Bottom line: Meitu’s shares are likely to price and debut weakly due to skepticism about its profit potential from big western investors, but could perform better over the longer term if the beauty app can monetize its large user base.
Meitu sets IPO price range
What’s likely to be Hong Kong’s biggest high-tech IPO in nearly a decade is creeping ahead, with word that beauty app operator Meitu has set a price range for its widely watched offering that puts it within reach of its target to raise $750 million. But a read between the lines shows that this offering could easily price at the lower end of its range, following earlier investor worries that Meitu might have difficulty leveraging its huge customer base into meaningful profits anytime soon.
Meitu’s quandary is hardly unique, in an Internet universe where having huge user numbers doesn’t always translate to big profits. In this case Meitu, operator of an app that lets users tweak selfies to make themselves look more attractive, is quite rich in terms of traffic, with 450 million active users. But it hasn’t found a way to actually make money from that audience, and instead earns 95 percent of its revenue from sales of smartphones that draw people to its app. Read Full Post…
Bottom line: Didi Kuaidi’s IPO could come as early as the fourth quarter, with Hong Kong, China and New York standing equal chances of winning what could be the year’s biggest China Internet listing, worth up to $2 billion.
Didi Kuaidi to list in Q4
Just days after launching a massive promotion to attract new customers to its private hired car services, Didi Kuaidi is reportedly starting the process that could end with a major IPO for China’s largest taxi app operator by year end. Such a development wouldn’t come as a huge surprise, following the company’s formation earlier this year through the merger of 2 bitter rivals to create a Chinese market leader reportedly valued at up to $9 billion.
But equally interesting will be where this fast-driving company chooses to list. Just a year ago the answer would have almost certainly been New York, which is where most of China’s top Internet companies are traded. But a recent boom in China’s own stock markets and a new program that allows mainland investors to buy Hong Kong stocks have made Chinese Internet companies start to seriously consider both of these markets for IPOs as well. Read Full Post…
Bottom line: China Mobile Games could be combined with Shanda Games if buyouts for the 2 companies succeed, followed by a re-listing in China that could gain strong interest from local investors.
China Mobile Games joins de-listing queue
The latest news that China Mobile Games (Nasdaq: CMGE) has received a buyout offer won’t surprise anyone, as it becomes the latest New York-listed Chinese Internet firm to receive such a bid due to its low valuation. What does come as a slight surprise is investor reaction to the bid, which saw China Mobile Games’ share price drop to well below the offer price. The could reflect some skepticism about the quality of this particular bid, which is coming from a Chinese securities brokerage.
This deal marks the latest in a long string of similar buyouts for US-listed Chinese firms whose shares have often languished in New York due to lack of interest from western investors who are unfamiliar with these names. Many of the companies are eying quick re-listings in their home China market, where they believe they can get valuations that are as much as double what they were worth in New York. Read Full Post…
Bottom line: The new purchase of 3 smaller rivals by Ourpalm could position the company as a consolidator for China’s fragmented gaming sector, and could be followed by one or more similar purchases in the next year.
Ourpalm buys 3 smaller rivals
A newly announced deal will see online game operator Ourpalm (Shenzhen: 300315) combine with 3 smaller rivals in a relatively large deal that could lay the foundation for a major new player to drive much-needed consolidation in the space. The new company looks interesting for a number of reasons, including Ourpalm’s existing connection with leading movie maker Huayi Bros, which could become an important strategic partner for the company.
Ourpalm could also become a strong platform to absorb some of the smaller Hong Kong- and New York-listed gaming companies that have struggled for investor attention due to stalling profit and revenue growth caused by their lack of scale. Potential players for future tie-ups could include recently listed Hong Kong players like Linekong (HKEx: 8267) and Forgame (HKEx: 484), or New York-listed Sungy Mobile (Nasdaq: GOMO), whose shares have all languished since their IPOs. Read Full Post…
Bottom line: New IPOs by Chinese tech firms will slow sharply next year, with profitable, sector-leading companies the most likely to make successful offerings.
