Bottom line: Yahoo’s reversal of its earlier decision to spin off its 15 percent of Alibaba into a separate company will have no impact on Alibaba, which is indicating separately that it will hold onto its own big stake in Uber China rival Didi Kuaidi.
Yahoo reverses course on Alibaba stake spin-off
A couple of news items are showing that the long and complex relationship between Internet search pioneer Yahoo (Nasdaq: YHOO) and Chinese e-commerce juggernaut Alibaba(NYSE: BABA) is far from over, and how the companies may remain hopelessly entangled for a while to come. The first item made global headlines, and has Yahoo reversing its earlier decision to spin off its 15 percent of Alibaba into a separate company. The second item has Yahoo founder Jerry Yang getting named as a top adviser to Didi Kuaidi, China’s main rival to US private car services giant Uber, which counts Alibaba as one of its major stakeholders.
At the heart of this complex dance is a personal relationship between Alibaba founder Jack Ma and Yahoo’s Yang. The pair struck up a friendship more than a decade ago, and ultimately formed a major alliance that saw Yahoo purchase 40 percent of Alibaba for about $1 billion. Yahoo later sold down that stake, netting billions of dollars in profits. But it still holds 15 percent of Alibaba, which is currently worth about $30 billion. Read Full Post…
Bottom line: Alibaba’s new announcement of expansion in France and Germany looks largely incremental rather than a major move, and is aimed at creating positive buzz around its international growth story.
Alibaba names France country head
E-commerce giant Alibaba(NYSE: BABA) is closing out 2015 with a couple of big new hires in Europe, as it tries to give investors new reason to cheer about its future growth prospects. But a closer read of the announcement detailing the hires of country chiefs in France and Germany reveals a distinctly Chinese story, rather than the global expansion tale that many investors are eagerly awaiting.
In this case, Alibaba is choosing to focus on how the new office openings in France and Germany will help merchants in those markets sell into China. That’s part of a broader trend that has seen Alibaba, archrival JD.com (Nasdaq: JD) and global names like Amazon (Nasdaq: AMZN) and Wal-Mart (NYSE: WMT) try to offer more global brands to increasingly affluent Chinese consumers who are willing to pay more for these trusted names. Read Full Post…
Bottom line: Lukewarm receptions for new IPOs by Bank of Jinzhou and STO Express reflect investor concerns about Chinese banks and parcel delivery firms, and more broadly worries about China’s economic slowdown.
STO Express races toward Shenzhen listing
The New York market for Chinese IPOs may be dormant as 2015 draws to a close, but Hong Kong and China’s domestic markets are buzzing this week as Beijing lifts a months-long ban on new offerings imposed during a major summer sell-off. As new listings resume, investors are showing strong skepticism towards 2 of the more market-oriented offerings getting set to hit the market, one in Hong Kong from regional lender Bank of Jinzhou (HKEx: 416) and the other in Shenzhen from leading private parcel delivery firm STO Express.
Both of these offerings are probably better indicators of true market sentiment than the many other IPOs getting set to launch in Shanghai and Shenzhen with the end of the 4-month ban. That’s because investors in both of these deals are more market oriented, unlike many of the other deals whose shares are being purchased by mainland speculators who have little interest or understanding of the companies they’re buying into. Read Full Post…
Bottom line: iKang’s managers may have to raise their earlier buyout offer to counter a new rival bid for the company, which could embolden investors to demand similar better prices for other US-listed Chinese companies being privatized.
Bidding war erupts for iKang
An interesting new wrinkle has entered the recent privatization wave sweeping US-listed Chinese companies, with word that a group backed by some major investors is making a rival buyout offer for medical clinic operator iKang (Nasdaq: KANG). So far as I know, this is the first case of a rival bid emerging to challenge any of the nearly 3 dozen privatization offers to emerge this year, mostly from management-led groups.
That’s not to say that this latest development is completely unexpected. Many minority stakeholders have complained loudly that most of the management-led buyout offers to be announced so far grossly undervalue the companies. Those complaints have worked once or twice, most notably in the case of online dating site Jiayuan (Nasdaq: DATE), whose non-management suitor sharply raised its buyout offer after investors complained that the original bid was too low. (previous post) Read Full Post…
Bottom line: Alibaba’s spin-off of its C2C marketplace for second-hand goods could reflect a new trend for big Internet firms to separately run individual assets, while LeTV may have provided most of the money in the first funding round for its smartphone unit.
Taobao spins off Xianyu
A couple of fund-raising headlines are spotlighting emerging trends in China, including a nascent move by big companies to spin off smaller units as separately run and funded entities. That move was center stage in new reports that e-commerce juggernaut Alibaba(NYSE: BABA) is spinning off its Xianyu marketplace that specializes in sales of second-hand goods between consumers.
The second headline comes from online video high-flyer LeTV(Shenzhen: 300104), and spotlights a trend that shows rapidly cooling investor sentiment towards overheated sectors like video and smartphones. That news has LeTV declining to name any of the backers in the first funding round for its fledgling smartphone unit, hinting that no serious investors were interested in this particular opportunity that raised $530 million. Read Full Post…
Bottom line: A new landscape in China’s O2O restaurant services market is taking shape around the “big 3” firms of Alibaba, Baidu and Tencent, with a Tencent-backed Meituan-Dianping the most likely to succeed.
