Bottom line: Tencent’s Supercell purchase looks like a relatively smart use of its big cash pile, and will give it access to leading-edge games and let it focus on the more important task of developing an ecosystem of products and services around WeChat and QQ.
Tencent gets $8.6 bln charge from Supercell
Internet giant Tencent(HKEx: 700) has been a victim of its own success, accumulating one of China’s largest cash pots even as it remained quite conservative as an acquirer. But now the company has taken some pressure off of itself to invest that cash, with the announcement of its purchase of a controlling stake in Finnish game maker Supercell for a hefty $8.6 billion. I haven’t done any detailed research on the purchase, but this does appear to be the largest acquisition of all time by a Chinese Internet company, and is probably worth as much as or even more than all of Tencent’s other acquisitions to date combined. Read Full Post…
Bottom line: JD.com will quietly close Yihaodian after acquiring the online store from Walmart, and Amazon is the most likely next large player to withdraw from China’s e-commerce market in the next few years.
JD.com takes over Walmart’s Yihaodian
In what can only be described as a major surrender, Walmart (NYSE: WMT) is selling its struggling online flagship Yihaodian in exchange for about $1.5 billion worth of shares in JD.com (Nasdaq: JD), China’s second largest e-commerce player. The development isn’t a complete surprise, since Yihaodian has struggled to compete with JD and industry titan Alibaba (NYSE: BABA) since Walmart purchased the company 4 years ago. The withdrawal also shines a spotlight on the very real fact that foreign companies often can’t compete on China’s Internet, and raises the question of whether Amazon (Nasdaq: AMZN) might be the next to abandon the complex market. Read Full Post…
Bottom line: A new China Life bid for iKang could trump Yunfeng, while 21Vianet could be mounting a stealth privatization bid that would see it slowly sell most of its shares to big buyers before mounting a formal de-listing attempt.
China Life eyeing bid for iKang?
A few strange twists are taking place in the story that has seen some 40 US-listed Chinese companies launch privatization bids since the start of last year, led by the surprise re-heating of a bidding war for private clinic operator iKang (iKang). In a separate headline, data center operator 21Vianet (Nasdaq: VNET) gave a new signal that it will abandon a previous buyout offer and may launch a stealth de-listing bid instead. And in the strangest development, the board of web portal operator Sohu (Nasdaq: SOHU) has rejected an investment plan by the company’s founder that looked like a prelude to a possible buyout offer at the time. Read Full Post…
Bottom line: Shares of Alibaba and JD.com will remain under pressure for the next few months from opportunistic short selling, but should rebound late this year due to strong growth prospects for their core e-commerce business.
Short sellers pressure Alibaba, JD shares
Separate reports are spotlighting a recent short-selling spree targeting China’s 2 leading e-commerce companies, Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD), wiping out billions of dollars in market value over the last few weeks. But the negative sentiment also raises the question of whether there’s something systemically wrong with these companies and China’s e-commerce market in general, or whether this is a short-term phenomenon created by people looking to make some quick profits. Read Full Post…
Bottom line: YY’s abandonment of its privatization plan and concurrent share buyback look like savvy moves to build confidence and attract attention from investors, and could soon be followed by similar withdrawals by other big buyout candidates.
YY abandons privatization
Following a steady stream of signals hinting at new obstacles for US-listed Chinese stocks trying to privatize, social networking site YY (Nasdaq: YY) has become the first to formally abandon its plans to abandon New York. I’ve been predicting that up to half or more of the 40-odd privatization plans announced since the start of last year could ultimately collapse, and have to commend YY for being brave enough to be the first to openly discuss the abandonment of its buyout offer. The original buyout group led by YY’s chairman and CEO could have easily just remained quiet on the subject until everyone assumed the offer was dead. But in this case they’ve taken the more responsible route of admitting to failure. Read Full Post…
Bottom line: Baidu’s long-term revenues will decline by 15-20 percent from current levels as a result of a cut-back in sponsored links and new transparency policies that will scare away some of its advertisers.
