Top News

ChinaCache makes big splash onto Nasdaq

By Ariel Tung (China Daily)
Updated: 2010-10-04 10:39

New York - Internet firm ChinaCache International Holdings Ltd said China's booming market offers golden opportunities after the company became the best first-day performer in the US stock market in three years.

Shares of the Beijing-based Internet service provider, whose clients include China Mobile, Sina and Alibaba, surged as much as 95 percent to $27.15 after selling 6.1 million American depository receipts for $13.90 each on Nasdaq on Friday.

This followed news that the number of Internet users in China has already surpassed the entire American population.

ChinaCache's listing comes as US stock markets have deteriorated, with many companies delaying offerings. Some Chinese companies such as China Education Inc have withdrawn their offerings.

However, ChinaCache's decision to continue its IPO is timely, said ChinaCache founder and Chief Executive Officer Wang Song. The company wants to strengthen its presence in the growing market driven primary by mobile Internet and Internet videos.

"The future growth of China's Internet is very promising. We want to be able to capture the market before the next wave of Internet development in China. We want to get ready for it," Wang said.

The company, which has 90 percent of its business in China, has seen growing revenue in the past few years. However, its revenue suffered a sharp drop in 2009, which was attributed to the global recession and a business model that focused primarily on a base of low-value and high-risk customers, according to Wang.

Since then, the company has shifted its business model and built up a more stable and balanced customer base. As it was able to achieve a much higher profit margin this time, the company's revenues have increased significantly, said Wang. Its clients have more than doubled over the past three years with 418 clients as of June.

The company is the first non-telecom carrier to receive a nationwide operating permit to provide Internet services in China. Its clients pay for its services either through a monthly fixed bandwidth or traffic volume usage, or chose a plan based on actual bandwidth and traffic volume used.

The company will continue to focus its business in China, Wang said. The $84 million in proceeds from the Nasdaq offering will allow the company to fund its research and development, as well as to expand its Internet network and systems.

ChinaNetCenter, another major Internet content service provider in China, has been questioned by investors for its declining performance after being listed on China's Growth Enterprises Market board.

But Wang is not worried about the competition.

"The Internet is a big market and it has great potential. A market like China should be able to accommodate a few players," he said.

ChinaCache controlled about 53 percent of the content delivery market in China as of December last year.

China Daily