ENTERTAINMENT: LeEco Buys US TV Brand, Raises More Cash

Bottom line: LeEco’s latest mega purchase will throw a lifeline to the struggling Vizio TV brand, as its latest issue of new shares at a big discount reflects growing investor fatigue and skepticism with the company.

LeEco throws lifeline to Vizio

Acquisitive online video superstar LeEco (Shenzhen: 300104) is back in the headlines for its latest mega-purchase, signing a deal to buy Vizio, a US-based TV brand that is at once one of the nation’s largest and also most obscure. At the same time, LeEco, formerly known as LeTV, is in separate but somewhat related headlines in a big cash-raising exercise through a new share issue. The company has become quite adept at such cash raising these days, often using its overvalued stock to bring in new money. Read Full Post…

SMARTPHONES: Huawei Margins, Sales Show Smartphone Stress

Bottom line: Huawei’s eroding profit margins and slowing smartphone sales growth reflect stresses being felt both at home and abroad in an overheated industry showing rapid signs of global saturation.

Huawei announces H1 results

The latest financial results from Huawei are showing how smartphones are at once becoming a growth engine but also a drag on the telecoms giant. The company’s fast-growing smartphone business was one of the main engines behind a 40 percent surge in sales during the first half of this year, as Huawei consolidated its position as the world’s third largest brand behind only Samsung (Seoul: 005930) and Apple (Nasdaq: AAPL). But at the same time, fierce competition in the sector also sharply eroded Huawei’s profit margins. Read Full Post…

INTERNET: Fortune 500 Misses China Web Giants, Captures JD Minnow

Bottom line: The appearance of JD.com as China’s first Internet company in the Fortune 500 and exclusion of the nation’s 3 biggest players underscores major shortcomings of the list due to its reliance on revenue as the basis for its rankings.

JD.com lands in Fortune 500

Everyone is buzzing these last few days about the latest edition of the Fortune 500, including the rising presence of China on the list of the world’s largest companies by revenue. But as a China tech watcher, the fact that most caught my attention was the absence of China’s top 3 Internet companies from the list, namely Tencent (HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). Adding to the puzzle was the appearance of Alibaba’s much smaller e-commerce rival JD.com (Nasdaq: JD), which became the first Chinese Internet company to make the Fortune 500 list. Read Full Post…

China News Digest: July 27, 2016

The following press releases and news reports about China companies were carried on July 27. To view a full article or story, click on the link next to the headline.

  • LeEco (Shenzhen: 300104) to Buy US TV Maker Vizio for $2 Bln (English article)
  • South China Morning Post CEO Resigns, Takes Position at Temasek (Chinese article)
  • Huawei Says Sold 60.56 Mln Smartphones in H1, Consolidates World No. 3 Position (Chinese article)
  • Gome (HKEx: 493) in Online Alliance with China Resources’ Feiniu.com (Chinese article)
  • China’s 4G Subscriber Base Surpasses 600 Mln in June – MIIT (English article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

LEISURE: Wanda Ups Carmike Bid, Gets Boost from China Life

Bottom line: Wanda may need to raise its offer price again to buy Carmike, while a plan to privatize its property unit stands a good chance of winning shareholder approval.

Wanda ups Carmike bid

Conglomerate Wanda Group is in a couple of a major headlines, one involving its traditional real estate business and the other for the newer entertainment unit it’s building up as part of a diversification drive. The real estate headline centers on Hong Kong-listed property developer Dalian Wanda (HKEx: 3699), which has just received an endorsement from a major shareholder in its bid to go private. The second item centers on Wanda’s fast-growing cinema business, and has the company boosting its offer for US theater operator Carmike (Nasdaq: CKEC) after minority stakeholders complained a previous bid was too low. Read Full Post…

INTERNET: Baidu Fails at Soccer, Video Spin-Off

Bottom line: Baidu could get a new higher offer for iQiyi later this year after a former deal collapsed due to undervaluation, while a new Chinese group led by deal maker Sonny Wu is likely to buy a majority stake of AC Milan later this year.

