Bottom line: A new $3.5 billion bank loan to help pay for game developer Supercell and an investment in shared bike service Mobike extend Tencent’s savvy strategy of targeted backing for companies that can quickly contribute to its core businesses.
Tencent nears mega loan for Supercell buy
Leading Internet company Tencent (HKEx: 700) is in a couple of major investment headlines as the new week begins, one in the virtual realm and the other grounded on the streets of major cities like Beijing and Shanghai. The larger of the items comes with word that Tencent is on the cusp of securing a $3.5 billion loan to help pay for its pending purchase of a controlling stake in Finnish game maker Supercell. The other item has the company leading a recent funding round for Mobike, operator of a shared bicycle service that is helping to revive China’s biking tradition. Read Full Post…
Bottom line: Tongcheng’s lack of hurry to make an IPO reflects confidence about its cash position due to new backing from Wanda, while ZTO’s high profitability looks unusual amid huge losses reported by most of its rivals.
Tongcheng in no hurry to IPO
A couple of IPO stories are in the headlines as the new week begins, led by word that online travel site Tongcheng is in no hurry to make a listing, following its link-up last week with the cash-rich Wanda Group. At the same time, delivery company ZTO Express, which is in a bigger hurry to list, is raising some doubts among observers who say the fat profits announced in its IPO prospectus are at huge contrast with peers in China’s highly competitive parcel delivery sector. Read Full Post…
Bottom line: Many US-listed Chinese companies that have yet to complete privatization bids announced last year are likely to formally abandon the plans in the next few months, after new withdrawals from Autohome and China Information Technology.
Autohome abandons buyout bid
It’s been well over a year since the cresting for a wave of privatization bids by US-listed Chinese firms, which were hoping to leave New York and get better valuations by re-listing back in China. But despite the early enthusiasm, many of the firms that announced such bids at the height of the frenzy have yet to complete their plans.
A small group of larger names, including Internet companies YY (Nasdaq: YY) and Momo (Nasdaq: MOMO), have formally announced the scrapping of their bids. Now 2 more have joined their ranks, with online car specialist Autohome (NYSE: ATHM) and cloud services provider China Information Technology (CNIT) (Nasdaq: CNIT) both announcing they have also abandoned their bids. At the same time, game developer Sky-mobi is moving forward with its own privatization bid, and has just announced the scheduling of a shareholder meeting to vote on the proposal. Read Full Post…
Bottom line: Alibaba will have to spend more heavily to rid its marketplaces of trafficking in pirated goods, while its Steven Spielberg partnership is part of a new wave of deeper film tie-ups between China and Hollywood.
Alibaba ties with Spielberg’s Amblin
Internet giant Alibaba (NYSE: BABA) is being rebuffed and embraced in the US in 2 separate headlines, reflecting conflicting feelings many Americans have towards one of China’s largest private companies and their sometimes controversial business practices. In the more upbeat headline, Alibaba’s movie-making unit has just signed a major new tie-up with director Steven Spielberg to co-produce movies from his Amblin Entertainment and distribute them in China. But in a far less friendly overture, Alibaba is also being blasted by a major US apparel group for lack of progress in its battle to stamp out trafficking in pirated goods in its online marketplaces. Read Full Post…
Bottom line: LeEco’s major new push into the US smart TV market could achieve some success due to its recent Vizio purchase, though its concurrent smartphone drive will be a dud due to lawsuits and mediocre product quality.
LeEco revs for US smart TV launch
Watch out, Comcast (Nasdaq: CMCSA) and Apple (Nasdaq: AAPL). Chinese online video superstar LeEco (Shenzhen: 300104) is taking direct aim at the lucrative US online video and smartphone markets, with plans for major new product launches later this month. I’ll admit I’m doing a bit of educated guessing here, since the company formally known as LeTV hasn’t made any formal announcements yet on its US ambitions.
But all the signs certainly point in that direction, following LeEco’s headline-making $2 billion July purchase of Vizio, a struggling maker of cheap, no-name TVs that is one of the biggest and also most obscure names in the huge US market. Added to that is LeEco’s recent issue of invitations to an event set for October 19 in San Francisco, where it says it will announce its “disruptive vision of a connected ecosystem of content-driven smart devices to the US market.” (English article) Read Full Post…
Bottom line: ZTO’s proposed New York IPO is getting modest interest due to concerns about competition in the parcel delivery sector, while bike sharing service Ofo could make its own offshore IPO in the next 3 years.
