Bottom line: Reports of the insolvency of online grocer Yummy77 are probably correct, but the company could still engineer an emergency rescue that would see it emerge as a wholly owned subsidiary of a big backer like Amazon.
Yummy77 reportedly insolvent
Just a week after 2 major new fundings highlighted the big potential for online grocers, a new headline is shining a spotlight on the darker side of a market that has rapidly overheated as new companies rush to cash in on the trend. That headline has media reporting that 2-year-old online grocer Yummy77, which is backed by global e-commerce giant Amazon (Nasdaq: AMZN), has run out of cash and become insolvent, making it the first major casualty in the space.
Before we go any further, I should note that the news on Yummy77 is all coming from media reports that haven’t been confirmed by the company. But at least one of those reports comes from the highly reputable China Business Network (CBN), which cites a number of sources that seem to indicate the news is true. My own visit to Yummy77’s site, www.yummy77.com, showed no signs of anything unusual, and I was able to select items for sale and put them into my shopping cart as normal. Read Full Post…
The following press releases and news reports about China companies were carried on April 8. To view a full article or story, click on the link next to the headline.
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Online Grocer Yummy77 Goes Bankrupt Due to Funding Squeeze – Report (Chinese article)
Huawei Needs 3-5 Years to Pass Apple (Nasdaq: AAPL), Samsung – Executive (Chinese article)
ZTE (HKEx: 763) Dives as US Probe, Executive Shuffle Stoke Uncertainty (English article)
Didi Says New Funding Round Well Received, Value Exceeds Market Talk (Chinese article)
Mondelez (Nasdaq: MDLZ) Teams Up With Alibaba to Sell More Oreos in China (English article)
Bottom line: Homelink’s new mega funding reflects a recent renewed boom for Chinese real estate in major cities, while Alibaba’s backing of Momo’s buyout could presage a tie-up between Momo and Weibo.
Alibaba joins Momo buyout group
A couple of big fund-raising stories are in the headlines, led by the latest mega-funding for the fast-expanding real estate agent Homelink. Meantime, separate reports are saying that e-commerce giant Alibaba (NYSE: BABA) has joined a group aiming to privatize social networking app Momo (Nasdaq: MOMO), helping to squash skepticism that the buyout offer announced last year might collapse due to insufficient funding.
The only common thread to these 2 stories is that they show big funding remains available for high-growth companies in China, fueled in part by profits being generated by China’s booming real estate market. That boom has been directly responsible for Homelink’s meteoric rise, and seems like a good place to start this discussion of these 2 new mega fundings. Read Full Post…
Bottom line: Ctrip’s stock could be set for strong gains over the next 12 months, thanks to strong profit growth following its recent string of equity tie-ups that have neutralized most of its major competitors.
Ctrip neutralizes rivals with string of tie-ups
In this series on my favorite China-concept stocks, leading online travel agent Ctrip (Nasdaq: CTRP) is the only one that I don’t really like in terms of corporate personality. But that fact aside, there’s still plenty for investors to like about this company that has slowly built up an enviable empire in China’s fast-growing market for travel services.
Ctrip was ahead of the curve with its establishment back in 1999 when China’s Internet and travel industry were both in their infancy. It was also one of China’s earliest Internet companies to list in the US, making a New York IPO back in 2003. Since then its prospects have soared with China’s booming travel industry, as the company faced relatively little competition for most of its first decade in business. Read Full Post…
Bottom line: A flurry of new de-listing activity shows that well-funded privatizations will continue despite market volatility in China, and could also spread to undervalued private companies listed in Hong Kong.
Wanda Commercial Properties eyes buyout
The headlines are brimming with new moves in the buyout wave that has swept over off-shore listed Chinese stocks, which are privatizing in droves due to disappointing valuations. Leading the news are 2 former high-flyers, online video site Youku Tudou (NYSE: YOKU), which has formally completed its buyout by e-commerce giant Alibaba (NYSE: BABA); and property giant Wanda Commercial Properties (HKEx: 3699), which has announced it is exploring a potential buyout less than 2 years after its Hong Kong IPO.
