Bottom line: Alibaba’s shares will remain under pressure through at least the end of the year, but could rebound after that and return to their IPO level or higher in 2016 as the bears lose interest and move on to their next victim.
Bears feast on Alibaba stock
Everyone has their good years and their bad ones, and 2015 is definitely shaping up as a year that e-commerce leader Alibaba (NYSE: BABA) would rather forget. After wowing investors with a record-breaking IPO a year ago, the company’s stock has been mauled in 2015 by a large stable of hungry bears, including the latest that emerged over the weekend in a report saying Alibaba stock could tumble further still.
That report from the well-respected financial magazine Barron’s sparked another sell-off for Alibaba’s shares when the new trading week began, pushing them close to record lows, even as the company issued a detailed rebuttal. I’ve had a look at Alibaba’s statement, and many of its points are legitimate though they do seem to miss the big picture. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 15. To view a full article or story, click on the link next to the headline.
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Apple’s (Nasdaq: AAPL) iPhone Gets Boost From China as Sales to Hit Record (English article)
Alibaba’s Ant Affiliate Invests in China Insurance Unit of Cathay Financial (English article)
Bottom line: Intensifying competition in dining-related O2O services is pressuring Meituan to raise more funds, and the company should seriously consider a strategic alliance with Alibaba.
O2O dining wars dog Meituan
Online-to-offline (O2O) services have become the flavor of the day on China’s Internet, and take-out dining has emerged at the epicenter of a stampede by all 3 of China’s leading Internet companies to develop the market. Over the last 2 years, leading search company Baidu (Nasdaq: BIDU), e-commerce leader Alibaba (NYSE: BABA) and social networking giant Tencent (HKEx: 700) have all launched major initiatives in the space, collectively pouring hundreds of millions of dollars into the area.
Against that backdrop, the independent Meituan is emerging as an orphan in the space, since it’s the only player without a major backer despite its status as China’s top group buying site. That could explain the latest reports that say Meituan has returned to financial markets and is in the process of raising up to $2 billion in new funds, less than a year after it raised $700 million in another massive cash-raising exercise. Read Full Post…
Bottom line: Major new funding raising by Uber, its Chinese equivalent, and Alibaba’s logistics arm reflect continued interest in such leading Internet firms by major global Investors, though funding will slow sharply for smaller, less known players.
Three new Internet deals raise $5 bln
It seems my earlier forecast was incorrect that major fund-raising for Chinese Internet companies could be cooling due to waning investor sentiment during the recent market volatility. The latest headlines include 3 major new deal close to completion, worth a collective $5 billion. The largest has Didi Kuaidi, the homegrown Chinese equivalent of private car services giant Uber, on the cusp of new a funding deal worth $3 billion. The second has the actual Uber also near a deal to raise $1.2 billion for its Chinese business, as it prepares to spin off the unit into a separate company.
Meantime, the smallest of the deals has e-commerce leader Alibaba ‘s(NYSE: BABA) Cainiao logistics unit also on the verge of a deal to provide hundreds of millions of yuan for a small logistics company. In this case the move appears aimed at helping Cainiao to build up its stable of partners providing logistics service. The addition of such outsiders would also help to validate Alibaba’s 2-year-old program to plow 100 billion yuan into its logistics capabilities.
The following press releases and media reports about Chinese companies were carried on September 11. To view a full article or story, click on the link next to the headline.
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Dell Says to Invest $125 Bln in China Over 5 Years (English article)
Lenovo (HKEx: 992) Starts OEM Smartphone Production for Other Brands – Report (Chinese article)
Mindray (NYSE: MR) Receives Revised Proposal to Acquire Company at $27 Per ADS (PRNewswire)
Didi Kuaidi Said to Join Alibaba, Tencent in Lyft Funding Deal (English article)
Tencent (HKEx: 700) WeBank Chief Cao Tong Resigns (Chinese article)
Bottom line: Major new moves by Minsheng Investment, SPD Silicon Valley Bank and Ant Financial spotlight Shanghai’s leading role in China’s push to liberalize its financial services sector with more private investment.
Shanghai leads charge into private banking
Three Shanghai banking stories are in the headlines today, spotlighting the leading role the city is playing as China tries to develop a private banking sector. Leading the trio of headlines is the year-old China Minsheng Investment, a major new private equity company backed by the nation’s oldest private bank, which is exploring a major new infrastructure project in Indonesia.
