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People's Daily Online>>China Business

People's Daily Online sets IPO price

By Ji Beibei (Global Times)

08:07, April 18, 2012

People's Daily Online Co said yesterday it will raise some 1.55 billion yuan ($246 million) in its initial public offering, nearly triple its original fundraising target, mirroring investors' confidence in the portal.

However, some analysts said whether it can use the money properly to ensure a sustainable growth is still not clear.

People's Daily Online Co announced yesterday it has set an indicative range of 20 to 22.5 yuan for its Shanghai IPO, enabling it to raise up to 1.55 billion yuan, a sum nearly three times its earlier target of 527 million yuan.

The price range, representing 34 to 39 times the company's earning per share, signaled the confidence of the capital market in the company, backed by expectations of future favorable policies toward culture industry, said Lin Jin, an IPO analyst with Shanghai-based Shenyin Wanguo Securities.

As the first ever State-backed online media company to be listed, the performance of People's Daily Online will set an example for other similar listing hopefuls, Lin said.

Xinhuanet, the portal of Xinhua News Agency, also planned to raise some 1 billion yuan by going public in Shanghai, according to earlier reports.

People's Daily Online Co said that it would set the final pricing for its IPO Friday and the company would use the funds raised to acquire companies, upgrade technology, as well as strengthen its editorial team and mobile Internet platforms.

Though there are signs of market confidence in the company's growth, some analysts yesterday expressed concerns over the sustainable growth of the company.

Caijing magazine quoted an unnamed analyst yesterday as saying that it will take time to know whether the company can live up to high expectations of the market.

Li Weidong, research director at consultancy China Venture, echoed the view.

"Whether the proceeds can be used properly will determine if the company can achieve a sustainable growth," Li noted.

Unlike "companies in resource and energy sectors, being a State-backed company will not be an obvious advantage in the Internet sector featuring high level of marketization," Li told the Global Times.

People's Daily Online is running a profitable polling service. The service raked in 140 million yuan last year for the company and is expected to bring 180 million yuan this year, according to Chen Zhixia, vice president of People's Daily Online Co.

However, Li doubted the polling service can be a growth engine of the company as the service will reach a plateau once all of the local governments have signed up for the service.

"Having diversified businesses including search service, microblog and e-business and building a mobile Internet platform welcomed by the market are challenges it needs overcome," Li said.

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