Going online – China internet IPOs to watch in 2014
Favorable financial market conditions combined with strong industry growth should make 2014 a big year for Chinese internet companies.
Investment advisory firm ABR Investment Strategy expects a number of successful initial public offerings (IPOs) to come online this year, with e-commerce, online video, travel and recruitment expected to be hot themes.
A recent ABR report titled China internet IPOs to look for in 2014 details nine online companies that are likely to list this year. Here are the top four by valuation:
ABR expects that China's e-commerce giant could be valued at $130 to $170 billion dollars, following a $360 million investment in Haier Electronics last year.
Alibaba's Taobao.com and Tmall.com, which are the leading online shopping platforms in China, are expected to see combined revenue rise nearly 80 percent this year after virtually doubling last year.
(Read more: The man behind Alibaba's eventual IPO)
This e-commerce site is also expected to benefit from China's insatiable appetite for online shopping. ABR expects the valuation for this company to be in the range of $45 to $55 billion. Third-party reports suggest there are over 150 million registered users and the company is also seeing strong traction in its mobile initiative.
While JD.com competes directly with Alibaba's Tmall, ABR expects that, over the long term, the market will be large enough to have more than one dominant player.
This online video site, majority owned by Baidu, is valued at between $5 and $6 billion. iQiyi is one of the leading online video players in China and is seeing strong growth in mobile advertising, which accounted for more than 20 percent of total advertising revenue in the fourth quarter of 2013.
ABR expects to see big things from iQiyi following its purchase of PPS early last year, with a foray in online gaming a real possibility for 2014.
(Read more: Baidu division now accepting bitcoins)
Fans of U.S. site Yelp will understand what Dianping is all about. It's a platform where users can find and share reviews and details about local businesses. The company says it has more than 90 million active users and over 8 million local merchants are on the site. ABR values it at between $4 and $4.5 billion.
The firm believes Dianping.com has become "the leading decision-making site for consumers in everyday life" and should be able to maintain this leadership position. Also, given 75 percent of its page views come from its mobile channel, it's likely to benefit from increasing mobile usage among consumers in China.
(Read more: First wave of Chinese IPOs gets underway)
Will China's internet stocks repeat their 2013 performance?
China's major internet stocks were on a tear last year. Barclays data reveals that, overall, China's internet stocks rose 111.3 percent, compared with the HSI and NASDAQ which saw gains of 38 percent and 2.9 percent, respectively.
ABR expects to see continued support for the likes of Baidu, QiHoo 360 and Sohu.com as online advertising gathers momentum. Barclays says advertising in China will also be helped along by several big sporting events in 2014, as well as steady and more concrete policies following theThird Plenum in November.
- By CNBC's Julia Wood. Follow her on Twitter @JuliaCNBC