Bottom line: A dissident shareholder’s proxy battle for a seat on Sina’s board stands a chance of success, but the odds are probably 40 percent or lower due to large holdings by Sina’s CEO.
Sina board seat at center of proxy fight
One of the more lively investor plays to shake up an insular US-listed Chinese company is taking place at Internet stalwart Sina(Nasdaq: SINA), with a flurry of he-said-she-said statements coming from the company and dissident shareholder Aristeia Capital. This somewhat unusual development first made headlines about a month ago, when Aristeia unexpectedly announced it was nominating two people to Sina’s board to shake up the company. Sina has responded with its own series of announcements justifying why its own long-serving board members are the best fit for the company.
All of this will come to a head at Sina’s annual meeting on Nov. 3, when one of its five board members will stand for re-election. Sina wants its own long-serving candidate to win the spot, while both of Aristeia’s candidates are contesting the position. What’s interesting here is that Sina is one of the few US-traded Chinese companies where the founders and top managers really don’t have the kind of overwhelming control of its stock that you often see. That means this particular board seat could really be up for grabs, which could perhaps shake up this underperforming company. Read Full Post…
Bottom line: China Reading’s IPO should be well received when it launches its road show as soon next week, and the shares should price and debut strongly on its good profit margins and growth prospects.
China Reading set to launch IPO road show
Another hot IPO with ties to one of China’s leading Internet firms is nearing the starting line, with word that the highly anticipated listing for Tencent’s(HKEx: 700) online literature unit is finally going to kick off shortly. That means we will finally get to see some financials for China Reading, whose plans for an $800 million IPO have been discussed since as early as February.
In fact, this particular IPO has been discussed for far longer than that, since the company has gone through a number of forms in its long march to market. I’ll recount that shortly, but will begin with some quick thoughts on this offering’s chances for success. We’ve already seen in this burgeoning IPO season that having a pedigree from a name like Tencent doesn’t guarantee success, as was the case with Alibaba-backed logistics firm Best Inc. (NYSE: BSTI). That IPO priced miserably due to stiff competition in the logistics space, and the stock is only up a modest 6 percent since it started trading in New York. Read Full Post…
Bottom line: ZhongAn should perform reasonably well over the short- to medium-term by drawing on its big-name investors for business, but faces uncertainty due to an untested business model.
ZhongAn banks on online insurance
There’s not a ton to say about the year’s first blockbuster IPO from the fintech realm, since it really went pretty much according to plan. I’m talking about the just-concluded listing for online-only insurance startup ZhongAn Online Property & Casualty Insurance, which was almost guaranteed a strong debut when its shares began trading yesterday in Hong Kong.
The bigger question for ZhongAn and its other fintech peers will be whether they can continue to thrive once the spotlights are gone and they have to do business over the longer term. Anyone can pretty up their books in the run-up to an IPO, but keeping the business flowing afterwards is often a bit more problematic. ZhongAn could be a good case in point, as its product lineup seems to be constantly evolving, as does the lineup for many of these fintech firms, due to individual and broader industry factors. Read Full Post…
Bottom line: Alipay’s joint venture with Li Ka-shing targeting local Hong Kong customers looks like a shrewd approach in its first major foray of that kind, though it will face skepticism about its ability to protect user privacy.
Alipay turns up HK drive with new JV
After dancing around the globe for the last few years without too much to show for its efforts, Ant Financial’s Alipay electronic payments unit is finally taking the plunge into local currency services with a new joint venture in Hong Kong. Despite the relatively muted headlines, this story looks rather revolutionary because it represents the first time one of China’s up-and-coming private financial services companies is going after local consumers.
Nobody said the road to global recognition would be easy for Alipay, or for similarly popular electronic payment services operated by social networking giant Tencent (HKEx: 700) or the stodgier state-backed UnionPay, which has actually tried something similar without much success. But this is a step these 3 companies need to take, and post at least limited success, if anyone is going to take them seriously over the longer haul. Read Full Post…
Bottom line: A flurry of IPOs for offshore Chinese tech firms marks the start of an upcycle following a three year lull, with fintechs likely to be the top stars.
Secoo fizzles in trading debut
After a relatively boring first eight months of the year, the IPO market has suddenly come to life with a flurry of offerings that are turning in a mixed performance. E-commerce seems to be a bit passe, though you would never guess that based on the recent run-up in the stock of sector lead Alibaba’s(NYSE: BABA) stock. Meantime, a small-ish biotech offering has wowed investors, and the best looks set to come with a couple of fintech offerings this week and towards the middle of October.
This particular spurt looks at least partly tied to the Chinese National Day holiday that will see the entire country basically close for all of next week, prompting companies that have been waiting to list to speed up the process to finish beforehand. Last week we saw logistics specialist Best Inc (NYSE: BSTI) deliver an offering to tepid response, followed by a much better result for money-losing biotech start up Zai Lab (Nasdaq: ZLAB). The week ended with a fizzle for luxury e-commerce firm Secoo on the Nasdaq. This week before the holiday, we could see debuts for the year’s first $1 billion-plus offerings from fintech firm ZhongAn Insurance. That should be followed by another fintech mega-deal by Qudian in mid-October. Read Full Post…
Bottom line: Google’s purchase of HTC’s Pixel assets is a sign of no confidence in HTC’s chances of longer-term survival as an independent smartphone maker.
