We will be on holiday from Sept 3-6 for the Chinese holiday marking the 70th anniversary of the end of World War 2. Regular postings will resume on Sept 7.
Journalist China
FUND RAISING: Slowing Economy Undermines BOC, Great Wall Motor Deals
Bottom line: Muted interest in Great Wall Motor’s fund-raising plan and Bank of China’s sale of a major asset reflect weakening investor interest in such deals due to the slowing Chinese economy.
Funding for Chinese Internet companies is showing no signs of slowing just yet, but reports of weak demand for 2 other deals reflects fading investor interest in more traditional sectors as China’s economy slows. The first of those has car maker Great Wall Motor (HKEx: 2333; Shanghai: 601633) sharply reducing plans for a new issue of A-shares on China’s domestic stock markets. The second has Bank of China (HKEx: 3988; Shanghai: 601398) attracting scant interest for the sale of a major asset in Hong Kong.
Neither of these developments comes as a huge surprise due to growing worries over China’s rapidly slowing economy. Great Wall was never one of China’s top auto makers to start with, and the big reduction in its 16.8 billion yuan ($2.6 billion) fund-raising plan comes as the domestic auto market slows and investors pile out of China’s crumbling stock markets. Meantime, Bank of China has been trying to sell its Hong Kong-based Nanyang Commercial Bank for a while now, and the latest reports say only 1 interested party has emerged. Read Full Post…
CELLPHONES: Apple Strong in China, Xiaomi Looks to Africa
Bottom line: Apple will continue to post strong iPhone growth in China but could lose some momentum if the stock market sell-off continues, while Xiaomi’s new push into Africa won’t offset its own rapidly slowing momentum.
Apple (Nasdaq: AAPL) and Chinese imitator Xiaomi are both in the headlines, as the former continues to consolidate its China position at the expense of the fading latter. In this case, Apple’s continuing China surge is reflected in new remarks from CEO Tim Cook, who says his company’s business has remained strong in China during the summer months despite concerns of a slowdown linked to the nation’s tanking stock markets.
While Apple has been feasting on China, Xiaomi is feeling growing pressure at home and is looking to other global markets for growth as it struggles to meet the lofty expectations it set for itself. According to the latest headlines, the latest stop on Xiaomi’s global roadmap is Africa, where the company is eyeing another BRICS country in South Africa. Such a move would put Xiaomi in 4 of the 5 BRICS, following its earlier moves into India and Brazil. Read Full Post…
News Digest: August 18, 2015
The following press releases and media reports about Chinese companies were carried on August 18. To view a full article or story, click on the link next to the headline.
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- Former BofA Merrill Lynch GM Joins LeTV (Shenzhen; 3001014) as Fund Raiser (Chinese article)
- Chong Hing Bank (HKEx: 1111) Plans to Raise HK$3.71 Bln in Rights Issue (English article)
- Qihoo 360 (NYSE: QIHU) Privatization Plan Threatened by LeTV (Shenzhen: 300104) (Chinese article)
- Vipshop (NYSE: VIPS) Oversold, Shares Worth $31 – Analyst (Chinese article)
- Latest calendar for Q2 earnings reports (Earnings calendar)
Shanghai Street View: Senior Stress
The status of seniors in China has always been slightly puzzling to me, due to the many contradictions you often see between the way older people are supposed to be treated and what actually happens. Such contrasts aren’t exclusive to China, and the west has also had to deal with the issue of swelling populations of seniors created by rising living standards and longer life expectancies.
The classic image of reverence for the elderly in China has always felt like a bit of a myth to me, since it often seems like the younger generation treat this group with something more like indifference. Even so, I was still quite surprised to read recent reports about a big outcry that recently broke out over plans for a new nursing home in Yangpu District. Read Full Post…
MEDIA: Youku Tudou Eyes Overhaul in Pursuit of Respect
Bottom line: Youku Tudou’s new name and campaign to create more exclusive content look like good strategic moves, but it really needs to sell itself to a larger benefactor to ensure its longer-term future.
Youku Tudou (NYSE: YOKU) was once China’s top online video site when it was formed 3 years ago through the merger of the country’s 2 leading players. But those glory days are firmly in the past now, as the company has been overtaken by more aggressive names like LeTV (Shenzhen: 300104) and iQiyi, the service backed by cash-rich online search giant Baidu (Nasdaq: BIDU).
Now media are reporting that Youku Tudou is rolling out a major overhaul that will include a new name for the company, as well as a massive spending campaign to build up an ecosystem for creating its own video content. The campaign certainly seems interesting and long overdue. But I’ve argued for a while now and still believe that what Youku Tudou really needs is to consider selling itself to a stronger Internet partner, rather than trying to continue as an independent company. Read Full Post…
MEDIA: Phoenix New Media Stumbles on Inability to Adapt
Bottom line: Phoenix Satellite and its new media arm will continue to sputter due to China’s slowing economy and a lackluster move into mobile advertising, and founder Liu Changle should consider selling the company.
