Chinese Internet Companies Still Cheap?

From Forbes: Alibaba's Magic Carpet

"Some of the heat from China's scorcher of summer in 2005 may be finding its way to the country's booming Internet and media companies. Indeed, shares in a swath of such firms may be ready for a new round of price increases following last week's successful Nasdaq IPO by Shanghai-based ad agency Focus Media and Rupert Murdoch's big bid on Monday for a U.S. Internet firm.

What some investors term a "familiarity gap" between Chinese and Western Internet companies seems to be closing as huge valuations in the U.S. and Western Europe combine with a better understanding of China's burgeoning Internet industry and public offerings that set increasingly robust prices here.

"Chinese Internet companies have historically traded at a discount to their American counterparts" because global investors aren't as familiar with Chinese companies as those in the States, says Victor Koo, a Stanford MBA who recently left his job as president at Sohu.com after six years. What Koo describes as a "familiarity gap" should be closing over time as companies learn how to communicate better with overseas investors, he says."

Many Chinese companies offer more profits in a booming market at lower valuations. Among China's most highly coveted "low hanging fruit" is Alibaba.com, whose Taobao.com unit has been putting pressure on eBay despite high-profile efforts in China by the U.S. online auction company."

China Net Investor: Alibaba.com is still a private company