China's Kingsoft sees stock pop in U.S. market debut (updated)

Kingsoft

08/05/2020 18:22

(Adds comments from CFO)
    May 8 (Reuters) - Shares of China's Kingsoft Cloud Holdings
Ltd  KC.O  jumped over 25% on its U.S. market debut, indicating
strong investor interest at a time when capital markets globally
have been roiled by an economic crisis from the COVID-19
pandemic.
    Beijing-based Kingsoft opened at $20.37 per share and rose
to as much as $22.02 in early trade.
    Kingsoft is the first major initial public offering in the
United States since early March. The company raised $510 million
after pricing its IPO at $17 per American depositary share (ADS)
in the middle of its marketed range, valuing it at roughly $3.7
billion.
    The cloud services provider increased the size of the deal
to 30 million ADS from 25 million due to better-than-expected
demand from shareholders.  urn:newsml:reuters.com:*:nL4N2CQ15X
    Kingsoft's services include cloud infrastructure as well as
enterprise cloud and artificial intelligence of things. Cloud
computing has so far been one of the sectors boosted by the
novel coronavirus outbreak, as it drives more businesses to
operate digitally and rely on cloud services.
    "People are staying at home. Obviously the data consumption
is really great. It’s actually very natural we are seeing the
increase of data usage, of the cloud business, (with) COVID-19,"
Kingsoft Chief Financial Officer Henry He said in an interview. 
    The IPO is also the first gauge of U.S. investor demand for
Chinese companies going public after a fraud scandal sent shares
in Chinese coffee chain Luckin Coffee  LK.O  into a free-fall
last month.
    Following Luckin's fallout, the U.S. Securities and Exchange
Commission and the Public Company Accounting Oversight Board
(PCAOB) issued a joint statement warning investors against
Chinese companies with regard to risks, including financial
reporting.
    Kingsoft's earnings have been audited for years as a
subsidiary of Kingsoft Corp  3888.HK , which is listed on the
Hong Kong Stock Exchange, a benefit to Kingsoft amid the Luckin
fallout, finance chief He said. 
    "We want to be good citizens in the global capital market."
He said. 
     Kingsoft's estimated revenue for the first three months of
2020 was between 1.35 billion yuan ($190.41 million) and 1.4
billion yuan, a year-on-year increase in the range of 59.6% to
65.5%. The company incurred a net loss of 1.1 billion yuan in
2019, compared with a net loss of 1 billion yuan in 2018.
    JPMorgan, UBS, Credit Suisse and China International Capital
Corp Ltd (CICC) were the lead underwriters for the IPO.
($1 = 7.0901 Chinese yuan renminbi)

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Luckin Coffee chairman defaults on loan, surrenders company
shares     urn:newsml:reuters.com:*:nL1N2BU1A8
Luckin Coffee shares sink after COO accused of financial
misconduct     urn:newsml:reuters.com:*:nL4N2BQ34P
China probes alleged fraud at Luckin Coffee, banks review IPO
work     urn:newsml:reuters.com:*:nL4N2BR218
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 (Reporting by Abhishek Manikandan in Bengaluru, and Joshua
Franklin and Echo Wang in New York;
Editing by Vinay Dwivedi and Nick Zieminski)
 ((abhishek.manikandan@thomsonreuters.com; (within U.S.+1 646
223 8780; outside U.S. +91 80 6182 3583);))