The following press releases and media reports about Chinese companies were carried on August 15-17. To view a full article or story, click on the link next to the headline.
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Soros Cuts Stakes in Internet Giants Alibaba (NYSE: BABA), Baidu (Nasdaq: BIDU) (English article)
Bottom line: SMG’s Whaley Tech division has become the focus of its drive into the new media realm, following Li Ruigang’s departure from his post as group chairman to focus on the unit’s development.
SMG chief tries hand at smart TV
I don’t generally hold out much hope for traditional Chinese broadcasters for making the transition to new media, since most are bureaucratic, state-run outfits staffed by an older generation that doesn’t really understand the emerging industry landscape. But 2 companies that have the potential make the transition are Shanghai Media Group (SMG) and Hunan Satellite TV, which are both making big drives into digital products delivered in on-demand formats over the Internet.
Of the pair, my favorite is Hunan Satellite, since the company has a strong track record of innovation that has helped it to build a national audience despite its location in the relatively backward interior Hunan province. But SMG’s longtime chief Li Ruigang is also trying to show he can take his company into the new media era, with word that he’s formally quit as chairman of his group to focus on development of its new media businesses. Read Full Post…
Bottom line: Alibaba and Tencent are starting to look similar in terms of size and tapering growth, and are unlikely to excite investors again until they can reignite growth to above the 30 percent level.
Growth sluggish at Alibaba, Tencent
Near simultaneous releases of the latest earnings reports from Tencent (HKEx: 700) and Alibaba (NYSE: BABA) are providing a good opportunity to compare China’s 2 largest Internet companies, and also how they’re doing at the moment and what their prospects look like. The pair are surprisingly similar in terms of size, but their characters and core strengths and quite different, reflecting the personalities of their founders.
Tencent’s focus on games and social networking reflects the wonky, somewhat nerdy nature of its founder Pony Ma, who feels far more comfortable networking with other geeky people and communicating online than speaking at big investor forums. Alibaba founder Jack Ma is much more of a salesman, which explains why his company has emerged as China’s leading e-commerce company. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 13. To view a full article or story, click on the link next to the headline.
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Alibaba Group (NYSE: BABA) Announces June Quarter 2015 Results (Businesswire)
Bottom line: Tencent should limit itself to only reporting rivals or former employees for illegal behavior in major cases of criminal behavior, or risk being labeled a tattle-tale and undermining its own image.
Tencent: a vindictive whistleblower?
Media are flocking to the latest China Internet scandal that has seen software security specialist Qihoo 360 (NYSE: QIHU) accused of hosting pornography on its cloud service. But this time it’s not so much the act of hosting pornography that’s drawing attention, since this kind of problem is relatively routine on China’s unruly Internet scene.
Instead what’s drawing the attention is the source of the accusations that led to the scandal. In this case the pornography was uncovered in an investigative TV report, after central broadcaster CCTV was tipped off by Internet giant Tencent (HKEx: 700). China Internet watchers will recall that Tencent has a long-running feud with Qihoo 360 dating back to a clash 5 years ago. Observers will also recall that Tencent was in similar headlines last month when it leveled corruption allegations at a former executive who defected to e-commerce giant Alibaba (NYSE: BABA). Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 12. To view a full article or story, click on the link next to the headline.
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Xiaomi Kicks Off India Production for Strengthened Redmi 2 Edition (Chinese article)
China Jails Former Bright Food Chief For 18 years For Embezzling $30 Mln (English article)
Tencent (HKEx: 700) Reports 360 (NYSE: QIHU) Cloud Service for Pornography (Chinese article)
ChemChina, Camfin to Launch Tender Offer for Rest of Pirelli (Milan: PECI) (English article)
Phoenix New Media (NYSE: FENG) Reports Q2 Unaudited Financial Results (PRNewswire)
Bottom line: Aggressive spending on O2O initiatives by China’s traditional and online retailers is likely to produce a new boom-bust cycle, and companies should consider more M&A as part of their plans.
Retailers spend millions on O2O
Online-to-offline retail services, often called O2O, have become the flavor of the day for traditional and web-based Chinese retailers over the last year, with at least 3 major new announcements coming out on the topic late last week. Two involved big internal campaigns to boost O2O services at electronics retailer Gome (HKEx: 493) and traditional supermarket chain Renrenle (Shenzhen: 002336), while a third saw e-commerce giant JD.com (Nasdaq: JD) make a major investment in traditional retailer Yonghui Superstores (Shanghai: 601933).
