Bottom line: Bilibili and iQiyi are likely to price in the middle of their ranges and debut flat to up slightly when their IPO shares start trading this week in the US.
iQiyi, Bilibili set for weak debuts?
This week is shaping up as one of the busiest I can recall for New York IPOs by Chinese firms, with at least four major listings set to take place. The first of those sputtered out of the gate on Tuesday, with hotel operator Greentree (NYSE: GHG) dropping 7 percent in its trading debut after pricing weakly and slashing the size of its offering. That less-than-stellar showing comes just days after another non-tech offering fizzled with the new listing of education specialist Sunlands (NYSE: STG) late last week.
Those weak signals could bode poorly for the three more IPOs set to take place later this week, including a launch for online video sites Bilibili and iQiyi on Wednesday and Thursday, the latter of which could raise more than $2 billion. In between that pair will be another education firm, OneSmart, which is set to debut on Wednesday. Read Full Post…
Bottom line: DreamWorks Animation’s withdrawal from its China joint venture marks the end of an explosive phase in China-Hollywood tie-ups, with one-off co-production deals the most likely form of cooperation going forward.
Take-two for DreamWorks Animation China JV
In what could herald a wave of the future, a highly-touted joint venture between DreamWorks Animation and Shanghai’s China Media Capital (CMC) has come unglued, with the official departure of DreamWorks from the tie-up. This particular exit appears quite symbolic, as Oriental DreamWorks was the first of what ended up becoming a huge wave of similar tie-ups between China and Hollywood. Thus the big question becomes if this abandonment of the venture could signal more unraveling of similar tie-ups ahead.
I suspect the answer to that question is yes, but perhaps not for the reasons you might expect. It appears that DreamWorks Animation’s decision to quit the joint venture owed to disappointing results, and I suspect the company’s acquisition by Comcast two years ago was also a factor. The fact of the matter is that China’s movie market still has huge potential. But Beijing has shown less appetite for these China-Hollywood tie-ups these days, less for political reasons and more because it is trying to stem the outflow of money for foreign acquisitions. Read Full Post…
Bottom line: Ant Financial’s purchase of 20 percent of Hong Kong restaurant ratings site OpenRice looks like a smart, incremental move to boost its presence in its first major foray to build a local customer base outside China.
Ant Financial buys into HK’s OpenRice
We’ll close out the week with a lighter story, with word that Alibaba’s(NYSE: BABA) Ant Financial affiliate has taken a nibble at Hong Kong with an investment in the territory’s most popular restaurant ratings site. On a more serious note, we should point out that this particular acquisition comes after the much higher-profile failure of Ant’s bid to buy US money-transfer giant MoneyGram (NYSE: MGI), which was vetoed by Washington on national security ground.
This latest particular purchase is somewhat interesting, as Hong Kong is quickly evolving into an important test case for whether Ant can successfully export its popular Alipay electronic payments service to other markets. Alipay is already widely available throughout the world, but only as a vehicle for Chinese to make payments when traveling overseas. Thus Ant really hasn’t tried to target local consumers in any market in meaningful ways outside China. Read Full Post…
Bottom line: A merged company combining Youon and Haluo could emerge as a strong regional shared bike company, while Shouqi could likewise emerge as a strong regional player in the private car services space.
Shouqi raises new money
China’s shared ride space has been on a turbulent ride of its own this past year, as billions of investor dollars flooded into a sector with big but also limited potential. The result has been the typical bloody battle for market share, which is starting to result in a trickle of mergers, closures and even one new fund-raising in the latest headlines.
In the merger column, a couple of second-tier shared bike operators, one named Youon and the other named Haluo, are formally getting together, perhaps presaging more mergers ahead. The second development has seen Shouqi, a private car services company operated by one of Beijing’s top taxi companies, raise a fresh 600 million yuan ($91 million) in cash. And the third is seeing a shared car company called EZZY formally throw in the towel, leaving its users little hope of recovering their 2,000 yuan deposits. Read Full Post…
Bottom line: A peak-time outage for Mobike highlights how popular the shared bike service has become in a very short time and its vulnerability to hiccups, even though bigger issues are more likely to threaten its longer-term survival.
Mobike sees mass outage
We’ll end the work week with a story about work itself that shows just how pervasive shared bike services have become in China’s major cities in just a year’s time. The story, involving a mass outage for leading operator Mobike, illustrates how such new technologies are prone to hiccups, and also how quickly they catch on in a place like China.
The question with all of these new technologies, especially a recent flurry related to the concept of a shared economy, is whether any will have legs and stand the test of time. The answer will probably be “yes” for a select few, such as the wave of cashlessness now taking over China that has even an old timer like me rarely spending cash for anything anymore and instead paying with my smartphone. But I suspect the vast majority of these new concepts, including shared bikes, will ultimately end up on the scrap heap of good ideas that didn’t quite work out. Read Full Post…
Bottom line: Tencent could be forced to take more measures to control addictive play of its popular “Honour of Kings” game, which could take a short-term toll on its gaming business.
