Bottom line: Bright’s plan to sell Weetabix 4 years after the purchase is mostly due to declining performance at the British cereal maker, with similar sales likely to follow for other poorly planned food purchases by Chinese buyers.
Bright loses appetite for Weetabix
After splashing into the global M&A headlines 4 years ago with its purchase of a well-known British breakfast cereal maker, Shanghai’s Bright Food has decided that Weetabix apparently isn’t its cup of tea. That seems to be the message in the latest headlines, which say that Bright is looking to sell the British company for quite a discount to the price it paid at the time of the ground-breaking deal in 2012.
Of course much has happened since Bright, known in Shanghai for its biscuits and dairy products, first announced the deal. Bright brought Weetabix’s core breakfast cereal products to China not long after the deal was closed, and even talked about making a separate listing for the British company. Read Full Post…
Bottom line: ZTE’s move into smart cars and Gome’s into smartphones follow a typical Chinese pattern of herd mentality investing, and are both likely to fare poorly.
ZTE buys car maker Granton
A couple of headlines are shining a spotlight on the herd mentality you often see among Chinese companies looking for the next big growth opportunity. One of those has telecoms stalwart ZTE (HKEx: 763; Shenzhen: 000063) buying a small bus maker, parroting a trend among a growing number of firms who see the future in smart vehicles. The other has the increasingly irrelevant electronics retailer Gome (HKEx: 493) rolling into the smartphone business, an area in desperate need of consolidation due to cutthroat competition. Read Full Post…
Bottom line: The acceptance by Gree’s chairman of a surprise shareholder rejection over a controversial investment, and a muted sell-off in response to a short-seller attack on Huishan Dairy both signal growing maturity by Chinese stock investors.
China stock investors grow up
A couple of stock stories in the headlines as the new week begins are spotlighting a nascent but encouraging sophistication of shareholders in Chinese-listed companies. Such investors are traditionally famous for a sheep-like mentality that sees them blindly pile into and out of stocks based on rumors, heard-on-the-street advice or even simply a name change, with little regard for reality about the company’s business prospects.
But perhaps these latest two incidents show a growing sophistication that could bring some much-needed stability to Chinese stocks, which are famous for their volatility. Leading the headlines is word that the chairman of home appliance giant Gree (Shenzhen: 000651) has accepted a recent rejection by shareholders over a controversial investment plan in an electric car company. At the same time, shareholders of Huishan Dairy (HKEx: 6863) have largely ignored a new report by notorious short-seller Muddy Waters, in contrast to earlier times when such an attack might have sparked a sheep-like panic causing the company’s shares to plunge. Read Full Post…
Bottom line: Gree’s new largess to employees with an across-the-board raise is an attempt to win back public good will, following setbacks for chief executive Dong Mingzhu in her attempt to defy shareholder wishes.
Gree’s Dong Mingzhu offers Christmas largess
I don’t usually write about Gree (Shenzhen: 000651), but an unusual storm of controversy around the home appliance maker nicely summarizes several tendencies that make Chinese companies both entertaining but also frustrating for westerners like myself to observe. The company’s main claims to fame are its air conditioners, and also its colorful chief executive Dong Mingzhu, who is often called China’s most powerful businesswoman.
Dong was doing a bit of goodwill hunting in the latest headlines, with word that Gree has decided to boost wages for all of its 70,000 employees by a 1,000 yuan ($145) each per month, a relatively large figure that probably equates to raises of 10 percent or more. The bigger subtext is that this raise comes after a series of personal setbacks for Dong, making the move look like her attempt to win back public approval and restore confidence in her leadership. Read Full Post…
Two names closely associated with e-commerce are in the headlines, led by industry leader Alibaba (NYSE: BABA), which is coming under fresh assault from a coalition of US trade groups for allowing trafficking in pirated goods in its online marketplaces. The other headline involves parcel delivery giant ZTO Express (NYSE: ZTO), which is coming under a different kind of assault as investors dumped its newly-listed New York shares on their first trading day after an impressive $1.4 billion IPO. Read Full Post…
Bottom line: Walmart’s investment in an online grocery delivery company is the latest advance in its rapidly growing alliance with JD.com, which could help to reignite its stagnating position in China’s retail market.
Walmart invests in New Dada
The growing alliance between global retailing titan Walmart (NYSE: WMT) and Chinese e-commerce giant JD.com (Nasdaq: JD) is taking yet another step forward, with word that the former is making another new investment in the latter in the hotly contested online grocery space. In this case the investment itself, in a JD-backed online grocery specialist called New Dada, is a relatively modest $50 million. Instead, the investment is more symbolic because it takes direct aim at the market-leading position of e-commerce titan Alibaba (NYSE: BABA). Read Full Post…
Bottom line: Wal-Mart’s deepening alliance with JD.com looks like a smart pairing of leaders in traditional and online retailing, while a new e-commerce joint venture between Alibaba and Suning doesn’t appear to offer anything new.
Wal-Mart opens Sam’s Club on JD.com
Leading Chinese e-commerce operators Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are in a series of similar headlines, as each looks for growth opportunities by pairing with traditional brick-and-mortar retailers. Industry leader Alibaba has just announced a rather vague joint venture with leading electronics retailer Suning (Shenzhen: 002024), a year after the pair formed a major equity tie-up. Meantime, JD.com has announced that global retailing giant Wal-Mart (NYSE: WMT) will open 2 major stores on its e-commerce platform, as part of a growing alliance between the pair that also kicked off with a major equity tie-up 3 months ago. Read Full Post…
Bottom line: Alibaba will have to spend more heavily to rid its marketplaces of trafficking in pirated goods, while its Steven Spielberg partnership is part of a new wave of deeper film tie-ups between China and Hollywood.
Alibaba ties with Spielberg’s Amblin
Internet giant Alibaba (NYSE: BABA) is being rebuffed and embraced in the US in 2 separate headlines, reflecting conflicting feelings many Americans have towards one of China’s largest private companies and their sometimes controversial business practices. In the more upbeat headline, Alibaba’s movie-making unit has just signed a major new tie-up with director Steven Spielberg to co-produce movies from his Amblin Entertainment and distribute them in China. But in a far less friendly overture, Alibaba is also being blasted by a major US apparel group for lack of progress in its battle to stamp out trafficking in pirated goods in its online marketplaces. Read Full Post…
Bottom line: Yum’s China operation could see profit growth accelerate as it steps up its expansion, providing a boost for its newly listed stock over the next 3-5 years.
Yum China eyes big KFC expansion
Fast food giant Yum (NYSE: YUM) is kicking off a publicity blitz in the run-up to the formal spin off of its China business, discussing ambitious growth targets for its biggest global market. It’s not surprising that the operator of the KFC and Pizza Hut brands is focusing on the future, since its China data in the present is far from impressive. That includes a surprise same-store sales decline in its latest quarterly report, and unimpressive profit growth of around 15 percent. Read Full Post…
Bottom line: ZTO’s proposed New York IPO is getting modest interest due to concerns about competition in the parcel delivery sector, while bike sharing service Ofo could make its own offshore IPO in the next 3 years.
Bike sharing service Ofo raises funds
Just a day after I noted the disappearance of a previously discussed New York listing plan by parcel delivery service ZTO Express, the company has re-emerged in the IPO headlines with a filing saying it plans to raise up to $1.5 billion. At the same time, an intriguing bicycle-sharing service called Ofo is also in the fund-raising headlines, picking up a smaller $130 million in new money from its own impressive list of investors that includes ride-sharing giant and Uber-killer Didi Chuxing. Read Full Post…
Bottom line: A Baidu downgrade by Deutsche Bank and new developments in its takeout dining and driverless car businesses highlight its heavy reliance on its search business and costly diversification attempts with no immediate profit potential.
Baidu teaming with Starbucks?
A trio of headlines are spotlighting the difficulties faced by Chinese Internet giant Baidu(Nasdaq: BIDU) as it tries desperately to diversify beyond its core online search business. At the center of this news flurry is a downgrade of Baidu’s stock by Deutsche Bank, which looks mostly related to the company’s big revenue decline after a scandal earlier this year. But the other 2 headlines, one about Baidu’s driverless car initiative and the other about its online take-out dining service, both nicely highlight the huge money that Baidu is spending on its new businesses, nearly all of them losing big money. Read Full Post…
