February 14, 2000
StockHouse News Desk
By Jack J. Bensimon (jbensimon@stockhouse.com)
Nasdaq-100 Columnist
Pacific Century CyberWorks: Leading Asian ISP Edging Higher
It has been said wealth accrues to those who are patient. Asian
Internet
investors' patience has been rewarded with an increasing number of
Internet
IPOs, with US brokerage firms expecting more to come in 2000. With the
rapid
speed of innovation in the broadband space, coupled with increasing
Internet
usage rates across Asia, companies that are developing the
sophisticated
infrastructure are most likely to gain market share. Pacific Century
CyberWorks is developing key partnerships, alliances, and the
connections
considered imperative to secure a dominant position.
Toronto, ONT, February 14 /SHfn/ -- Forget some of the astronomical
returns
earned on US Internet stocks. They are nothing compared with what's
going
to
happen in Asia in 2000. The pace of technological innovation in the
Internet
sector in that region is breathtaking.
The Asian Pacific region is flush with new Internet IPOs. With Asian
economies staging a renewed comeback from sitting in the doldrums for
several years, the region's equity markets are gaining ground quickly.
And
there are signs that the surge will continue well into the year.
Spanning from Singapore to Tokyo, these markets have performed at
levels
that would mirror the quadrupling in 1999 of the Kosdaq, Korea's
counterpart
to the Nasdaq. The top performing Asian Internet stocks in 1999 were
Softbank [SFTBF] (Japan's fifth biggest company in terms of market cap)
up
1250%, and Yahoo! [YHOO] Japan, up 4206%. Pacific Century CyberWorks
[1186],
headed by Hong Kong entrepreneur Richard Li, rose 120% in the last week
of
1999.
Pacific Century is Asia's biggest ISP (outside of Japan). The company
is
assembling a satellite-based broadband Internet network modeled on the
US
Excite@Home platform, combining the physical network with ISP service
and
a
portal.
In addition, Pacific Century is an Internet investment firm, or
Internet
"incubator," or what the Japanese refer to as "netbatsu". With over
$500
million at its disposal in its VC arm, CyberWork Ventures, PCCLF has a
portfolio of over 30 companies including Softnet [SOFN], which has 2.4
million cable subscribers in the US. Pacific Century's growth has been
phenomenal. At a $24 billion market cap, Pacific Century is now worth
as
much as the Hong Kong real estate empire built up over 30 years by Li
Ka-shing, who is Richard Li's father.
"Pacific Century is much more than an Internet investment firm. In
fact,
its
goal is to be the largest provider of broadband access in the world."
However, Pacific Century is much more than an Internet investment firm.
In
fact, its goal is to be the largest provider of broadband access in the
world.
And the demographic data is hospitable to companies like Pacific
Century.
While the Internet still has a relatively modest presence in Asia,
Internet
use is being bolstered by the pervasive trend of rapidly declining
phone
rates and increasing PC sales. Industry sources estimate that the
number
of
Asian Internet users could triple to 135 million by 2003.
The Asian Internet boom, however, is not yet comparable in magnitude
and
scale to what has happened in the US. In addition, the biggest
difference
is
that the Asian Internet boom will emanate not primarily from the
household
sector, but from Asia's export-driven business sector, where billing
and
shipping can be done cheaper and more efficiently on the Net.
Pacific Century has developed the infrastructure to capitalize on this
booming sector. Pacific Century is developing a region-wide broadband
delivery mechanism for cable-TV viewers, offering broad exposure to the
Internet revolution in Asia.
There is competition growing in the region, with the likes of
Singapore-based Pacific Internet [PCNTF] making substantial inroads
across
Asia (especially first-mover advantages in Singapore) as a powerful
force
to
contend with. However, Pacific Century's arsenal of partnerships,
alliances,
and "quanxi" (Chinese for connections) arrangements with key government
officials, makes it easier to tap capital markets and build brand name
recognition. Some of the partnerships include heavyweights such as
Intel
[INTC], Softnet, and Silk Route, to name a few.
And like its competitors, the company is veering into the emerging
markets
of Korea and India. Korea's wealthy population has an active interest
in
the
Internet, although its protectionist mode of trade is still in force.
An example of how protectionist measures are influencing Internet usage
is
the shortage of high-density bandwidth from Singapore to the US.
Although
broadband is fast in Singapore, it is slow when users access overseas
sites
since data must travel through overtaxed conventional cables regulated
by
Singapore authorities.
Pacific Century is aiming to reconcile some of these problems, and is
creating the infrastructure to secure its piece of the pie.
These shares trade on the Nasdaq OTC Bulletin Board, with an average
daily
trading volume of 3-4 million shares, atypically high for OTC shares.
In
addition, liquidity is boosted by the fact they also trade on the Hang
Seng
Exchange with average daily volume over 80 million shares. At current
valuation levels in the $3.30 zone, and given its market prowess in a
region
of the world that has only seen the beginning of the Internet
explosion,
Pacific Century shares represent excellent value.
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