Bottom line: JD.com’s latest results show it could reach profitability on an operating basis later this year, while its new tie-up with Tuniu looks like a well-conceived plan that reflects a growing wave of equity tie-ups among Chinese Internet firms.
JD’s loss narrows, ties with Tuniu
China’s second largest e-commerce firm JD.com (Nasdaq: JD) has been busy wowing investors these last few days, starting with its latest quarterly ressults that shows it is making strong progress in moving towards sustainable profits. Meantime, the company has also become the largest individual stakeholder in online travel site Tuniu (Nasdaq: TOUR) through its participation in a deal that saw Tuniu raise $500 million by selling shares to a larger group of investors.
Wall Street greeted the pair of news stories with mildly positive reaction, bidding up JD.com shares by 2 percent after the reports came out. The stock has rallied nearly 50 percent this year and is 77 percent above its IPO price from a year ago, as investors grow more bullish on this company that is China’s biggest challenger to the much larger Alibaba (NYSE: BABA). Tuniu shares also got a nice lift from the news, rising 4.5 percent. Read Full Post…
Bottom line: Sina stands a 50-50 chance of getting a takeover bid within the next year, as suitors eye it for its low valuation, well-respected name and controlling stake of Weibo.
Sina anticipating suitor?
Leading web portal Sina (Nasdaq: SINA) has become one of China’s perennial Internet underperformers, leading to occasional talk that it might become a takeover target for a larger, better-run peer. Now Sina has just announced its renewal of a “poison pill” plan designed to prevent such a hostile takeover. This particular move looks like a formality rather than indicator of a looming takeover bid, since Sina launched the original plan 10 years ago and perhaps it is now is now set to expire. But the fact that Sina is not only renewing the plan, but doing so in a very public way, indicates it may feel it could become a takeover target in the current hot climate for Chinese Internet M&A. Read Full Post…
Bottom line: Tuniu is likely to quickly resolve a revolt by some of its third-party travel agents, and a sell-off of its shares looks overdone, while Rakuten’s third foray into China could finally succeed thanks to its choice of a more suitable partner.
Rakuten invests in Fanli
We’ll close out this week with a couple of stories buzzing through the Internet realm, led by a travel agent rebellion against online travel site Tuniu (Nasdaq: TOUR). Meantime, Japanese e-commerce giant Rakuten (Tokyo: 4755) is taking its third try at the China market through a new investment in an e-commerce company called Fanli.com, following failed previous forays with leading online travel agent Ctrip (Nasdaq: CTRP) and online search leader Baidu (Nasdaq: BIDU).
These 2 stories are mostly linked by the fact that both involve Internet companies. But in a twist that looks purely coincidental, Rakuten was also one of the earlier investors in Tuniu before the latter made its New York IPO early last year. It’s not clear if Rakuten still holds that stake in Tuniu, but if it does its shares just lost nearly 5 percent after a Thursday sell-off on reports of the merchant revolt. But Tuniu’s shares are about 75 percent above their IPO price, meaning its early investors are still doing quite well. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 26. To view a full article or story, click on the link next to the headline.
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Bottom line: Alibaba, Tencent and Ping An’s online insurance joint venture should easily find backers for its first major fund-raising, and could even exceed its $8 billion valuation target due to strong demand.
Zhong An targets $1 bln in new funds
This year’s list of major private funding raising by high-tech firms continues, with word that an online insurance joint venture involving 2 of China’s biggest Internet names is seeking to raise a hefty $1 billion in its first funding round. This particular venture certainly has a strong pedigree, as it’s backed by Alibaba (NYSE: BABA) and Tencent (HKEx: 700), China’s 2 leading Internet companies with a combined market value of nearly $400 billion. The pair are joined in the venture by Ping An (HKEx: 2318; Shanghai: 601318), China’s second largest insurer and also one of the most aggressive players in its space. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 20. To view a full article or story, click on the link next to the headline.
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China Mobile (HKEx: 941) Reports 2014 Profit Of 109 Bln Yuan, Down 10 Pct (Chinese article)
Coolpad (HKEx: 2369), Qihoo 360 (NYSE: QIHU) To Roll Out Own Mobile OS (Chinese article)
Lenovo (HKEx: 992) Names Gianfranco Lanci As Company President (HKEx announcement)
Ctrip (Nasdaq: CTRP) Reports Unaudited Q4 And Full Year 2014 Results (PRNewswire)
Bottom line: Apple Watch should debut strongly in China thanks to extensive partnerships with top Chinese retailers and app makers, giving the product instant relevance in the local market.
