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99 Wuxian CEO Amalisia Zhang believes a fear among Australian investors about a lack of transparency and poor governance in China is hurting her share price. Louie Douvis
by Sally Rose
Amalisia Zhang, the founder and chief executive of ASX-listed mobile commerce platform 99 Wuxian, has pledged to spend more time in Australia helping local fund managers "get comfortable" with the idea of investing in Chinese companies.
The CEO believes a general fear among Australian investors about a lack of transparency and poor governance in China has been hurting her company's share price.
Shares in 99 Wuxian surged 12.5 per cent in their first trading session when the company floated a 5 per cent stake on the ASX in October 2013. But at Monday's close the shares were down 71 per cent from their July 2014 peak at 20¢.
"I am a little bit sad that the share price has not performed better and have now realised how important it is to give people in the Australian market a better chance to get to know us," Ms Zhang said.
Ms Zhang visited Sydney, Melbourne and Perth in late April spruiking the company's latest trading update. In the March quarter revenue grew 26 per cent on the previous corresponding period to 34.7 million yuan ($7.13 million), while earnings before interest, tax depreciation and amortisation jumped 83 per cent to 2.7 million yuan ($560, 000).
"One fund manager actually said that now we had met he was more comfortable we were a real company that actually exists, and he will consider investing in the future," Ms Zhang said. China fears
Horror stories of North American investors being burned through investments in fraudulent Chinese companies, such as Sino-Forest Corp and Longtop Financial Technologies, have led to a high degree of scepticism among local institutions about investing in stocks that represent businesses operating exclusively in China.
Closer to home the implosion of U&D Coal and warnings from the Australian Securities and Investments Commission over governance worries in emerging market equity issuers have added to the cautious mood.
A lack of understanding about exactly what 99 Wuxian does has also made it hard for the company to sell its message, Ms Zhang said.
99 Wuxian owns and operates an electronic commerce platform that is integrated into the mobile applications of more than 50 Chinese banks.
Ms Zhang's family connections have been credited with helping the entrepreneur win contracts with some of the largest financial institutions in the country such as Bank of China, Agricultural Bank of China, and China Citic Bank. Her father Zhang Hongyi is a former president of the Bank of China's Shenzhen branch.
The service is mostly white-labelled. Consumers who download their bank's mobile app are automatically registered with the 99 Wuxian service. The platform allows people to pay a range of merchants through a single secure log on with their bank, eliminating the need to enter credit card or bank details. 99 Wuxian makes money by taking a clip of all payments processed.
Phone, internet and other utility bills form the bulk of the traffic, with an explosion in the popularity of online gaming accounts among young Chinese professionals also proving lucrative. A loyalty points program is designed to increase expenditure through the platform. Part of 99 Wuxian's growth strategy is increasing its linkages to outlets where consumers can order physical goods such as clothes or groceries.
Following Ms Zhang's latest visit BBY Ltd has initiated formal coverage of 99 Wuxian with a "buy" recommendation. Foster Stockbroking maintains a "hold" recommendation. Wooing Aussie investors
99 Wuxian's Australian chairman Ross Benson said he is hopeful local investors will come to recognise the value of the 99 Wuxian's very large potential market.
Mr Benson is also the executive chairman of Investorlink Group, 99 Wuxian's second-largest shareholder.
After floating 99 Wuxian on the ASX in 2013, Investorlink bought Chinese online commerce logistics company eCargo Holdings to the local market in November 2014. At Monday's close, eCargo was trading 37.5 per cent below its offer price at 25¢.
Investorlink is also a shareholder in another 10 privately held Chinese technology companies that operate online businesses, that are all potential future candidates for an ASX listing, Mr Benson said.
But he was tight-lipped on the details.
"In China it is best to be seen to maintain discretion until you are in a position where you need to go public," he said.
However, the reluctance of Australian fund managers to invest in Chinese-domiciled stocks presents a stumbling block.
"It will take a lot of work and time to get local investors comfortable with the corporate governance of buying Chinese companies," he said.
NNW Price at posting:
20.0¢ Sentiment: Buy Disclosure: Held