Alibaba eyes Ele.me stake
We’re seeing more signs of a major shuffle in the China market for online-to-offline (O2O) dining services, with e-commerce leader Alibaba(NYSE: BABA) at the center of 2 major new developments in the space. One would see Alibaba invest $1.5 billion for about a third of Ele.me, the leader in O2O takeout dining services. The other has media reporting that Alibaba is looking to sell its 7 percent stake in Meituan-Dianping, China’s recently formed leading group buying site that operates a rival takeout dining service.
The big driver behind both of these stories is a major consolidation taking place in the O2O marketplace, where money-losing companies are suddenly scrambling to find wealthy backers after being cut off by their more traditional funding sources. Many of those companies have found a receptive audience from China’s cash-rich “big 3” Internet titans of Alibaba, Tencent(HKEx: 700) and Baidu (Nasdaq: BIDU). Read Full Post…
Bottom line: Alibaba and Baidu’s inclusion in MSCI indexes and SouFun’s new dual listing in China highlight reasons why overseas markets are still an attractive place for leading private Chinese companies to list.
SouFun eyes dual listings in China, NY
Two new developments last week highlighted why overseas listings are still beneficial and even desirable for some Chinese companies, even as a flood of New York-listed firms move ahead with plans to leave New York and re-list in China.
The first development saw MSCI, one of the world’s top index compilers, say it would include Chinese companies in its products for the first time by choosing several US-listed firms, including Internet titans Alibaba(NYSE: BABA) and Baidu (Nasdaq: BIDU). The second saw investors applaud a plan by leading online real estate services firm SouFun (NYSE: SFUN) to take control of a Shanghai-listed company, a move designed to gain access to Chinese capital markets while maintaining its New York listing. Read Full Post…
Bottom line: Weak pricing for Dali Foods’ Hong Kong IPO reflects investor uncertainty about China’s economy and stock markets, though the shares could briefly rise on their debut due to support from state-backed investors.
IPO for snack maker Dali draws tepid demand
A lukewarm reception for an upcoming IPO from snack maker Dali Foods is providing the latest evidence that global appetite for Chinese offerings is still quite wobbly. Dali has cut the size of its fund-raising plan by about 20 percent, following in the footsteps of China’s oldest investment bank CICC (HKEx: 3908), which made a similar reduction for its IPO whose shares made their trading debut last week.
The weak sentiment reflects uncertainty about China’s domestic stock markets, which reflects uncertainty about the nation’s broader economy that is showing signs of slowing. Hong Kong’s stock markets have become increasingly synced with far more volatile mainland stock markets, which soared in the first half of this year, only to come crashing back to earth during a massive summer sell-off. Read Full Post…
Bottom line: Vipshop’s third-quarter revenue shortfall is the latest signal that China’s e-commmerce sales are set to slow after a period of rapid growth, and could pressure the company’s stock over the next few months.
Warm autumn chills Vipshop sales
Discount e-commerce superstar Vipshop (NYSE: VIPS) has suddenly lost some of its luster, after announcing a revenue shortfall that sparked a 27 percent plunge in its stock. The unusual revenue miss looks even more unusual in China’s broader booming e-commerce sector, where leaders Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are still basking in the glow of a record-breaking Singles Day online shopping blitz last week. (previous post)
The bigger question that many will be asking this week is whether there’s any broader significance to Vipshop’s new announcement that it missed its previous third-quarter revenue forecast by 6 percent. (company announcement; Chinese article) Some others have warned of a similar slowdown, and I previously said the big Singles Day sales totals were at least partly manipulated by online merchants trying to meet tough targets set by online mall operators. (previous post) Read Full Post…
Bottom line: Alibaba’s 60 percent sales growth on Singles Day is truly impressive, but was almost certainly boosted by merchants that delayed logging transactions on its network until the 24-hour period to help meet their sales targets.
Alibaba shatters Singles Day sales record
The numbers are in, and e-commerce juggernaut Alibaba (NYSE: BABA) has posted a record performance for this year’s Singles Day online shopping extravaganza that has surprised even me for the margin by which it surpassed last year’s record. I’ll end the suspense right away and reveal that Alibaba posted 91.2 billion yuan ($14.3 billion) worth of sales over its platforms during the 24-hour online shopping binge, up more than 50 percent from last year’s $9.3 billion. (company announcement)
To put that in perspective, Alibaba posted $112 billion in gross merchandise value (GMV) for goods sold over all its platforms in this year’s entire second quarter. That means the Singles Day total is equal to 13 percent of its entire total for the 3 months through September, quite impressive for a single day. Read Full Post…
Bottom line: JD’s decision to shutter its Paipai C2C marketplace looks like a smart move, as China looks set to crack down on online trafficking in fake goods that is often rampant and hard to police on such sites.
JD to shutter Paipai by next April
E-commerce JD.com(Nasdaq: JD) has just announced it is formally shuttering it Paipai C2C site, citing difficulties policing the thousands of small merchants and individuals who sell products on the site. Timing of the move is slightly strange, since JD announced the downbeat decision just a day before the November 11 Singles Day, which has become the world’s biggest day for online shoppers.
On the surface at least, the move looks like a major victory for archrival Alibaba(NYSE: BABA), whose Taobao online marketplace competes directly with Paipai and controls the vast majority of China’s C2C e-commerce market. But the move also represents a major tactical decision for JD, since C2C markets are notoriously difficult to police for fakes, substandard products and fraud due to the huge number of merchants they host. Read Full Post…
