NEW YORK - A pair of new Chinese issues rose sharply in their debuts on the New York Stock Exchange Wednesday, a day after their initial public offerings priced in the middle of expectations.
Chinas VanceInfo Technologies, a provider of information technology (IT) services and software development, rose 17% to close at $9.96 per American Depositary Share (ADS).
On Tuesday, the company raised $65 million with an offering of 7.65 million ADS priced at $8.50 apiece, in the middle of a $7.50-to-$9.50 forecast range.
The company plans to use proceeds for general corporate purposes, including funding of possible acquisitions.
For the 2006 year, VanceInfos net income was almost 38 percent higher at $4.4 million, while net revenue rose about 47 percent to $29 million.
"VanceInfo is experiencing nice top line and bottom line growth," said Scott Sweet, managing director of IPOboutique.com.
Large corporations, including Citibank, IBM and Microsoft, use VanceInfos IT services.
The company said that based on a third-party review it ranks among the top three Chinese offshore software development firms for the North American and European markets.
CHINESE HOUSING MARKET
The days second debut, Chinese residential real estate developer Xinyuan Real Estate, soared 20% in its first day as a public company, with the ADS rising to $16.80.
On Tuesday, the company raised $245 million with its sale of 17.5 million ADS for $14 a piece, compared with a $13-to-$15 forecast range.
The company said proceeds will be used to buy the rights to land for future property development.
As with many of the Chinese IPOs that have launched on the NYSE or Nasdaq this year, Xinyuans business is set to profit from the increasing spending clout of Chinas middle class.
Year to date, 32 Chinese companies have launched IPOs, raising more than $6 billion. Recently interest in some of the offerings has been lukewarm, including two new issues that fell in their market debuts on Tuesday.
Xinyuan was warmly received by investors because of its growth prospects, said IPOboutiques Sweet, adding the companys target market of Chinas "Tier II" cities has a well-heeled population eager to buy homes.
"The growth of the middle class in China has resulted in significant unmet demand for affordable homes," said Sweet, adding that real estate investor Sam Zells Equity International, which has put money into Xinyuan, has boosted interest in the company.
Chief Financial Officer Longgen Zhang, in New York for the companys debut, told Reuters the company, on average, completes its housing developments -- from acquisition of the land to homeowners getting the keys to their new homes -- in about 18 months.
He added that the company is focusing on Chinas 35 Tier II cities, most of which are provincial capitals, because real estate development in these areas is "at an early stage."
The company is already active in five of its target cities, and plans to branch into several more each year.
Equity Internationals stake is about 13% post- offering. Another private equity investor, BlueRidge China Partners, owns another 19.4%.
Xinyuan posted net income of $16 million on revenue of $142.4 million in 2006 and profit of $9.6 million on revenue of $61.9 million in 2005.
Zhang expects the company to be able to maintain the pace of growth set in recent years, but declined to disclose specific targets for revenue or earnings. (Reporting by Lilla Zuill; Editing by Jeffrey Benkoe and Andre Grenon)
Copyright 2007 Reuters. See original article on InformationWeek.com
