It’s official: the year for New York IPOs of Chinese firms has formally begun, and the first company out of the gate for 2012 is an unlikely candidate in the form of a rental car company with the rather boring name of China Auto. The company made its formal first public filing on Thursday in the United States for a New York initial public offering to raise up to $300 million, a respectable figure for a sector that has been dogged for nearly a year now by a series of accounting scandals that have hammered US-listed China stocks. (English article; Chinese article) China Auto included a wide range of data in its first public filing, but most of it was detailed information about its core car rental business and no mention was made of whether or not it is profitable. My guess would be that the company does indeed earn a profit, as any loss-making company would be foolish to try its luck as the first new Chinese company to list in New York this year in the highly skeptical climate towards such stocks. The year 2011 was one that most US-listed Chinese firms would rather forget, characterized by a series of accounting scandals that saw many companies plunge in value, often by 50 percent or more. Recent signs have emerged that the worst of the sell-off may be past (previous post), though the true test will come with the first new IPO by a Chinese company in the new year. Based on this initial filing, that company could well be China Auto. Significantly, China Auto comes from the auto rental space, making it a much more conventional company that investors can better understand, unlike the high-tech and Internet firms that make up the big majority of the largest US-listed China firms. China raced past the US to become the world’s largest auto market in 2010, as economic incentives from Beijing boosted demand from millions of new Chinese yuppies during the global downturn. Most of those incentives have now ended, causing sales to slow considerably, perhaps providing a golden opportunity for the car rental business that caters to people who would rather rent than own a car. I’ll need to see some more financials — specifically how profitable or loss-making China Auto is — before making a sharper prediction on how its IPO will fare if it goes forward. But given the preliminary data and broader market conditions, I would say the offering should attract moderate interest from investors and should help restore some confidence to the battered sector.
Bottom line: China Auto is likely to see moderate success from its pending US listing, helping to restore some confidence to the battered sector of US-listed China stocks.
Related postings 相关文章:
◙ Cleanup Resumes, Facebook Sniffs Out China Investors 在美上市的中国企业将继续面临“大清洗”
◙ Xunlei, Muddy Waters Sound Upbeat Notes 迅雷和Muddy Waters保持谨慎乐观
◙ 2011 Limps Out With Haitong IPO Withdrawal 海通证券推迟IPO 2011以市场疲弱状态落幕
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China’s thirst for luxury goods is a well established fact, with sales soaring for big brands like Louis Vuitton and Burberry in recent years as Chinese consumers eagerly spend thousands of dollars for the latest status symbol. But the taste for luxury for more everyday items is far less established — a reality that Disney (NYSE: DIS) will have to contend with as it embarks on an ambitious plan to open up to 40 of its recently developed Disney-brand stores in China over the next 3 years. (
I want to start today with a silly story that shows that despite the recent confidence crisis for US-listed Chinese stocks, anyone with a good China story to tell can still earn a fast buck on Wall Street. The story I’m referring to involves battered video sharing site Ku6 Media (Nasdaq: KUTV), which has announced a tie-up with YouTube that will see the global giant start a new channel to bring Ku6’s content to a global audience. (
There are a couple of interesting stories out today on stock markets that specialize in China listings, one pointing to a potential surge in new offerings in Hong Kong while the other suggesting a long-delayed international board being set up in Shanghai won’t be launching anytime soon. Let’s start with the Hong Kong development, which is the more interesting of the two. Media are quoting a Chinese securities regulator saying his agency wants to streamline the process for Chinese companies to list in Hong Kong, a move aimed at helping smaller entrepreneurial companies to raise funds. (
Huawei Technologies, one of China’s most successful exporters but also one of its most frustrated, is following in the footsteps of crosstown rival ZTE (HKEx: 763; Shenzhen 000063) in discovering cellphones, a far less controversial product than its traditional networking equipment business. The move looks like a smart one for Huawei, even if the company is a little late coming to this product area, with many interesting implications. Chinese media are quoting an executive saying Huawei is aiming to become one of the world’s top 3 cellphone makers within the next 5 years — a big order for a company that is currently just a minor player but certainly not impossible for one with Huawei’s vast resources. (
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