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: Washington is likely to find Huawei guilty of illegally selling US equipment to Iran, while Germany is likely to scuttle a Midea-Kuka alliance by finding an alternate strategic local investor for Kuka.
US seeks documents from Huawei
Cross-border trade involving sensitive technologies is dominating the headlines as we head into summer, lead by a new development in Washington that looks ominous for Chinese telecoms giant Huawei. That news has the US asking Huawei for documents related to previous sanctions against the company, implying new sanctions could be coming over sales to Iran that may have violated US trade rules. The other headline shows opposition continuing to grow in Germany over a proposed purchase of 30 percent of local robotics firm Kuka (Frankfurt: KU2G) by Chinese home appliance giant Midea (Shenzhen: 000333). Read Full Post…
Bottom line: Midea’s plan to buy 30 percent of German robotics maker Kuka is likely to collapse due to EU resistance, reflecting growing wariness towards China’s global buying spree of western technology.
EU official sounds alarm at Midea’s Kuka buy
Alarmism at China’s growing string of global M&A is spreading from the US to Europe, with growing signs of resistance to the recently announced purchase by Chinese company of a major stake in a leading German robotics firm. Two separate new headlines point to the nascent resistance against the landmark deal announced 2 weeks ago, which would see Chinese home appliance maker Midea (Shenzhen: 000333) acquire 30 percent of Germany’s Kuka (Frankfurt: KU2G) for more than $1 billion. (previous post) According to the latest reports, a top European Union (EU) industry official and one of Kuka’s largest shareholders are separately expressing reservations about the deal, in what almost looks like a coordinated effort to show the uneasiness some Europeans are feeling. Read Full Post…
Bottom line: New sales of Alibaba and Lenovo shares by big stakeholders partly reflect disappointment in each stock’s performance by the seller, as both companies face issues that could stunt their medium-term growth.
Big stakeholders sell Alibaba, Lenovo shares
The folks at e-commerce giant Alibaba (NYSE: BABA) and PC leader Lenovo (HKEx: 992) are licking their wounds today, after each was dumped by a major major shareholder. In the first case longtime backer SoftBank has just sold off a big chunk of its Alibaba holdings, raising a hefty $7.9 billion in the process. The second deal has Internet giant Google (Nasdaq: GOOG) looking to sell about $200 million worth of Lenovo stock. Alibaba and SoftBank are trying to put a positive spin on their development, but the bottom line is that both Alibaba and Lenovo stock have become disappointments recently for all investors. Read Full Post…
Bottom line: Alibaba will avoid being penalized in a new SEC probe, but may be forced to modify some of its aggressive accounting practices in a compromise with the US securities regulator.
Alibaba in new SEC probe
I’m beginning to understand why e-commerce giant Alibaba(NYSE: BABA) has been aggressively building a team of Washington lobbyists, following announcement of its latest clash with a US government agency. This time it’s the securities regulator that’s tussling with the aggressive Alibaba, with word that the US Securities and Exchange Commission is investigating the company for potential illegal accounting practices. The SEC is already well acquainted with Alibaba, following another unrelated probe of the company last year related to piracy in its online marketplaces. Read Full Post…
Bottom line: Tencent’s new disclosure that it processes more than 500 million daily mobile financial transactions highlights its rapid growth in the space, pushing market leader Alipay to accelerate its own expansion into Asia.
WeChat wallet creeps up on Alipay
It’s rare to see Internet giant Tencent’s (HKEx: 700) tech-savvy but reclusive chief Pony Ma do interviews or make public appearances, so when he does it’s always reason to take notice. In this case Ma has disclosed new figures that show just how rapidly Tencent is moving into the mobile financial transactions business, rapidly encroaching on an area previously dominated by Alibaba (NYSE: BABA) affiliate Alipay. A separate headline also reflects to some extent the pressure that Alipay is feeling, with reports that its parent Ant Financial is accelerating its recent move into several major Asian markets. Read Full Post…
Accused of poor regulation and unfair competition by traditional import-export traders, cross-border e-commerce in China has been subject to new regulations since the beginning of April. Over the long term, the new regulation is expected to improve the shopping experience by focusing on the quality of goods.
With over 5,000 cross-border online trading platforms and more than 200,000 enterprises involved, e-commerce has become a major force for foreign trade into and out of China. In 2015, cross-border consumer deals settled online reached $ 40 billion, up 50 percent, representing over 6 percent of the total consumer e-commerce sector. China’s Commerce Ministry estimates the broader cross-border e-commerce market is much larger, growing at an average rate of 30 percent to reach up to $1 trillion by 2018. (analysis report) Read Full Post…
Bottom line: A backdoor listing plan by SF Express in Shenzhen, a New York IPO plan by China Music Corp and 3 new China OTC listings by ZTE units reflect creative approaches to new listings by Chinese firms due to bottlenecks for traditional IPOs.
SF Express eyes backdoor listing
A trio of IPO stories in the headlines are quite revealing, as none are happening through traditional channels on China’s 3 main stock exchanges in Shanghai and Shenzhen. Instead, the largest of the 3 plans has parcel delivery giant SF Express eyeing a backdoor listing using a shell company from the minerals business. Meantime, music streaming company China Music Corp has popped up across the Pacific in New York, where it is reportedly planning an IPO that could be the largest of its kind this year. Read Full Post…
Bottom line: CIC’s withdrawal from the bidding for a stake in Yum’s China unit represents a minor setback, but Yum’s long history in the market makes finding major local investor less important.
CIC ends bid for Yum China stake
KFC parent Yum Brands (NYSE: YUM) has lost a major potential ally as it prepares to spin off its China business, with word that China’s sovereign wealth fund has dropped out of the bidding for 20 percent of the unit. Reuters is reporting that China Investment Corp (CIC) abandoned its bid for a number of reasons, including Yum’s refusal to sell a controlling stake to the new investor group. Yum has previously said it wants to sell just 20 percent of the China unit, which includes 7,200 stores. It also plans to sell more of the unit’s shares through an IPO later this year in Hong Kong or New York. Read Full Post…
Bottom line: Alibaba’s new lower-key approach to publicizing its fight against piracy is in response to an embarrassing spat with a major industry group, and looks like a smarter way to handle its anti-counterfeiting efforts.
Alibaba takes lower-key approach in anti-piracy fight
Just days after a high-profile and embarrassing tussle with some of the world’s top luxury brands, e-commerce giant Alibaba (NYSE: BABA) is trying to put the matter in the past by reaffirming its commitment to fighting piracy outside an industry alliance it previously joined. At the same time, the company’s talkative chief Jack Ma was uncharacteristically quiet after a trip this week to Washington to meet with unspecified officials.
Anyone who has followed Alibaba for a while knows this kind of behavior is quite typical for the company. Alibaba’s is usually quite talkative and self-promotional, which reflects Ma’s own nature. But that high-profile behavior often magnifies the inevitable setbacks that occur for any company of this size, and Alibaba and Ma often go into “quiet mode” after such negative news. Read Full Post…
