ChinaCache Internaitonal (CCIH) hasn't gotten alot of attention on the IPO circuit due to its history of losses. Ironically though this mostly ignored IPO priced above the expected $10-12 range Thursday night at $13.90 showing significant demand. Not to mention they upped the shares by roughly 10% as well. On Friday the stock soared some 100% on the opening and now trades at $28 around noon time after reaching a high of $30.70.
What's unsettling about the IPO system is the lack of access to these IPOs by the small investors. CCIH sellers should not have been stuck with only receiving $13.9 with so much demand. Not to mention that modern technology fully allows the market to give all investors access to IPOs. It's just not a level playing field for a big hedge fund or mutual fund to have made a 100% on the opening just because they are large. Guarantee plenty of investors including Stone Fox would've paid up to $15, 16, 17 or more to get this IPO at the opening. Its time to completely redo the IPO market and let small investors bid via E*Trade, Ameritrade, or any other broker like on a normal stock to determine the market price.
What seemed mostly ignored by the IPO experts going into the IPO was that they are labeled as the 'Akamai of China' and Q2 2010 (last reported Q) showed a decent revenue increase not to mention its first profitable quarter with the elimination of stock-based compensation and post acquisition settlement costs. Some prefer to keep such charges in the analysis, but doing so presents a incorrect view of the growth in margins.
CCIH is the leading provider of Internet content and application delivery services in China, accounting for 53% market share in terms of revenue in 2009, according to iResearch. We provide a portfolio of services and solutions to businesses, government agencies and other enterprises to enhance the reliability and scalability of their online services and applications and improve end-user experience. Our nationwide service platform which consists of our network, servers and intelligent software, is designed to handle planned and unplanned peaks without significant upfront and ongoing capital outlay and other investments on the part of our customers.
Unfortunately for this investor, in the end enough investors figured out the potential of CCIH and the stock soared. Internet stocks around the world continue to soar like the recent MakeMyTrip (MMYT) so CCIH is no different. Someday the IPO market will function like a modern day market with full access to all, but for now we're still stuck with the arcane privileged system of the old days.
Disclosure: No position