Chinese Tech Stock Weekly Summary

by: IRG Ltd

The following is excerpted from IRG's weekly stock report:


• According to industry sources, has secured an approval from the Hong Kong Stock Exchange for an IPO estimated to be worth some US$1 billion. Alibaba Group reportedly plans to list its business-to-business operation,, but has not considered to make its other units part of the IPO. Alibaba Group is partly owned by Yahoo Inc. The business-to-business division makes up the largest part of Alibaba Group. Its consumer arm includes the auction firm Taobao, online payments unit Alipay and Yahoo China. Alibaba's IPO is being sponsored by Goldman Sachs and Morgan Stanley with Rothschild as an adviser.

Media, Entertainment and Gaming

• CDC Games, a business unit of CDC Corporation (NASDAQ:CHINA) announced key performance metrics for certain of its commercially available games in China. It cited Yulgang, one of China’s most popular online games, now in its third year of commercial availability, as having posted average daily revenue growth of more than 20 percent in September 2007 compared to both July and August 2007. Special Force, the first-to-market, first-person-shooter online game launched by CDC Games in China in June 2007, now exceeds 6 million registered users. Average daily revenue for Special Force was up sequentially 23.4 percent from July to August and 52.3 percent from August to September. Peak concurrent Users [PCU] was up approximately 13.3 percent from August to September and average play time for Special Force users is now approximately 79 minutes. Following the acquisition of the OPTIC games division from CITIC Pacific in 2007, CDC reported that their primary game, Shaiya Online, has performed well with average daily revenue in September up 15 percent compared to July. Shine Online, a new cartoon fantasy, 3D MMORPG launched by OPTIC in September 2007, already has 765,000 registered users in its first 10 days of commercial availability.

• The9 Limited (NASDAQ:NINE) and Blizzard Entertainment announced that Blizzard Entertainment's World of Warcraft, the subscription-based Massively Multiplayer Online Role-Playing Game [MMORPG] has achieved record peak concurrency of 800,000. The figure stands for the highest concurrency since the game's commercial launch in June 2005. The9's business is primarily focused on operating and developing high-quality games for the Chinese online game market.


• According to data from the country’s Ministry of Information Industry, at the end of August 2007, there were more than 515 million mobile users in China. The report noted how the number of mobile users has been on the rise by an average of 6.8 million per month, with Chinese mobile users sending a total of 378.5 billion SMS messages in August, up 38.3 percent year-on-year. The report stated that the country posted a 28 percent increase in its production of mobile handsets to 347.6 mobile handsets over the same period last year.

• According to the country’s Ministry of Information Industry [MII], China is planning to submit a home-grown fourth-generation (4G) mobile data specification to the International Telecommunications Union [ITU] in either 2008 or 2009. The ministry described the 4G technology as enabling users to surf the web and transmit files much faster than current 3G standards, which gives it strong possibility in the wireless multimedia sector. The search for a dominant 4G standard is set to begin in 2008, with the ITU begins accepting proposals from countries around the world. The first 4G networks are forecast to be commercially deployed by around 2010.


• According to industry sources, two Chinese telecommunications operators – China Mobile (NYSE:CHL) and China Netcom (CN-OLD) – have plans to list yuan-denominated A shares in mainland China next year. The two companies are already listed in Hong Kong. China Mobile Ltd., China's largest mobile operator by subscribers, has selected China International Capital Corp. to handle its IPO. China Netcom has chosen CICC, Huatai Securities Co. and UBS AG to underwrite its listing. Sources mentioned that the two telecommunications operators had looked to raising between US$300 million and US$400 million earlier this year. Software

• Kingsoft Corporation announced that it has raised HK$768 million (US$99 million) from its Hong Kong IPO after fixing the price at the top of the range. The report said that if the greenshoe is exercised in full, the deal is expected to increase by another 15 percent to US$114 million. Industry analysts ascribe to the bullish market the performance of the online game and software developer, with the offering happening with the surging of the Hang Seng Index. Sources said more than 200 institutional investors participated in the deal even though the institutional order book closed a day ahead of schedule. The deal was jointly arranged by Deutsche Bank and Lehman Brothers.

• According to statistics from the Ministry of Information of Industry, China's software industry posted a 22.9 percent in its revenue to 343.8 billion yuan (US$45.7 billion) for the first eight months of this year. Of the total revenue, software products accounted for a 24.1 percent rise to 121.2 billion yuan (US$16.1 billion); system integration with an 18.5 percent rise to 84 billion yuan (US$11.1 billion); software technological services with a 23.9 percent rise to 55.8 billion yuan (US$7.4 billion); embedded system software with a 24.5 percent rise to 74.2 billion yuan (US$9.8 billion); and IC design with a 27.6 percent rise to 8.5 billion yuan (US$1.1 billion).

• e-Future Information Technology Inc. (NASDAQ:EFUT) , a leading front supply chain management software and service company in China, announced that Beijing Tourism Group [BTG], one of China's largest tourism groups, has licensed e-Future ONE VPM (Visual Process Management) Solution to centralize purchasing and optimize business processes of its selected business segments. Beijing Tourism Group is one of China's largest tourism groups. e-Future is a leading software and service provider in China's front-end supply chain market from manufacturers to consumers. e-Future's clients are centered in the retail, automotive, general household appliance and consumer goods industries.

• India’s largest IT park, Technopark announced that it has signed a strategic co-operation agreement with China-based Shenyang Information Industry Bureau. Under the agreement, Shenyang-based IT software companies would explore the possibility of locating themselves at Technopark either as wholly owned foreign enterprises [WOFE] or as joint venture partners with Indian software companies and also supporting frequent exchange IT Software delegations. The report said Technopark would promote co-operation between Indian IT companies from Technopark and Shenyang-based IT software companies in the areas of software export and outsourcing services for Japanese, South Korean, American and European markets, with the cooperation focused on software outsourcing training, specially the training for BPOs, animation outsourcing and allied areas.


• China Digital TV (NYSE:STV), a provider of smart card systems for Pay-TV operators in China, announced that it has raised US$192 million in an IPO of shares. The company said it will use the funds in part to expand research and development. The Beijing-based company disclosed that it has not yet ruled out plans of mergers and acquisitions.

Information Technology

• Longtop Financial Technologies (NYSE:LFT), a software and IT services provider, announced its move to go public. According to IDC, Longtop is ranked No. 3 for banking IT solutions in China, with the firm providing services to three of the four largest state-controlled banks. Goldman Sachs Group is the lead underwriter of the IPO.

• China TransInfo Technology Corp. (NASDAQ:CTFO), a leading Geographic Information System technology provider for China’s Transportation, Land & Resource and Digital City segments, announced that it will launch the test version of its Transportation Information Service Operation Platform (TIS Operation Platform) in January 2008. The test version is going to be followed by the commercial launch in June 2008. Following the launch of it TIS Operation Platform, China TransInfo said it will pursue opportunities to sell advertising space targeting the platform's end users. China TransInfo, through its subsidiary Beijing PKU ChinaFront High Technology Co., Ltd., offers a full range of GIS application solutions that cover GIS system planning, deployment, system construction, data testing, system audit & optimization, user's manuals and customer training through self-developed GIS platform software products for 2D and 3D GIS system models. The Company has 13 copyright registered certcertificates granted by the China Software Testing Center and the National Copyright Administration.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.