Here is the Harmon writeup for those that have not read it yet (I wish DLJ could get me a few shares of this one; looks like a legitimate winner):
AsiaInfo Holdings at helm of Chinese Internet
2000 is the year of the Dragon in China. Welcome to the Dragon of the Internet. AsiaInfo Holdings.
Right now one of the better IPOs coming down the pipeline hails from China. Just as Terra Networks, to me, is a key holding for the Hispanic/Latin Internet market, AsiaInfo Holdings could represent a core company to own in the burgeoning Chinese Internet.
The Internet is borderless and has been for decades. A router in Asia routes information the same way a router in Europe or America does. Think global, invest global. Think how the Internet thinks and then apply cultures, economics and history to it.
AsiaInfo has built the China Internet backbone and continues to build it.
In other words, any Internet data or traffic movement in China probably flows through a network built by AsiaInfo Holdings. There are magnitudes to consider there. How big?
I estimate that there are about 1 million computers hooked up to the Internet in China today. Not a large sum compared to current North American or European numbers. But e-harmon.com forecasts that by 2005 more than 5 million computers could be tapped into the Net in China.
How many people? I estimate that today in China and Hong Kong, more than 15 million people use the Internet. Perhaps 40 million users could be online in China by 2003.
Is all usage the same?
Internet use by consumers in China is not the same as in North America or Europe, since the government regulates content. This is where a cursory knowledge of culture and politics matter.
If consumer-centric content is regulated, then it makes sense that a larger use of the Web in China will likely be in ecommerce exchange between buyers and sellers of industrial and raw goods - manufacturers, wholesalers, retailers, shippers. China is a manufacturing hub, after all. Hong Kong serves the world as a port (a portal by any other name).
No matter if it's consumer or corporate. AsiaInfo looks like it may be at the center of the Chinese Internet.
AsiaInfo revenue looks impressive, with $48.2 million for the first nine months of 1999, easily more than double the same period in 1998. Losses through September 1999 were $737,000.
Basically every time a new user, company or supplier in China uses the Web, then AsiaInfo has what I believe is a sweet spot for scaling with the Chinese Internet opportunity. AsiaInfo's strength lies in its content-agnostic and data-agnostic approach, and its core tie to the Chinese government and telecom.
And unlike in the U.S. or Europe, in China companies with so broad a reach cannot do so without the government's approval. It is not a free-market economy or pure capitalist approach. Monopolies are allowed. Venture backers include Intel, Warburg Pincus and Fidelity Ventures. The IPO is scheduled the week of Feb. 28 through Morgan Stanley. |
