Bottom line: Sina’s latest financials show it could be benefiting from recent woes at Baidu, while JD.com’s results show its growth is slowing as it moves towards its important goal of becoming profitable.
Sina jumps on strong profit growth
Two of China’s top Internet companies have just reported their latest quarterly earnings, with web stalwart Sina (Nasdaq: SINA) wowing Wall Street with new numbers that show its Twitter-like Weibo (Nasdaq: WB) service may finally be gaining some traction. Meantime, investors were less impressed by e-commerce giant JD.com (Nasdsaq: JD), which continued to post strong revenue growth but remained squarely in the loss column. JD tried to comfort investors by saying its operations are now quite profitable on a non-GAAP basis, but that didn’t seem to change sentiment too much. Read Full Post…
This week’s Street View takes us to Shanghai’s cyber realm, where I feel compelled to write about a recent trend that has seen an explosion in chat groups on the hugely popular WeChat mobile messaging platform. I write occasionally about cyberspace in this column, usually focusing on apps that make life easier for Shanghai residents for things like hailing taxis and locating nearby public toilets.
But the chat group phenomenon is slightly different, as it doesn’t have any real-world applications and is solely designed to facilitate better communication among groups of friends, acquaintances, colleagues, family members, or simply people with a common interest. Such groups really are quite useful in some cases, for example by helping people to plan an outing or for students to pass on messages about their latest class assignments. Read Full Post…
Bottom line: Facebook’s new hire of a top WeChat executive could be the latest signal that it expects to get permission to launch a China-based service soon, possibly by the end of this year.
WeChat exec defects to Facebook
Following several months of relative silence, social networking (SNS) giant Facebook (Nasdaq: FB) is back in the China headlines, with word of a major executive poach from China’s leading SNS company. This particular headline is filled with mixed signals. On the one hand, the hire of a former top executive from WeChat looks like a significant move closer to China, since the hugely popular Chinese SNS operator would be Facebook’s main rival if it’s ever allowed into China. But on the other hand, the executive is a foreigner from WeChat’s international division, which has been a poor performer in the service’s weak attempts to go global. Read Full Post…
Bottom line: Car Inc’s hired car services unit’s $5.5 billion valuation on China’s New Third Board is hugely overinflated, while Yidao’s new clash with Tencent shows the regulator needs to become more active in oversight of WeChat.
Two of China’s second-tier hired car services providers are in the headlines heading into the weekend, as these smaller companies fight an uphill drive to attract attention away from industry giants Didi Chuxing and Uber. The larger of the 2 stories has the hired car services unit of car rental leader Car Inc (HKEx: 699) receiving approval for a listing on China’s over-the-counter (OTC) New Third Board, valuing the company at a hefty 37 billion yuan ($5.5 billion). The second story has Yidao getting in a tussle that has seen promotion of its services blocked on Tencent’s (HKEx: 700) wildly popular WeChat platform . Read Full Post…
Bottom line: The MIIT should be commended for resisting pressure by China’s 3 telcos to ban free private voice services for enterprise customers, but should move quickly to show it will license such service providers like DingTalk and WeChat.
DingTalk halts free enterprise voice service
The ongoing battle between China’s big 3 state-run telecoms carriers and an emerging field of private sector challengers was in the headlines last week, when rumors emerged that the regulator was set to stop private firms from offering free voice services for business customers. The move looked set to potentially shut down popular services provided by Internet giants Tencent(HKEx: 700), Alibaba (NYSE: BABA) and others, before the regulator clarified that licenses were needed for companies to provide such voice services. (Chinese article) Read Full Post…
Bottom line: Tencent’s new disclosure that it processes more than 500 million daily mobile financial transactions highlights its rapid growth in the space, pushing market leader Alipay to accelerate its own expansion into Asia.
WeChat wallet creeps up on Alipay
It’s rare to see Internet giant Tencent’s (HKEx: 700) tech-savvy but reclusive chief Pony Ma do interviews or make public appearances, so when he does it’s always reason to take notice. In this case Ma has disclosed new figures that show just how rapidly Tencent is moving into the mobile financial transactions business, rapidly encroaching on an area previously dominated by Alibaba (NYSE: BABA) affiliate Alipay. A separate headline also reflects to some extent the pressure that Alipay is feeling, with reports that its parent Ant Financial is accelerating its recent move into several major Asian markets. Read Full Post…
Bottom line: China Mobile’s retirement of its Internet-based texting and video services reflect its inability to compete with private providers of such services, and underscores its growing position as a slow-growth network operator.
China Mobile shutters Internet text, video services
In a move that was long overdue, leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) has thrown up the white flag with a symbolic surrender to WeChat, Youku and the many other private companies that have steadily stolen its new business opportunities. In this case the surrender comes in the form of formal retirements for China Mobile’s Internet-based Fetion texting service, and also its lesser known mobile video product.
Fetion was once hugely popular in China, allowing users to send SMS text messages for free by routing them over the Internet. China Mobile was an early innovator in creating that kind of “over the top” (OTT) service that took advantage of the mobile Internet. But more recently it has rapidly lost that position to more nimble private companies like Tencent (HKEx: 700) and Youku. Read Full Post…
Bottom line: Beijing should take more aggressive steps to ensure true competition between China’s 3 telcos, to prevent collusion like their current resistance to ending domestic roaming fees.
China telcos resist end to roaming fees
The latest sign of collusion in China’s telecoms sector was in the headlines last week, as the nation’s big 3 carriers appeared to band together to counter new calls for an end to domestic roaming charges. A number of arguments were put forth for maintaining such fees, but the bottom line is that carrier costs of providing such service are negligible and the fees themselves remain an important revenue source.
The US market, which is most similar to China, eliminated such fees more than a decade ago due to competition between 4 major carriers that emerged in the 1990s. But China’s carriers, while competitive in some areas, appear to be acting together in anti-competitive fashion to resist the change, a common occurrence due to close ties between the companies. Read Full Post…
Bottom line: WeChat’s growth will continue to fuel strong revenue gains for Tencent but could also create a drag on profits, while China Mobile’s profits are likely to be flat as savings from slower infrastructure spending are offset by big 4G promotions.
Transactions boom on WeChat
High-tech leaders Tencent (HKEx: 700) and China Mobile (HKEx: 941; NYSE: CHA) are providing a nice contrast with their latest earnings reports, pitting one of China’s most innovative private companies against one of its biggest state-run laggards. The results cast a painful spotlight on China Mobile, China’s largest mobile carrier, whose profits sagged in the fourth quarter as it lost business to more nimble companies like Tencent. Meantime, Tencent’s profits and revenue posted healthy gains, as it provided data to generate excitement about its fast-growing but money-losing WeChat social networking service.
Shares of both companies reacted much as one would expect, continuing recent trends. China Mobile shares dipped 2.1 percent after its results came out, and are down about 15 percent over the last year. Tencent’s results came out after the market closed, but I expect they will rally in the new trading day. Over the last year they are up 5 percent, which is quite impressive when one considers the main Shanghai index is down 19 percent during that time. 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: 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…
