TOM Online Disappoints On IPO
When TOM Online, a leading Hong Kong Internet company
with close ties to Li Ka-shing, went public, hopes were
high. On its Nasdaq debut though, it only closed up 0.2
percent at US$15.58. Each American Depository Share price
represents 80 shares of TOM Online, which are listed on
Hong Kong's GEM (Growth Enterprise Market) board. TOM
Online sold one billion shares, or 25.6 percent of its
share capital, for the listing. The IPO valued the company
at US$760 million.
TOM Online's portal, wireless and gaming business competes
directly with Sina.com, Sohu and NetEase, the three leading
portal players in China. Since late 2002, all three companies
have enjoyed significant growth,
mainly because of revenues from SMS services and online
gaming.
TOM
Online is a Chinese-language Hong Kong portal which
was spun off from the TOM Group, which has a strong media
presence. Although it is now based in Beijing, it is still
widely considered to be a Hong Kong company, and is backed
by Li Ka-shing, Hong Kong's wealthiest businessman. Earlier,
Li was known in Hong Kong has as "Superman",
because of his success in investments. As investments
have headed directly to China, and as Chinese companies
have raised capital without going through Hong Kong, his
reputation has taken a hit.
The disappointing performance shows that investors are
now more sophisticated, and prefer to buy shares of Chinese
companies which have established market presence in China,
instead of going through Hong Kong companies, some of
which now have a bad reputation, and have failed to deliver
shareholder value after the Internet bubble popped in
2000. Linktone, a small Shanghai company selling ringtones
and mobile phone entertainment, has also been tracking
downwards.
Current market focus is on the IPO of SMIC, China's newest
chip
foundry, which is due for listing in New York and
Hong Kong within the next two weeks.
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