Baidu's Qunar travel site makes strong public opening
Updated: 2013-11-02 06:35
By AMY HE in New York (China Daily USA)
|Video by Wan Li / For China Daily. Click to watch on Youtube|
Qunar Cayman Islands Ltd, the travel website of Chinese Internet giant Baidu Inc, traded almost double its initial share value today on its opening day, raising $167 million.
Qunar, which means "where are you going" in Chinese, offered 11.1 million American depositary shares at $15 each, more than the expected $12 to $14 range, which was even higher than the company's initial target of $9.50 to $11.50 per share for its initial public offering.
Trading under the symbol QUNR, shares opened at $28.35 and at one point hit a high of $34.99 The stock closed at $28.40, an 89.3 percent jump. Goldman Sachs Group, Deutsche Bank and Stifel Financial Group were the lead book-runners for the sale.
Founded in 2005, the Beijing-based Qunar aggregates information from thousands of travel agencies, flight routes and hotels to give customers discounts when they book. Baidu, China's largest search engine, purchased a majority stake in the company for $306 million in 2011.
"Going public is an important milestone for Qunar in our company's history," said Qunar CEO Zhuang Chenchao at the closing ceremony on Qunar's opening day.
"However, our IPO is just the start of the journey and we are going to continually build our system to redefine the Chinese online traveler user experience, and to redefine the whole industry," he said. "With funds raised in the public market, we will be able to offer more [products], best-value deals and services at your [fingertips], anytime, anywhere."
After being plagued with accounting scandals, Chinese companies are making their comeback in the US stock markets and Qunar's debut was strong, analysts say.
"Whenever [a stock] doubles in a day, I would say it exceeds expectations," said Tim Hanson, senior analyst at Motley Fool Asset Management.
"Qunar is obviously operating from a [strong] position, just right ahead of the gate, of having Baidu as a major backer," he said. "Baidu is obviously a known quantity, has a very premium valuation now, people have a lot of respect for [CEO] Robin Li."
The Baidu name makes Qunar a much safer stock option, Hanson said, than it would be if the company were coming out on its own. But even on its own Qunar has shown increasing revenue and dramatically narrowing losses, so investors probably foresee profits coming quickly, he added.
Hanson cautioned that there is still volatility in the Chinese economy that will affect the market, despite optimism about Chinese Internet companies.
Baidu, he said, is an example of a company that has seen the volatility reflected in its share prices: "[Shares] went from $160 to $80, back to $160. So 50 percent loss in a year—which is tough for an investor to take—but then also 100 percent gains in a year, and that doesn't happen very often. That volatility, that's probably over-corrected in both directions."
For now, Qunar had a "relatively easy IPO" and it launched into a "strong environment," one where investor demand for Chinese Internet names is strong, said Hanson.
Two other Chinese Internet companies, 500.com and Sungy Mobile, submitted initial filings for American debuts.