China Digital TV Energizes IPOs With a Gain of 75%
By LYNN COWAN
October 6, 2007
China Digital TV Holding Co. turned a slow week for new stock issues into one that crackled with energy Friday, soaring 75%.
The Beijing company’s stock was among just a trio of initial public offerings of stock to begin trading in the past week, and its first-day rally followed heady gains of 73% by Constant Contact Inc., a provider of on-demand email marketing services to small businesses and nonprofit organizations, on its first day of trading Wednesday.
A third offering, from MAP Pharmaceuticals Inc., also performed well Friday, advancing 11%.
China Digital TV closed at $28 a share on the New York Stock Exchange, up from its IPO price of $16. The 75% gain ranks it as the third-best IPO debut of the year, after medical software firm Athenahealth Inc.’s 97% gain in September and software firm VMware Inc.’s 76% rise in August.
China Digital sold 12 million American depositary shares at $16, a price above its expected $13 to $15 range, which had already been raised by $2 on Wednesday. The offering was managed by underwriters Morgan Stanley and Credit Suisse Group.
The company, founded in 2004, sells smart cards and software that control access to digital-television networks’ programming.
The company’s chief financial officer, Liang Xu, said the market for digital television in China began about a decade ago but didn’t grow rapidly until recent years. “We’re definitely confident in the business process and the growth of this industry,” said Mr. Xu in a telephone interview.
Among the risks China Digital faces is the fact that Chinese TV viewers are used to receiving television free or for a low price and may not be willing to pay higher rates for digital service.
Meanwhile, MAP’s gain came after cutting its IPO price by $2 from its lowest planned range. Based in Mountain View, Calif., MAP closed at $13.35 a share on Nasdaq, up from its IPO price of $12.
The company focuses on making versions that can be inhaled of proven therapeutic drugs. Its two most advanced product candidates are for pediatric asthma and migraine headaches.
None of its products have been approved for commercial sale, and the company hasn’t generated any product revenue. The offering was underwritten by Merrill Lynch & Co., Morgan Stanley and Deutsche Bank AG.
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NEW YORK, Oct 5 (Reuters) - American depositary shares of China Digital TV Holding Co Ltd’s (STV.N: Quote, Profile, Research) soared 75 percent on Friday after pricing above a forecast range a day earlier.
The ADS, which opened at $30 in trading on the New York Stock Exchange, ended the day at $28, a $12 jump from its offering price of $16 per ADS.
On Thursday, the company sold 12 million American Depositary Shares at $16, compared with a forecast range of $13 to $15, which was raised on Wednesday from an earlier $11 to $13 forecast.
Each ADS represents one ordinary share.
High demand for digital television service in China caught investors interest, said Scott Sweet, managing director of IPOboutique.com
“The explosive growth of digital television in China and the vast potential for further sales to an increasingly educated populous,” boosted the offering, said Sweet.
“Plus having the middle class being the fastest growing sector in China, allowing the capability for such a “luxury”, very much works to this IPO’s favor and increases it allure.”
The Beijing-based company, which provides conditional access systems to the digital television market, has given underwriters, led by Morgan Stanley and Credit Suisse, the option to buy an additional 1.8 million ADS to cover overallotments.
As of June 30, the company had installed conditional access systems at 130 digital television network operators in 26 of the 32 provinces, autonomous regions and centrally administered municipalities in China, according to a regulatory filing with the U.S Securities and Exchange Commission (SEC).
China Digital TV’s IPO surge puts the company in the No. 3 spot, after Athenahealth (ATHN.O: Quote, Profile, Research) and VMWare (VMW.N: Quote, Profile, Research), as 2007’s best first-day performers.
The company plans to use proceeds for research and development, sales and marketing, acquisitions, and general corporate purposes.
