NetEase's 11,571pc share gain whets the appetite of mainland internet companies for listing in the US The spectacular 11,571 per cent gain of Chinese portal NetEase.com has led to stock market envy among its mainland peers. According to company and banking sources, at least eight other China-focused internet companies plan to list on the Nasdaq or other markets - a sign the dotcom bubble that burst in 2000 could be re-inflating. But unlike the previous mania - in which Web companies lacked earnings but pointed to other metrics such as viewer eyeballs and click-through rates - many of the internet companies now considering initial public offerings (IPOs) are profitable. Leading the upcoming listing wave is Li Ka-shing's Tom.com, which is spinning off its Tom Online division. In August, three-year-old Tom.com reported its first quarterly profit of $10.1 million on 9.8 per cent higher sales of $455.53 million. Internet revenue climbed 31 per cent to $123.9 million, of which $88 million was from wireless services. 'Tom.com will announce its listing plans within weeks,' a source close to the company said. 'All the industry players are keeping their eyes on it and will follow afterwards.' Last month, Tom.com said it would spin off Tom Online, which provides internet and mobile short messaging services (SMS). The unit is likely to be listed on both the Growth Enterprise Market and Nasdaq, with Citigroup as the lead underwriter. The interest in mainland-focused internet stocks comes amid a global equities rally and the huge run-up in the shares of Sina.com, Sohu.com and NetEase, which have soared 3,456 per cent, 5,463 per cent and 11,571 per cent respectively from their record lows. NetEase shares closed on Friday at US$61.86. 'Sentiment in the Hong Kong and global markets has been improving,' said Edmond Chan Chiu-kong, a partner in the capital market services group of PricewaterhouseCoopers. 'Companies are becoming more active in seeking IPOs, while investors are also looking for new stories in growth industries to invest [their money].' Mainland companies prefer listing in the United States because requirements are less strenuous. In addition, the US has a larger pool of capital to provide greater liquidity. Shanghai-based Linktone is another SMS provider considering a listing on the Nasdaq or in Hong Kong, though it said an IPO was not likely to happen for a further three to six months. 'I do think there are companies like Linktone ... which certainly have the opportunity to do something like [listing] in 2004 if the market remains stable and continues to be attractive like it is right now,' Linktone chief financial officer Mark Begert said. 'The portals have had such incredible returns in the past 12 to 18 months. Investors are looking for the next big thing in China.' Founded in October 1999, Linktone ranks among the top 10 wireless content providers in China and has been profitable since May 2001. Both Linktone and Tom Online are counting on rapid growth in mobile voice and data usage on the mainland to drive sales going forward. At the end of August, China had 244.1 million wireless users, almost equal the 244.9 million fixed-line customers. According to telecommunications research firm Norson Telecom Consulting, revenue from mobile data on the mainland is expected to more than double this year to 15 billion yuan (HK$14.01 billion), compared with seven billion yuan last year and one billion in 2001. Another hot area of growth is the online gaming market. Statistics indicate there are more than eight million online game subscribers in China, many of whom play for hours on end. Perhaps the biggest beneficiary of this trend has been Shanghai Shanda Networking, the mainland's No1 online game operator. At any one time, there are more than 800,000 people playing a Shanda game such as The Legend of Mir II and Tactical Commanders. Shanda has roughly 80 million registered users, and the firm said it had earned US$25 million last year on revenue of $50 million. It expects profit and revenue to double this year as the gaming market continues to grow. Industrywide revenue generated from mainland game players reached 910 million yuan last year, while related industries generated about 10 billion yuan in turnover. Growth is forecast to hit 200 per cent this year. 'Shanda is working on listing plans now,' a company spokeswoman said. 'We are optimistic about the future for Chinese IT companies like us to go public.' In the search engine industry, both Baidu and recent market entrant Huicong have been mentioned as possible IPO candidates. Baidu, the world's No2 search engine, has said it might list on the Nasdaq as early as the first half of next year. Founder Robin Lee earlier said the company achieved its first profit in the second quarter. The search-engine portal has more than 2,000 partners including Tom.com. More than 80 per cent of the mainland's 68 million internet users find what they want on the Web using Baidu.com. But reports on the mainland have suggested Baidu is more interested in using talk of an IPO as a leverage point in price negotiations with US portal Yahoo!, which may take an equity stake. Analysts and fund managers are keen to see more Chinese Internet names appear on the Nasdaq, which would broaden investor choice beyond the online triumvirate of Sina, Sohu and NetEase. 'There are a lot of investors focused on the growth of the China economy and its wireless and Internet platforms,' said Peter Conley, director of equity research at MDB-Analytiq in Los Angeles, an independent firm that supplies research to large mutual funds. 'The companies - particularly the three portals - have attained a degree of profitability and scalability compelling [to investors].' But not all mainland internet companies seek Nasdaq glory. Alibaba.com, a four-year-old business to business e-commerce portal, has said it will remain private and vigorously denied recent reports it plans to go public soon. It said it was making money and did not need the cash an IPO would provide. 'I didn't tell anybody that Alibaba will go public in near future,' chief executive Jack Ma Yun said. 'The more we are qualified to go public, the better conditions are, the less we are interested about going public in haste.' Mr Ma said many investment banks had approached Alibaba about taking the company to market but he felt it was unhealthy to 'jump into another swarm of China concept' stocks. 'Almost all the companies which went public or plan to go public are chasing [listings] out of short-term interest,' he said.