Xinhua Finance Media Limited (XFML) did not turn out to be another Home Inns or New Oriental, at its IPO debut last Friday. Besides the difference of market sentiment then and now, I think the fundamental reason lies within the company and the business itself.

First Xinhua Finance is in the media and advertising business. Note media industry is still heavily regulated in China, this is different from Home Inns’ economy hotel business, which is pretty much a free market (as long as they can secure the building).

More importantly, Xinhua Finance has very limited operating history, it’s pretty much a holding company of various traditional media and adverstising assets. A large portion of the capital raised in IPO will be used to pay down the debt (due to its parent etc.); on the other hand, we know New Oriental has many years operating history, Home Inns started business since 2002, both grew organically for an extended period of time (vs. Xinhua’s acqusition strategy).

That being said, should we throw the towel for Xinhua? It’s still too early to tell. We know Focus Media (FMCN) is enjoying its good time because its outdoor LCD advertising appears to be very effective for some consumer products in China. Baidu, the Google of China, has also done well by helping the small business’ market product more effectively. But a large piece of the advertisement pie is still for traditional media in China. Despite the rapid development of Internet, Internet advertisement in China is still not as significant as in US. We can get that idea just by comparing the market share of Google and Baidu in each country’s advertising industry.

I believe the real estate, automobile, luxury goods and financial services, will need to reach end consumers (white collars) through traditional media (TV, radio, newspaper and magzine). Because that’s where target audience are.

Xinhua Finance will have the chance. The question is: can they seize the oppertunity now that they got the money?