Google’s HTC purchase: reason for optimism or pessimism
Everyone is giving their two cents about the big new tie-up between Taiwan smartphone maker HTC (Taipei: 2498) and Google(Nasdaq: GOOG), so I figured I’d weigh in as well on this deal that has quite a few threads. From where I sit, the deal marks the latest distress sign coming from an overcrowded smartphone field here in China, even though HTC is technically based in Taiwan.
Equally or even more interesting is the question of whether Google is a white knight riding to HTC’s rescue, or rather trying to protect its own interests from what it sees as a fast-sinking ship. I tend to think the case might be the latter, which I’ll explain shortly, even though both Google and HTC would probably vehemently deny such a conclusion. Read Full Post…
Bottom line: The US is likely to take a tougher stance towards Chinese M&A of politically sensitive companies following Trump’s veto of a major deal, but in such cases will still need to justify the national security risk.
Trump vetoes sale of chipmaker
In a move that is sure to make major waves but wasn’t completely unexpected, Donald Trump has made his first big statement on the sale of US high-tech companies to Chinese buyers by formally blocking a relatively large deal that was pending for quite some time. Followers of the space may recognize I’m talking about chipmaker Lattice Semiconductor (Nasdaq: LSCC), which was set to be bought by a China-backed private equity firm in a deal that has dragged on for more than a year.
Some might argue that this marks a big setback for cross-border M&A between China and the US in the high-tech realm, though the decision does seem consistent with what we’ve seen in the past. I’ll recount some of the deals we’ve seen previously vetoed for similar reasons, which usually involves defense applications. Perhaps the major difference here is that Trump has made the first such move quite early in his presidency, which could presage a more aggressive position for national security reviews in future deals. Read Full Post…
Bottom line: A new music re-licensing deal between Alibaba and Tencent, combined with a meeting between the copyright regulator and major online music sellers, hint at attempts to create a more level playing field in the space.
Alibaba, Tencent in music cross-licensing deal
A couple of items from the music sector are in the headlines today, showing how tricky the situation is becoming with copyrights and online licensing in China. One of those has two major players, the music services of Internet giants Alibaba (NYSE: BABA) and Tencent(HKEx: 700), signing an agreement to cross-license music to each other when one of them owns the rights to such music. The other has China’s copyright office actually calling a meeting between those two companies and two other major players, NetEase(Nasdaq: NTES) and Baidu(Nasdaq: BIDU), to discuss issues confronting the industry.
Two issues appear to be driving these two deals that appear to be related. One is concerns from the music industry that rights to their songs will become fragmented and confined to single platforms under the current licensing system, limiting consumer choice. Similar concerns might also be what’s driving the regulator to get involved as well. An interesting footnote to this might be whether the same thing could soon happen in the video licensing arena, which shares similar issues. Read Full Post…
Bottom line: Huawei could overtake Apple as the world’s second largest smartphone seller in the next 1-2 years, while it could also pose a challenge in global cloud services over the next 5 years.
Huawei takes a shot at the cloud
We’ll begin the new week with a couple of items from Huaweithat show how the company that began as a telecoms network builder looks set to unseat fading PC giant Lenovo (HKEx: 992) as China’s global leader in consumer tech. The first of those has one research house releasing data that show Huawei’s smartphones surpassed Apple(Nasdaq: AAPL) for two consecutive months in June and July to become the world’s second largest brand. The second has a Huawei executive discussing his plans for the company’s cloud computing services, saying he wants to become a global top 5 player.
The first headline shows that Huawei is not a company to be taken lightly, which means that people should pay close attention to the second headline. In my years of covering Huawei, the company has proven to be quite focused and determined, and pours large amounts of money into product development to make sure it can meet its goals. It focused its early efforts on building traditional telecoms networks, but more recently has moved to enterprise networks and consumer devices like smartphones and notebook computer. Read Full Post…
Bottom line: Google’s campaign to build a China-based artificial intelligence team is at least partly designed to woo Beijing, as part of its broader effort to get permission to open a China-based Google Play app store.
Google Play edging towards China?
In the latest signal of its move back to China, Internet titan Google (Nasdaq: GOOG) is apparently on a hiring spree in Beijing that looks aimed at building up an artificial intelligence (AI) team in the world’s largest online market. This particular move doesn’t come as a huge surprise, and seems to be part of Google’s recent obsession with the world’s biggest Internet market.
The backstory is that Google quit China seven years ago, at least for its core search business that is the backbone of its operations in other markets, due to a dispute over Beijing’s tough policies requiring all sites to self-police themselves for sensitive content. But over the last two or three years Google has had a change of heart, realizing it really can’t afford to ignore an Internet market that has 750 million users. Read Full Post…
Bottom line: Jumei could formally abandon its stalled buyout plan soon, putting more downward pressure on its stock, while iKang needs to enter serious negotiations with two bidders for the company.
Jumei, iKang under pressure over stalled buyouts
Ever wonder what happened to a handful of buyout plans for US-listed Chinese companies that were announced more than two years ago but never got completed? That’s certainly not a question that keeps most of us up at nights, but it’s suddenly popping into the headlines with a series of scathing letters from a minority investor called Heng Ren, which is criticizing two of the unfinished deals.
Specifically, Heng Ren is blasting online cosmetics seller Jumei International (NYSE: JMEI) and clinic operator iKang (Nasdaq: KANG), which both announced plans to privatize quite a while ago but have yet to complete those. These aren’t the only two whose privatization plans, which were part of a wave in the first half of 2015, failed to get completed. But most of the others that failed to complete their buyouts, including YY (Nasdaq: YY) and Momo (Nasdaq: MOMO), made specific announcements that they were abandoning their plans. Read Full Post…
