There’s quite a bit of new listings and delistings news out there today, led by word that car rental specialist China Auto’s (NYSE: CARH) stalled IPO is finally moving ahead, although only after being cut by half as overseas investors continue to show little or no interest in new Chinese offerings. That news comes as another auto rental firm with a similar name, AutoChina (OTC: AUTCF) has announced it is being sued by the US securities regulator, following its delisting from the Nasdaq last year at the height of the confidence crisis against US-listed China stocks. Last but not least, People’s Daily Online, the web site of the official newspaper of the Communist Party, is moving ahead with its own landmark IPO, kicking off the roadshow for an offering that will undoubtedly get a warm welcome from cash-rich Chinese investors who are also party members. Let’s start with China Auto, which has said it now hopes to raise up to $158 million from its IPO, with its New York trading debut set for April 26. (Chinese article) The new fund-raising target is about half of China Auto’s original goal of raising up to $300 million, announced when it became China’s first company this year to file for a US IPO back in January. (previous post) For unexplained reasons the company’s IPO disappeared for a while, and another firm, discount online retailer Vipshop (NYSE: VIPS) became the first Chinese firm to make a New York IPO 3 weeks ago in a dismal offering that showed overseas investors are still skeptical of Chinese firms following a series of accounting scandals last year. (previous post) I predict that China Auto, which posted a net loss of 118 million yuan in the first 9 months of last year, will price its shares at the bottom of their indicated range, and it will end up raising around $130 million. Despite that weakness, I wouldn’t be surprised if some bargain hunters rushed in and helped it to post a modest raise on it first trading day. Meantime, the unrelated AutoChina, which was delisted from the Nasdaq last year, has announced that it’s being sued by the US Securities and Exchange Commission for manipulating trading in its shares to make it look like there was more investor interest in the company than there really was (company announcement) My only comment in this situation is that it’s bad when a law firm sues your company for stock manipulation, but it’s really bad when the securities regulator sues you, and this could well mark the beginning of the end for AutoChina’s shares in the US, which now trade over-the-counter. Finally, there’s the People’s Daily website, which has kicked off its roadshow for a domestic IPO to raise up to 1.5 billion yuan, or about $240 million. (English article) I fully expect this landmark offering, a sign of China’s recent drive to liberalize the media sector, to be a huge success, boosted by cash-rich party members and their associates wishing to give Beijing some face. But from an investor point of view, I wouldn’t get too excited about this company over the longer term, as profits will clearly be a distant secondary priority for an organization so closely associated with the party.
Bottom line: China Auto’s upcoming IPO will price near the bottom of its range, but its share could post a modest rise on their trading debut boosted by bargain hunters.
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