Alibaba.com Ltd., operator of China's largest online trading site for companies, almost tripled on its first day of trading in Hong Kong, making the stock four times more expensive than Google Inc. relative to earnings.
The Chinese company's shares closed at HK$39.50 from their HK$13.50 offer price. That gives Hangzhou-based Alibaba a market value of $25.7 billion, closing in on Yahoo Japan Corp. as Asia's biggest Internet company.
The stock trades at 155 times next year's estimated earnings, underscoring the surge in demand for Chinese shares that made PetroChina Co. the world's first $1 trillion company yesterday. Alibaba, founded nine years ago by a former English teacher with $60,000, predicts profit will almost triple this year on rising online trades in the world's fastest-growing major economy.
``It's a high valuation but if Alibaba can use its leadership position in the e-commerce market to get more Chinese businesses to pay for its services, it will justify it,'' said Rafe Xu, an analyst at Sinopac Securities Asia Ltd. in Shanghai, who plans to initiate coverage on the company. ``They have a lot of work to do.''
Investors got a chance to buy Alibaba shares in last month's $1.5 billion initial public offering, the biggest by an Internet company since Google's $1.9 billion IPO in 2004. Deutsche Bank AG, Goldman Sachs Group Inc. and Morgan Stanley arranged the Chinese company's sale, which led Hong Kong individuals to order about 257 times the amount of stock available to them.
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