Those efforts come just a week after leading search engine Baidu (Nasdaq: BIDU) reported disappointing quarterly earnings due to heavy spending on O2O, and more generally as O2O has become a buzzword for nearly all of China’s major traditional and online retailers. The activity surge reflects realization that leading retailers of the future will operate a hybrid model that uses both online and offline channels to sell products and services. Read Full Post…
Bottom line: Both Autohome and especially BitAuto look like strong candidates for buyout bids, following rapid declines in both companies’ stocks due to a rapid slowdown in China’s car market.
Internet auto stocks run out of steam
We’ll begin the new week with a look at 2 of China’s leading online auto specialists, BitAuto (NYSE: BITA) and Autohome (NYSE: ATHM), whose shares have both tanked over the last 3 months in tandem with a rapid cooling of China’s car market. The trend is similar to what’s happened at online real estate service providers, whose shares have slumped for the last year due to a prolonged and much-needed correction in China’s overheated property market.
China stock watchers will know that E-House (NYSE: EJ), one of the two major US-listed real estate services firms, launched a privatization bid in June, part of a broader wave that has seen dozens of Chinese firms leave New York this year due to low valuations. (previous post) That leads to my next prediction, namely that BitAuto, Autohome or potentially both could soon become the latest companies to join the privatization queue. Read Full Post…
Bottom line: Jin Jiang’s pursuit of Shenzhen-based Vienna Hotel Group, combined with other recent M&A, could vault it to China’s leading hotel operator, though its sudden rapid expansion looks at least partly politically motivated.
Jin Jiang aims high with Vienna Hotel talks
Shanghai-based hotel operator Jin Jiang’s (HKEx: 2006; Shanghai: 600754) recent appetite for M&A continues to grow, with word that the company is in talks to buy a Shenzhen-based rival in a deal that would boost its hotel count by a third. A successful purchase of the privately held Vienna Hotel Group would mark the latest mega-purchase by Jin Jiang, which has suddenly emerged as China’s hot hotel company to watch.
Jin Jiang is certainly a household name in my adopted hometown of Shanghai, and this latest deal, when combined with others, would move the company into the ranks of one of China’s top 5 operators and the only one with a global presence. There’s only one problem with all of this, namely that Jin Jiang is one of the only top players that’s a state-run company. That contrasts sharply with other leading names like Homeinns (NYSE: HMIN), China Lodging (Nasdaq: HTHT) and Plateno, that are all privately owned. Read Full Post…
Bottom line: Alibaba’s naming of a westerner and former top Goldman Sachs executive as its new president looks like a smart move to boost its struggling global expansion, and could bring more focus to the division over the next year.
New Alibaba president to lead international efforts
After muddling around on the global stage for a while without much to show for its efforts, I’m happy to see that e-commerce giant Alibaba (NYSE: BABA) has finally taken the step of hiring someone with extensive experience outside China to spearhead its international expansion. The company’s naming of a former Goldman Sachs executive as its new president should help to bring some focus to an international drive that to date has been quite fragmented and hasn’t produced any solid results.
More broadly speaking, the naming of Michael Evans as the new president of Alibaba Group marks the second major appointment for the company in the last 3 months, as founder Jack Ma installs a new executive team to head his $200 billion company. His decision to name foreigners to some of the top spots mirrors a similar strategy by PC giant Lenovo (HKEx: 992) and also Tencent (HKEx: 700), one of Alibaba’s chief rivals. Read Full Post…
Bottom line: Ctrip is likely to make a counter-bid for eLong following a surprise offer from Tencent, sparking a potential bidding war that should ultimately see Ctrip emerge as the victor.
Tencent launches surprise bid for eLong
I’ve been predicting for the last few months that leading online travel site Ctrip (Nasdaq: CTRP) would make a buyout bid for former rival eLong (Nasdaq: LONG), so I was quite surprised to read that such a bid has come instead from Internet giant Tencent (HKEx: 700). This particular move is all the stranger because Tencent hasn’t shown much interest in the travel sector before now, though it previously invested in eLong and now owns about 15 percent of the company.
I also have to suspect that this particular bid came without the knowledge of Ctrip, which itself owns 37 percent of eLong. Ctrip got its stake after joining a group that bought out a controlling 62 percent of eLong previously held by US travel giant Expedia (Nasdaq: EXPE) earlier this year. Tencent has owned its stake in eLong since 2011. Ctrip’s recent moves have all pointed to its own buyout offer for eLong, leading me to believe that we could quickly see a bidding war break out for the company. Read Full Post…
