Coinciding with the year’s busiest shopping season that kicks off in the
Referred to as the Chinese Amazon.com, Dangdang is the largest book retailer in China in terms of revenue and, according to an iResearch consumer survey, the number one ranked brand among Chinese business-to-consumer (B2C) e-commerce companies when it comes to awareness, trusted online shopping experience and price competitiveness.
The company is offering 17 million American depositary shares (ADS), which account for 21.8% of its enlarged share capital. However, the shares underlying the ADSs on sale will be class-A shares, which have only one-tenth of the voting power of the class-B shares that most of the pre-IPO shareholders own. As a result, public investors will only have 2.8% of the voting power. The remaining 97.2% of the voting power will rest with the management, including co-founders Peggy Yu Yu and Gouqing Li, and other pre-IPO investors. A 15% greenshoe option could, if exercised, skew those numbers marginally more in favour of the public investors.
This compares with Amazon.com at 35 times projected 2012 earnings and 50 times next year’s numbers. Recently listed Chinese online clothing retailer
The IPO is being arranged by Credit Suisse and Morgan Stanley and is expected to price on December 7. The trading debut is scheduled for the following day.
With 97% of its 590,000 book titles being in Chinese, few people outside of China are unlikely to log on to dangdang.com to do their Christmas shopping, but the company does offer investors another option to get exposure to the consumer retail sector in China. In the first nine months of this year, dangdang.com averaged 1.24 million unique visitors every day with the numbers rising steadily through the year to 1.6 million per day in September.
And people aren’t just browsing. Revenue has increased from Rmb446.9 million in 2007 to Rmb1.46 billion in 2009 and Rmb1.57 billion in January to September this year. The company also turned profitable in 2009, with a bottom line of Rmb16.9 million. It recorded another Rmb16 million of net profit in the first nine months this year.
Dangdang also believes that B2C e-commerce sales will grow as a percentage of total retail sales in China -- it accounted for a mere 0.2% last year -- as online shopping becomes more accepted and overcomes key challenges related to consumer preferences, fulfilment, logistics and payments.
But promising statistics aside, Dangdang will also have to overcome a weakening appetite for new Chinese listings in the
Based on the early feedback, sources say Dangdang is attracting a lot of attention and after two days of marketing in
At the other end of the spectrum is Syswin, a Beijing-based real estate agency, which fell 11.4% in its
And on Tuesday, China Xiniya Fashion, a designer of business clothing for men, fell 9.6% on its first day of trading after it raised $88 million in an IPO arranged by Cowen & Co and Samsung Securities (