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Alibaba’s Ma In Unusual Defensive Posture 阿里巴巴马云的防守战

By newsdoug on June 15, 2011

Playing defense is hardly the style for Alibaba Group founder and chairman Jack Ma, but he seems to be taking just such a posture in his ongoing dispute with partners Yahoo (Nasdaq: YHOO) and Softbank over the company’s online payments unit. Ma, who rarely holds press conferences these days, took the unusual step of holding one such event this week in his hometown of Hangzhou to try and explain why he secretly moved Alibaba’s fast-rising online payments service, Alipay, out of his group, China’s largest e-commerce company, and into another independent company without first consulting either Yahoo or Softbank. (English article; Chinese article) Playing defense is clearly not Ma’s style, which leads me to believe he realizes that he committed a major mistake — one which caused Yahoo’s shares to drop sharply when the news got out. Ma justified the move saying that China was preparing to issue its first round of licenses for domestic online payment companies, and that Alipay might not qualify for a license due to its foreign ownership. According to the reports, Yahoo and Softbank both thought their stakes in Alibaba wouldn’t prevent Alipay from getting a license, and I’m increasingly convinced that this argument has merit. What Ma hasn’t said in all this is that China is preparing to also license foreign companies to provide domestic online payment services later this summer, so the whole debate over domestic versus foreign control of such companies does seem to be a moot point. In that light, Ma’s defensive posture seems much more understandable and I wouldn’t be surprised to see Alipay return to Alibaba Group as soon as late this year. In the process, Alibaba may also have to pay Yahoo millions of dollars to help it settle a class-action shareholder lawsuit against it related to this mess.

Bottom line: Alibaba could end up reintegrating Alipay to resolve its dispute with Yahoo over the online payments unit, and could be liable for millions to help Yahoo settle a class-action lawsuit.

防守基本不是阿里巴巴创始人兼主席马云的风格，但近日在他与雅虎<YHOO.O>、软银围绕其在线支付部门的分歧中，马云恰恰是采取了防守姿态。如今已很少举行新闻发布会的马云本周在家乡杭州特地举行媒体沟通会，竭力解释他为何将阿里巴巴集团旗下支付宝的股权转移至另外一家公司，而且事先并未咨询合作夥伴雅虎与软银。玩防守显然不是马云的风格，这也让我觉得马云确实意识到自己犯了大错，因消息一出，雅虎股价急挫。马云解释称，中国政府正准备为国内在线支付企业发放首批牌照，而因外资控股问题，阿里巴巴可能无法获得牌照。根据报导，雅虎与软银均认为其在阿里巴巴的股权不会妨碍支付宝获得牌照，我个人越来越觉得这个说法有道理。马云没说的是，中国还准备在今夏晚些时候批准外国公司在华提供在线支付服务。这样说来，马云的防守姿态似乎更可以理解，而如果最快今年底支付宝就重返阿里巴巴集团，我不会感到惊讶。在这个过程中，阿里巴巴可能不得不支付雅虎数百万美元计的款项，帮助其处理相关的股东集体诉讼案。

一句话：阿里巴巴可能会停止重组支付宝，以解决与雅虎的争端，且可能还要拿出数百万美元计的资金，帮助雅虎处理股东集体诉讼。

IPOs: Uxin Files in NY, Battery Maker in China, Mindray on ChiNext

By newsdoug on May 30, 2018

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…

IPOs: Floodgates Open With Tencent, Sohu, Bona, Fintech Listings

By newsdoug on October 16, 2017

Bottom line: A periodic window of IPOs that opens every 2-3 years is taking shape, with fintechs and other new categories like online literature likely to do well, while older concepts like e-commerce could struggle for attention.

My long-predicted IPO floodgate has finally burst, with no less than four major offerings in the headlines as we go into the new week. The new offerings I’m referring to involve two in the US, one for fintech startup Ppdai and another that has been talked about forever for Sogou, the search engine backed by Internet superstar Tencent (HKEx: 700) and the less steller Sohu (Nasdaq: SOHU).