Baidu’s iQiyi sale collapses

Online search leader Baidu (Nasdaq: BIDU) is in a couple of major headlines, each marking a setback in the company’s aspirations to diversify into entertainment. In the larger item, Baidu’s previously announced sale of its iQiyi online video unit has collapsed, after a minority investor complained the sale price was too low. The second headline has Baidu chief Robin Li’s name suddenly disappearing as leader of a group trying to buy European soccer club AC Milan, with reports that another major Chinese deal maker has emerged as head of the group. Read Full Post…

IPOs: Regulator Reluctance Drives Ucar Onto OTC Board

Bottom line: The CSRC needs to implement IPO reform, even though it may cause short-term stock market volatility, or risk more market distortions like the recent surge in New Third Board and backdoor listings.

Ucar lists on New Third Board

China’s over-the-counter (OTC) stock exchange notched a notable milestone last week, when a private car services provider with just a year of history made its trading debut with a hefty valuation of more than 40 billion yuan ($6 billion). The impressive valuation for Ucar extended a trend that has seen new listings and valuations explode this year on the Beijing-based National Equities Exchange Quotation (NEEQ) system, often called the New Third Board.

The explosion owes to a number of factors, most a by-product of a sharp slowdown for traditional IPOs on China’s more mature stock markets in Shanghai and Shenzhen due to the regulator’s concerns about market volatility. That same conservatism has prompted a growing number of companies to seek public listings by injecting their assets into existing traded shell companies, again creating distortions and chaos in the market through a process known as backdoor listings. Read Full Post…

China News Digest: July 26, 2016

The following press releases and news reports about China companies were carried on July 26. To view a full article or story, click on the link next to the headline.

  • Baidu (Nasdaq: BIDU) Says Group Withdraws Offer to Acquire iQiyi (PRNewswire)
  • Wanda’s AMC (NYSE: AMC) Raises Bid for Carmike (Nasdaq: CKEC) to $1.2 Bln (Chinese article)
  • Chinese Dealmaker Sonny Wu Said to Lead Takeover of AC Milan (English article)
  • Huawei H1 Revenue Rises 40 Pct, Profit Margin Falls to 12 Pct (Chinese article)
  • Geely (HKEx: 175) Sells 2 EV Joint Ventures to Parent for 1.35 Bln Yuan (HKEx announcement)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

ENTERTAINMENT: Newly Re-Listed Giant Joins Global Game Hunt

Bottom line:  Giant Interactive’s new bids for Caesars Entertainment online game unit and Supercell show it has lots of cash for global acquisitions, which it hopes to use to vault it into the big leagues of Chinese online game companies.

Giant chases global acquisitions

Online gaming company Giant Interactive may be mostly a memory for US investors, following its de-listing from New York in 2014. But the company wants the world to know it still has global aspirations. That’s my interpretation of the latest series of reports, which have Giant pursuing several major global acquisitions in Finland, Israel and the US.

Two of the reports appear to be related, and say Giant is in talks to buy the online game unit of US gambling giant Caesars Entertainment (Nasdaq: CZR), which includes Israeli game developer Playtika. One of the reports adds that Giant is also in talks to potentially join a group led by Chinese Internet giant Tencent (HKEx: 700), which has agreed to buy a controlling stake of Finnish game giant SupercellRead Full Post…

INTERNET: Baidu Maps South America as Rio Games Near

Bottom line: Baidu’s rapid expansion of its global mapping services is mostly targeted at Chinese traveling abroad, and is unlikely to attract many local users because better services are already available in most markets.

Baidu maps South America
Baidu maps South America

Still suffering from a spate of negative news at home, leading search engine Baidu (Nasdaq: BIDU) is trying to draw attention to the more upbeat subject of its global expansion that is slowly inching forward. The company has squarely focused its global drive on emerging markets, and is continuing that trend with word that it’s launching new editions of its mapping services for most of South America. Baidu has already launched a version of its core search business in Brazil, and many will probably view this move to launch mapping services in 13 countries as a prelude to future launches for search service in those markets. Read Full Post…

Shanghai Street View: Grouped Out

Groups explode on WeChat
Groups explode on WeChat

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…