The following press releases and news reports about Chinese companies were carried on March 5-7. To view a full article or story, click on the link next to the headline.
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Wanda’s AMC (NYSE: AMC) Theater Chain to Buy Carmike for $1.1 Bln (English article)
Tencent (HKEx: 700) to Invest $1 Bln in Sohu (Nasdaq: SOHU) Video Unit – Source (Chinese article)
Adidas (Frankfurt: ADS) to Boost China Outlets by a Third With 3,000 Stores (English article)
HutchisonChina MediTech Announces Launch of Potential US IPO of ADSs (Businesswire)
Bank of China (HKEx: 3988) to Spin Off, Separately List BOC Aviation Unit (HKEx announcement)
Latest calendar for Q4 earnings reports (Earnings calendar)
A popular restaurant chain called Memory tops the menu of this week’s Street View, with word that the local eatery is living up to its name with a sudden closure that’s sending it into the history books. Memory’s particular form of untimely death is all too common in China these days, usually occurring when an owner abruptly shutters his business and flees after piling up huge piles of debt.
The story was even more personal for me, since I was just introduced to the chain a few weeks ago when a friend suggested it for dinner one evening. I was so impressed by its innovative take on traditional Shanghai cuisine, combined with its nostalgic decor and extremely reasonable prices, that I even went back for a second helping just last week. But it seems the low prices that were one of its biggest draws were also Memory’s downfall, leading to the sudden closure. Read Full Post…
Bottom line: Guo Guangchang’s appearance at this year’s meeting of China’s legislature is a positive signal for Fosun investors, designed to ease their concerns that he might be in danger of arrest as part of an anti-corruption probe.
Fosun chief Guo attends annual Beijing political pow-wow
Local media are buzzing today with the latest thoughts from some of China’s biggest corporate leaders, many of whom are attending a big meeting in Beijing connected to the annual meeting of China’s legislature. But among all the chatter taking place on the pow-wow’s sidelines, the most interesting tidbit among companies I follow is the mere presence of Guo Guangchang, head of the massive Fosun conglomerate.
Guo’s appearance at the Chinese People’s Political Consultative Conference (CPPCC) would normally be a non-event, since he’s an official member of this group that provides advice to Chinese lawmakers. But Guo was in far more sinister headlines back in December, when he disappeared for a few days under murky circumstances and later said he was assisting in an unspecified government investigation. (previous post) Read Full Post…
Bottom line: Alibaba’s latest $4 billion fund-raising could signal a potential deal to buy its shares currently held by Yahoo, as both companies look to remove a distracting issue that is affecting both of their stock prices.
Alibaba eyeing Yahoo stake?
Chinese e-commerce giant Alibaba (NYSE: BABA) just can’t seem to get enough money. Despite having more than $18 billion in its coffers at the end of last year and access to billions more in credit, the company is reportedly back in talks with a group of banks to raise another $4 billion. That raises the question of why exactly it needs all this money.
Alibaba has certainly been an aggressive acquirer over the last 2 years, spending billions on a wide range of companies in industries from entertainment, to hired car and social networking services and many others. Two weeks ago the company was in yet another major M&A headline, when it disclosed it had quietly purchased more than 5 percent of faded group buying giant Groupon (Nasdaq: GRPN) in the open market. (previous post) Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 4. To view a full article or story, click on the link next to the headline.
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Bottom line: Cautionary comments from Caixin and Ele.me about investments from Alibaba and its affiliates reflect a growing wariness from companies at accepting money and yielding control to the e-commerce giant.
Alibaba’s Ant invests in Caixin
The voracious Alibaba (NYSE: BABA) is in 2 new M&A headlines as we head into the end of the week, led by word that its Ant Financial affiliate was an investor in a new fund-raising round in Caixin, one of China’s best respected financial media. A second headline has take-out dining pioneer Ele.me denying reports that Alibaba, which is already one of its biggest shareholders, will devour the company completely. Instead, Ele.me is saying it will continue working closely with Alibaba’s own take-out delivery service called Koubei.
