. On the one hand, landlords claim that eggshell apartments are in arrears and demand to terminate their leases, while on the other hand, tenants say that they are not only forced to surrender their leases, but also that their rent cannot be refunded. Tenants who paid rent in the form of “rental loans” also faced problems such as having to make monthly mortgage payments even if they had no room to live in. For a while, landlords and tenants have been “exploding”.
The Shanghai Consumer Protection Commission published a report on the complaints received in 2020, showing that among the 3,000 complaints received about long term rental apartments, almost half of them were related to Ziwutong, reaching 1,368 complaints.
This reporter checked the SkyEye search and found that as of April 7, there were a total of 411 risk tips related to Ziwu Tong, including the existence of corporate breach of trust and abnormal operation, and there were as many as 81 legal actions alone, being litigated for reasons including housing lease contract disputes, property damage disputes, reputation disputes, labor dispute disputes and so on.
In November 2020, the Minhang District People’s Court of Shanghai settled the case on the previous three companies (Shanghai Wanfu Decoration Materials Co., Ltd, Shanghai Xinqing Office Furniture Manufacturing Co., Ltd and Beijing Kehai Jiaye Technology Co. The court held that Ziwutong failed to fulfill the payment obligations determined by the effective legal documents within the period specified in the enforcement notice, and therefore listed the company and its legal representative Gao Jing as a defaulted executee and took measures to restrict consumption.
The Black Cat complaint platform shows that the number of complaints against eggshell apartments alone has been as high as 36,122, and most of the disputes are in a state where the complaint website has replied but are still unresolved.
Some customers said that they had filed a withdrawal request on October 6, 2020, which should have been paid within seven working days as stated by the apartment, but more than a month later it has been showing the status of waiting for financial payment.
There are also tenants who claim that the rent of eggshell apartment last year has not been refunded so far, and no one is responsible for the company.
Some tenants claim that Eggshell Apartments not only cut corners in the last few months of the lease, but also made repeated payments for utilities and gas, and that they had not received their deposit after they returned the lease, but the app showed that the refund was successful, arguing that the company was suspected of fraud.
It is worth noting that the reporter checked the official website and found that Eggshell Apartments still claims that it currently manages more than 400,000 rooms and has served more than 1 million users, making it the number one brand satisfaction in the industry.
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