No longer toxic, Chinese IPOs pop: WSJ

(This story was published by The Wall Street Journal Online's China Real Time Report blog at http://blogs.wsj.com/chinarealtime/)

Autohome, China's online auto retailer, is the latest initial public offering of a Chinese company to pop in its debut.

Shares of the Autohome, which opened on the NYSE under the ticker "ATHM", rose nearly 80% Wednesday. Shares traded above $30, after the online retailer priced above the top end of its range at $17 Tuesday night.

This year Chinese-backed IPOs, considered toxic just two years ago, have been investors' darlings.

Four other Chinese companies -- 58.com, 500.com, Qunar, Montage Technology Group and Sungy Mobile -- that went public in the U.S. this year have had similar first-day pops and have continued to run higher after their debut, according to Renaissance Capital. Another company, amicrocredit small business lender China Commercial Credit, dipped slightly on its first day of trading but is now up more than 30%.

Only one Chinese IPO LightInThe Box is down this year. Its shares have dropped 27% from its $9.50 IPO price.

China was once a major source of new listings for the major U.S. exchanges. But in late 2010, investors started to fall out of love after a host of Chinese companies were accused of of having lied to investors about their accounting metrics and details of their businesses. Shares of Chinese companies listed in the U.S. were hit hard, and 49 of these companies announced plans to withdraw their listing between 2010 and October 2012.

But starting late last year, investors appeared to forget all of that. In March 2012, Vipshop, a flash sale site operating in China, tested the market. It was the first Chinese company to list in the U.S. in eight months, and it struggled at first, dropping 15% in its first day. But investors who held on reaped a huge win. The stock is up 1137.8% (Yes those decimal places are correct) and is trading at $71.50 compared to its $6.50 IPO price.

YY, which went public in November 2012, is up more than 300% since then.

"Investors are far more confident that Chinese companies don't have the same accounting issues they did before," said Scott Sweet, senior managing partner of IPO Boutique. "They're also realizing that they've been extremely lucrative."

Mr. Sweet said the superb performance of Chinese IPOs could help bring the most highly anticipated one -- Alibaba -- to market in early 2014.