Military critical of Tencent hit game
Internet juggernaut Tencent(HKEx: 700) has been in nonstop headlines lately for its smash hit game called “Honour of Kings”, along with its stock price that keeps reaching new highs. The company must certainly be feeling a bit uneasy from all the publicity, especially since Tencent tends to be quite low-key in line with the style of founder Pony Ma. But equally worrisome is the negative publicity “Honour of Kings” has been getting due to its addictive nature.
There’s a reason that Tencent and some of its major peers can continue to post strong double-digit growth despite their huge size. In Tencent’s case the reason lies at least partly with its phenomenal success as a game developer and operator, and also its related ability to create strong online communities from such gamers. Read Full Post…
Bottom line: Ctrip’s offline travel alliance campaign looks like a shrewd move with good chances of success, while Tongcheng’s move back into profits shows the sector is heading into a new stable period.
Tongcheng travels back to profits
A couple of travel-related stories are in the headlines today, led by a blitz into the offline realm by leading online agent Ctrip (Nasdaq: CTRP). The other item has smaller rival Tongcheng reporting its first profit in four years, as it becomes the latest to emerge from a prolonged price war that bloodied the entire industry and sent most companies into the loss column.
Neither of these stories is huge, which partly reflects the fact that this industry is finally emerging from a brutal period to a new one of relative calm. But Ctrip is clearly looking for its next battle front, after consolidating its position by taking over most of its major rivals, including Qunar and eLong, to end the price wars. Read Full Post…
Bottom line: The departure of Ofo from 14 cities reflects growing frustration by local officials with bike sharing services, and could be followed by more expulsions until the industry consolidates to a single major player.
The honeymoon seems to be rapidly ending for China’s cash-rich shared bike services, with word that Ofo, one of the oldest players, is withdrawing from 14 cities in its bid to figure out what exactly it’s doing. At the same time, media are reporting that Ofo has also settled a dispute with a customer who was injured when his brakes failed while he was biking downhill in Beijing.
These stories highlight just a couple of the many issues that Ofo and Mobike, the industry’s other leader, will face as they pedal into uncharted territory with their innovative but problematic services. Reflecting the looming consolidation that’s coming, one of my sources tells me that BlueGogo, one of the larger late arrivals to the scene, is currently shopping itself but is apparently finding little or no interest. Read Full Post…
Bottom line: Legoland’s new Shanghai theme park spotlights the growing lure of China’s leisure travel market, while Royal Caribbean’s removal of South Korean ports from its China-based trips spotlights how political tensions can affect tourism-reliant businesses.
Legoland coming to China
A couple of Shanghai-based leisure stories are spotlighting two very different trends in China’s leisure travel sector, where a burgeoning middle-class is seeking new and interesting vacation ideas. On the more upbeat side, one of Europe’s top theme park developers is expressing a major vote of confidence in the market, with word that the developer of Legoland theme parks will open one of its mega-resorts in Shanghai. But on the downside, the country’s largest cruise operator, Royal Caribbean (NYSE: RCL), has removed South Korean ports from its China-based trips amid growing frictions between Beijing and Seoul over a controversial missile defense system. Read Full Post…
Bottom line: NetEase’s new global expansion could stand a good chance of success due to its strong record with self-developed titles, which could help it pass Baidu in market value over the next 1-2 years.
NetEase holds developer forum in San Francisco
The company that made its name from a series of games based on the famous Chinese novel Journey to the West is trying to turn that story into reality, as NetEase (Nasdaq: NTES) eyes expansion outside its home market. The West contained in NetEase’s latest announcement is quite different from the West in the classic novel, the former referring to North America and Europe while the latter refers to India.
But other similarities between the novel and this new global expansion do abound in NetEase’s new announcement that it has just held its first-ever developer’s forum in the West. In both cases, the main character is traveling into unfamiliar terrain in pursuit of major rewards. And in both cases, each faces big challenges before attaining those goals. Read Full Post…
Bottom line: Ctrip’s profits could double or more this year following its successful digestion of Qunar, providing some upside to its stock.
Ctrip shares set to take off?
As earnings season for US-listed Chinese stocks hits full throttle, I thought I’d take a look at the latest results from Ctrip (Nasdaq: CTRP), which are sending mixed but generally positive signals. That’s because Ctrip is in the process of digesting former archrival Qunar (Nasdaq: QUNR), which was the industry’s second largest player but is also losing quite a bit of money.
Ctrip pulled off the coup of the century a couple of years ago when it forged a deal that gave it a controlling stake of Qunar, acquiring the shares from former majority shareholder Baidu (Nasdaq: BIDU). I personally thought that deal should have received some regulatory scrutiny since it combined the top two players in the space. But the regulator apparently thought otherwise, or simply approved the deal if it was even asked. Read Full Post…
