Last night (Oct 24 10 PM, Shanghai time) I bought some Longtop (NYSE:LFT) shares at its IPO debut. I think this is more like “gold rush”, not something a rational investor would usually do. After I bought it at opening ($27), the stock gapped down as low as $23.25 (see the pattern here?). But it reversed its trend in late afternoon and closed at $32.40, which is up 85% from the offering price of $17.50. Its Q2 2007 earning is $0.12, and year 2006 earning is $0.22.
Keep in mind for a growth company like LFT, PE ratio is not as good indicator as revenue growth. Here is what I saw from its prospectus (recent developments):
“We estimate that our total revenues, excluding revenues from FEnet, for the three months ended September 30, 2007 will range from approximately $19 million to $20 million, which is an increase of 42.4% to 49.8% from $13.3 million in the corresponding period in 2006. We estimate that our software development revenues, excluding revenues from FEnet, for the three months ended September 30, 2007 will range from approximately $17.2 to $18.2 million, which is an increase of 62.6% to 72.0% from $10.6 million in the corresponding period in 2006.”
Here is an interesting post at trader168 I read yesterday afternoon.
若从中长期发展的角度去进行判断，Wall Street的investment bankers在评估逻辑上，他们目前应很有可能是以FISV、INFY去给LFT做估值（同样有意无意地YTEC也在最近的市场表现中出现了很大的投机机会，借了不少光），感觉这应是我们观察LFT、YTEC未来走势的一个非常重要的出发点。
I decided to buy the stock not because of this, but it did confirmed some of my thinking. BTW, I have seen other good analysis about Chinese ADRs, from the author jade_guanyin.