Bike sharing service Ofo raises funds
Just a day after I noted the disappearance of a previously discussed New York listing plan by parcel delivery service ZTO Express, the company has re-emerged in the IPO headlines with a filing saying it plans to raise up to $1.5 billion. At the same time, an intriguing bicycle-sharing service called Ofo is also in the fund-raising headlines, picking up a smaller $130 million in new money from its own impressive list of investors that includes ride-sharing giant and Uber-killer Didi Chuxing. Read Full Post…
Bottom line: NetEase could abandon a newly announced New York IPO plan for its media arm if it can find a suitable buyer, while a previously announced New York listing plan by ZTO Express could be revived before year-end.
NetEase news unit makes filing for NY IPO
What’s shaping up as a quiet year for Chinese IPOs in New York has just gotten a small boost, with word that online gaming giant NetEase (NYSE: NTES) has made an initial filing to list its respected but financially-challenged news portal business. Meantime, rumors are building for what’s likely to be one of next year’s biggest offerings from Ant Financial, the financial services affiliate of e-commerce giant Alibaba(NYSE: BABA) and owner of the Alipay e-payments service. But in this case, Ant is shooting down the latest buzz that specific plans are in place for a Hong Kong IPO next year. Read Full Post…
Bottom line: A Baidu downgrade by Deutsche Bank and new developments in its takeout dining and driverless car businesses highlight its heavy reliance on its search business and costly diversification attempts with no immediate profit potential.
Baidu teaming with Starbucks?
A trio of headlines are spotlighting the difficulties faced by Chinese Internet giant Baidu(Nasdaq: BIDU) as it tries desperately to diversify beyond its core online search business. At the center of this news flurry is a downgrade of Baidu’s stock by Deutsche Bank, which looks mostly related to the company’s big revenue decline after a scandal earlier this year. But the other 2 headlines, one about Baidu’s driverless car initiative and the other about its online take-out dining service, both nicely highlight the huge money that Baidu is spending on its new businesses, nearly all of them losing big money. Read Full Post…
Bottom line: The closure of online grocer Tablelife and a major overhaul at paid advice service Fenda show investors are growing more impatient with Chinese Internet companies without clear road maps to profitability.
Online grocer Tablelife shuts down
Two news items on downsizing websites reflect not only intense competition on China’s Internet, but also a growing impatience among financial backers for money-losing sites without a clear road map to profitability. It wasn’t long ago that anyone with a dot-com name could easily find hundreds of thousands or even millions of dollars in funding, as both domestic and foreign investors threw money at anything with even the slightest hint of growth potential.
Fast forward to the present, when investors are becoming far more selective and avoiding companies that can’t show a clear paths to profits due to stiff competition and notoriously stingy Chinese web surfers. That reality has apparently spelled the end of the line for online gourmet grocer Tablelife, and a major scale-back for paid advice service Fenda following a 47-day disappearance from the Internet. Read Full Post…
Bottom line: Alibaba is the biggest beneficiary of business lost by Baidu after a scandal earlier this year, with search rivals Qihoo and Sogou also likely to pick up new business.
Baidu loses digital ad crown to Alibaba
A couple of news items are showing how Baidu’s (Nasdaq: BIDU) core search business is coming under assault from several directions, in an ominous sign for the company’s main revenue source. The first item shows that Baidu has officially lost its crown as China’s top digital adverting platform to e-commerce titan Alibaba (NYSE: BABA), following a scandal earlier this year that wiped out up to a fifth of its revenue. In the other item, reports are saying that China’s other Internet titan Tencent (HKEx: 700) has boosted its stake in Sogou, one of Baidu’s main search rivals, to 45 percent. Read Full Post…
Bottom line: NetEase’s move into cloud computing and closure of its forum service are part of an overhaul positioning it for future growth, and could propel it into China’s top 3 Internet companies in the next 5 years.
NetEase launches cloud service
China’s lowest-key Internet giant NetEase is making some more new adjustments, extending reports last week that it was planning to spin off or sell its old but stagnating web portal business. One of the new moves includes word that the company has shuttered its equally slow-growth web forum business. The other has the company launching a new cloud service, with plans to pump hundreds of millions of dollars into the business over the next few years. Read Full Post…
