Bottom line: Earlier announcers of privatization plans like Jiayuan are likely to succeed due to their more reliable funding sources, but many of the deals announced by Chinese firms in the second half of June could ultimately collapse.
De-listing bells keep ringing for Jiayuan
China’s sudden stock market rally isn’t reassuring US investors who believe that many of the most recent buy-out offers for New York-listed Chinese firms may collapse due to questionable funding. That has prompted at least 1 firm, online dating site Jiayuan (Nasdaq: DATE), to come out and openly say it is still committed to the privatization process that could ultimately end with its departure from New York and re-listing of its shares in its home China market.
The rationale for this kind of a move hasn’t changed throughout China’s massive stock market gyrations, which saw the main Shanghai index more than double over the past year at its early June peak, before crashing in a major sell-off. The crash has subsided in the last few days thanks to major intervention by Beijing, though it’s far from clear whether the selling binge is over. Read Full Post…
Bottom line: As many as three-quarters of privatizing US-listed Chinese firms could see their buyout offers revoked, but many of their stocks may be oversold due to excessive investor worries during the latest trading session.
Orphan stocks look oversold after sell-off
What started as a wave of euphoria by US-listed Chinese firms looking to make some quick money by de-listing from New York and returning home is rapidly turning into chaos, with shares of many of those companies tumbling in the latest trading session. The fall is directly tied to China’s own rapidly crumbling stock markets, which was where most of these US orphans were hoping to re-list to get better valuations than they had in New York.
But now those plans have been thrown into doubt, and at least one analyst is joining my previous prediction that many of the record 27 companies to receive privatization offers this year could ultimately see those offers revoked. That means many of these companies may be forced to remain listed in the US, where they were punished by angry investors in the latest trading session. Read Full Post…
Bottom line: Resolution of Baidu‘s dispute with a one of its top clients, combined with declining profits, reflects a new reality that is seeing its pricing power erode as it faces growing competition from both search and non-search service providers.
Exec confirms Baidu settles Putian dispute
A new report is confirming that leading search engineBaidu (Nasdaq: BIDU) has quietly settled a dispute with one of its major advertisers, which shaved nearly 15 percent off the company’s stock at the time. But the dispute is clearly have some lasting damage on Baidu’s share price, reflecting the reality that new challenges from rival search engines and also from non-search services like Tencent’s (HKEx: 700) WeChat may be undercutting Baidu’s ability to command huge premiums for its advertising services.
Baidu’s misery in China’s stock Markets
Adding to Baidu’s misery is the recent plummet in China’s stock markets, which has fueled a concurrent drop in overseas-listed Chinese tech stocks like Baidu. That sell-off saw Baidu’s shares dip more than 5 percent in the last 3 trading days of last week. That fall shaved off nearly $4 billion from its market value, as its shares reapproached levels last seen during the stand-off with the Putian Healthcare Industry Chamber of Commerce that broke out in late March. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 2. To view a full article or story, click on the link next to the headline.
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Didi Kuaidi Gets Set to Enter US, Challenge Uber – Source (Chinese article)
Former DST China Partner Shou Zi Chew Joins Xiaomi as CFO (English article)
China’s Gamers Aren’t Buying Many Consoles (English article)
TCL (Shenzhen: 000100) Prepares 795 Mln Yuan Share Buy-Back Program (Chinese article)
Bottom line: LeTV’s purchase of a major stake in Coolpad is likely to upset Coolpad’s existing alliance with Qihoo, and could lead to a turbulent period that could ultimately see one of the alliances terminated.
LeTV buys into Coolpad
The battle for supremacy in China’s crowded smartphone space has just taken a strange twist, with word that online video superstar LeTV (Shenzhen: 300104) has purchased a major stake in domestic manufacturer Coolpad (HKEx: 2369). This particular move was quite unexpected, as I had written just last week that software security specialist Qihoo 360 (NYSE: QIHU) was the most likely candidate to purchase a stake in Coolpad being sold by the company’s largest shareholder, Data Dreamland.
Coolpad was once one of China’s hottest homegrown smartphone makers, but intense competition drove it to form a joint venture late last year with Qihoo, which contributed $420 million in much-needed cash for its stake in the venture. That led me to believe that Qihoo could make a bid to invest directly in Coolpad and perhaps eventually buy the company outright after Data Dreamland last week announced its intent to sell some or all of its 38.3 percent stake in Coolpad. (previous post) Read Full Post…
Bottom line: Qihoo is likely to soon take control of Coolpad by buying shares from its controlling stakeholder, while allegations of insider trading surrounding Qihoo’s recent buyout bid are unlikely to affect the company.
Qihoo eying Coolpad stake?
