Lead: Foreign media published an article on Friday saying that social media platform YY is more likely to be the first Chinese company to go public in the US in the past 7 months. Over the past period, Chinese companies listed in the United States have encountered a lot of questions about transparency, growth rates, and corporate governance.
The following is the full text of the article:
Duowan YY submitted its prospectus to the US Securities and Exchange Commission (SEC) on Monday. Unlike some other Chinese companies, the company does not suffer from poor profitability, inaccurate financial reports, and lack of supervision.
Play More YY provides online games, karaoke, concerts and educational services on its platform. The company’s platform already has more than 400 million users. YY is profitable and has attracted some well-known investors, including Disney-owned venture capital company Steamboat Ventures and hedge fund tycoon Chase Coleman (Tiger Global Management). The company’s IPO (Initial Public Offering) will also be underwritten by front-line investment banks such as Morgan Stanley.
In FY2011, the revenue of Duowan YY more than doubled year-on-year, reaching 319 million yuan (about 50.8 million US dollars). In the first half of this year as of June 30 this year, the profit of playing more YY was 20.8 million yuan (about 3.3 million US dollars).
However, due to the scandals exposed by many Chinese companies such as Sino-Forest and Southeast Rongtong last year, the threshold for Chinese concept stocks to be listed in the United States was significantly raised. Investors believe that Chinese companies can only attract interest from US investors if they have achieved profits for several consecutive quarters and have a 50% revenue growth rate.
Kevin Pollack, managing director of Paragon Capital in New York, said: “This has undoubtedly brought about the effects and improvements of de-existence. If you know what problems need to be avoided, then there will be more opportunities. .”
Investor attitude eased
Bankers, lawyers and investors generally believe that not many Chinese companies will go public in the United States in the near future, but investors’ attitudes toward Chinese companies are gradually easing, especially in the fast-growing technology industry companies. Dennis Galgano, Morgan Joseph’s head of international investment banking, said: “A company like YY has a selling point. The company has 400 million users, and future growth can also be calculated.”
Recently, Workday, Palo Alto Networks and ServiceNow successfully listed on the US stock market, and some other Chinese technology companies also regard this as a signal that the market will accept their listing plans.
Before playing more with YY, the last Chinese company to go public in the US was Vipshop. After the IPO in March, Vipshop’s share price fell, but then a 50% rebound occurred. Vipshop’s IPO price is $6.50, and this Thursday’s closing price is $9.80. In May of this year, car rental service provider Shenzhou Car Rental gave up a total of $138 million in IPO plans due to the unresponsive investors.
Doubts remain strong
To be sure, most Chinese companies that want to list in the US will still face severe scrutiny from investors. Many investors are still reluctant to take additional risks to invest in Chinese companies, especially considering the recent strengthening of the US stock market. And because the US Congress issued a report questioning Huawei, a Chinese telecommunications equipment manufacturer, political factors will also play an important role in investor decision-making.
Recently, some Chinese listed companies with poor stock prices in the United States have chosen to privatize, which will also be detrimental to other companies’ future IPOs. These companies may choose to relist in Hong Kong or Mainland China and expect a higher valuation. Since September, several Chinese companies have announced privatization plans, including Yongye International, China Shengda Packaging and Siyuan Group.
Phil Groves, president of DAC Management, a Hong Kong investment management and advisory firm, said: “Overall, the market still has great doubts about Chinese companies. Some new situations have emerged, but old problems are still having an impact. “(Zhang Fan)
