China tech trio headed for Nasdaq IPOs
(Reuters)
Updated: 2005-10-25 15:44

Three Chinese technology firms are readying initial public offerings on the Nasdaq worth a combined $500 million or more by the year's end, seeking to capitalize on strong demand for China plays on global markets.

Nasdaq has ramped up marketing activity in China, hoping to surpass the 10 domestic companies it listed last year despite some concern over the more stringent requirements of U.S. disclosure and accounting standards.

Many of the Chinese companies going to Nasdaq are start-ups -- as opposed to former state-owned monopolies -- that have been funded and guided by offshore venture capitalists with the express purpose of ultimately doing an overseas IPO.

The world's biggest electronic exchange has listed six China-based companies so far in 2005, but its Asia Pacific chief told Reuters last week he was aiming to beat last year's total amid expectations of an upcoming flurry of deals.

On Monday, chip designer Actions Semiconductor and chip maker Vimicro International filed for separate IPOs worth up to $225 million and $100 million, respectively.

A third company, solar energy equipment maker Suntech Power, is planning a roughly $200 million IPO on the Nasdaq by the end of the year, according to a source familiar with the situation.

And a fourth, outdoor advertising specialist Target Media, previously told Reuters it is aiming for an IPO worth about $150 million either late this year or in early 2006.

In its filing with the U.S. Securities and Exchange Commission, Actions Semiconductor said revenue swelled to $57.3 million in 2004 from $5.6 million in 2003.

Revenue expanded further to $109.7 million in the first nine months of this year, versus $25.1 million a year ago, as demand leapt for its chips used in popular MP3 music players.

Actions's net income grew to $26.5 million in 2004 from $100,000 in 2003. Earnings in the first nine months of this year amounted to $53.7 million, versus $9.8 million a year ago.

In its SEC filing, Vimicro said its net revenue grew to $50.3 million in 2004 from $16.6 million in 2003. Revenue for the first half of 2005 totaled $40.4 million, versus $24.1 million for the same period a year earlier.

Gross profit grew to $17.9 million in 2004 from $5.6 million in 2003. Gross profit for the first half of this year jumped $14.2 million, compared with $8.7 million a year earlier.

The company said it incurred a net loss of $5.6 million in 2004, which included non-cash share-based employee compensation expenses of $13.4 million.

"We may incur net losses in the future," the company said in its filing, adding it expects to increase operating expenses in anticipation of expected growth.

FERTILE GROUND

Seeking to take a piece of the mega-listing China business that has typically been the purview of the rival New York Stock Exchange, Nasdaq told Reuters it is now in talks for a $1 billion-plus IPO for a China-based transport sector firm.

The Nasdaq has become a popular listing ground for China start-ups, especially from the media and technology fields.

The exchange hosts 22 China-based listings, with market capitalisations ranging from $2.4 billion for the largest, online game operator NetEase, to $89 million for the smallest, Qiaoxing Universal Telephone.

The latest listing, a $96 million offering by medical device maker China Medical Technologies, reflects Nasdaq's desire to broaden its appeal beyond tech and media.

Many are seeking also to take advantage of strong China sentiment in the United States.

China Medical Technologies shares are up 27 percent since its offering. Shares for another recent listing, Focus Media are up 58 percent since July. And search engine Baidu is up 200 percent from its August IPO price.