Xinhua Finance Media Debut Drop and the Current IPO Climate

Xinhua Finance Media Ltd (XFML) went ahead with its scheduled IPO Friday despite the recent sharp decline of Chinese stocks, but the reception of this latest offering on the street was nothing but cold.

Before the IPO, there was speculation that XFML would scrape its plan in light of the plunge of Chinese domestic stocks on February 27th, when major Chinese indexes lost nearly 9% in one day, triggering a round of global markets sell-off. XFML was originally priced between $12 to $14 per American depositary share [ADS] and the price was settled in the middle of the rang Thursday at $13 per ADS. Now the stock is traded at $11.12.

I have prepared $4,000 for this IPO last week at my Scottrade account. Now I am just glad I didn’t jump right in when the trading began.

Actually, Thursday’s debut of ClearWire (CLWR) should also give us some indication of the climate of IPOs. CLWR was priced at the high end of its range at $25. The stock closed at $24.80 Thursday and had dropped about $2.39 or nearly 10% again Friday.

Comments

[karmal1]

The thing that people don't understand is that Bush and her Xinhua Finance Ltd company has the inside track. She has it because she's earned it over the last 15 years or so. There are few westerners that have the ear of the Chinese government like Bush does regarding Chinese business and it's interface with the rest of the world. Research the "EXCLUSIVE" contracts through Xinhua Finance with the Chinese government that grants unbelievable access to information as well as the ability to report China financial data to the world. Look at her FTSE/Xinhua Indices and ETF's, and her Milken indice information. If you research Xinhua Finance Ltd you will see that there is no other company that even comes close to having the information, the contacts, and the contracts that this company has in China regarding financial information, as well as considerable insight of all things business in China. There's ben talk of discounting XFML because of "China governmental regulations" is also absurd. Ever hear of the FCC, FTC, etc. etc in the US? Do companies here make a profit in spite of the regulatory powers that be? Of course they do. When you realize that China's growing at 9 - 10% a year compared with the US's paltry 3%, but you can't get it that pioneers and leaders in an extreme growth astmosphere like that are almost destined to profit, then you're looking at the speed bumps and not the highway. To consider that Xinuha Finance has no real competition in many areas, and for many years to come, should be enough to cause you to do the commisserate research prior to expounding in such a vague way or just looking at their IPo in such a wacky and volitile market of the past week or so. Consider instead all the Western companies that are already doing, or are planning to do, business in China. Who do they contact to create, produce and place their ads for the products they wish to sell? Who now has the most watched financial TV programs in China? One of the largest advertising agencies in China? Some of the most respected financial print products in China? The most listened to financial radio programs in China? An audience of hundreds of millions, already? Think - Xinhua Financial Media Ltd. Name another company that is real competition if you can.

Also, research Fredy Bush. A recent Ellis Island award winner. One of Forbes 50, (not 500)... 50 Women to Watch in the World, she serves as Chairwoman of the China Investment Forum, she won the Asia Entrepreneur of the Year Award from CNBC— as follows:
Fredy Bush of Xinhua Finance Ltd. embodies the talent and skills of an adroit entrepreneur who has the courage to challenge paradigms, the vision to develop new business ventures based on opportunities and the confidence to encourage others to innovate. Under Ms. Bush’s entrepreneurial skills, Xinhua Finance became the first China concept company to be listed on the Tokyo Stock Exchange’s Mother Board. The first non-japenese company to be listed on the TSE. And there's more.

Watch XFML soar over the next two years and remember your flippant overview of such a monumentally adroit company and it's leadership.

[Chimin Sang]

Investing based on the information you posted above may be your style, but it is highly risky. This is why this stock gets discounted -- due to its risk factor.

If you have deep pocket, and you are willing to bet on Bush and 'relationship', you can go ahead, and your return may be quite high -- because you bear the extraordinary risk.

For the rest of common people, don't take this kind of risk. Invest money on companies you can understand better and have shown a track record of making money and have shown signs of keeping the competitive edge.

[Siwei Zhong]

this is from the XFML F-1 document:
'..cable and satellite television broadcasting on Inner Mongolia Satellite Television, to an estimated audience of 210 million potential television viewers in key Chinese urban areas including Beijing, Shanghai and Guangzhou.."

so its TV viewership is those of "Inner Mongolia Satellite Television".

Anyone wishes to bet on XFML shall first understand where Inner Mongolia is located in China !

I just want to point out some facts:
1) I wonder how many people in the 3 cities (Beijing Shanghai Guangzhou) are viewers of "Inner Mongolia Satellite Television", when there are so many popular local channels available.

2) I've been doing business travel to all those cities for countless time, I am not even aware of such channel available in any business hotels I have stayed.

I have no doubt of Ms. Bush's PR capability, but running a successful business in China requires much more than PR.

about "most respected financial print products in China" , I think those from XFML are far from that class by any measurement at the current moment.

Ask any fund manager in HK or Shanghai which are the most popular finance magazines. I can tell you it's Caijing. Caijing, though a PRC publication, is widely circulated in HK among those fund managers who have a need to know most updated PRC events.

This requires no argument, go to Central in Hong Kong (the areas the HK Stock Exchange and the HK Monetary Authority are located) and check out the newstand what Chinese finance magazines are on display, as simple as that. I drop by those newstand everyday. I live in HK, I have too many fund manager friends who told me this message. I don't need further proof.