Vipshop Vies For First Internet Listing of 2012 唯品会欲在赴美上市电商公司中力拔头筹

By newsdoug on February 20, 2012

Vipshop files for first Internet IPO of 2012 An online discount retailer named Vipshop has taken an early lead in the race to become the first Chinese Internet company to list in the US this year, while the more established Sohu (Nasdaq: SOHU) has set up a new headquarters for its popular video service, laying the groundwork for its own US IPO for the unit. Meantime in other news for US-listed tech firms, IT outsourcing company Camelot Information Systems (NYSE: CIS) has been hit by a second class action lawsuit over a big drop in its share price, in what looks like another major headache for the company. Let’s look at Vipshop first, a relatively small company that is taking the bold move of being the first Chinese web firm to file for a US IPO this year, with plans to raise up to $125 million. (English article) The company looks similar to many other Chinese e-commerce firms in that it is losing money, posting a loss of $107 million last year amid stiff competition in the space. Considering its money-losing status and lingering broader doubts about the accounting practices of Chinese companies in general, this offering is likely to attract very limited interest and in all likelihood will fall in its trading debut. Investors interested in China IPOs would be better served to look at another company, car rental firm China Auto, which became the first Chinese firm this year to file for a US listing last month with plans to raise up to $300 million. (previous post) Meantime, Sohu has announced it will spend $20 million to set up a headquarters for its popular online video site in Tianjin. (Chinese article) The location of the office in Tianjin, clearly separate from Sohu’s own Beijing headquarters, indicates that Sohu is trying to develop this unit as its own entity and I would expect to see the company file for a potential US IPO for the unit as soon as the second half of this year, putting it alongside rivals Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO) as a publicly listed firm. Lastly, there’s Camelot, which after being hit by one class action shareholder lawsuit earlier this month, has now been hit by yet another one from another law firm specializing in such suits, after a sharp drop in the company’s stock in 2010 and 2011. (lawsuit announcement) Somewhat surprisingly, the stock hasn’t reacted very much to the lawsuits, and actually rose 2.5 percent on Friday. Perhaps that’s because its shares are already down sharply from the $25 level of about a year ago to their latest close in the $2.50 range. Maybe there’s a good buying opportunity here, though of course that’s assuming that Camelot can survive these 2 lawsuits.

Bottom line: Vipshop will attract weak investor interest as China’s first US Internet IPO of 2012, while Sohu’s latest moves indicate an IPO for its video business potentially by year end.

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