Appraiser puts $113 million price tag on steel company’s intangibles; but will investors buy Chinese IP valuations? – Blog – Intellectual Asset Management (IAM) – Maximising IP Value for Business

Last week Sutor Technology Group announced that an independent valuation of the intellectual property owned by it and its subsidiaries had arrived at a figure of Rmb700 million (approximately US$113 million). The Chinese steel manufacturer and service provider is publicly traded on the NASDAQ exchange, and while a relatively small Chinese company putting a price on its intangible assets is no longer a novel proposition, it does raise the question of how much stock outside investors will be willing to put in the conclusions of China’s growing IP valuation industry.

Summing up the assets in question, Sutor CEO and chairwoman Lifang Chen said: “Currently, we own nearly 70 items of intellectual property, including invention patents, utility model patents, design patents and high-tech product certifications.” The company’s most recent annual report stated that as of 30th June 2014, it owned 67 patents with 19 pending. A cursory search of the USPTO database did not turn up any US patent assets owned by Sutor or its three subsidiaries. The company said its IP rights were generated through internal research and development.

Lately, the signs are that the company has struggled to attract and retain investors. In February it received an additional 180-day compliance period to satisfy NASDAQ’s $1.00 minimum bid price requirement or else face delisting (a situation currently faced by Inventergy). That danger is behind it for the time being after Sutor executed a reverse stock split last week. The company also started trading under a new ticker symbol, reportedly in order to “help foster a stronger and more recognisable brand for the company”.

We obviously cannot be certain what types of rights are included in this portfolio, or of the methodology used to value it, so it is hard to know what to make of the $113 million figure. For a bit of context, Sutor reported 2014 revenues of $405 million.

But if Sutor’s announcement is an attempt to spur interest among potential shareholders, it may run up against reservations over the ambiguous nature of IP valuation, particularly where Chinese rights are involved. The analysis was undertaken by Beijing Dongpeng Assets Appraisal Firm, and conducted, per the press release, “according to the internationally recognised standard of appraisal”. Considering that there is no universally agreed-upon standard for valuing IP assets, that doesn’t necessarily bring us much closer to knowing how the figure was arrived at.