Chinese e-commerce portal Alibaba.com (阿里巴巴) made a strong debut on the Hong Kong stock market yesterday, with its shares soaring as much as 170 percent in the morning session.
Alibaba.com shares rose as high as HK$36.05 (US$4.64) before finishing morning trade at HK$35.75.
Demand has been heavy for the business-to-business Web site, which raised US$1.5 billion through its global offering of 858.9 million shares, or a 17 percent stake of the company.
The public portion of its offering was 257 times oversubscribed. More than 382 million shares traded hands in morning trade.
Some analysts had cautioned that the stock was overpriced at its issue price of HK$13.50 a share, but investors have been keen to tap the booming Chinese technology market. Alibaba.com said its share sale was the biggest technology IPO since Google.
"The pent up demand is certainly there," Rick Munarriz, who researches technology companies for The Motley Fool, said in an e-mail.
"It would be hard to justify a triple or a quadruple [jump] at this point, but just the fact that you had US$100 billion in orders chasing US$1.5 billion in stock bodes well for the debut," he said.
Alibaba founder Jack Ma (
"I think the success of Alibaba on the Hong Kong stock market will also attract high technology corporations in China, Asia and the world to list in Hong Kong," he said in Hong Kong.
The morning low was HK$28, still about 185 times Alibaba.com's projected earnings for next year and much higher than the 83 times price-to-earnings multiple of Chinese-language Internet-search provider Baidu.com Inc (
Alibaba.com -- whose Web site allows companies in China and overseas to trade with one another online -- is one of China's fastest growing Internet companies.
Its registered members soared to 24.6 million this year from 6 million in 2004.
Paying members increased to 255,000 by June from 77,000 in 2004.
The company recorded a net profit of 295.2 million yuan (US$39.2 million) in the six months ended June. It expects full year profit to triple to 622 million yuan from 219.9 million yuan, on strong growth in revenue from both its international and Chinese Web sites.
Speaking in Taiwan on Monday, Ma said he wanted to turn the company into a "leading e-commerce platform for China, Asia and even the world."
Yahoo Inc holds a 39 percent stake in Alibaba.com's parent, Alibaba Group, and bought about US$100 million in Alibaba.com shares.
Yahoo's stock climbed about 40 percent ahead of the IPO but shed 5 percent just after the HK$13.50 issue price was announced.
Some analysts suggested US investors had expected a higher valuation, but Motley Fool's Munarriz said the issue price was just an indicator.
"A lot of those gains [in Yahoo] are pre-IPO expectations baked into the share price," Munarriz said. "The pricing isn't as important as what [Alibaba.com] ultimately trades at in the coming days, weeks and years, since that will determine the paper profits at Yahoo on its investment."
Hong Kong's benchmark Hang Seng Index, which slid 5 percent on Monday in its biggest ever one-day points loss, recovered to close the day up 1.28 percent at 29,312.99.