Shares in People.cn Co. Ltd., the official website of the People's Daily, the flagship newspaper of the Communist Party of China, surged 73.6 percent to 34.72 yuan per share on its first day of trading on the Shanghai bourse.
The company started trading at 31.01 yuan per share on the Shanghai Stock Exchange Friday morning, 55.05 percent higher than its initial public offering (IPO) price of 20 yuan.
The IPO, which has attracted a great deal of market attention as it marks the first-ever listing of a state-owned media website, is expected to raise up to 1.34 billion yuan through the sale of 69.11 million shares on the Shanghai market.
Trading of the shares was suspended half an hour after the market opened, as their price climbed 10 percent higher than the opening price, according to Shanghai Stock Exchange regulations.
It was suspended again till 2:55 p.m., or the last five minutes of the trading, after its turnover rate exceeded 80 percent.
The company's IPO prospectus showed that People.cn's net profits rose to 139.48 million yuan last year from 81.65 million yuan in 2010. The major source of the company's profits comes from advertisements, as well as information and wireless services.
The company said it plans to use 527 million yuan from the IPO proceeds to improve its wireless services, purchase technological upgrades and bolster its editorial team.
People.cn's IPO comes as China's state-owned portals are trying to go public in order to better compete with commercial websites such as Sina.com and Sohu.com.
The company's market value has reached 9.597 billion yuan after the IPO, compared with the 3.646 billion U.S.dollars of Sina.com, which listed in the U.S. market.
Zhang Yannong, president of People's Daily, said the strong performance was "a recognition from Chinese investors," a result of the company's significant "cultural value" as it strives for an integration between the newspaper and the web portal.
The successful IPO of the People.cn has provided more room for the future development of the website, and also paved way for the listing of cultural and media enterprises, said Zhang.
Analysts said People.cn's performance was within expectation, which gained popularity among investors for its strong government background and a leading position in the cultural and media sector.
"But the share price has climbed to a relatively high level and its future performance would depend on the company's growth potential," said Gui Haoming, chief analyst with Shanghai-based Shenyin-Wanguo, a leading brokerage company.
He noted the slight decline in the last five minutes of trading, which indicated less possibility of future speculation as investors were aware of the risk.
Boosted by People.cn's strong performance, shares of media and entertainment companies also rose during morning trading.
Chinese stocks closed lower Friday, with the benchmark Shanghai Composite Index down 8.38 points, or 0.35 percent, to 2,396.32. The Shenzhen Component Index edged down 0.21 percent, or 21.26 points, to close at 10,180.39.