Youku (YOKU), China's leading online video portal, saw its IPO return a whopping 161% today, the largest first-day pop since Baidu traded up 354% the day after its 2005 IPO. Youku now commands a $3.7 billion market cap and is valued at an incredible 78x LTM sales, with investors clearly believing the company can grow sales significantly faster than 50% annually and also scale margins rapidly.
The IPO was one of two very successful Chinese IPOs today, with online bookseller Dangdang (DANG) trading up 87%, making it the fourth-strongest first-day performer this year. While overall performance of Chinese ADRs has been mixed, those with the strongest growth profiles and the most clear exposure to the country's economic growth and emerging middle class have tended to perform well. Internet adoption is also clearly a compelling story, as evidenced by today's IPOs as well as the content delivery network ChinaCache (CCIH; up 91% since its September IPO).
With Youku's closest peer Tudou (TUDO) recently filing for an IPO, there may be more high-demand Chinese IPOs on the horizon.