Bottom line: Live broadcasting specialists Inke and Huya should do well over the next year but could face difficulty after that as popularity of such services fades, while Xiaomi’s stock gains over the last two days look like a dead-cat bounce.
Inke goes live with strong trading debut
Following the unimpressive debut of smartphone maker Xiaomi(HKEx: 1810) earlier this week, live streaming site Inke (HKEx: 3700) is the latest high-tech listing in the headlines with a more impressive debut in Hong Kong. This latest deal follows the US listing for Huya (NYSE: HUYA), China’s first live streaming site to make an IPO, which has tripled since its New York IPO in May.
There are some mixed messages in here, perhaps indicating mixed investor sentiment towards many of these new-economy companies as investors try to separate the wheat from the chaff. If that’s the case, investors certainly seem to think that Huya and perhaps Yinke represent the wheat in the hot online streaming category. Meanwhile, they seem less certain about Xiaomi, which fizzled in its trading debut on Monday but has come bouncing back somewhat since then. Read Full Post…
Bottom line: Xiaomi’s stock is likely to be volatile over the next year and could move broadly downward as investors wait to see if the company’s comeback has legs and it can move into higher-end products.
Xiaomi fizzles in trading debut
Smartphone maker Xiaomi(HKEx: 1810) seems to have become the proverbial lead zepplyn sinking further and further into the mire as it finally made its trading debut in Hong Kong. The company has been dogged by skepticism almost since the get-go of its blockbuster IPO, which ended this morning here in Asia with the stock’s official trading debut. The question from here now becomes: how far will the stock sink before it finds a bottom, and what are its real prospects over the mid- to longer-term?
Let’s jump right in with the news, which had Xiaomi shares dipping 2.3 percent when their long awaited trading began here in Hong Kong on Monday morning. The shares opened at HK$16.60, versus an IPO price of HK$17. Things didn’t get much better after that, and the stock was down to HK$16.36 the last time I checked midway through the morning session. Read Full Post…
Bottom line: A court order barring Micron Technology from China and Donald Trump’s attempts to keep China Mobile out of the US reflect blurring lines between business and politics in heightening US-China trade tensions.
Fujian court bars Micron sales in China
Two new headlines are showing how trade tensions between the US and China are spilling over into the high-tech realm, while also reflecting a certain amount of confusion and twisting of the facts. Leading the somewhat misleading headlines is an item that has U.S. memory chip giant Micron (Nasdaq: MU) suddenly being shut out of China for a number of its products due to a patent dispute. The other headline has Donald Trump saying that leading Chinese telco China Mobile(HKEx: 941; NYSE: CHL) shouldn’t be allowed to offer services in the US due to national security concerns.
The Micron story is being spun by some media as having a US-China trade tensions angle, when really that’s not the case and it’s just a typical patent dispute. The same could be said for the much larger case involving a US ban on telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063), which is being spun as part of US-China trade tensions, even though ZTE is being punished for violating much older US sanctions against sales to Iran. China Mobile, on the other hand, is clearly a Trump pet project and does reflect his protectionist tendencies. Read Full Post…
Bottom line: A new IPO by e-commerce company Pingduoduo could do reasonably well due to its rapid growth and unusual business model, but could suffer from a “flavor of the day” element over the longer term.
Pinduoduo puts new spin on group buying
After years of basically having just two choices to invest in China’s e-commerce market, investors will soon have another new and interesting option with the upcoming listing of a company called Pinduoduo. I’ll admit that I was unfamiliar with Pinduoduo before reading about this upcoming listing. But that said, the numbers do point to a potential high-flyer in the making, including a business model that combines elements of Groupon (Nasdaq: GRPN) and Facebook (Nasdaq: FB) to let people recruit their friends to get good deals on merchandise.
The company is also noteworthy for its ties to social networking giant Tencent(HKEx: 700), whose wildly popular WeChat platform is apparently the main venue where friends can get together to get their deals. This particular deal comes as China’s own homegrown Groupon, Meituan-Dianping, prepares for its own Hong Kong listing in a deal expected to raise up to $6 billion, amid a broader bumper IPO season for China new economy offerings. Read Full Post…
Bottom line: New listing plans by used car platform operator Uxin, EV battery maker Amperex and medical device maker Mindray should all do well, driven by strong growth potential and their leading positions in China.
Bumper crop of new China IPOs headed to market
The latest IPO season for Chinese firms is kicking into high gear on both sides of the Pacific, with announcement of several hot new offerings that each has a slightly different story to tell. At the head of the class is a new listing for used car platform operator Uxin, which is aiming to raise up to $500 million in New York.
That’s followed by a listing plan for electric vehicle battery maker Amperex, which is having to settle for a sharply-lower valuation than it had been originally seeking with a listing in China. Last but not least there’s medical device maker Mindray, which de-listed from New York and has just submitted a plan to list on China’s enterprise-style ChiNext board, after its initial plan to re-list on one of China’s larger main boards was rejected. Read Full Post…
Bottom line: China Mobile’s first-ever drop in 4G subscribers in April owes to the company’s early arrival to the space, and reflects the broader market’s maturation that is also adding similar pressures to Unicom and China Telecom.
China Mobile 4G users takes first-ever dip
Much ado is being made about new data from the three big telcos that includes a first-ever drop in 4G subscribers for industry heavyweight China Mobile (HKEx: 941; NYSE: CHL). This particular first seems to have been a long time coming, and really shouldn’t surprise anyone too much. The fact of the matter is that China’s mobile market has been nearing saturation for a while, and the nation’s big 3 telcos have been increasingly stealing customers from each other for the last two or three years as the number of unserved users dwindles.
