Craigslist-Like 58.Com Soars in Debut: China Overnight
58.Com Inc. (WUBA), a Craigslist-like Chinese online marketplace, jumped on its first day of trading after its U.S. initial public offering exceeded target. NQ Mobile Inc. (NQ) rebounded for a third day to pare a monthly slump.
58.Com’s American depositary receipts surged 42 percent to $24.12 in New York. The Beijing-based company raised $187 million in the IPO for $17 apiece, higher than its initial target range of $13 to $15. NQ Mobile jumped 18 percent, rebounding after a 62 percent tumble that followed Muddy Waters LLC’s Oct. 24 report alleging it inflated sales. The Bloomberg China-US Index of the most traded Chinese stocks in the U.S. fell 0.7 percent, paring its fourth monthly gain to 1 percent.
The share offering of the classifieds website became the fourth and biggest IPO by a Chinese company in the U.S. this year. NQ Mobile surged 64 percent in the past three days after the company took steps to make its cash deposits more transparent and issued documents to refute Muddy Waters’ allegations that the software company inflated sales and misrepresented cash balances.
The deal “really benefits from indiscriminate demand for small to mid-cap IPOs in specialty industries, such as technology and Internet related,” Josef Schuster, founder of IPOX Schuster LLC in Chicago said in e-mailed comments. “It looks like the scrutiny surrounding NQ Mobile has not had an effect.”
The iShares China Large-Cap ETF (FXI), the largest Chinese exchange-traded fund in the U.S., added 0.1 percent to $37.57 in New York, for a 1.3 percent gain for the month. The Standard & Poor’s 500 Index slipped 0.4 percent, capping a monthly rally of 4.5 percent.
58.Com, founded in 2005 by Chairman and Chief Executive Officer Jinbo Yao, raised its IPO price target range to $15-$16 before the completion, its filings showed. Morgan Stanley, Credit Suisse Group AG and Citigroup Inc. were the lead-managers of the sale.
The company posted net income of $285,000 for the first half this year, compared with a net loss of $19.3 million a year earlier, its prospectus showed. Its revenue, mainly from merchant membership charges and sales from customers’ online marketing, jumped 51 percent to $58.8 million in the six months through June. Average quarterly paying members had grown 16 times since 2010 to 273,000 in the first half of this year.
“The market favors companies like us, so that we had to raise price targets twice before the IPO completed,” CEO Yao, said in a phone interview in New York. “I don’t like this jump in price right at the start of trading because that will put excessive pressure on our performance. I’d rather see our future business improvements reflected in gradual price appreciation.”
Travel-booking website Qunar Cayman Islands Ltd., which is planning an IPO today, increased its target price by as much as 26 percent Oct. 30, while online sports lottery operator 500.com Ltd. filed for a $150 million debut Oct. 22.
The number of Chinese IPOs in the U.S. this year has rebounded from a low of three in 2012 and is down from the 13 in 2011, data compiled by Bloomberg show.
Chinese web retailer LightInTheBox Holding Co. raised $78.9 million in June, followed by China Commercial Credit Inc. and Montage Technology Group Ltd.
NQ Mobile’s ADRs surged to $14.40, the highest close since its 47 percent plunge on Oct. 24, after Muddy Waters said investors should sell the stock.
TAL Education Group, a private tutoring service provider based in Beijing, retreated 2.1 percent from a record high to $19.19 in New York. Its 32 percent surge for the month was the biggest on the China-US gauge. Vipshop Holdings Ltd. (VIPS), an online retailer of clothing based in Guangzhou, climbed 2.4 percent to $68.93 for a monthly rally of 21 percent.
The Hang Seng China Enterprises Index in Hong Kong advanced 3 percent in October to 10,627.02, its fourth month of advances. The Shanghai Composite Index (SHCOMP) retreated 1.5 percent for the month to 2,141.61, snapping three months of increases.
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