Full Truck Alliance (NYSE:YMM)
Full Truck Alliance (NYSE:YMM) shares gained 13.6% this morning.
Even though the Chinese economy had a rough quarter, U.S.-listed Chinese companies were higher today thanks to FTA’s better-than-expected earnings report and generally more hopeful news about China. Today’s dramatic upswing can be directly attributed to these elements.
What’s the Reason?
Full Truck Alliance (NYSE:YMM) increased revenue by 49.3 percent to $249.3 million in the second quarter despite the severe Shanghai lockdowns between March and May. The company also posted adjusted (non-GAAP) earnings per ADS of $0.04. Both were better than expected and well over the upper end of the conservative guideline issued in June.
Though freight volumes decreased by 11.1% from the previous year, Full Truck Alliance (NYSE:YMM) could accomplish more with the same amount of resources. There is evidence that Full Truck’s platform has more substantial pricing power and operational efficiency due to higher commissions and more advertising.
In addition, management projected healthy revenue growth for the coming quarter, with estimates ranging from 32.9% to 39.2%. Remember that China’s macroeconomic climate has stayed rather nasty as of late.
However, that may also be getting better. China’s State Council revealed a 19-point stimulus package focused on infrastructure spending, totaling roughly $117 billion on Thursday. That’s a significant number, but it’s not huge, and it’s unclear whether or not China’s measures will be sufficient to kickstart a recovery after COVID lockdowns and the implosion of China’s property sector hammered the local economy.
In addition, U.S. and Chinese officials are apparently close to reaching an agreement to provide U.S. auditors access to Chinese financial records, a prerequisite for Chinese equities listed in the U.S. to maintain their listings here. There were a lot of worries that Chinese equities traded in the U.S., including Full Truck Alliance (NYSE:YMM) Alliance, might be delisted from U.S. exchanges within the next three years, but if this news is accurate, delisting might not happen at all.
What Next?
With a price-to-sales ratio of roughly 10, Full Truck Alliance (NYSE:YMM) Alliance may seem pricey; however, this is somewhat deceptive, considering the company also has $3.9 billion in cash on the balance sheet and no debt. That’s about half its market valuation, bringing its actual price-to-sales ratio to a little over five.
The company is a Chinese one to keep an eye on in addition to the more well-known Chinese tech brands because it is expanding at steady rates and is beginning to turn a profit due to higher monetization.
Featured Image: Megapixl @Krunja
Author Shariq Khan 
