China Real Estate Information (CRIC) IPO's Today; Will Re-enter E-House Holdings (EJ)

Thus far our "cautionary" sale of E-House Holdings (EJ) Wednesday has worked out as the stock has been weak since. I had thought the CRIC spin off it might be some sort of complicated structure but upon further research it just looks like a straight IPO.


We were unsure when its spin off of China Real Estate Information (CRIC) would take place but it appears today is the day.

• (Oct 15) E-House China Holdings Ltd. fell the most this month in New York trading before its real estate information business unit starts trading in the Nasdaq stock market tomorrow.
• E-House dropped for a fourth day, losing 3.5 percent to $21.49. China Real Estate Information Corp, created by the merger of E-House’s real-estate information business and Sina Corp.’s online real estate business, will offer 18 million American depositary receipts, according to the prospectus. The company may raise around $230 million based on the share offer price of $11.80 to $13.80, Goldman Sachs Group Inc. said.
• “There’s uncertainty of how much value will be assigned to CRIC,” said Jeff Papp, a senior analyst at Lisle, Illinois- based Oberweis Asset Management Inc., which manages $700 million, including Chinese stocks. “E-House will still hold a large chunk of CRIC so their value will be partially dependent on the value of CRIC.”

CRIC is interesting in and of itself with some massive revenue growth but very dependent on 1 customer which brings huge risk. (in 2008, $28 of $50M in revenue was with 1 customer)

• In the six months ended June 30, China Real Estate profit grew to $11 million from $7.2 million in the same period in 2008. Sales rose nearly 62 percent to $31.2 million from $19.3 million

• “The merger would create the largest online and offline real estate information and consulting services provider in China covering 56 cities,” Wendy Luo, a Beijing-based analyst, wrote in a note to clients. “E-House’s remaining business, mostly primary agency, is undervalued.”

So it's an interesting issue - is E-House worth more with CRIC inside the umbrella entity or outside floated to the public. In the very near term the answer is "less" based on how E-House is trading but that could just be uncertainty.

It will be interesting to see how China Real Estate Information fares today; if this IPO came in fall 2007 it would double overnight as anything Chinese was attracting lemmings by the bushel. Nowadays it would of been better served to be called China Real Estate Information and Green Battery to get the "sex appeal" factor: "ooohhh batteries, so old ... yet so new!" [Sep 24, 2009: A123 Systems (AONE) - Hype or Hope]

We hope to get back into E-House today after our 48 hour hiatus, and as long as it holds that 50 day moving average we're content to stay.

No position (stalking)