The bigger question raised by this data is what the slowdown could mean over the longer term, when China Mobile and smaller peers Unicom(HKEx: 762; NYSE: CHU) and China Telecom(HKEx: 728; NYSE: CHA) might see slow or negative growth in subscriber terms. The answer to that question is that this trio will be able to feast on their protected home market for many years to come, though they may be forced to innovate a bit more in order to get a tapped-out audience to keep paying more for services. Read Full Post…
Bottom line: The departure of Lu Qi from Baidu could deal a setback to some of the company’s less advanced and more ambitious efforts in artificial intelligence.
Baidu’s AI drive takes detour
Just a year after being named as the man who would lead search leader Baidu (Nasdaq: BIDU) into a future filled with artificial intelligence (AI), Lu Qi has abruptly abandoned his post as the company’s COO. Investors were clearly spooked by the move, dumping Baidu’s stock on Friday to the tune of a nearly 10 percent drop, the kind of one-day decline not seen since the company became embroiled in an advertising scandal two years ago.
Put simply, this particular departure seems to throw Baidu’s entire AI future into a bit of doubt. But then again, this kind of move seems to be quite par for the course for Baidu founder Robin Li, who has become famous for his “flavor of the day” approach that sees him delve whole-heartedly into new businesses one day, only to jettison them a year or two later. Read Full Post…
Bottom line: A brouhaha involving Lenovo’s branding as unpatriotic for not supporting homegrown technology is likely to blow over quickly, and spotlights China’s continued reliance on foreign technology.
Lenovo branded as traitor
In a story that looks like a something from the McCarthy era, embattled PC maker Lenovo (HKEx: 992) has landed at the center of a controversy that’s seeing it branded by some as a traitor for choosing foreign technology over a homegrown Chinese alternative. This kind of thing isn’t at all that uncommon in China, where politics, business and everyday life mix freely.
We’ve seen a few examples of such mixing over the last few months, all involving western companies that were forced to repent after making the egregious error of listing places like Hong Kong and Taiwan as separate “countries” from China on their marketing materials. Such missteps ended up causing outrage by some nationalists on the web, prompting sleepy regulators to step up and demand such places be labeled as part of China. I’m not a big fan of Donald Trump, though I did find his branding of this kind of thing as “Orwellian nonsense” as both humorous and also a nice gentle rebuke to China. Read Full Post…
Bottom line: China’s approval of a small US chip merger shows Beijing is actively reviewing such deals again after a brief pause to show its displeasure over US trade tensions, and bodes well for eventual approval of Qualcomm’s purchase of NXP.
China resumes consideration of global mergers
Trade tensions between Washington and Beijing have thrown a number of major companies into turmoil, as the two sides spar over the former’s attempts to form a new, more balanced bilateral relationship. Telecoms equipment maker ZTE(HKEx: 763; Shenzhen: 000063) has stolen a lot of the limelight in that regard, as the company’s earlier case involving illegal sales of US products to Iran gets sucked into the fray.
But lower-key on the ladder has been a form of passive aggressive behavior coming from Beijing, which had quietly halted reviews of major global M&A, most notably in the high-tech microchip space. That behavior was costing time and frustration for several companies with pending deals, including Qualcomm’s (Nasdaq: QCOM) pending mega-purchase of Europe’s NXP (Nasdaq: NXPI). Read Full Post…
Bottom line: Xiaomi is likely to quietly settle a copyright infringement lawsuit against it by Coolpad, which is opportunistically looking for some hush money before Xiaomi’s IPO and can’t afford a long drawn-out court battle.
Coolpad sues Xiaomi as latter’s IPO draws near
In a move that smells of desperation, down-and-out smartphone maker Coolpad (HKEx: 2369) has filed a lawsuit against the up-and-coming Xiaomi. Anyone with half a brain will know the timing of this lawsuit looks quite suspicious, since Xiaomi is getting ready to make what could be this year’s biggest IPO in the next month or so, likely to raise up to $20 billion.
It’s quite difficult to know if this particular lawsuit has any merit, though we do know that Coolpad was an early hot player in the smartphone space and thus may legitimately hold some intellectual property similar to things that Xiaomi is now using. But the fact of the matter is that Coolpad can hardly afford to wage a long and potentially costly legal battle. Instead, it is probably hoping for a quick settlement to give it some much-needed cash to continue funding its money-losing daily operations. Read Full Post…
Bottom line: Lenovo’s ejection from the Hang Seng Index caps its long fall from grace over the last four years, and leaves the company in an increasingly deep hole that may be hard to emerge from.
Lenovo ejected from Hang Seng Index
Capping its long fall from grace, PC giant Lenovo (HKEx: 992) has been officially booted from the Hang Seng Index, in a move that looks highly symbolic but also has some very real ramifications for this former high-flyer. It’s probably too early to relegate Lenovo to the history books, but we can certainly say the company is down for the count with this latest blow.
As someone who has followed Lenovo for most of its life as a listed company, I can provide my own view that the company is certainly facing a life-or-death moment in its lifetime that dates back more than three decades, making it one of China’s oldest tech names. I have called repeatedly for the departure of CEO Yang Yuanqing and introduction of some newer, younger blood to the company’s top ranks. But it doesn’t seem that Yang’s boss, Lenovo founder Liu Chuanzhi, cares too much what I think, as he has repeatedly stuck with this right-hand man throughout the company’s decline. Read Full Post…
