HONG KONG -- These days, it might be a lot to expect Internet companies to come to market with profits or even a detailed business plan, but Hong Kong has now written a new chapter in the annals of dot-commery: an IPO before a company's main product is even up and running.

The IPO of portal

Tom.com

is not just any public issue. When the stock starts trading on Hong Kong's new second board on March 1, it will cap the most frenzied rush for a new issue in Hong Kong history, with an oversubscription rate among retail investors expected to top 1,300 times. This promises to be the hottest IPO since the "red chip" craze of 1997, in which any firm connected to China's government commanded lofty multiples without any evidence of managerial skill or solid business prospects.

Local investors were so enthusiastic for the offering, being handled globally by

BNP Prime Peregrine

, banks handling applications had to call in police on Wednesday to handle the throngs of Net-giddy punters. The

Stock Exchange of Hong Kong

has asked the investment house to file a report on the preparations it took for the chaotic IPO procedure.

Any mutual fund or investor failing to get a piece of Tom.com will likely say goodbye to an instant profit of several hundred percent. Daytraders should even be able to get in on some of the action if they are quick. But anyone hanging on to the stock for much more than a week would be wise to take great care. The most popular of the red chips,

Beijing Enterprises

(its ticker is "392.HK"), now languishes well below its issue price of two years ago, even though it was more than 1,200 times oversubscribed. The same fate could well befall Tom.com.

Why? Because the new company, which could raise as much as $113 million with its IPO, is just a few months old. More amazingly, not only does Tom.com not have any idea when it might make money, the company's most attractive assets according to its CEO -- non-Chinese language sites to sell Chinese travel packages and other things Chinese to the rest of the world -- do not even exist yet.

For the world of Internet underwriting, selling a company before the best part of the product has even made its first appearance sets some sort of a record for premature birth.

"In the U.S., most bankers generally have higher standards than that," says Jay Chang, Internet analyst at

Credit Suisse First Boston

, which is not underwriting Tom.com. "It's playing with fire."

The business model for Tom.com, if that is what it can be called, is sketchy. Asked what the company's big competition is, CEO Carl Chang told

TSC

that in the business of providing Web sites that link China and the rest of the world, "I don't see any real competition." That's interesting, since the No. 1 risk factor on page 8 of his company's prospectus says: "Tom operates in a highly competitive market."

Even presuming the business plan eventually gets up and running, how much of a market is there really for booking trips to China over the Net? Things like tours and translators are all easily arranged through Western and non-Chinese Asian hotel chains, and reservations at these are widely available right now online.

There is always the possibility of e-commerce, but here Tom.com competes with a flurry of Chinese-language portals, such as

Hongkong.com

, as well as local versions of

Yahoo!

and mainland Chinese sites including

Sina.com

and

Sohu.com

. While Tom.com's Chinese site now has 3 million page views a day, according to CEO Chang, he declines to provide even rough traffic projections for the non-Chinese site once it's up.

The CEO was quoted widely in the Hong Kong media last month as predicting that Tom.com would make money within three years. Now, that forecast has been revised to having no idea whether the site will ever make a penny.

But there are more reasons to be wary about jumping into Tom.com for more than the very short term. The stock will trade (and be available to foreign investors) on Hong Kong's new second board, the

Growth Enterprise Market

, more commonly known as

GEMS

.

Only a few months old, this

Nasdaq

wannabe has waived rules demanding a two-year lockup of shares by management. This is not the first time "special circumstances" have been cited in Hong Kong that end up benefiting the controlling shareholder of Tom.com, tycoon Li Ka-shing or his family. Now, Mr. Li's companies can dump their Tom.com shares in six months. His son, Richard Li, runs

Pacific Century Cyberworks

, another fast-rising Internet play in the region. (

TSC

profiled the company

last month.)

Investors are now being invited to buy shares in a company, the most interesting product of which is still in development, and the management of which could be free to bail out before the product ever sees the light of day.

CEO Chang was unapologetic. "We believe this is how the new economy is working," he said. "It's better than going to IPO with a lousy site."