Apple Watch coming to China
Global gadget leader Apple (Nasdaq: AAPL) has been in the local tech headlines nonstop these last few days, wowing Chinese fans with a customized version of its new Apple Watch that will debut in China next month as part of its global launch. Pundits are mixed on how the watch will fare in China, but I expect it should do quite well thanks to inclusion of China’s hottest apps together with the company’s own strong reputation for well-designed, cutting-edge products.
In a separate but probably related Apple headline, media are also reporting a new smart air conditioner that the company has developed with local appliance leader Haier (HKEx: 1169) will also debut in April. Apple first announced this alliance last June as part of a broader smart device alliance under the name of HomeKit, and I suspect the Apple Watch will be usable with these new air conditioners. Read Full Post…
Bottom line: New smaller acquisitions by 58.com and Tuniu look like smart, focused moves to complement their existing business, and should quickly help to improve their top and bottom lines.
Tuniu buys Taiwan-focused travel agents
A couple of smaller acquisitions are in the headlines today, with word that online travel agent Tuniu (Nasdaq: TOUR) and Internet classified ad site 58.com (NYSE: WUBA) have both made strategic purchases that look like thoughtful, well-targeted moves. In this case Tuniu has announced it will buy 2 travel agencies that will boost its exposure to the Taiwan travel market, while 58.com is buying a site that specializes in home interior decoration products.
Both deals were relatively small, worth less than $40 million, which is generally the kind of purchase I like to see as it indicates a more focused approach to M&A. That contrasts sharply with the much bigger recent purchases by China’s largest Internet companies, most notably by Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). Read Full Post…
Bottom line: China’s overall Internet growth will continue to slow as the market starts to become saturated, with messaging and other mobile services continuing to steal share from microblogging and video operators.
Microblogging decline bites Weibo
A newly released annual government report on China’s Internet is full of good news for the online business community, with most sectors posting double-digit growth as overall penetration neared the 50 percent mark. But a few sectors stood out as distinctive losers in the report from the China Internet Network Information Center (CNNIC), led by the microblogging space that saw a sharp decline in users.
That’s not too surprising due to departures or pull-backs in the space last year by big names like NetEase (Nasdaq: NTES) and Tencent (HKEx: 700), though it certainly doesn’t bode too well for sector giant Sina Weibo (Nasdaq: WB). Another relative loser was online video, which posted only tiny growth last year as the sector came under regulatory assault aimed at reining in companies like Youku Tudou (NYSE: YOKU) and Baidu’s (Nasdaq: BIDU) iQiyi. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 22. To view a full article or story, click on the link next to the headline.
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Spring Airlines (Shanghai: 601021) Jumps 44 Pct In Shanghai Trading Debut (Chinese article)
Alibaba (NYSE: BABA) Seeks Stake In Insurer New China Life (HKEx: 1336) – Paper (English article)
Huawei, Global Union Partner On OTT TV Service (English article)
Dalian Wanda Group Pays 45 Mln Euros For Soccer Club Atletico Madrid (Chinese article)
eHi (Nasdaq: EHIC), Ctrip (Nasdaq: CTRP) Launch Next Phase Of Partnership (PRNewswire)
Bottom line: Ctrip’s latest M&A reflects the growing scarcity of good acquisition targets for cash-rich Chinese Internet firms, which could pressure them to issue dividends or launch share buy-backs.
Ctrip makes UK acquisition
A new overseas purchase by leading online travel agent Ctrip (Nasdaq: CTRP) is drawing yawns from investors, reflecting the very real fact that Chinese Internet firms have far too much cash in their coffers and no place to spend it. This particular dilemma is one that most western companies would love to have, since excess cash can be used for not only M&A and organic expansion, but also to pay dividends or buy back shares. But in the case of Chinese companies, a big chunk of the cash has been raised in a series of massive bond and share offerings over the last 2 years, meaning it would be strange to turn around and return the money to investors through a dividend or share repurchase. Read Full Post…
