HK tech IPOs to cash in on tom.com mania

Initial public offerings (IPO) from mobile phone operator Sunday, Chinadotcom Corp’s Internet portal arm Hongkong.com Corp, and Sun Hung Kai Properties Ltd’s Internet unit SUNeVision Holdings Ltd could attract up to HK$6.89 billion in subscriptions, analysts say.

Tom.com Ltd, about 48 per cent held by Li’s Cheung Kong (Holdings) Ltd and Hutchison Whampoa Ltd, lured more than 465,000 applications in its late February retail IPO. Tom.com shares ended their third trading day on Friday atHK$8.50, up 377.5 per cent from its HK$1.78 issue price.

Encouraged by the heavy oversubscription of tom.com Ltd stocks, Hongkong.com fixed the issue price of its 640 million shares at HK$1.88. This is the top of a range between HK$1.60 and HK$1.88 after being increased twice, or 88 per cent above the minimum price of HK$1.00 in an initial range, market sources said.

"The issue has been oversubscribed by dozens of times," a source close to the deal said. Hongkong.com will be listed on the Growth Enterprise Market (GEM) on March 9.

"The IPO price (of Hongkong.com) is more expensive than the tom.com in relation to the book value," said Alan Hutcheson, head of research at Pacific Challenge Securities. Tom.com’s issue price was about 3.7 times its book valuewhile Hongkong.com was between 6.0 and 7.0 times, he said.

But OSK’s Wong said Hongkong.com should get good interest since all its new shares were by placing and retail investors had to buy in the market after dealing in the shares started. "The issue price is relatively small and could easily riseby one to two folds," he said.

The other GEM listing candidate SUNeVision is offering 300 million new shares at between HK$8.38 and HK$10.28 with dealing to start on March 17. "The company has solid development plan and its Internet business are focused and in relation to its current business, property development," an analyst at a European house said. Unlike the pure Internet portal plays, Hongkong.com and tom.com, SUNeVision’s business includes a data centre and co-serve facilities provider, I-Advantage, Internet technology provider, Sun Technologies and an Internet access, SuperHome.net.

It also operates Internet portals, namely Propertystreet.net, insurancestreet.net and an auction site Red-dots.com.

However, the relatively high issue price would limit the stock’s short-term gains, Wong said. "Investors are likely to chase Hongkong.com for its short-term rising potential but talking about quality, SUNeVision is the best among the three companies," he said.

Mobile telephone operator Sunday is planning a dual listing on Hong Kong’s main board and U.S. Tech-laced Nasdaq in the week of March 13. However, the recent Internet mania had stolen the limelight from other sectors, one analyst said. "Sunday is just so-so, especially after it raised offer price and its mobile phone business is not very exciting," Wong said.

Sunday is offering 690 million new shares at between HK$3.40 and HK$3.78, versus its initial range of HK$3.10 and HK$3.60. The company is 60 per cent owned by Distacom Hong Kong Ltd and the rest is held by Lai Sun Development, USI Holdings China Travel Services and Hong Kong Parkview.

Despite Wong’s lukewarm reception to Sunday’s listing, another analyst said overall sentiment towards technology stocks were bullish. "Overall market sentiment will remain reasonably good following tom.com," Hutcheson said. "There is potential for these (IPOs) to double after issue."