The following press releases and media reports about Chinese companies were carried on July 16. To view a full article or story, click on the link next to the headline.
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McCain raises concerns about possible China bid for Micron Tech (Nasdaq: MU) (English article)
Huawei Gets Permission to Manufacture Cellphones in India (Chinese article)
China’s Tsinghua Gives $100 Mln to Android Challenger (English article)
Meituan to Acquire Chinese Travel Search Engine Kuxun – Source (English article)
HK Securities Regulator Orders Halt to Trading in Hanergy (HKEx: 566) (Chinese article)
Bottom line: Retailers like Yum and Mondelez are increasingly suffering from weak China sales due to a local slowing economy, and are unlikely to return to rapid growth of previous years over the short- to medium-term.
Mondelez in China shuffle
Two separate stories involving major western food retailers paint a gloomy picture for the China market, which is losing momentum in tandem with the country’s slowing economy. One headline has Yum Brands (NYSE: YUM), operator of the KFC fast food chain, announcing results that continued to be weak in this year’s second quarter, despite a major overhaul for its China operation and the fading impact of a major food safety scandal a year ago. The other news has Mondelez International (Nasdaq: MDLZ), maker of Oreos cookies, reportedly making major adjustments to its China operations, in a move that one insider says is the equivalent of lay-offs. Read Full Post…
Bottom line: Chinese companies should follow the lead of Huawei, Baidu and Tencent in fighting internal corruption, but Beijing should also play a role by ensuring such probes don’t become a weapon for companies to attack each other.
Tencent corruption probe nets former video exec
The growing clampdown on corruption at private Chinese companies was in the headlines last week, when Internet giant Tencent (HKEx: 700) disclosed that it was investigating half a dozen employees suspected of accepting bribes. But unlike other similar probes that have been growing in number over the last year, this particular one involved former Tencent employees, including one now working as a top executive for Internet rival Alibaba (NSYE: BABA).
Such corruption and other economic crimes have no place in a healthy corporate landscape, and leading Chinese high-tech names like Huawei, Baidu (Nasdaq: BIDU) and now Tencent should be commended for their efforts to stamp out the problem. But Tencent’s targeting of a high-level employee who went to work for a rival is also slightly troublesome, as it shows that companies could use such probes as a weapon to punish workers who defect to their competitors. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 10. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Says Entertainment Unit Executive Taken Into Custody (English article)
Bottom line: China’s new IPO freeze to support its tumbling stock markets is ultimately a bad idea, signaling that Beijing will intervene in its financial markets to rescue irresponsible investors.
China freezes new IPOs
After several days of rumors, China’s securities regulator formally announced a temporary suspension of all IPOs over the weekend in a bid to halt a slide that has seen the main Shanghai index tumble nearly 30 percent over the past month. While such a step is understandable and may even help to calm the markets, it is ultimately misguided and should be allowed to quickly expire for a number of reasons.
A long-term freeze will hinder China’s drive to internationalize its markets, since it signifies that Beijing won’t let market forces prevail and instead will step in to rescue investors every time they spend their money irresponsibly. Such a long-term suspension would also create uncertainty for the many private firms that are some of China’s most dynamic companies, potentially cutting off a vital funding source just when they need it to fuel their rapid growth. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 4-6. To view a full article or story, click on the link next to the headline.
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Ant Financial Raises 13 Bln Yuan in First Funding, Valued at 180 Bln Yuan (Chinese article)
Alibaba-backed (NYSE: BABA) Meizu Sells 8.9 Mln Smartphones in H1, Up 540 Pct (Chinese article)
Bottom line: Xiaomi’s rapidly falling sales growth is the result of many factors that reflect its youth and inexperience, and the company should pause and return to its early strategy or risk seeing its slowdown accelerate.
Xiaomi sales growth slows further
Media are swarming to the latest sales figures from sputtering smartphone sensation Xiaomi, which has just announced first-half data that looks mediocre to downright bad, depending on how you look at it. The company is trying to put a positive spin on the data, saying its first-half sales rose 33 percent from a year earlier. But one media report points out the latest 6-month sales were actually down from the second half of 2014, marking the first-ever sequential decline for this rapidly sputtering smartphone superstar.
This latest data shouldn’t come as a huge surprise, but instead marks a continuation of a steady stream of signals that point to a rapid reversal of fortune for Xioami. I’ve previously said the company and its charismatic CEO Lei Jun are at least partly to blame for the negative publicity they are now receiving, since they built up huge expectations over the last 2 years through a non-stop series of lofty announcements and other high-profile publicity stunts. Read Full Post…
Bottom line: Yingli’s use of crowd-funding to finance a small project and the bargain sale price of a small polysilicon maker reflect continuing struggles at second-tier solar companies and the need for more consolidation.
Desperate Yingli tries crowd funding
Two solar energy stories are showing how overcapacity continues to haunt the sector 2 years after it began to emerge from a major downturn. The first involves a desperate-looking fund-raising plan from the struggling Yingli (NYSE: YGE), which is trying to use crowd funding to pay for a new solar plant. The other news involves another slightly bizarre investment in the space, with Internet titan Tencent (HKEx: 700) and real estate giant Evergrande (HKEx: 3333) paying a bargain price for Mascotte (HKEx: 136), a money-losing Taiwanese maker of polysilicon, the main ingredient used to make solar panels. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 1. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Eyes $600 Mln Investment in India Online Payment Firm Paytm (Chinese article)
Baidu (Nasdaq: BIDU0 to Invest 20 Bln Yuan in Nuomi.com Over Next 3 Years (English article)
KFC (NYSE: YUM) Forms Alliance With Alipay (Chinese article)
Yingli (NYSE: YGE) Seeks Public Solar Investment With Internet Financing Platform (PRNewswire)
Amazon (Nasdaq: AMZN) to Offer Loans to Sellers in China, 7 Other Countries (English article)
Bottom line: The current fund-raising frenzy reflected in a recent round of buyouts for US-listed Chinese companies and large IPOs like the one for Legend Holdings is likely to quickly fizzle if China’s stock market sell-off continues.
KongZhong gets buyout offer
The China fund-raising machine has continued to rumble ahead despite the recent stock market sell-off in Shanghai, with yet another privatization offer coming for a New York-listed firm and a lethargic but respectable debut for newly listed Legend Holdings (HKEx: 3396). The former item saw shares of game operator KongZhong (Nasdaq: KZ) jump after receiving a buyout offer, even as most New York-listed Chinese shares slumped in line with the big sell-off in Shanghai. The latter item saw Legend shares finish down slightly in their Hong Kong trading debut, which doesn’t sound too exciting but was still far better than the 3.3 percent decline of the Shanghai benchmark index. Read Full Post…
Bottom line: A probable correction in China’s stock markets could cause Tongcheng to abandon its decision to list at home, and lead to a weak debut for Legend Holdings’ Hong Kong IPO.
Toncheng eyes China IPO
When the history books are written, the latest batch of IPO news could well mark the end of a brief but unusually buoyant period that has seen many Chinese companies eschew overseas stock markets for listings at home. Leading off the news was a sizzling performance by securities brokerage Guotai Junan (Shanghai: 601211) on its trading debut in Shanghai, as it become China’s biggest domestic IPO since 2010.
Another piece of IPO news also cast a spotlight on the hot Chinese stock markets, as online travel site Tongcheng said it was eying a listing at home in the next year, in a snub to New York where most of its peers are traded. Last but not least, the lukewarm reception for Chinese listings abroad was reinforced by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which failed to attract any major international investors as it priced its Hong Kong IPO. Read Full Post…