Meantime, one of the other IPOs also involves Tencent, with its China Reading online literature unit getting cleared by the Hong Kong stock exchange and set to file its prospectus. Last but not least is Bona Film, the formerly New York-listed company that has been cleared for a re-listing in China. Read Full Post…

IPOs: Tencent Literature IPO Nears Take-Off, But Will It Read?

By newsdoug on October 10, 2017

Bottom line: China Reading’s IPO should be well received when it launches its road show as soon next week, and the shares should price and debut strongly on its good profit margins and growth prospects.

China Reading set to launch IPO road show

Another hot IPO with ties to one of China’s leading Internet firms is nearing the starting line, with word that the highly anticipated listing for Tencent’s (HKEx: 700) online literature unit is finally going to kick off shortly. That means we will finally get to see some financials for China Reading, whose plans for an $800 million IPO have been discussed since as early as February.

In fact, this particular IPO has been discussed for far longer than that, since the company has gone through a number of forms in its long march to market. I’ll recount that shortly, but will begin with some quick thoughts on this offering’s chances for success. We’ve already seen in this burgeoning IPO season that having a pedigree from a name like Tencent doesn’t guarantee success, as was the case with Alibaba-backed logistics firm Best Inc. (NYSE: BSTI). That IPO priced miserably due to stiff competition in the logistics space, and the stock is only up a modest 6 percent since it started trading in New York. Read Full Post…

SMARTPHONES: Smartisan Gets New Funding, But From Where?

By newsdoug on August 7, 2017

Bottom line: Smartisan’s new funding and plans to produce 5-6 smartphones a year look like an anomaly in the highly competitive market, and it’s unlikely to survive as a standalone entity over the next 5 years.

I was a bit surprised to read that a clear second-tier smartphone player, the uppity Smartisan, has received 100 million yuan ($147 million) in new funding, as we begin the latest week of summer. I haven’t seen this company’s name or many second-tier players like OnePlus in more than half a year, though their collective names have come up quite a bit in the bigger smartphone numbers.

That’s a reference to the “other” category in the quarterly smartphone figures put out by data tracking firms like IDC, which show that this collective group that includes all names lumped together after the top 5 is rapidly losing share. In IDC’s latest China market data that came out last week, the top 5 vendors, Huawei, Oppo, Vivo, Xiaomi and Apple (Nasdaq: AAPL), collectively controlled 73 percent of the market. “Others”, including the likes of Smartisan, had to divvy up the remaining 26.9 percent. But what was most notably was that 26.9 percent marked a sharp decline from last year, when this group controlled 36.2 percent. Read Full Post…

INTERNET: Tencent Limits Gamers, Joins with TCL

By newsdoug on July 4, 2017

Bottom line: Tencent’s roll-out of time playing limits for teenager gamers for a popular new title looks aimed at preventing a regulatory intervention, while its new TCL tie-up could presage a spin-off of its video business.

Internet titan Tencent (HKEx: 700) is in a couple of headlines as the US observes its Independence Day holiday, starting with word that it’s limiting teenagers from playing too much of a very popular new title. The other headline has the company teaming up with TV stalwart TCL (HKEx: 1070; Shenzhen: 000100) in a new smart TV tie-up.

The only real common thread to these headlines is that they both involve Tencent, though each does spotlight a certain pattern that’s quite typical for China’s most successful Internet company. In the first case, the game story spotlights Tencent’s strong record at developing and operating games, which are its largest source of revenue. The TCL story highlights Tencent’s fondness for making strategic minority investments, often with mixed results. Read Full Post…

E-COMMERCE: Beating Highlights Brutal Competition for Couriers

By newsdoug on June 28, 2017

Bottom line: A major altercation between a customer and deliveryman from STO Express underscores the intense competition in the sector, which puts huge pressure on couriers and companies in general.

An incident making the rounds in Chinese media is highlighting just how brutally competitive the parcel delivery business has become — literally. The incident is quite appalling but not really too surprising, with reports that courier STO Express (Shenzhen: 002468) has fired a deliveryman who seriously beat a customer who filed a complaint about him.