Security software specialist Qihoo 360 (NYSE: QIHU) is in a couple of noteworthy headlines as we end the week, led by an announcement that hints it could be close to buying a sizable stake in its smartphone partner Coolpad (HKEx: 2369). At the same time, Qihoo’s name has appeared in another headline that says a Guangzhou man is being accused of insider trading related to a plan announced last week to take the company private.
These 2 headlines aren’t really too related beyond the fact that they both involve Qihoo, whose aggressive business tactics and outspoken CEO have made the company a lighting rod for controversy. The Coolpad news reflects Qihoo’s recent aggressive push into smartphones, mirroring similar actions by many other Chinese Internet firms. The insider trading news is more reflective of China in general, where such dealing is rampant and largely tolerated by a securities regulator that has other larger issues on its agenda. Read Full Post…
Bottom line: More than $20 billion in new fund-raising deals by China companies outside the country reflects the huge amount of global money now chasing Chinese investments, lured by the nation’s soaring stock markets.
Billions flood into Chinese companies
I was so surprised by the number of major new China-related deals churning through the fund-raising system that I decided to do some math, which showed that 5 deals in the headlines today were worth a staggering total of $21 billion. Those deals involved a wide range of topics, led by a new $9 billion privatization bid for software security specialist Qihoo 360 (NYSE: QIHU), the largest such plan to date among a wave of Chinese firms de-listing from New York.
That deal was followed in size by another similar one from Focus Media, whose $7.4 billion plan to re-list in Shanghai following its own New York privatization has hit an unexpected hurdle with an investigation of the shell company that is hosting the backdoor listing. The there’s a hefty $3.5 billion fund-raising plan by leading brokerage Citic Securities (HKEx: 6030; Shanghai:006030), which has attracted 2 of Singapore’s leading investors as it prepares to issue new shares in Hong Kong. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 18. To view a full article or story, click on the link next to the headline.
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Citic Securities (HKEx: 6030) Seeks $4.7 Bln in Share Sale; Temasek Among Buyers (English article)
Qihoo 360 (NYSE: QIHU) Announces Receipt of Proposal to Acquire the Company (PRNewswire)
Alibaba (NYSE: BABA), Foxconn in Talks to Invest $500 Mln in India’s Snapdeal (English article)
Trina Solar (NYSE: TSL) Plans $500 Mln India Plant Amid Ban (English article)
Imax (NYSE: IMAX) Sets China Unit IPO Goal at $300 Mln (English article)
Bottom line: Huawei’s big deal with JD.com reflects growing momentum that will see it overtake Xiaomi in China’s smartphone market by year end, while Qihoo’s boosting of its stake in its Coolpad joint venture could be a prelude to an eventual buyout.
Huawei’s Honor scores big smartphone win
Two big smartphone stories are in the headlines today, led by a massive new order for Huawei that could help it move up the charts to unseat the stumbling Xiaomi as China’s second largest manufacturer. Another struggling player is in the second headline, with software security specialist Qihoo (NYSE: QIHU) announcing it will boost its stake in its joint venture with Coolpad (HKEx: 2369), another former superstar that is fast fading out of the China smartphone race.
After a period of brief quiet at the start of this year, these latest developments reflect some major shuffling happening in China’s smartphone market, which is at once the world’s largest but also extremely competitive. The latest trends show that global giant Apple (Nasdaq: AAPL) has begun to resurge in the market, and that the stodgier Huawei is also rapidly moving up the food chain. Meantime, former high-flyers like Xiaomi and Coolpad seem to be moving in the other direction. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 27. To view a full article or story, click on the link next to the headline.
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LeTV (Shenzhen: 300104) to Raise 7.5 Bln Yuan Through Private Placement (English article)
Bottom line: Baidu’s crackdown on internal corruption and big jump in a ranking of global media firms are both good publicity, but won’t change the fact that it’s facing sharply slowing growth over the next year.
Baidu probes 3 directors for corruption
Following a bruising battle with some of its leading advertisers in March, leading search engine Baidu (Nasdaq: BIDU) is in the headlines this week on a more positive note with a report it is cracking down on internal corruption. At the same time Baidu is in a separate similarly positive headline that shows it is quickly climbing the ladder on a list of global media companies, surpassing much older rivals like Yahoo (Nasdaq: YHOO) and Microsoft (Nasdaq: MSFT).
The first of these headlines casts a spotlight on the many corrupt practices that frequently occur in China’s young business culture, such as preferential treatment for customers who pay “special” fees and bribe individual employees. Such practices were almost certainly a factor behind the high-profile spat that saw one of China’s largest associations of hospital owners boycott Baidu’s advertising services in March, dealing a significant blow to Baidu. (previous post) Read Full Post…
