SHANGHAI China's People.cn Co Ltd finished 74 percent higher on its first day of trading in Shanghai after a $219 million IPO as investors flocked to the state-backed news portal, giving it a bigger market value than the New York Times.
Demand for People.cn shares were so high that the stock was suspended for most of the afternoon, after triggering multiple stock exchange circuit breakers.
"Investors are scrambling for People.cn due to its scarcity. As long as you're a Chinese person, you would know the company," said Liu Guanwu, a media IPO analyst with Beijing-based consultancy Analysys International.
At its Friday closing price of 34.72 yuan, 73.6 percent higher than the initial public offering price of 20 yuan, People.cn was worth 9.6 billion yuan ($1.5 billion), more than New York Times, which has a market capitalization of $951 million.
The stock opened at 31.01 yuan and was temporarily suspended when it triggered a stock exchange circuit breaker after rising 10 percent from its opening price. It was suspended again till the last five minutes of the trading day, after triggering another stock exchange circuit breaker when more than 80 percent of the stock changed hands.
"Institutional investors I have spoken to seem rather interested in this stock primarily because it's a government entity," said Chen Yi, an equity analyst with Xiangcai Securities in Shanghai.
"From the look of things, retail investors seem to have also followed suit today," Chen said.
The Shanghai Composite Index closed 0.35 percent lower at 2,396.3 points.
Beijing has actively encouraged its state-owned news media organizations to list in the domestic market in order to secure capital to improve services and extend Beijing's control in the free-wheeling Internet sector.
Xinhuanet, the Internet portal of state news agency Xinhua, is also set to raise 1 billion yuan in Shanghai, but like People.cn, it will have to compete hard for advertising dollars with new media Internet darlings Sina Corp and Sohu.com Inc.
Analysts said the positioning of People.cn and Xinhuanet is different from that of Sina or Sohu because state-backed media focuses on political news, while Sina and Sohu are more entertainment focused.
Moreover, Sina and Sohu are not technically news organizations and their websites work more like news aggregators with some original content available. However, People.cn and Xinhuanet hire reporters and analysts to conduct interviews and generate content.
The challenge for these state-backed media firms would be to get transformed into more commercial entities and to draw eyeballs and advertising dollars.
In 2010, China's Ministry of Finance was People.cn's biggest customer, accounting for 22.2 percent of its revenue.
People.cn raised 1.38 billion yuan in its initial public offering, more than twice its target, and is one of the first state-controlled media groups to list. It sold 69.1 million shares near the bottom of its indicative range of 20.0-22.50 yuan.
People.cn had said it was aiming to raise about 527 million yuan for working capital and to fund expansion.
In February, China Xinhua News Network Corp (CNC), the TV unit of state-run Xinhua News Agency, debuted in Hong Kong through a back-door listing initiated via a HK$700 million share-swap of a listed firm previously known as Tsun Yip Holdings Ltd.
CNC Holdings closed at HK$0.90 on Friday, down 32 percent from the close of its first trading day as CNC Holdings on Feb 8. ($1 = 6.3060 Chinese yuan)
(Additional reporting by Clement Tan in HONG KONG; Editing by Kazunori Takada)