Stock Market

Is every company with the word ‘Chinese’ in it’s title, gold? After Friday’s latest IPO of China Digital TV Holding Co. (STV), it would seem so. The shares rose 75% in the first day of trading, from $16 at the start of Friday’s trading day to the closing price of $28 per share. One only has to have a look at the chart, which resembles one side of Mt. Everest, to see why Friday’s offering made it the 3rd most successful IPO of the year.

The company’s profile on Bloomberg.com states:

China Digital TV Holding Co., Limited provides conditional access, or CA, systems to the digital television market. The Company also licenses set-top box designs to set-top box manufacturers and sells digital television application software such as electronic program guides and subscriber management systems to digital television network operators.

Investors seemed intrigued by the prospect of a company whose business is to develop and distribute digital cable television to China’s rapidly growing upper and middle classes. In the giant country, the population with a disposable income to spend on luxuries such as upscale cable television and household electronics continues to explode, and investors are hoping that by getting in early in STV shares, they will reap returns akin to other successful Chinese tech companies.

The company has plenty of room for growth inside China, but is having its market share tested by other international, and more well-established competitors, such as News Corp.’s subsidiary, NDS Group, and Irdeto Access. STV has also stated that it may have to lower its subscription prices in order to keep and expand its market share.

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