The first time I heard that Alibaba.com was planning for an initial share sale was in 2005 when Baidu.com went public. Since then, I have been following news about Alibaba.com’s IPO with a lot of interest, because I knew I wanted a piece of it (maybe I should have bought some BIDU given the price of that stock today).
Early this month, Alibaba.com won regulatory approval to list shares on Hong Kong Stock Exchange and last week, the IPO date was finally settled on November 6th, under symbol 1688.HK. According to latest reports, Alibaba.com has just revised its price range from $HK10.00 - HK$12.00 to HK$12 to HK$13.50 a share due to strong demands. The IPO could bring Alibaba an estimated $1.5B, the second largest internet IPO in history only after Google’s $1.67 debut.
Alibaba.com is a e-commerce website that provides small buyers and suppliers sales leads from China and overseas for online trading. Currently, its online marketplaces have more than 24 million registered members.According to Bloomberg.com, Alibaba’s IPO will value the company at 54 times its estimated 2008 profit. For 2007, Alibaba.com forecasts $83M in revenues, nearly doubling the earnings from the previous year. Currently, Aliabab.com dominates a Chinese B2B market with a 69% share. Its closest rival, Global Sources, has 8.4% market share and is traded at 33 times estimated 2008 earning.
Two months ago, I opened a Global Trading Account at E-Trade. The main reason for having such an account is to trade mainland Chinese stocks that are only listed on HKSE. I have bought one stock already (Industrial & Commercial Bank of China (ICBC), purchased at HK$5.00, now traded around HK$6.50) and Alibaba.com’s IPO will be my next bet. To get myself ready for the IPO, I transferred $7,000 to my E-Trade account and hopefully I could buy about 2,000 to 3,000 shares when the stock begins trading on November 6. In the past, I have bought several Chinese IPO stocks on or a little after their IPOs on the secondary markets. There were some successes (LFC and EJ) and failures (GRRF and XFML).
The reason I like Alibaba.com is its dominant position in the e-commerce business in China and growth potentials. And from what I have seen, going with the leaders is always profitable.
Following are some recent reports on Alibaba and its IPO: