Bottom line: New York IPO plans by a Canadian Solar unit and Solar Power Inc could auger a new wave of similar listings by Chinese new energy power plant builders, offering investors a higher growth alternative to traditional utilities.
Solar Power Inc banks on solar plant construction
Just a day after solar panel maker Canadian Solar (Nasdaq: CSIQ) announced it has spun off its fast-growing solar power plant-building unit for a US listing, another China-based peer is discussing plans for a similar IPO. This time a company called Solar Power Inc is the one disclosing plans for a New York listing to raise up to $300 million, in an emerging trend that’s seeing the rise of a new generation of specialty solar energy plant builders and operators.
A secondary trend in this sudden spurt of new activity also looks encouraging for New York, which has become a pariah these days among Chinese companies that feel US investors are undervaluing their stocks. These 2 new listing plans by Canadian Solar and now Solar Power acknowledge that New York is still an attractive option for certain kinds of Chinese companies, which I’ll address towards the end of this post. Read Full Post…
Bottom line: Canadian Solar is likely to target at least $100 million in an IPO for its power plant-building unit before year end, which could be an attractive investment alternative for buyers of traditional utility stocks.
Canadian Solar IPO spotlights plant construction
Just days after announcing big new financing for its unit focused on solar power plant construction, Canadian Solar (Nasdaq: CSIQ) is taking a big new step by disclosing it is preparing an IPO to separately list that unit. The move marks the latest wrinkle in the evolving story for Chinese solar panel manufacturers, which are quickly becoming their own best customers by selling their products to solar plants that they build themselves.
Canadian Solar and some of its peers have actually engaged in this kind of plant construction for a while, though the pace has picked up in the last couple of years. But the latest trend marks a divergence from the past, since Canadian Solar and others are now becoming long-term owners of the plants they build and putting them into wholly-owned units that look like a solar equivalent of traditional power utilities. In the past, Canadian Solar and the others would simply build solar plants, and then sell them to independent long-term owners upon completion. Read Full Post…
Bottom line: Mindray, E-House, Ming Yang and other US-listed Chinese companies that announce revised buyout offers by the end of this month stand a better than 70 percent chance of completing their privatizations.
Mindray shares leap on merger deal signing
After several months of silence, the wave of privatization bids by US-listed Chinese firms earlier this year is suddenly jumping back into the headlines with a series of new developments that indicate the more solid offers will move forward. The latest news has medical device maker Mindray (NYSE: MR) announcing it has just entered into a formal buyout deal, which even includes a price that’s slightly higher than its previous offer.
Mindray’s announcement comes the same week that wind power equipment maker Ming Yang (NYSE: MY) announced its own new privatization bid (previous post), and real estate services company E-House (NYSE: EJ) announced a lower price for its previously announced bid. (previous post) In both of those cases, skeptical investors reacted by dumping shares of both companies, causing them to trade well below the offer price. Read Full Post…
Bottom line: A new round of buyouts for US-listed Chinese firms is being greeted with skepticism due to China’s volatile economy, and could offer a good buying opportunity for investors with strong appetite for risk.
Investors dump E-House shares after new buyout offer
In what looks like an emerging new trend, investors are dumping shares of online real estate services firm E-House (NYSE: EJ) after it announced a new lower offer price for its shares under a privatization bid first announced in June. This lowering of the price doesn’t come as a huge surprise, since US-listed Chinese shares have tumbled since many first announced privatization bids in the first half of the year with an eye to re-listing back in China.
But what does come as a surprise is US investor reaction to the new offer. In the case of E-House, the company’s shares fell more than 5 percent after it announced the new buyout price, which still represented a nearly 7 percent premium to the stock’s last close. Normally one would expect the shares to rise after such an announcement to approach the new bid price. But in this case the sell-off seems to reflect investor skepticism that the new deal will ever get completed, even at the lower price. Read Full Post…
Bottom line: Hailiang looks well placed for growth due to its small size, a major new expansion and positioning in the recession-proof education space, which could help to boost its shares that look quite cheap at current levels.
Hailiang builds business in primary education
After a period of neglect due to their low-tech image and overly eager expansion by some, Chinese education stocks appear to be coming back into vogue on growth that looks solid, if not spectacular. On the heels of solid quarterly reports by 2 sector leaders 2 weeks ago, the much smaller and recently listed Hailiang Education (Nasdaq: HLG) has just released its first post-IPO earnings report that shows similar respectable growth. But more intriguing is the potential for growth acceleration, as the company launches a massive new campus and starts to expand its well-regarded brand as one of China’s leading private educators.
As a regular China IPO watcher, I’ll admit that Hailiang didn’t make it onto my radar screen in July when it made a small offering using the relatively low-profile “best-efforts” method. That’s not too surprising, since China’s markets were in free-fall at that time after a spectacular run the previous year, and their downward spiral was infecting most of their US-listed Chinese cousins. Read Full Post…
Bottom line: The arrest of a leading private equity executive for insider trading and Jin Jiang’s new fund-raising represent the latest efforts to clean up China’s unruly stock markets and make them more attractive to international investors.
Private equity giant detained for insider trading
I don’t normally write too much about China’s domestic stock markets due to their chaotic nature, but a couple of news items are shining a spotlight on the ongoing major task of cleaning up these unruly venues as they try to become more international. The larger of the 2 stories is making big waves here in China, where the one of the nation’s best-known private equity chiefs has been detained for insider trading. The second item has recently acquisitive hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600574) preparing for a major new fund raising, as it tries to clean up its own financial house in a bid to become China’s first global hotel operator.
Each of these items is quite different, though both are focused on different aspects of cleaning up a domestic stock market that often seems more like the Wild West than a place for serious investors. Share price manipulation is common practice in the market, which is reflected in the insider trading story. The Jin Jiang story reflects the murky relationships that often exist between listed companies and government entities, making it nearly impossible for serious investors to clearly understand a company’s financial health. Read Full Post…
Bottom line: CICC’s IPO will price and debut weakly due to uncertainty about its prospects following recent management turmoil, though the stock could do well over the longer term if its new executive team performs well.
Investor unimpressed by CICC offering
Chinese investment bank CICC is quickly discovering just how much its fortunes have faded, with word the former financial superstar has scaled back its Hong Kong IPO by 20 percent due to lack of investor interest. Just a month or two ago CICC might have been able to blame the lukewarm sentiment on the broader market, as a massive sell-off on China’s A-share markets infected Hong Kong. But strong recent demand for 2 major new listings in Hong Kong shows positive sentiment is returning, and that CICC is being left out of the rebound.
IPOs by Chinese companies have come creaking back to life in Hong Kong lately, led by last week’s strong debut for IMAX China (HKEx: 1970), the Chinese unit of Canadian big-screen theater technology company IMAX (NYSE: IMAX). Since debuting last week, IMAX China shares have risen by a third on big hopes for rapid expansion in China’s theater market. Last week, the stodgier China RE insurance company also priced shares for its upcoming $2 billion Hong Kong IPO at the top of their range, after getting strong demand. Read Full Post…
Bottom line: Shanda Games’ imminent de-listing could be followed by a behind-the-scenes consolidation by one or more savvy private equity firms to create a major new online game firm capable of challenging NetEase or even Tencent.
Shanda Games heads for de-listing door
Faded online gaming pioneer Shanda Games (Nasdaq: GAME) is finally heading for greener pastures, releasing what’s likely to be its final earnings report as its shareholders get set to vote on a plan to privatize the company. Shanda Games’ road to privatization has been long and tortured, and is only now finally coming to completion after its initial announcement nearly 2 years ago. (previous post) But that said, I do have to commend Shanda’s strong-willed founder and chief Chen Tianqiao for finally getting the job done.
From a broader perspective, Shanda’s departure continues a trend that has seen online game companies de-listing en mass, after their stocks struggled for years due to stiff competition. In an interesting twist to that trend, these gaming laggards have been one of the few groups to actually complete privatizations among the 3 dozen US-traded Chinese companies that announced such buyouts earlier this year. Read Full Post…
Bottom line: Jiuxian’s decision to list in China and Dangdang’s continued effort to de-list from New York show that low-quality Chinese firms will have difficulty getting attention from US investors and are probably better listing in their home market.
Jiuxian wine cellar to list on China’s OTC
Two news items continue to show a growing distaste for New York by Chinese web firms, led by word that veteran online wine seller Jiuxian has just received approval for an IPO on China’s over-the-counter (OTC) board. The second items comes from veteran e-commerce site Dangdang (NYSE: DANG), whose outspoken CEO is quoted complaining about his company’s low valuation and saying his plans are moving forward to de-list from New York and re-list in China.
The most commonly heard theme to these stories is that Chinese firms can get better valuations in their home market than New York, because their names are more recognized in China. But another theme that gets far less attention is that many of these complaining companies are simply low-quality products whose only real attraction is their “made in China” label. Read Full Post…
Bottom line: China should expand its plans for a new enterprise board in Shanghai to include a place for the Chinese units of big multinationals like Yum and Uber, allowing domestic investors to buy into these big foreign names.
Calls grow for KFC parent to spin off China unit
Global fast food giant Yum Brands (NYSE: YUM) became the latest major multinational to contemplate a spin-off for its China business last week, following in the tracks of Uber and IMAX (NYSE: IMAX), two leaders in their respective areas of hired car services and big-screen theater technology. The trend acknowledges that China will soon become the world’s largest consumer market, and its unique qualities and complexities often justify creation of separate companies for these big global names to effectively develop the market.
China should seize on this trend and modify its current plans for a new Nasdaq-style enterprise board based in Shanghai to also include a place for these larger, newly created companies with foreign roots. Reports earlier this year indicated the regulator was aiming to roll out the new strategic industries board as soon as next year, though its plans could be delayed due to the recent turmoil on China’s stock markets. Read Full Post…
Bottom line: Giant Interactive is likely to achieve a backdoor listing in China over the next 12 months, while Qihoo could receive a new, lowered privatization offer by the end of this year.
Giant eyes China backdoor listing
Early signs of stabilizing on China’s stock markets are breathing new life into the nascent migration by Chinese tech firms that are abandoning overseas listings to re-list back at home. The latest signals of new movement are coming from formerly New York-listed Giant Interactive, which is eyeing a backdoor listing in Shenzhen, and from Qihoo 360 (NYSE: QIHU), which is indicating its faltering plan to de-list from New York is still alive.
Both of these deals have a bit of history, and are part of a broader wave that saw 3 dozen US-listed Chinese firms announce plans to privatize in the first half of this year. Most of those plans came when China’s domestic stock markets were rallying sharply. Backers of the bids were betting that companies whose shares had languished in New York could get much higher valuations from investors in their home China market. Read Full Post…