Both headlines reflect a growing resistance by founders of these companies to outright ownership by Alibaba-related companies. In the first case, Caixin was quick to issue a statement saying Ant was only one of several new investors in its new funding round. Ele.me’s case is similar, quashing earlier speculation that it would ultimately get swallowed up by its cash-rich backer. Read Full Post…
Bottom line: Vipshop looks like a strong bet due to its position as a focused e-commerce leader among consumers who are most interested in bargains and less concerned about famous brands.
Vipshop trives on bargain focus
So far this series on my favorite Chinese stocks has focused on big names like Tencent(HKEx: 700) and Fosun International (HKEx: 656), which are sector leaders with strong, focused management. But hiding behind these giants are a field of lesser-known second- and third-largest players in their sectors offering even better growth potential because they are far smaller and at an earlier stage in their development.
One such name is Vipshop (NYSE: VIPS), which has carved out a place as China’s third largest e-commerce company by honing in on shoppers who are more interested in bargains and less concerned with big-name brands. While some may call this area a niche, it’s really more of a focus since it encompasses quite a large segment of the Chinese shopping population. Read Full Post…
Bottom line: Baidu’s shares could see some upside through the rest of the year if it executes on reported plans to spin off its money-losing businesses, while NetEase could post lackluster performance unless it gets more aggressive in M&A.
Baidu stock jumps after results
Two of China’s top Internet companies have just released their latest quarterly results that both look pretty good, even though investor reaction was quite different to the latest financials from leading search engine Baidu (Nasdaq: BIDU) and NetEase (Nasdaq: NTES), China’s second largest game operator. Baidu’s shares jumped 11 percent in after-hours trade after the release of its latest results that largely continued recent trends, while NetEase’s shares plunged 15 percent after its results came out.
In both instances, investors seem to be focused on the company’s financial strategy going forward rather than actual numbers in their latest reports. In the case of Baidu, investors are eagerly awaiting execution of a plan that will reportedly see the company spin off many of its newer non-search businesses that are losing big money. In the case of NetEase, investors may be disappointed that the company has been a non-player in China’s Internet M&A scene, even though it has quite a lot of cash in its coffers. Read Full Post…
Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
Bottom line: A strong reception for Apple Pay from consumers, banks and merchants bodes well for the service, which should attract a major audience among iPhone users but won’t pose a major threat to rival services from Alipay and WeChat.
Apple Pay launches in China
The launch of Apple Pay in China is buzzing through the local headlines a day after the roll-out, in a move that looks certain to shake up a stodgy industry dominated by homegrown names like Alipay. The most revealing headlines report on the rush by everyone, from consumers to banks and merchants to jump onto the Apple Pay bandwagon. That reflects the buzz that any major move by Apple (Nasdaq: AAPL) can create in the world’s largest smartphone market.
Local consumers are undoubtedly pleased that Apple chose China for the Asia launch of Apple Pay, selecting their market over more traditional candidates like Japan and South Korea. China is only the fifth global market for Apple Pay, following launches in the US, Canada, Britain and Australia. The pride element at being first in Asia, combined with Apple’s existing premium image here, will draw a big majority of Chinese iPhone and iPad users to try out Apple Pay on their devices. Read Full Post…
Bottom line: Meituan-Dianping’s IPO is likely to raise more than $2 billion and should get a strong reception when it comes, most likely by mid-year in New York, while ZTO Express’ $1-$2 billion IPO will get a cooler reception due to its steep losses.
Meituan-Dianping eyes IPO
After a quiet start to the year, the market for offshore Chinese IPOs is slowing coming to life with word of 2 listing plans that should both top the $1 billion mark. One would see leading group buying site Meituan-Dianping list, most likely in New York or possibly Hong Kong, in a deal that would probably raise at least $2 billion. The second is also Internet-related, and would see parcel delivery giant ZTO Express also raise up to $2 billion in a New York IPO.
Perhaps not surprisingly, both of these companies are losing money despite their position as industry leaders. That’s because competition has been cut-throat in both spaces, especially in the parcel delivery business that supports China’s booming e-commerce sector. Meituan and Dianping were also locked in heated competition before they merged late last year to face the current company, which still faces stiff competition from 2 of China’s leading Internet companies, Baidu(Nasdaq: BIDU) and Alibaba (NYSE: BABA). Read Full Post…
