Pactera Surges on Buyout Plan as Qihoo Jumps: China Overnight
Chinese equities rose to the highest level in three months in New York as Pactera Technology International Ltd. (PACT) jumped after receiving a proposal to go private and Qihoo 360 Technology Co. climbed to a record high on a stronger-than-estimated sales forecast.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. surged 1.7 percent to 97.01 yesterday, the highest price since Feb. 6. Pactera, a Dalian-based information technology outsourcing company, surged 31 percent, while software developer Qihoo extended a five-day rally. E-Commerce China Dangdang Inc. (DANG) climbed 16 percent after an upgrade by Bank of China International Holdings Ltd. (CHIH) Suntech Power Holdings Co. led a rally in solar producers.
Pactera said yesterday a group, consisting of members of its senior management and funds managed by Blackstone Group LP (BX), offered to acquire outstanding company shares to take it private for $7.5 each, a 43 percent premium over its closing level May 17. A week earlier, AsiaInfo-Linkage Inc. (ASIA) agreed to be bought by a consortium led by Citic Capital Holdings Ltd.
“The stocks have been completely ignored, which has made a good value proposition for the private-equity funds,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages $700 million in assets including Chinese stocks, said by e-mail yesterday from Lisle, Illinois. “While the private offers reflect a good premium, I don’t think they accurately reflect the future value these companies can trade.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., advanced 1.2 percent in New York to $38.37, rising the most in three weeks. The Standard & Poor’s 500 Index (SPX) retreated less than 0.1 percent to 1,669.66.
Pactera’s American depositary receipts surged to a two-month high of $6.87, the steepest gain on record. The company was formed after a merger between HiSoft Technology International Ltd. and VanceInfo Technologies Inc. on Nov. 9. The surge trimmed the ADRs’ loss this year to 13 percent.
AsiaInfo, a Beijing-based telecommunications software developer, agreed to be bought by private investors for $12 per share on May 13, 52 percent above the level on Jan. 12, 2012, a day before it received the going-private offer.
“Some of the China names that once were darlings and since have fallen from grace are especially appealing” to PE investors, Papp at Oberweis said, adding these companies could seek listing in Hong Kong in a few years after leaving the U.S. stock market.
Beijing-based Qihoo (QIHU), owner of the most-used web browser in China, forecast second-quarter sales of at least $142 million, beating the $122 million average projection of seven analysts compiled by Bloomberg before its earnings release May 19 . The company’s first-quarter revenue of $109.9 million and net income of $5.6 million also exceeded what analysts had estimated.
The copmany’s new web search engine, started in August, will contribute to about 10 percent of its sales in the second quarter to stoke faster revenue growth, up from about 5 percent in the January-March period, analysts led by Timothy Chan at Morgan Stanley wrote in a note yesterday. They raised a price target for Qihoo’s ADRs to $46 from $39, reiterating a rating of overweight, equivalent to buy.
Qihoo’s ADRs jumped 7.6 percent to $44.19 on its fifth day of gains, the highest price since its U.S. listing in March 2011. Trading volume was more than three times the daily average over the past three months.
E-Commerce, the biggest online book retailer in China, soared 16 percent to $6.62, the highest level since June.
Analysts at BOC International, the investment banking arm of Bank of China Ltd., upgraded its recommendation on the company known as Dangdang to buy from hold yesterday, citing expectations the company will become profitable from the second half of 2014, a year earlier than their previous estimate.
Suntech, the world’s largest solar-panel maker in 2011, jumped 27 percent to 84 cents in New York. Trina Solar Ltd. (TSL) advanced 20 percent to $6.78, the highest price since July, while LDK Solar Co. also climbed 20 percent to a three-month high of $1.83.
JA Solar Holdings Co., the largest solar-cell producer by capacity, surged 70 percent to $9.56, after first-quarter shipments exceeded the Shanghai-based company’s forecast on strong demand in Japan.
Goldman Sachs Group Inc. plans to invest as much as 50 billion yen ($487 million) in renewable energy projects in Japan in the next five years, Hiroko Matsumoto, a Tokyo-based spokeswoman for Goldman, said by phone yesterday.
The U.S. government and the European Union have decided to negotiate settlements involving China’s solar-panel shipments to the West, which is valued at about $30 billion, The New York Times reported yesterday, citing officials and trade advisers in Beijing, Brussels and Washington.
The Shanghai Composite Index (SHCOMP) of domestic Chinese shares added 0.7 percent to 2,299.99, the highest level since March 27. The Hang Seng China Enterprises Index (HSCEI) in Hong Kong advanced 1.5 percent to 11,186.54, rising the most since May 8.
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