Baidu cuts Q2 revenue outlook
What’s the cost of being honest, or at least a little more honest? If your name is Baidu (Nasdaq: BIDU), apparently the answer is about $400 million, which is how much China’s leading search engine has just lowered its latest quarterly revenue forecast after taking steps to become more transparent. Put differently, the figure is about one-eighth of Baidu’s previous revenue forecast for the quarter, meaning it would translate to lost revenue of about $1.3 billion of the $10.25 billion it generated for all of last year. Read Full Post…
Bottom line: A lackluster debut for China Online Education and abrupt end to the bidding war for iKang point to weak investor interest in US-listed Chinese stocks, which is likely to persist through year end.
51Talk operator fizzles in NY trading debut
Chinese IPOs in New York continue to sputter heading into the summer months, with the latest offering by China Online Education Group (NYSE: COE) debuting flat after raising a very modest $46 million. Meantime, one of the most hotly contested privatizations in an exodus of Chinese companies from New York has come to an abrupt and somewhat disappointing end in the case of clinic operator iKang (NYSE: KANG). That development has come with word that 2 groups vying to buy out iKang have suddenly dropped their bids, yielding to a third group associated with e-commerce giant Alibaba (NYSE: BABA). Read Full Post…
Bottom line: Jack Ma’s newly stated preference for an Ant Financial IPO in Hong Kong could touch off a new clash that would challenge the local securities regulator to grant an unusual listing exception or risk losing the blockbuster deal to New York.
Ant Financial eyes HK IPO
Just a couple of years after a high-profile tussle that saw e-commerce giant Alibaba (NYSE: BABA) ditch Hong Kong to make its record-breaking IPO in New York, talkative founder Jack Ma is gearing up for a similar game of chicken for an upcoming IPO by his company’s affiliated Ant Financial unit. That’s my initial assessment, following media reports that Ma has said his first preference would be a Hong Kong IPO for Ant Financial, China’s leading private financial services company whose prize asset is its Alipay electronic payments service. Read Full Post…
Bottom line: Alibaba’s new self-calculated valuation of $185 billion looks realistic and even possibly low, but the stock will remain under pressure until the intentions of big stakeholders SoftBank and Yahoo become clearer.
Alibaba estimates value at $185 bln
It’s not often that you get to see a major company put a value on itself, but that’s exactly what we’re getting as a result of new information coming from this week’s sale of nearly $8 billion worth of stock in Chinese e-commerce giant Alibaba (NYSE: BABA). I’ll end the suspense right away and say that Alibaba has valued itself at about $185 billion with the latest sale of a big block of its stock held by longtime Japanese backer SoftBank. While that number looks quite impressive, it’s also noteworthy because it values Alibaba quite a bit lower than arch-rival Tencent (HKEx: 700), as the pair jostle for the title of China’s biggest Internet company. Read Full Post…
Bottom line: A new $300 million investment by Tencent, Baidu, JD.com and a private equity firm in Bituato is aimed at providing major strategic partners to ensure its continued profitability as an independent car trading platform.
Baidu, Tencent, JD invest in Bitauto
China’s non-stop chain of Internet M&A has created some strange bedfellows, including a new investment that will make partners out of search leader Baidu (Nasdaq: BIDU) and social networking giant Tencent (HKEx: 700). The pair, 2 of China’s top 3 Internet companies, are coming together with e-commerce giant JD.com (Nasdaq: JD) and another private equity firm to invest a fresh $300 million in online car listing services firm Bitauto (NYSE: BITA). The investment by each company is relatively small, and has slightly different significance for all 4 parties involved. Read Full Post…
Bottom line: Baidu’s new tie-up with a US-based stock broker reflects growing access to global stocks by Chinese investors, and could help to stem the recent privatization wave of overseas-listed Chinese companies.
Baidu in US stock tie-up with Robinhood
In a move that has highly symbolic overtones, online search giant Baidu (Nasdaq: BIDU) has just formed a new alliance with a US company that will finally make its own New York-listed stock available to investors in its home China market. That deal will see US stock trading startup Robinhood offer its services over Baidu’s own brokerage platform, in a tie-up that reflects the growing access that Chinese investors are gaining to overseas stock markets. Read Full Post…
