China Confidence Crisis Separates Wheat from Chaff 中国企业信任危机对不同公司各有利弊

By newsdoug on July 11, 2011

There are several new developments in the ongoing confidence crisis toward publicly listed Chinese firms, reflecting a new reality that investors are still receptive to such plays but clearly prefer ones with solid balance sheets and good long-term growth prospects. Reflecting that trend, Sun Art Retail Group, China’s largest hyper-market operator, is moving ahead with its Hong Kong IPO and has actually priced the deal at the Investors snap up Sun Art, attack Longtop top of its range, raising $1.1 billion. (English article) Clearly the market is still excited about industry leaders in sectors with strong growth potential — in this case supermarkets, which should see strong expansion prospects as China builds out a new generation of mini-cities around its major urban centers. (previous post) At the other end of the spectrum, China’s largest port builder, China Communications Construction, has pulled a $3 billion IPO in Shanghai due to poor investor sentiment. In this case the market clearly wasn’t too excited about this company, as China’s port-building industry has probably already undergone its largest expansion and future growth could be muted. (English article) Last but certainly not least there’s the latest news from the beleagured Longtop Financial (NYSE: LFT), whose ongoing accounting scandal in many ways kicked off the current confidence crisis in overseas-listed China stocks. In the latest twist with this company, a law fiirm has put out a last call for anyone interested in joining a class-action lawsuit against Longtop, reminding them they must sign up by July 22. (announcement) This announcement is just the latest reminder of the huge hurdles ahead for Longtop, whose other woes include the resignation of its CFO, auditor and three independent directors (previous post), as well as an ongoing investigation. I would be extremely surprised to see Longtop survive this crisis, which is likely to claim many similar companies before investors regain confidence in this group.

Bottom line: Strong results for IPO candidate Sun Art and the latest woes for Longtop show that overseas investors are becoming increasingly selective about China plays.

中国赴美上市企业信任危机出现些许新进展，显示投资者仍可接受这一现象，但明显更青睐那些资产负债表稳健、长期增长前景良好的企业。中国高鑫零售在香港首次公开募股（IPO）的发行价定在区间的最高端，融到11亿美元。市场仍明显看好业内具有强劲增长潜力的领袖企业，以超市行业为例，随着中国年轻人开始在大城市郊区购房，有望带动郊区超市发展。形成鲜明对比的是，由於中国股市整体疲软，中国最大的港口建设商–中国交通建设公司在上海IPO规模为30亿美元。市场明显并不太看好这家公司，原因是中国港口建设行业很可能已经经历了史上最大的扩张速度，未来增长有限。最後是东南融通（Longtop Financial）<LFT.N>的最新消息，该公司的会计丑闻在很大程度上掀开了中国海外上市企业信任危机的冰山一角。最新消息是，一家律所发出最後呼吁，提醒有意参与对东南融通集体诉讼的人士，应在7月22日前签名加入。这将再次提醒投资者，东南融通前路所面临的巨大坎坷，其它伤痛还包括其首席财务官（CFO）、审计师和三名独立董事请辞，以及该公司正在接受调查。如果东南融通能度过此次危机，我会极为惊讶；在投资者对中国赴美企业重建信心前，还将有许多类似公司受到影响。

一句话：高鑫零售IPO规模庞大和东南融通最新受创表明，海外投资者对中国企业的股票越发挑剔。

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