The following press releases and news reports about China companies were carried on March 29. To view a full article or story, click on the link next to the headline.
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Anbang Trumps Marriott (NYSE: MAR), Raises Offer for Starwood (NYSE: HOT) to $14 Bln (English article)
China Bank Profits Flat-Line as Bad Debts Continue to Soar (English article)
Alibaba’s (NYSE: BABA) Cainiao Logistics Arm Forms Alliances, In Same-Day Delivery Drive (Chinese article)
Shanghai Disneyland (NYSE: DIS) Sells Out for Opening Day (English article)
Bottom line: Bank of China’s plan to create a Southeast Asian unit around its Hong Kong-based BOCHK looks like a smart move that will give investors a chance to buy shares of its more commercially-focused global operations.
Bank of China to create separate SE Asia unit
Chinese banks have always been a difficult investment option for westerners due to their heavy reliance on China, where they take orders from Beijing leaders that use them as an economic policy tool rather than letting them act like real commercial lenders. The banks’ international operations are more interesting from an investor’s perspective, as they tend to behave more commercially because they have to competite in markets where they don’t enjoy any special government-granted advantages.
The problem is that international operations are usually just a tiny business for most of the big Chinese banks, even as industry leaders ICBC (HKEx: 1398; Shanghai: 601398) and Bank of China (HKEx: 3988; Shanghai: 601988) spend billions of dollars on offshore acquisitions and other overseas expansion. That’s why a new plan by Bank of China looks particularly exciting, as it will finally give stock buyers an option to invest exclusively in the company’s offshore operations, in this case in Hong Kong and Southeast Asia. Read Full Post…
Bottom line: Minsheng Bank’s new stock incentive plan and ICBC’s Mexico expansion reflect moves to make China’s banking sector more market-oriented, providing potential upside for the lenders’ undervalued stocks.
Minsheng rolls out employee stock plan
Two big stories on the banking front are reflecting the big potential in depressed Chinese bank stocks, even as the sector faces a major bad debt crisis brought on by several years of state-ordered binge lending during the global financial crisis. The first of those will see Minsheng Bank (HKEx: 1988; Shanghai: 600016), China’s first private lender, launch a program that rewards top performing employees with stock at discounted prices. The second has leading state-run lender ICBC (HKEx: 1398; Shanghai: 601398) getting final regulatory approval to open a subsidiary in Mexico, one of the world’s largest developing economies. Read Full Post…
Bottom line: Trina’s new loan and BYD’s uncertain outlook for EV sales this year reflect continued reliance of new energy technology companies on state support, which could pressure them as government incentives get retired.
Trina, BYD fueled by state support
Two new energy stories are in the headlines today, reflecting the progress but also the continued reliance on government support that this up-and-coming group of companies faces. That particular reality isn’t new, though some who were hoping the industries would become commercially independent more quickly may be disappointed. But more important, this reality could challenge many of the companies in the next 2-3 years in the face of disappearing support from governments that believe they have already given enough incentives to this slowly-developing group.
The first development has solar panel maker Trina (NYSE: TSL) announcing $143 million in financing for a new plant in Thailand, with all of the money coming from local lenders that almost certainly have government ties. The second has electric car maker BYD (HKEx: 1211; Shenzhen: 002594) reporting annual results that showed a surge in its EV business last year thanks to government incentives, setting the stage for a possible rapid slowdown this year as those incentives get set to retire. Read Full Post…
Bottom line: Xiaomi’s hiring of a new CFO and entry to Brazil are its latest steps in a gradual transformation to a more western-style global company, in preparation for an IPO that is at least 2 years away.
Xiaomi to launch next week in Brazil
Stumbling smartphone sensation Xiaomi is back to doing what it knows best, namely making headlines with the latest moves in its global expansion and by hiring executives from other high-profile companies. In this case the smartphone high-flyer has just announced its formal plan to enter Brazil, putting it squarely in 3 of the 5 BRICS countries after India and China. The other move looks a bit scripted, and will see a top China executive from Russian high-tech investor Digital Sky Technologies (DST) join Xiaomi as CFO.
The latter piece of news looks slightly strange because DST is one of Xiaomi’s investors, and it would be unusual to do something hostile like stealing a top executive from one of your big backers. Instead, this looks more like a planned move that is relatively common in this kind of situation, which sees big investors supply executives to the companies they back in preparation for eventual IPOs. Read Full Post…
Bottom line: SAIC’s foray with GM into Indonesia could stand a moderate chance of success, while BYD’s new auto financing joint venture is unlikely to provide a major boost for its stalling EV campaign.
BYD gets approved for auto finance JV
Two of China’s more innovative automakers are in the headlines today, making interesting moves as each looks to maintain growth as the domestic car market sputters. One move will see domestic leader SAIC (Shanghai: 600104) make a new attempt to move outside China with plans to open an Indonesian factory with US joint venture partner General Motors (NYSE: GM). The second move has the sputtering BYD (HKEx: 1211; Shenzhen: 002594) getting government approval to launch a vehicle finance joint venture, which could potentially help to jump-start its stalling electric vehicle (EV) program. Read Full Post…
Bottom line: New mega fund-raising by Citic and Galaxy Securities could presage a flurry of global buying in the year ahead as non-banking financial firms look to expand abroad.
Citic raises $10 billion
Massive new fund raising by 2 major Chinese financial firms is showing that these companies remain an attractive option for international investors, even as traditional banks have become a pariah due to their huge volumes of bad debt. The deals by financial conglomerate Citic Ltd (HKEx: 267) and Galaxy Securities (HKEx: 6881) will raise a collective $12.3 billion, and could also presage a new wave of global buying by fast-growing Chinese financial firms outside the nation’s traditional banks. Read Full Post…
The slow-motion collapse this week of HSBC’s (HKEx: 5; London: HSBA) plans to sell its stake in Ping An Insurance (HKEx: 2318; Shanghai: 601318) is shining a harsh spotlight on the big role that politics can play in deals involving major Chinese companies. The case is particularly interesting because it also shows how this kind of Chinese politics can quickly cost investors billions of dollars, since Ping An’s shares have dropped sharply as it looks increasingly likely the deal will collapse. Ping An’s Hong Kong-listed shares lost more than 6 percent of their value early this week after news of the deal’s potential collapse first emerged, though they’ve regained some of the ground since then.
The slow-motion collapse this week of HSBC’s (HKEx: 5; London: HSBA) plans to sell its stake in Ping An Insurance (HKEx: 2318; Shanghai: 601318) is shining a harsh spotlight on the big role that politics can play in deals involving major Chinese companies. The case is particularly interesting because it also shows how this kind of Chinese politics can quickly cost investors billions of dollars, since Ping An’s shares have dropped sharply as it looks increasingly likely the deal will collapse. Ping An’s Hong Kong-listed shares lost more than 6 percent of their value early this week after news of the deal’s potential collapse first emerged, though they’ve regained some of the ground since then.
