Wednesday, March 30, 2011

Qihoo 360 Technology (QIHU) IPO Set to be Star Event of the Day

For reasons unclear, we had yet another gap up in what has shaped up as a V shaped, low volume bounce during the past 2 weeks.  While an line ADP report was out this morning, the market was at premarket highs well in advance of that figure. S&P 1330 is a level I have my eyes on as it was an old high in the market, and technicians want to see a new higher high created to resume the uptrend.  That said, since we are now gapping up (many days on no news in particular) 0.4, 0.5% three or four times a week, making new highs should be easy.

We have a new Chinese IPO that is getting a ton of buzz Qihoo 360 Technology (QIHU); should commence trading imminently.  It priced last night @ $14.50 and early indications show roughly a 100% gain with a price in the upper $20s at the open.   I realize valuations don't mean anything when you combine an IPO + China + Internet, but the company was prices at a nose bleed 25x sales at IPO, and speculators look to open it at 50x sales.  To repeat, a tech stock at 6-7x sales would be considered a premium valuation in normal times...

Via Marketwatch:
  • A China-based Internet company has commenced an initial public offering of shares that some analysts expect could be one of the biggest IPOs out of that country this year.  Qihoo 360 Technology,  which offers free Internet browsing and security products to a growing base of users in China, priced its IPO on Tuesday night at $14.50 per depositary share, above the expected range. 
  • Beijing-based Qihoo had planned to sell 12.1 million shares at a price range of $10.50 to $12.50 a share, according to a filing with the Securities and Exchange Commission. Underwriters include UBS Investment Bank and Citi. 
  • Sweet called Qihoo “one of the best Chinese IPOs” to come out since the fourth quarter of last year, describing the company as “a dominant force in the Chinese Internet space” in a note to clients. He upgraded his rating on the deal from 3 to 4, citing strong investor interest.
  • Stephanie Chang, analyst with Renaissance Capital in Greenwich, Connecticut, said the Qihoo IPO is “definitely attracting interest because it plays into the trends that are popular now” — that is, the Internet and China, the world’s biggest Internet market
  • With more than 300 million monthly users in China, Qihoo runs the second-most popular browser in China, after Microsoft Corp’s Internet Explorer, according to the company’s SEC filing.
  • For the year ended Dec. 31, 2010, the company reported net income attributable to shareholders of $5.5 million, on revenue of $57.7 million, according to the company’s filing. That compares with a net income of $2.1 million, on revenue of $32.3 million for the year-earlier period. 
  • The company’s biggest customer is Google (GOOG) which pays Qihoo 360 in exchange for referral of Internet search traffic, the prospectus said. Google accounted for 21% of Qihoo’s revenue in 2010, according to the filing. 
 No position

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