Asian investors need to select the companies that are going to succeed in the Internet market rather than take a broad basket strategy, according to Goldman Sachs.
'You have to identify the winners and you have to identify the losers,' Internet analyst Rajeev Gupta said. 'A basket strategy doesn't work.' Yet picking the companies likely to succeed in Asia is difficult as the market is still developing with uncertainty over who will be the market leaders.
'The problem we have in Asia is we don't know who the Yahoo! is and we probably won't have an answer for another 12 months,' Mr Gupta said.
Pacific Century CyberWorks is expected to succeed due to strong management and alliances with overseas partners but valuing the stock is difficult as its business model is in flux.
'This is an incredibly difficult stock to value particularly for a company whose business model is still work in progress,' Mr Gupta said.
Based on Goldman's forecast of 650,000 subscribers next year and using America Online's (AOL) subscriber value as a benchmark, CyberWorks' shares are valued at $4 each.
However, taking the forecast 13.2 million subscribers for 2004 and applying a 50 per cent discount to the AOL subscriber value shows CyberWorks at $42 a share.
