Investment

Share price of Chinese online store jumps 57% on Nasdaq

By Kelly Chung Dawson (China Daily)
Updated: 2010-10-27 10:58

NEW YORK - Shares of Mecox Lane, China's largest online vendor for clothing and accessories, soared 57 percent in their market debut on Tuesday as investors bet on growth in China's online retail sector.

The stock closed at $17.26, after pricing at $11. The shares opened at $17.50 and gained as much as 68 percent in their Nasdaq debut.

On Monday, the Shanghai-based company sold 11.7 million American Depositary Shares for $11 each, raising about $129.17 million. It had planned to sell shares for $8 to $10 each.

"Everyone is excited about the emerging e-commerce market," Mecox Lane CEO Alfred Gu told China Daily. "The market is still in its infancy but there is immense opportunity for growth."

Earlier this month Internet provider ChinaCache International Holdings Ltd raised $84 million in a Nasdaq debut that saw the biggest first-day gain for a US IPO in three years.

With an estimated 420 million Internet users in China, the Chinese online commerce market is expected to continue its rapid growth.

Last year, Mecox Lane reported a net income of $7.2 million on a revenue of $177.7 million. In the first half of this year, sales climbed 42 percent to $108 million, a US Securities and Exchange Commission regulatory filing showed.

"I think investors are confident in our business model and in our future growth because we have a proven track record," Gu said.

"Our investors are sophisticated, and they know our record. We have delivered consistently for nine years, with rapid growth, and we've been profitable for many years."

Primarily an online platform for various brands, the company also offers its brand Euromoda in 478 stores across China.

In addition, Mecox Lane stores offer the US brand Rampage, a partnership that Gu says has been highly successful. Only about 20 percent of Mecox Lane's profits come from its stores, he said.

The company will use the money raised from the IPO to expand operating capabilities, with a plan to build a new logistics center that will double its output of 40,000 parcels a day to more than 100,000, Gu said.

Mecox Lane has no plans for expansion outside China.

"There is huge opportunity in the Chinese market," Gu said. "We're still a relatively small company and the market is huge. We expect to see a high growth rate in the coming years."

China Daily