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October 26, 2006

Home Inns Is A Hot China IPO

posted by MR WAVETHEORY at 10/26/2006 04:19:00 PM
It seems like every retail concept that is hot in the US is being exported to China. Home Inns and Hotels Management Inc. (Nasdaq HMIN) which went public today on Nasdaq is the latest. Its business model is to replicate Best Western International Inc. in China - clean rooms at affordable prices for business travelers. Even the logo looks like Best Western's. Nice huh?

Home Inns closed up 63% (+8.70) to close at $22.50. The 7.9 million American Depositary Share (ADS) offering, which represents an almost 25 percent stake in the company, sold for $13.80 per share compared with a forecast range of $10 to $12. The IPO pricing valued the company at $890 million - or roughly $10 million per hotel. Rich? Yes. This is China we're talkin about. Not America, so the model builds in aggressive assumptions for growth. Net income for the hotel chain, which operates 82 budget hotels in China, jumped to 20.9 million yuan ($2.6 million) last year from 1.5 million yuan in 2003 as it targets Chinese travelers spending 150-300 yuan ($18-$35) per night. For those who are trying to dig into the mechanics of this deal, two ordinary shares are equivalent to 1 ADR share and there are 64,470,129 ordinary shares outstanding. Try ploughing through the S-1 for Home Inns.

According to Home Inns, Home Inns was founded in 2002 with a ground breaking vision of a new kind of comfortable lodging experience throughout China. With professional and courteous service, comfortable rooms, convenient locations, and prices that make sense for individual business and leisure travelers, Home Inns is helping to redefine travel in China for the 21st century.

When you visit a Home Inns hotel anywhere in China-be it in the modern metropolis of Shanghai, or the comparatively provincial city of Zhengzhou-you will be greeted by the same comforts as you would expect to find in your own home. From our comfortable beds and pillows and free in-room broadband internet access, air conditioning and water coolers in every room, to our modern bath rooms, complete with complimentary bathroom kit and fresh bath towels, Home Inns ensures that every traveler has a restful, productive stay, no matter where their travels take them in China.

Home Inns was spun off/founded by Ctrip (Nasdaq CTRP) Founder Neil Shen.

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