(Yicai Global) June 11 -- Shares of Phoenix Tree Holdings, the operator of one of China’s biggest co-living space rental platforms, soared after the company reported a 63 percent year-on-year gain in revenue for the first quarter despite the coronavirus pandemic.

Phoenix Tree’s stock price [NYSE: DNK] closed 6.6 percent higher yesterday at USD10.02, after earlier surging as much as 11.7 percent. The Beijing-based company, also known as Danke Apartment, released its earnings report before the start of trading in New York.

Revenue came in at CNY1.94 billion (USD274 million) in the three months ended March 31, while the firm’s net loss widened 51 percent to CNY1.23 billion (USD174 million) from CNY816.2 million. Its occupancy rate fell 2 percentage points from a year earlier because of lockdowns imposed in response to the contagion’s outbreak.

“We took measures to counteract some of the worst impacts from the decrease in occupancy rates including reducing the rates of sourcing and renovation of additional apartment units and negotiating with property owners for early termination of certain leases,” Executive Chairman Derek Shen said in an earnings conference call. “As a result, the number of apartment units we operated decreased sequentially.”

Operating expenses rose 58.5 percent to CNY3.1 billion. Rental costs jumped 67.5 percent to CNY1.96 billion, and research and development spending on technology and products was CNY61 million (USD8.63 million), a 25.6 percent increase, the report showed.

“With the pandemic outbreak seems to be under control in China, we have started to see early signs of recovery recently,” Shen said. “As the Chinese government began relaxing its tribal restrictions on quarantine measures in recent weeks, more residents have begun to return to the cities where they work.”

For this quarter, Phoenix Tree expects revenue to be about CNY1.85 billion to CNY1.95 billion.

As of March 31, Phoenix Tree had a presence in 13 cities across China, operating 419,000 apartments, an annual gain of 47 percent. It operated 207,000 apartments in the three big cities of Beijing, Shanghai and Shenzhen, with other cities accounting for the remaining 212,000. It is the first time since the first quarter of 2019 that the company has had more than half of its apartments in cities other than the big three.

Editor: Peter Thomas