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58.com applies for IPO in US

2013-09-29 08:57 Global Times Web Editor: qindexing

China's leading online marketplace 58.com Inc submitted its IPO application to the US Securities and Exchange Commission (SEC) Saturday, with a financing expectation of $150 million under the symbol "WUBA," according to the prospectus on SEC's website.

58.com provides an online marketplace for local merchants and customers in 381 cities to share information and conduct business in fields such as second-hand goods, jobs, housing, pets and yellow pages, the prospectus said, noting it is the largest online marketplace by monthly unique visitors on the website and mobile application.

It is a good opportunity for 58.com to be getting listed in the US stock market due to the market being on an upward trend, especially IT stocks, Zhong Rixin, an analyst with imeigu.com, told the Global Times Saturday.

Another favorable condition is that US investors' confidence in Chinese stocks is recovering, Zhong said, noting the stock prices of some Chinese enterprises listed in the US have risen to high records this year.

The Chinese market in online classifieds is expected to rise from $275.4 million in 2012 to $2.4 billion in 2017 due to the existence of numerous megacities and limited resources faced by local businesses, especially small and medium-sized enterprises, according to a report of iResearch cited by the prospectus.

58.com chose the right time, said Wang Tingting, an iResearch analyst, noting it is faced with an expanding market.

However, there are also some doubts about 58.com's performance. The website has faced decreasing website traffic volume and low profits, Economic Information Daily reported on September 6.

It generates revenue primarily from memberships and online marketing service. The website has seen a loss in the past three years - a net loss of $13.9 million in 2010, $83.4 million in 2011 and $30.4 million in 2012. For 2013, the company has seen a net income of $0.3 million in the first six months.

It is normal that the website has spent a large amount of capital to attract users and increase website traffic in its primary years, but it started to gain profit this year, which is a good sign, Zhong said. The website was founded in 2005.

The website traffic volume rank of 58.com in 2013 has dropped from No.140 in China in the first quarter of 2012 to around No.270 in September, according to the report of Economic Information Daily.

Website traffic volume is not the only indicator of performance, Wang said. The quality of traffic volume is also important and 58.com's efforts on mobile Internet should also be taken into account.

58.com launched its mobile application in 2011 to facilitate communication between merchants and consumers. In the second quarter of 2013, the application attracted 39.4 percent of the company's average monthly page views, according to the prospectus.

China's mobile Internet users are expected to increase rapidly, from 420 million in 2012 to 784 million in 2017, according to iResearch's report cited by the prospectus.

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