Alibaba.com became Hong Kong's most profitable initial public
offering (IPO) stock yesterday after an astonishing trading debut.
Shares in the e-commerce portal skyrocketed 192 percent on its
first day to close at HK$39.5.
Investor optimism pushed the largest mainland
business-to-business (B2B) operator's shares to an intra-day high
of HK$39.95, or 196 percent more than its IPO price of HK$13.5.
Each lot of Alibaba, which comprises 500 shares, will equal a
profit of HK$13,000.
The B2B operator was the most hotly traded stock on Hong Kong's
bourse yesterday, generating a whopping HK$17.4 billion in turnover
that took up 10.3 percent of total turnover of all main board
stocks.
"It is very apparent that a lot of capital is rushing in to buy
Alibaba.com," said Linus Yip Sheung-chi, a strategist at First
Shanghai Securities. "Hot demand will mean supply will continue to
be strained. So I expect the share price might go up even more
because of that."
The e-commerce portal's IPO raised $1.47 billion, while the
retail tranche in Hong Kong alone generated HK$447.5 million as
investors clamored to subscribe and a record amount of cash was
frozen.
Market watchers were surprised by Alibaba's stellar trading
debut. Many had expected it to be overshadowed by Monday's stock
market plunge, which was sparked by Premier Wen Jiabao's comments
that the direct investment scheme for mainlanders could see further
delays.
"I cannot offer any comment as to whether the stock is
overvalued or not. I think trading at almost 300 times its 2007
earnings forecast - it's pretty obvious what the answer is," said
Wong Chi Man, an analyst at China Everbright Research. "Investors
should ask themselves whether a company can in fact maintain growth
of 200 to 300 percent in the next two to three years."
But opinions are divided about whether Alibaba is trading at a
reasonable valuation.
Kenny Tang Shing-hing, associate director of Tung Tai
Securities, remains optimistic about Alibaba's prospects, despite
the hefty share price.
(China Daily November 7, 2007)