Things aren’t looking too good these days for Hong Kong-based Phoenix Satellite (HKEx: 2008), a former rising star in China’s tightly controlled media market that has stumbled badly due to its inability to adapt to a changing industry landscape. Phoenix warned of a major profit decline last month due to a soft TV ad market (previous post), and now its younger Phoenix New Media (NYSE: FENG) unit is also showing signs of distress due to a heavy reliance on portal advertising delivered over traditional desktop computers.
The new quarterly earnings report from Phoenix New Media does contain one bright spot, namely a 124 percent increase in revenue from advertising services offered over smartphones and other mobile devices. (company announcement) But that part of the business is still quite small, with the result that Phoenix New Media reported overall advertising revenue growth of just 7.2 percent, and overall revenue growth of 2.9 percent during the second quarter of this year. Read Full Post…
Shanghai Street View: Promoting Privacy
I had to smile to myself when I read a report this week on a mini-scandal at a local H&M clothing store, involving an overeager security guard who pulled open a fitting room curtain without checking first to see if anyone was inside. The guard quickly discovered there was a woman trying on clothes in the small space, prompting the woman to complain about the intrusion.
The woman’s age in this case was quite revealing. At just 22 years old, she was clearly quite a bit younger than many Chinese who grew up with an entirely different concept of privacy. That was what prompted my smile, since people from that older generation probably would have considered the guard’s behavior quite ordinary and hardly cause for complaint. Read Full Post…
TELECOMS: China’s Chip Appetite Grows With Marvell Pursuit
China has developed a sudden appetite for global microchip makers, with the latest reports saying several Chinese suitors are pursuing a purchase of the telecoms chip business of US-based Marvell Technology (Nasdaq: MRVL). This kind of consolidation is sorely needed in the global microchip sector, especially in the telecoms area, where many smaller companies are having trouble competing with global titans Qualcomm (Nasdaq: QCOM) and Taiwan-based MediaTek (Taipei: 2454).
An interesting twist to this story has seen Chinese state-backed firms emerge as some of the main consolidators in this trend, reflecting Beijing’s desire to build up a local chip-making sector. Despite years of trying and billions of dollars in investment, China has yet to find success in building a homegrown chip giant that can challenge big global names like Qualcomm, Intel (Nasdaq: INTC) and Taiwan’s TSMC (Taipei: 2330). Read Full Post…
LEISURE: Voracious Jin Jiang Eyes Shenzhen Hotel Company
Bottom line: Jin Jiang’s pursuit of Shenzhen-based Vienna Hotel Group, combined with other recent M&A, could vault it to China’s leading hotel operator, though its sudden rapid expansion looks at least partly politically motivated.
Shanghai-based hotel operator Jin Jiang’s (HKEx: 2006; Shanghai: 600754) recent appetite for M&A continues to grow, with word that the company is in talks to buy a Shenzhen-based rival in a deal that would boost its hotel count by a third. A successful purchase of the privately held Vienna Hotel Group would mark the latest mega-purchase by Jin Jiang, which has suddenly emerged as China’s hot hotel company to watch.
Jin Jiang is certainly a household name in my adopted hometown of Shanghai, and this latest deal, when combined with others, would move the company into the ranks of one of China’s top 5 operators and the only one with a global presence. There’s only one problem with all of this, namely that Jin Jiang is one of the only top players that’s a state-run company. That contrasts sharply with other leading names like Homeinns (NYSE: HMIN), China Lodging (Nasdaq: HTHT) and Plateno, that are all privately owned. Read Full Post…
INTERNET: Alibaba Taps Ex Goldman Exec to Lead Global Charge
Bottom line: Alibaba’s naming of a westerner and former top Goldman Sachs executive as its new president looks like a smart move to boost its struggling global expansion, and could bring more focus to the division over the next year.
After muddling around on the global stage for a while without much to show for its efforts, I’m happy to see that e-commerce giant Alibaba (NYSE: BABA) has finally taken the step of hiring someone with extensive experience outside China to spearhead its international expansion. The company’s naming of a former Goldman Sachs executive as its new president should help to bring some focus to an international drive that to date has been quite fragmented and hasn’t produced any solid results.
More broadly speaking, the naming of Michael Evans as the new president of Alibaba Group marks the second major appointment for the company in the last 3 months, as founder Jack Ma installs a new executive team to head his $200 billion company. His decision to name foreigners to some of the top spots mirrors a similar strategy by PC giant Lenovo (HKEx: 992) and also Tencent (HKEx: 700), one of Alibaba’s chief rivals. Read Full Post…
