Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  Equities  >  Stock Exchange of Hong Kong  >  Tencent Holdings Ltd    0700   KYG875721634

Mes dernières consult.
Most popular
News SummaryMost relevantAll newsSector newsTweets

Tencent Unit's Hong Kong IPO Draws a Crowd

share with twitter share with LinkedIn share with facebook
share via e-mail
11/01/2017 | 02:09pm CET
By Saumya Vaishampayan 

The tech-stock ardor sweeping the world has reached Hong Kong, judging by the response to China Literature Ltd.'s initial public offering.

Orders for the IPO of the Tencent Holdings Ltd. unit, expected to raise $1.1 billion next week, have already topped $100 billion. Institutional investors have ordered more than 50 times their allotted shares; retail investors have been even keener, oversubscribing some 620 times.

The fever for China Literature, which operates an online library and has nearly 200 million monthly active users, partly reflects a phenomenal year for tech stocks globally. U.S.-listed shares of Alibaba Group Holding Ltd. have soared 111% in 2017, while Facebook Inc. shares have jumped 57%.

China Literature's links with Tencent are also a big draw for local investors, who hope some of its magic will rub off on the over-60%-owned subsidiary. Formed through a combination of Tencent Literature and Cloudary in 2014, China Literature makes money when its users pay to access books after reading the first few chapters free.

Tencent's domination of internet gaming and social networking in China--the latter via its hugely successful WeChat app--have helped it grow into one of the world's most valuable tech companies. Its own Hong Kong-listed shares have risen 90% this year.

China Literature is also benefiting from scarcity value. Tech stocks accounted for just 12% of Hong Kong's benchmark Hang Seng Index in September, compared with financials' 48%, according to Hang Seng Indexes. In the U.S., tech is the largest segment of the S&P 500 index, accounting for a quarter by weighting.

In September, Hong Kong retail investors placed orders for 393 times the initially available shares in internet-based insurance company ZhongAn Online Property & Casualty Insurance Ltd, co-founded by Alibaba founder Jack Ma. The stock is up more than 30% from its IPO price, according to FactSet.

The appetite for China Literature's IPO has helped drive up short-term interbank borrowing costs in Hong Kong this week, as investors using borrowed funds to place orders for shares effectively locked up piles of Hong Kong dollars. The overnight interest rate hit a nine-year high Tuesday, and though it fell back Wednesday, it remains elevated compared with levels earlier this year.

"This happens for very welcomed IPOs," said Iris Pang, a China economist at ING. The liquidity squeeze can be amplified when more than one popular company goes public at once, she added. Videogame-equipment maker Razer Inc. is looking to raise up to $630 million in Hong Kong this month.

China Literature and ZhongAn notwithstanding, Hong Kong's IPO market has been somewhat deflated this year. A total of 117 companies with a combined deal value of $13.1 billion have listed this year, according to Dealogic. That is the smallest year-to-date deal value since 2013.

Controversy has arisen over the quality of some companies listing in the city in recent years, in particular mainland financial companies that get heavy backing from "cornerstone investors"--who typically agree to buy big stakes before IPOs and hold them for a set period--only to perform poorly after the IPO. Such investors anchored Postal Savings Bank of China Co.'s 2016 IPO, at the time the world's biggest in two years. The bank's shares have risen just 11% in 2017, far behind the Hang Seng Index's 30%.

The stock price of Chinese brokerage Guotai Junan Securities Co., whose cornerstone-backed IPO was Hong Kong's biggest so far this year, fell in the month after the company went public in the spring, though it has since rallied. China Literature's IPO is set to be largest in Hong Kong this year not backed by cornerstone investors, according to Dealogic data.

Hong Kong listings facing other problems. The city's securities regulator said last month it is investigating 15 financial firms for their work on arranging shoddy IPOs in recent years that have caused investment losses in the billions of dollars.

As China Literature prepares to go public, two Hong Kong-listed global companies--mining giant Glencore PLC and handbag maker Coach Inc., which was recently rebranded as Tapestry Inc.--this week said they plan to delist, citing low trading volumes and lack of investor interest.

Write to Saumya Vaishampayan at [email protected]

Valeurs citées dans l'article
ChangeLast1st jan.
DJ INDUSTRIAL 0.66% 24962.48 Delayed Quote.0.99%
HANG SENG -1.37% 31006.89 Real-time Quote.3.08%
NASDAQ 100 0.04% 6761.8546 Delayed Quote.5.99%
NASDAQ COMP. -0.11% 7210.0856 Delayed Quote.4.79%
S&P 500 0.10% 2703.96 Real-time Quote.2.19%
share with twitter share with LinkedIn share with facebook
share via e-mail
08:15pNASPERS : Fund managers weigh benefits, flaws of Naspers-Tencent tie-up
09:44aHSI opens down 347 pts to 31,084; H-share -159 pts at 12,527
02/21HSI opens up 176 pts to 31,050; H-share up 95 pts at 12,492
02/20HSBC : HSI opens up 49 pts to 31,165; H-share down 7 pts at 12,528
02/20Over 210 million Chinese walk for health during Tencent holiday campaign
02/20Over 210 million Chinese walk for health during Tencent holiday campaign
02/20TENCENT : Redick denies intentionally using racial slur 76ers' J.J. Redick denie..
02/19ALIBABA : Tencent go neck-and-neck in China retail acquisitions
02/19Casino bets on Sarenza shoes to keep online rivals at heel
02/19TENCENT : Is Helsinki Asia's new gateway to Europe?
More news
News from SeekingAlpha
11:19aNetEase Proved Money Can Be Made From Free-To-Play Battle Royale Games 
02/21A Cold Analysis On 2017 And A Look Beyond 
02/21YY AND MOMO : Alibaba And JD.Com Are Moving Their Cheese 
02/21A Chinese Tech ETF For The Lunar New Year 
Financials ( CNY)
Sales 2017 241 B
EBIT 2017 79 721 M
Net income 2017 65 026 M
Finance 2017 59 838 M
Yield 2017 0,20%
P/E ratio 2017 53,96
P/E ratio 2018 42,68
EV / Sales 2017 14,4x
EV / Sales 2018 10,1x
Capitalization 3 528 B
Duration : Period :
Tencent Holdings Ltd Technical Analysis Chart | 0700 | KYG875721634 | 4-Traders
Technical analysis trends TENCENT HOLDINGS LTD
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 38
Average target price 403  CNY
Spread / Average Target 8,5%
EPS Revisions
Hua Teng Ma Chairman & Chief Executive Officer
Chi Ping Lau President & Executive Director
Yu Xin Ren COO & President-Interactive Entertainment Group
Shek Hon Lo Chief Financial Officer & Senior Vice President
Zhi Dong Zhang Chief Technology Officer
Sector and Competitors
1st jan.Capitalization (M$)
NASPERS LIMITED-4.79%125 811
NETFLIX45.11%121 957
WEIBO CORP (ADR)29.42%30 251
COSTAR GROUP INC18.48%12 727