That pair are joined by 2 smaller stories involving ongoing privatizations by budget hotel operator Homeinns (Nasdaq: HMIN) and the shriveling Ku6 Media (Nasdaq: KUTV). Media are saying that Homeinns has already lined up a Chinese listing vehicle to resume its life as a publicly traded company after it de-lists from New York. And Ku6 has announced it has formally signed a buyout agreement that will result in its own de-listing. Read Full Post…
The following press releases and news reports about China companies were carried on April 6. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Completes SCMP Acquisition, Makes Digital Content Free (English article)
China’s ZTE (HKEx: 763) Names New Chief as It Grapples With US Blacklist (English article)
Youku Tudou (NYSE: YOKU) Announces Completion of Merger (PRNewswire)
Temasek Sees Valuation Concerns in Chinese Technology Industry (English article)
Ku6 Media (Nasdaq: KUTV) Enters Merger Agreement For Going Private (PRNewswire)
Bottom line: Groupon’s new tie-up with Comcast shows it’s more interested in working with a well-known US-based company than the unfamiliar Alibaba, which could force Alibaba to quietly dump its Groupon stake by the end of this year.
Comcast buys into Groupon
It seems e-commerce giant Alibaba (NYSE: BABA) isn’t the only company interested in money-losing group buying site Groupon (Nasdaq: GRPN). Less than 2 months after Alibaba disclosed it had purchased 5 percent of Groupon shares, apparently in the open market, a firm backed by US cable giant Comcast (Nasdaq: CMCSA) has just announced plans for its own strategic tie-up with the faded group buying site.
This new move certainly seems to throw some doubt on my previous prediction that Alibaba’s purchase could presage a boosting of its stake in Groupon, or perhaps even an outright buyout bid. While such a move is still possible, Groupon does seem to be signaling that it intends to remain independent. It also seems to be indicating it prefers this more direct approach to forming new partnerships, rather than Alibaba’s approach that looks a bit stealthier since it appeared to buy its Groupon shares without the company’s consent. Read Full Post…
Bottom line: Weak debuts for 2 China bank IPOs in Hong Kong and anemic profit growth for ICBC and Bank of China reflect the industry’s building bad loan problem, which could erupt into a full-blown crisis by the end of this year.
The headlines are littered with negative stories about Chinese banks as we reach the climax of the latest earnings season, reflecting the dismal outlook for this group of lenders staring at a major bad loan crisis. Often I like to be contrarian in this kind of situation and say it could represent a good buying opportunity, since Chinese bank stocks now trade at very low price to earnings (PE) multiples. But in this case I really do think far worse is still to come before the building crisis subsides, meaning there’s still plenty of downside for these stocks.
The bleak outlook was reflected by new Hong Kong IPOs for 2 local commercial lenders, whose shares both priced near the bottom of their range and ended flat on their first trading day. At the same time, 2 of China’s top 4 banks, ICBC (HKEx; 1398; Shanghai: 601398) and Bank of China (HKEx: 3988; Shanghai: 601398), both posted their latest quarterly results that continued to show their profits were sapped by growing bad debt. Read Full Post…
Bottom line: Fresh food sellers Yiguo and FruitDay could see strong growth and go public in the next 2-3 years, banking on strong partnerships with Alibaba and JD.com and growing consumer willingness to buy groceries online.
Yiguo in big new funding
Fresh fruit and other grocery items are the latest hot ticket in China e-commerce, with 2 up-and-coming players receiving big new fundings of $100 million or more. The larger of the pair has e-commerce leader Alibaba (NYSE: BABA) and global private equity giant KKR helping online fresh food seller Yiguo raise about $260 million in new money. The other has an online fruit specialist called FruitDay, whose backers include Alibaba arch-rival JD.com (Nasdaq: JD), raising its own $100 million.
This particular trend is really a sub-trend of a broader movement by China’s e-commerce giants into the grocery business over the last few years, encroaching on traditional supermarkets and also Wal-Mart’s (NYSE: WMT) Yihaodian that found early success in the space. Even Amazon (Nasdaq: AMZN) China has gotten into the business, though many of these companies specialize in more traditional packaged foods rather than fresh products. Read Full Post…
The following press releases and news reports about China companies were carried on March 30. To view a full article or story, click on the link next to the headline.
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Anbang Wouldn’t Cross 15 Pct Offshore Investment Cap with Starwood Buy – Source (Chinese article)
Online Fresh Food Retailer Yiguo Gets $240-$280 Series C Funding from Alibaba, KKR (Chinese article)
China Said to Consider Cutting Subsidies for Electric Vehicles (English article)
The following press releases and news reports about China companies were carried on March 29. To view a full article or story, click on the link next to the headline.
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Anbang Trumps Marriott (NYSE: MAR), Raises Offer for Starwood (NYSE: HOT) to $14 Bln (English article)
China Bank Profits Flat-Line as Bad Debts Continue to Soar (English article)
Alibaba’s (NYSE: BABA) Cainiao Logistics Arm Forms Alliances, In Same-Day Delivery Drive (Chinese article)
Shanghai Disneyland (NYSE: DIS) Sells Out for Opening Day (English article)