The second story has media reporting that Ant Financial, the finance unit of e-commerce giant Alibaba (NYSE: BABA), will become the biggest tenant in Shanghai’s new tallest building when Shanghai Tower opens for business soon. The final news bit involves Shanghai’s own SPD Bank (Shanghai: 600000), whose joint venture with US-based Silicon Valley Bank has finally received permission to do business in China’s currency, the yuan, 3 years after the venture’s formation. Read Full Post…
Bottom line: Alipay’s move into Hong Kong through a tie-up with Marriott marks the start of a major global expansion for the online payment service, with Hong Kong the likely first stop due to its strong China ties.
Alipay in new Marriott tie-up
Homegrown Chinese electronic payments service Alipay is taking its growing rivalry with state-owned behemoth UnionPay to the global stage, with word of a major new move outside its home China market. That move will see Alipay follow a familiar route for many globally-minded Chinese companies, with a first stop in Hong Kong. It has Alipay forming a major new alliance in the former British colony with global hotel giant Marriott (NYSE: MAR), as the first stop on an overseas tour that could ultimately see the financial services affiliate of Alibaba (NYSE: BABA) challenge global names like Visa (NYSE: V) and MasterCard (NYSE: MA).
This latest move is part of a larger new tie-up between Marriott and Alipay, which is part of the Alibaba-affiliated but separately owned Ant Financial. The tie-up is mostly limited to mainland China initially, but significantly includes Hong Kong-based hotels. It also marks one of the biggest moves to date into Hong Kong by Alipay, which is better known as an electronic payments service used for smaller items usually costing $20 or less using shoppers’ online accounts and smartphones. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 10. To view a full article or story, click on the link next to the headline.
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3 China Telcos to Start Taking iPhone 6s Orders from Sept 10 (Chinese article)
Alibaba’s (NYSE: BABA) Koubei to Spend 5 Bln Yuan on Offline Merchants in 2015 (English article)
Minsheng Investment to Spend 30 Bln Yuan on Indonesia Industrial Park (Chinese article)
Coolpad (HKEx: 2369) Shares Drop 17 Pct at Trading Resume, Amid Qihoo Dispute (Chinese article)
LeTV (Shenzhen: 300104) Invests in Battery Charging Company (Chinese article)
Bottom line: Alibaba’s latest sell-off is part of an ongoing correction in the company’s value, reflecting a new era of more realistic expectations from investors.
Bloom continues to shrivel from Alibaba’s rose
After years of basking in the hype of adoring investors who briefly valued it even higher than much-older and far more global rival Amazon (Nasdaq: AMZN), Chinese e-commcerce leader Alibaba (NYSE: BABA) has entered a new phase centered on more realistic expectations for the company. That new phase has seen Alibaba’s stock tumble to a more realistic level this year on a steady series of bad news, including the latest reports that one of its key sales metrics wasn’t as strong as previously estimated last quarter.
But that wasn’t the only bad news for Alibaba in the last few days. Earlier reports this week said the company was cutting back in its college recruitment, in what looked like another sign of slowing growth. (previous post) An Alibaba official seemed to refute those initial reports, only to have a second series of reports emerge that seemed to confirm that the recruitment slowdown was indeed happening. (English article) Read Full Post…
Bottom line: JD.com’s new share repurchase program looks like a good use of cash due to likelihood of a rebound for its stock, while its tie-up with a top Korean peer also looks like a good way to target Chinese consumers who like imported goods.
JD launches share buy-back
After amassing huge quantities of cash through a series of IPOs and other fund-raising activities, Chinese Internet companies are rapidly discovering a new use for those idle funds by buying back their own stock. The latest such move has JD.com (Nasdaq: JD), the nation’s second largest e-commerce company, announcing a new plan to buy back up to $1 billion worth of its shares, on the belief they have become undervalued in a recent sell-off.
JD was also in the headlines for another new tie-up with a major Korean retailer, announcing the opening of a flagship store to offer imported goods from South Korean e-commerce giant Lotte.com. This particular move is part of an ongoing drive by Chinese e-commerce firms to offer more imported goods to local consumers who are often wary of domestic products that are fakes and suffer from poor quality. Rival Alibaba (NYSE: BABA) has embarked on a similar drive, announcing its own new tie-up with Germany’s Metro Group the same day as the JD announcement. (company announcement) Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 9. To view a full article or story, click on the link next to the headline.
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