HONG KONG: Tencent’s e-book unit China Literature saw its shares double in their debut on Wednesday as Hong Kong investors embrace a rush of tech listings, with the stock on track to mark the biggest first-day pop for a large IPO globally this year.
The company’s stunning debut has shown that Hong Kong has raised its game as it strives to compete with the New York and Nasdaq exchanges which have been the more traditional home for Chinese tech IPOs seeking to attract international investors.
China Literature’s shares rose to as much as HK$110 (SR52.75) in early trade, compared to its offering price of HK$55 per share, giving it a market value of nearly $13 billion. The shares eased to HK$100 in early afternoon trade.
“As the first Tencent-controlled subsidiary tapping capital markets, China Literature has to perform well in the secondary market to set a good example for other Tencent units,” said an institutional investor who took part in the IPO, declining to be identified as he was not authorized to speak to the media.
But while many investors cheered the stock on, others noted that Wednesday’s valuations for the Tencent Holdings unit were stretched.
Company executives project net profit of 400 million yuan (SR226.18 million) for 2017 and 1 billion yuan for 2018, according to investors who attended IPO roadshow meetings.
That implies China Literature is trading at 201 times its forecast 2017 earnings and 80 times its 2018 projections. By contrast, Tencent is trading at 51 times its 2017 forecast profits.
Co-CEO Liang Xiaodong told reporters after the opening bell ceremony that the stock’s surge was a pleasant surprise.
“Going forward, we will conduct M&As and forge strategic alliances ...in a bid to stay ahead in our industry,” he said.
China’s biggest e-book platform offers 9.6 million literary works from 6.4 million authors. Tencent began e-book publishing in 2004 and after an internal reorganization, formed China Literature in 2013.
Demand for the IPO, which raised $1.1 billion, was such that retail investors bid for 625 times the shares on offer — tying up HK$521 billion ($67 billion), equivalent to a fifth of Hong Kong’s cash in circulation, as they waited to see whether their offers would be accepted.
A closing gain of more than 44 percent would make it the best-performing debut this year worldwide by any company raising more than $500 million, according to Thomson Reuters data.
Its IPO success comes as the number of tech offerings in Hong Kong is picking up. Online insurance group ZhongAn raised $1.5 billion in September in Asia’s biggest-ever financial technology IPO. Its shares jumped 18 percent in their debut.
Razer, a gaming hardware maker backed by Hong Kong billionaire Li Ka-shing as well as Intel, will make its Hong Kong debut next Monday. It has priced its HK$4.12 billion IPO near the top end of its price range, IFR reported on Tuesday.
“(ZhongAn) gave people size and returns, so retail and high net worth individuals got excited. And that is being reflected in China Literature and Razer,” said one banker involved in the China Literature deal, also declining to be identified.
But even so, for many Chinese tech firms, the US market remains more attractive.
Sogou, China’s second-largest search engine and around 45 percent owned by Tencent, is due to list on Thursday after pricing an up to $585 million IPO on Wednesday.
Tencent owns 62 percent of China Literature, while Carlyle Group holds 12.2 percent. A further 6 percent is owned by Trustbridge Partners, which was founded by Shujun Li, the former CFO of Shanda Interactive.
Tencent’s China Literature in stellar debut as HK investors rush in
Tencent’s China Literature in stellar debut as HK investors rush in
Egypt’s Suez Canal, Namibian Ports Authority sign MoU to propel port development, training
RIYADH: Egypt’s Suez Canal Authority and the Namibian Ports Authority have signed a memorandum of understanding amid efforts to propel cooperation in development and training.
The agreement aims to exchange expertise and enhance bilateral cooperation in several areas, most notably marine construction, the sale and leasing of marine units, and advanced training through the Suez Canal Authority’s academies, according to a statement.
This is supported by figures from the Suez Canal Authority, which reported revenues of $1.97 billion from 5,874 ship transits since early July, representing a 17.5 percent year-on-year increase, chairman Osama Rabie said during a recent meeting with an International Monetary Fund delegation.
It also aligns well with Rabie’s further forecast that the canal’s revenues would improve during the 2026/2027 fiscal year to around $8 billion, rising to approximately $10 billion the following year, according to a statement issued by the authority.
The newly released statement said: “Rabie affirmed the authority’s readiness for fruitful and constructive cooperation with the Namibian Ports Authority, given the expansion of the entity’s international projects and its efforts to open new markets and engage with the African continent.”
“The chairman explained that the Suez Canal Authority’s efforts succeeded in developing and reopening the Libyan port of Sirte after 14 years of closure, marking a successful start to international projects with friendly and sister nations,” it added.
The chairman instructed that all necessary support and procedures be put in place to initiate practical cooperation on multiple projects, highlighting that the authority offers a comprehensive system for maritime and logistics services through its shipyards and subsidiaries.
For her part, Nangula Hamunyela, chairperson of the Namibian Ports Authority, voiced her enthusiasm for collaborating with the Suez Canal Authority on advancing Namibia’s ambitious port development plan, home to the largest ports in West Africa.
She stressed that this partnership highlights the strong relationship between Egypt and Namibia and will help further deepen bilateral ties.
Hamunyela further highlighted that the Suez Canal Authority’s advanced technology and vast expertise across multiple sectors will play a key role in supporting and speeding up development efforts in Namibian ports, reducing dependence on foreign expertise and technology from outside the region.
Egypt’s Suez Canal generated a total of $40 billion between 2019 and 2024 and remains the country’s most important source of foreign currency.
