Tue Sep 10 17:52:56 UTC 2024: ## Chinese EV Dealership Aochuang Holdings Seeks $6.25 Million in US IPO Despite Declining Revenue

**Haikou City, China -** Aochuang Holdings Inc. (ANE), a Chinese electric vehicle (EV) dealership operating in Hainan Province, has filed to raise $6.25 million in an initial public offering (IPO) on the US market.

Despite a growing EV market in China, Aochuang faces several challenges, including declining revenue, a shift to operating losses, and increasing cash used in operations. The company’s IPO plans have raised concerns among analysts due to these financial struggles and its reliance on a fragmented market with intense competition.

Aochuang specializes in the sales and maintenance of passenger EVs through its network of four dealerships. The company claims to have received manufacturer authorizations for two additional dealerships, which are expected to open by the end of 2024. However, three of its existing dealerships face authorization expiry dates in December 2024 unless extended.

The company’s revenue has been declining, and its selling expenses have dropped accordingly, leading to a negative selling efficiency multiple. While the EV market in China is projected to grow significantly, Aochuang has been forced to reduce prices and services to stay competitive, further impacting its profitability.

Despite these challenges, Aochuang is looking to capitalize on the government’s support for transitioning to zero-emission vehicles and Hainan’s ban on fuel vehicle sales. However, analysts caution that Aochuang’s excessive valuation assumptions, along with its foreign private issuer and emerging growth company status, pose significant risks for potential investors.

**Analyst Donovan Jones from IPO Edge recommends investors avoid the ANE IPO.** He argues that Aochuang’s declining financials, competitive pressures, and overvalued IPO pricing make it a risky investment.

Aochuang plans to use the IPO proceeds for building charging stations, expanding vehicle brands, and general corporate purposes. The IPO is expected to price soon, with EF Hutton as the sole bookrunner.

**Investors are advised to conduct thorough due diligence before considering an investment in Aochuang Holdings Inc.**

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