Linekong finishes flat in banner year for IPOs
On this final day of 2014, I thought I’d take a look at the scorecard for high-tech IPOs this year, including how they’ve performed since their debuts and what we might expect for next year. It seems fitting to start the discussion with the final high-tech IPO of the year, which came with a flat trading debut on Tuesday for mobile gaming company Linekong (HKEx: 8267). That may sound bad, but it’s actually quite good for gaming stocks that have become investor pariahs over the last 2 years. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 31. To view a full article or story, click on the link next to the headline.
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Fosun (HKEx: 656) To Buy Meadowbrook In $433 Mln Transaction (English article)
Ping An Unit Buys 1 Bln Yuan In United PV (HKEx: 686) Convertible Bonds (Chinese article)
Linekong (HKEx: 8267) Finishes Flat In HK Trading Debut (Chinese article)
China Plans To Extend Green Vehicle Subsidies Until 2020 (English article)
ZTE (HKEx: 763) Unveils Redesigned Logo In New Strategic Focus On M-ICT Innovations (Businesswire)
Bottom line: Shares of BAIC and Dalian Wanda will be flat over the next few months after weak trading debuts, while Linekong shares will open down 5-10 percent if they debut before year-end.
Dalian Wanda dips in IPO
The year-end flurry of IPOs happening in Hong Kong is sputtering, with the 2 biggest offerings by shopping mall operator Dalian Wanda (HKEx: 3699) and car maker BAIC Motor (HKEx: 1958) both making weak trading debuts. That doesn’t bode too well for one of the year’s final remaining IPOs for Linekong, since other companies from the highly competitive video gaming sector haven’t done very well in their similar recent listings in Hong Kong. Read Full Post…
Bottom line: Linekong’s IPO should price in the middle of its range and post modest gains on its trading debut, while Dalian Wanda will price near the bottom of its range and debut flat to down slightly.
Linekong aims for December 19 trading debut
The year-end rush of IPOs is steaming ahead in Hong Kong, with online game operator Linekong popping back into the headlines for a year-end listing, as property giant Dalian Wanda starts to sell its own IPO story to investors. The former deal is relatively large for an online game company, aiming to raise nearly $200 million. Meantime, the latter could become the biggest IPO Hong Kong has seen in several years, with the potential to raise nearly $4 billion. Frankly speaking, neither of these deals looks too exciting to me as both come in sectors plagued by overcapacity and stiff competition. But that said, at least Dalian Wanda could be a good longer-term bet due to its status as one of China’s best-run and biggest commercial property developers. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 9. To view a full article or story, click on the link next to the headline.
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Facebook’s Zuckerberg, Apple’s Cook Meet China’s Internet Minister In US (English article)
Xunlei (Nasdaq: XNET) Pop-Up Window Service Shut Down For Pornography (Chinese article)
Trina Solar (NYSE: TSL) Acquires 28 Pct Stake In Shuntai Leasing (PRNewswire)
LeTV (Shenzhen: 300104) To Acquire Affiliated Le Vision Pictures (English article)
Game Operator Linekong To Make HK IPO December 19, Raise Up To $190 Mln (Chinese article)
In the absence of big company news so far this week, I’ve decided tolook at the scorecard for the flood of technology IPOs over the last 12 months and what it might say about what’s ahead into next year. The record so far looks quite good in general, especially for companies that made a flurry of New York offerings at the end of last year and whose shares have mostly doubled or more since then.
But one notable exception to the trend is mobile games, as 2 of the 3 major players to make recent listings are now squarely in negative territory. That doesn’t bode well for a 3 upcoming similar listings, 1 in New York and 2 in Hong Kong, which appear to be stalling due to the cool investor sentiment. Read Full Post…
Much of the world is fixated on the upcoming IPO of e-commerce giant Alibaba in New York, but a far smaller new listing plan by mobile game developer Feiyu Technology is shining a low-key spotlight on a recent jump for such listings in Hong Kong. Many have said that Hong Kong should be the most attractive offshore listing ground for Chinese venture-backed IPOs, since the former British colony is closer geographically and culturally than the currently favored site of New York. But strict listing rules on profitability and ownership structure have kept most Chinese venture-backed tech firms looking to New York instead. Read Full Post…