This particular incident comes just a day after I wrote about the latest IPO by a parcel delivery firm, Best Inc, which is hoping to raise up to $750 million in New York. (previous post) That IPO is noteworthy because Best is still losing massive money, unlike most of the other courier companies that have made listings, even though the industry’s brutal competition makes it hard for me to believe the others are as profitable as they say. Read Full Post…

IPOs: Qudian Moves Toward Blockbuster NY Listing

By newsdoug on March 21, 2017

Bottom line: Qudian’s IPO will get a moderately warm reception in New York, drawing interest due to its status as a major private fintech firm but also wariness owing to many uncertainties in the young sector.

Anything involving movement of money has always been slightly problematic in China. Be it paying for things online, paying to play computer games, or even borrowing small sums to buy something like a smartphone, nothing has ever been easy for Chinese consumers. That’s mostly due to the creaky financial system they inherited when the country began its march into the modern era starting in the 1980s and ’90s.

That lack of services has been a godsend for a new generation of companies that are now making their way to market by supplying some of the many basic financial services that consumers crave. An IPO by one of the largest of those looks set to happen in the next 3 months, with word that microlender Qudian has made its first private filings for a New York listing to raise up to $1 billion. Read Full Post…

ECOMMERCE: Wanda’s E-commerce Foray Running on Empty?

By newsdoug on February 15, 2017

Bottom line: Wanda will continue to operate its ffan e-commerce site for another year, following the departure of its CEO, but could quietly end the initiative afterwards due to lack of synergies with its brick-and-mortar shopping malls.

The headlines have been buzzing this week about the departure of the chief executive of the e-commerce unit Wanda Group, the real estate-turned-entertainment giant with a voracious appetite for global acquisitions. The big theme from the chatter is that the departure of Li Jinling, the unit’s third CEO in 3 years, marks a setback and possibly even presages a death knell for the Wanda initiative into the online shopping realm.

Wanda is speaking out on the subject, saying it never intended to launch a website that would compete directly with the likes of sector leaders Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD). Perhaps that’s true, though that didn’t stop Wanda and its ultra-confident chief Wang Jianlin from boasting of lofty ambitions when it signed up Internet titans Baidu (Nasdaq: BIDU) and Tencent (HKEx: 700) as partners to its ffan e-commerce site in 2014. Read Full Post…

IPOs: Meitu Aims High with Price Range, Attracts Low-Brow Investors

By newsdoug on November 29, 2016

Bottom line: Meitu’s shares are likely to price and debut weakly due to skepticism about its profit potential from big western investors, but could perform better over the longer term if the beauty app can monetize its large user base.

What’s likely to be Hong Kong’s biggest high-tech IPO in nearly a decade is creeping ahead, with word that beauty app operator Meitu has set a price range for its widely watched offering that puts it within reach of its target to raise $750 million. But a read between the lines shows that this offering could easily price at the lower end of its range, following earlier investor worries that Meitu might have difficulty leveraging its huge customer base into meaningful profits anytime soon.

Meitu’s quandary is hardly unique, in an Internet universe where having huge user numbers doesn’t always translate to big profits. In this case Meitu, operator of an app that lets users tweak selfies to make themselves look more attractive, is quite rich in terms of traffic, with 450 million active users. But it hasn’t found a way to actually make money from that audience, and instead earns 95 percent of its revenue from sales of smartphones that draw people to its app. Read Full Post…

IPOs: Qudian IPO Banks on China Consumer Micro Loans

By newsdoug on October 31, 2016

Bottom line: Microlender Qudian could raise $500 million or more in an IPO in the first half of next year, most likely in New York, and could get a modestly positive reception as one of the first in a new wave of private Chinese financial firms to list overseas.

Growing signals are emerging that an offshore IPO could be coming soon for Qudian, a financial firm that began its life as a microlender named Qufenqi helping college students to buy things like computers and smartphones. That’s my assessment after learning from one of my sources that Qudian has hired a foreign-trained CFO and also an investment bank, typical developments for a company that wants to make an offshore listing within the next year and often even sooner.

From an investor’s perspective, the company would offer an interesting private play into China’s financial sector, albeit a relatively niche part of that sector. Investors can already buy into numerous Chinese banks and other financial institutions like brokerages and asset managers. But most of those are state-owned and make many of their decisions based on government directives, with the result that their decisions often have a heavy political element that doesn’t always make commercial sense. Read Full Post…