12/17 Lehman "Buy" reiteration.
-- SL: Pacific Century CyberWorks: Teams With NetCel in E-Commerce Venture -- 08:31am EST 17-Dec-99 Lehman Brothers (Stephen McKeever, 2869 3835; Ravi)
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Ticker: 1186.HK 52wk Range: HK$0.15-HK$9.15 Rank(Curr): V1-Buy
Price : HK$8.55 Price Target*: NA Rank(Prev): V1-Buy
Today's Date: 12/17/99
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* PCCyb has announced the outline of its e-Commerce strategy through the creation of a joint venture, Total E-Comm, with NetCel Holdings.
* Three JVs are to be established initially under PCCyb and Total E-Comm to provide end-to-end e-Commerce services to PCC's broadband ISP platform, companies within the Cyberworks Ventures stable, and other companies that wish to establish e-Commerce operations.
* We view the establishment of these joint ventures as positive as it represents the first concrete steps towards the implementation of PCCyb's e-Commerce strategy alongside an experienced partner that can help to accelerate the execution of the company's strategy.
Pacific Century CyberWorks has announced the formation of a 50/50 joint venture with NetCel, Total E-Comm. PCCyb will inject US$30 million into the JV while NetCel will inject NetCel360, a comprehensive e-Commerce service provider. Total E-Comm will hold 75% of NetCel360 and solicit the participation of other strategic partners for the remaining 25% stake. Likely partners could be companies such as UPS, who would be able to provide logistics, financial, and legal services.
Through NetCel360, and other potential e-Commerce ventures, Total E-Comm hopes to provide a complete outsourcing solution for any business in Asia that wishes to participate in e-Commerce. Services to be offered include consulting, web solutions, customer/call center services, logistics, and financial services - all crucial components for making e-Commerce transactions a reality.
NetCel360 is expected to start operations in 2Q00 in five Asian countries: Hong Kong, Japan, Singapore, Australia and Malaysia. In 2001, the service is to be extended to Taiwan, Korea, Philippines and New Zealand. Target customers are multinational and Internet companies operating in the Asia region as well as Asian conglomerates. PCC and companies held within Cyberworks Ventures will be able to leverage the expertise of NetCel360 and will provide the first group of customers. PCCyb will form a JV, eNOW, with Total E-Comm to manage the e-Commerce side of the PCC broadband business. In addition, another JV will be set up to help PCCyb's venture companies to set up their e-Commerce businesses.
NetCel's strength lies with its management team. The founder of NetCel, Phillip Kelly, was the Asia-Pacific president of Dell Computer, a company renowned for its streamlined supply chain and a pioneer of online computer sales. Under Kelly's leadership, Dell created a business with sales of more than US$1 billion.
CONCLUSION AND RECOMMENDATION
We believe that PCCyb's strategy to provide comprehensive end-to-end e-commerce service is a first in Asia. Moreover, the alliance with NetCel means that the company has aligned itself with a strong strategic partner to help implement its strategy.
We are also encouraged by the fact that this development represents another step forward by the company to flesh out its strategy to exploit the explosive growth we expect for Internet usage, online advertising and e-commerce in the
Asian region. We reiterate our V1-Buy recommendation on Pacific Century Cyberworks.
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A Lehman "Buy" is a "1" rating.
Best wishes,
Tom |
