How Did Chinese IPOs Perform in 2009?

by: The Sun

After a dismal year in 2008, the U.S. IPO market recovered a little bit in 2009. According to Renaissance Capital, there were a total of 63 deals last year, up more than a third from the year before when only 43 companies went public. To give you an idea of how bad the past two years were for IPOs, there were more than 200 initial offers from 2004 to 2007, when the IPO market peaked in 2007 with 272 offers when the recession began in December. As Renaissance Capital put it in its 2009 Global IPO Review, “2009 will be seen as a transition year between crisis and recovery to normalcy.”

2009 US IPOs

Of the 63 IPOs in 2009, 10 were Chinese companies. Of those 10 Chinese IPOs, Lihua International (LIWA), which manufactures industrial wires, Duoyuan Global Water (DGW), which makes water conditioning, filtration, and purification products, and (CYOU), which is a online gaming provider, are the best performers of the 2009 class, not only among Chinese companies, but also all the IPOs.

Company IPO Date IPO Price Year-End
Return (NASDAQ:CYOU) 04/01/09 $16.00 $33.51 109.4%
Chemspec International (NYSE:CPC) 06/23/09 $9.00 $6.60 -26.7%
Duoyuan Global Water (NYSE:DGW) 06/23/09 $16.00 $36.08 125.5%
Lihua International (NASDAQ:LIWA) 09/04/09 $4.00 $10.55 163.8%
Shanda Games Limited (NASDAQ:GAME) 09/24/09 $12.50 $10.25 -18.0%
China Real Estate Info. (NASDAQ:CRIC) 10/15/09 $12.00 $11.20 -6.7%
ZST Digital Networks (NASDAQ:ZSTN) 10/19/09 $8.00 $8.75 9.4%
7 Days Group Holdings (NYSE:SVN) 11/19/09 $11.00 $12.49 13.5%
China Nuokang Bio-Pharma (NASDAQ:NKBP) 12/09/09 $9.00 $7.75 -13.9%
Concord Medical Services (NYSE:CCM) 12/11/09 $11.00 $8.72 -20.7%

I bought one IPO stock last year, 7 Days Group, the economy hotel chain operator, with a price of $12.50 from the secondary market on its IPO day, then some more in December when the stock was traded at $11.55. The stock gained 13.5% last year and is now at $14.70. The reason to invest in SVN is very simple: As people in China travel more and more these days, the demand for hotel rooms could be strong and SVN could benefit from the strong demand. By investing in SVN, I am hoping it can do as well as its competitor, Home Inns & Hotels Management (NASDAQ: HMIN).

Disclosure: Author has stock in SVN.