China Stocks

Speculating on Longtop Financial

Reading Time: < 1 minute

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):

China IPO

Longtop Financial Tech IPO

Reading Time: 3 minutes

I didn’t pay much attention to Chinese IPOs listed in US lately. This spring (March) I got into XFML, which is a big mess. Recently I traded WX (Wuxi Pharma Tech), which I think is the best Chinese IPO this year so far. But I am not a biotech/pharma guy, and I felt WX valuation was not cheap shortly after IPO, so I decided to sell it.

Today I happened to read that Longtop Financial Tech (LFT, 东南融通), an IT and software provider for financial services in Xiameng, China, will be listed in NYSE this week. You can read its prospectus here and listen to its roadshow at IPOHome. I have not got into the financial details, but from my preliminary analysis, this is a solid company in a fast growth industry (financial services in China).

From IPOHome, it will be priced between $14 to 16, and will debut this week. Note Goldman Sachs (Asia) will be the underwriter.

(Customers line up for ATM machines, China Merchants Bank, Shanghai, 2007)