My earlier forecast that spring may soon arrive for US-listed China stocks may have been premature, as the year’s first IPO by Vipshop (NYSE: VIPS), a money-losing online discount retailer, has been a resounding flop just about any way you look at it. Some might say the fact that Vipshop completed the IPO at all is an accomplishment, and perhaps that’s true since its offering is the first major one by a Chinese company in New York for more than half a year. But the results of the offering and its share trading debut are both dismal from any perspective. The company initially hoped to raise up to $117 million when it first filed for its IPO, and later set a price range of $8.50 to $10.50 per American Depositary Share. But in a relatively rare development, it couldn’t even price the offering within that previously stated range, and ended up having to offer shares at $6.50 each — 24 percent lower than the bottom of the range. (English article; Chinese article) That meant the company only raised $71 million in the process, again nearly 40 percent less than the top end of its original target. Clearly investors weren’t very interested in this money-losing web firm, as overall sentiment towards US-listed Chinese companies remained weak due to a series of accounting scandals last year. If the early signals weren’t loud enough, investors voiced their lack of interest in Vipshop one last time on its Friday trading debut, bidding the shares down 15 percent to end the day at $5.50, giving it a market capitalization of $268 million. The offering marked a decidedly worse performance than the last major US offering by a Chinese company, video sharing site Tudou (Nasdaq: TUDO), whose miserable debut last August prompted other IPO candidates to indefinitely postpone their listings until the market improved. Tudou, which was also losing money, priced its offering in the middle of its range, and then saw its shares tumble 12 percent on their first trading day. So if Tudou was a failure, then it’s probably fair to call Vipshop a disaster. Vipshop is a relatively small player in China’s e-commerce space whereas Tudou is the second largest online video site, so it may not be completely fair to compare the 2. Still, the message from this latest offering is loud and clear: investors aren’t interested in Internet companies that are losing money, and even profitable companies would need to be leaders in their categories to attract much attention. That poses an interesting challenge for the handful of other companies that are moving ahead with listings. China Auto, the earliest company to file for an IPO this year, could still do ok as it’s not an Internet company and is a leader in the auto rental space. Shanda Cloudary and LaShou could be more problematic, as they’re leaders in the online literature and group buying spaces, respectively, but both are still losing lots of money. I expect all 3 of these companies to move forward with their offerings despite this chill from the Vipshop debut, but would look for all to see similar weak pricing and drops on their trading debuts.
Bottom line: Vipshop’s dismal IPO and trading debut indicate overseas investors still have little appetite for money-losing companies in China’s crowded Internet space.
Related postings 相关文章:
◙ Vipshop Takes Lead in IPO Race 维品会或成为今年首家赴美上市中国企业
◙ Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划
◙ China Auto Wins 2012 Race For 1st US IPO 神州租车抢先成首个赴美IPO的中国企业
After an IPO earlier this year that was a major flop, discount e-commerce company Vipshop‘s (NYSE: VIPS) have quietly jumped in the last few months despite many obstacle it has faced this year. This otherwise low-key company, which has been out of the headlines since its disastrous IPO in March, caught my attention after I read a report saying its market cap has passed that of Dangdang (NYSE: DANG), previously China’s largest publicly listed e-commerce firm. (
The literature unit of online game giant Shanda Interactive seems determined to move forward with its plan for a New York IPO despite a weak investor climate, landing $15 million in new funds from venture investor Orbis as it forges ahead. This kind of late-stage investment is clearly designed to generate some buzz for an offering that looks slightly interesting to me, but may still have limited appeal for the average Wall Street investor worried about recent volatility in US-listed China stocks after a series of accounting scandals last year. This latest investment also seems aimed at setting a valuation for the unit, Shanda Cloudary, again as Shanda Interactive looks to raise as much cash as possible to help pay down its big debt from its own recent privatization. (
The winter for China IPOs in New York has officially moved into deep freeze with the official announcement that car rental specialist China Auto, the first Chinese company to file for a US listing back in January, has formally scrapped the offering. (
Leading e-commerce site 360Buy is increasingly looking like a schizophrenic company in terms of its IPO plans, a troublesome development that may reflect a growing rift between its charismatic chief executive and some of its deep-pocketed investors who last year gave it a record $1 billion-plus in new capital. Founder Liu Qiangdong has been quite adamant that an IPO is off the table until next year at the earliest, as he works to build his company into one that would be truly attractive to investors by bringing in seasoned top-level managers and earning profits — 2 things it currently lacks. But then other reports keep popping up saying the company, which also goes by the name Jingdong Mall, is quickly moving towards an IPO to raise billions of dollars, including some high-profile reports last year to that effect. (
