INTERNET: Didi Kuaidi Raises Big Bucks, Drives Into SE Asia

Bottom line: Didi Kuaidi could rise over the next 1-2 years to challenge Uber, as it embarks on a global expansion starting in Southeast Asia, fueled by billions of dollars in new investment.

Didi Kuaidi, Uber race for new funds

China’s homegrown version of global hired car services giant Uber continues to race ahead, with word that Didi Kuaidi is on the cusp of a new fund-raising that’s similar in size to the many recent amounts raised by its larger US cousin. At the same time, we’re seeing the earliest signals that Didi Kuaidi may be getting read to challenge Uber outside of China, with separate reports saying the former is in talks for a major investment in a major Southeast Asian taxi app operator.

The market for hired car service apps seems to change almost daily, with hardly a week passing without the announcement of a major new milestone or conflict between these aggressive companies and traditional taxi drivers. Uber is a good example, hitting speed bumps with government raids of 2 of its Chinese offices earlier this year, only to disclose it had no intention of leaving the market and was preparing to invest $1 billion in China this year alone. (previous post) Continue reading

FUND RAISING: KongZhong Stumbles Into Buyout Queue, Legend Limps Up

Bottom line: The current fund-raising frenzy reflected in a recent round of buyouts for US-listed Chinese companies and large IPOs like the one for Legend Holdings is likely to quickly fizzle if China’s stock market sell-off continues.

KongZhong gets buyout offer

The China fund-raising machine has continued to rumble ahead despite the recent stock market sell-off in Shanghai, with yet another privatization offer coming for a New York-listed firm and a lethargic but respectable debut for newly listed Legend Holdings (HKEx: 3396). The former item saw shares of game operator KongZhong (Nasdaq: KZ) jump after receiving a buyout offer, even as most New York-listed Chinese shares slumped in line with the big sell-off in Shanghai. The latter item saw Legend shares finish down slightly in their Hong Kong trading debut, which doesn’t sound too exciting but was still far better than the 3.3 percent decline of the Shanghai benchmark index. Continue reading

Shanghai Street View: Reliable Rides

Hired cars put taxis on defensive

As a high-tech writer, I’ve been chronicling the story of Internet-based car services like Uber and Didi Kuaidi in China for the last 2 years and how they’re shaking up a market that was dominated for decades by stodgy taxi companies. But an experience this past week here in Shanghai made me realize just how revolutionary these services have become, and more broadly how the Internet is shaking up and democratizing many traditional industries.

My moment of insight came during a field trip with some students to the Lujiazui financial district, which has become a standard part of the financial journalism course I teach at a local university. I made the trip as usual trip by subway, and met my students at one of the many high-rise office towers for our tour of a local news agency. Continue reading

News Digest: June 30, 2015

The following press releases and media reports about Chinese companies were carried on June 30. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════

  • Wanda Cinema (Shenzhen: 002739) to Raise 2.2 Bln Yuan for 16 Purchases (Chinese article)
  • Legend Holdings (HKEx: 3396) Edges up in HK Debut After $1.96 Bln IPO (English article)
  • Didi Kuaidi Operator to Invest in Southeast Asian Taxi App ‘GrabTaxi’ - Source (English article)
  • KongZhong (Nasdaq: KZ) Receives Proposal to Acquire the Company (PRNewswire)
  • Putian Hospital Association Restarts Ad Buying on Baidu (Nasdaq: BIDU)

CELLPHONES: LeTV Challenges Qihoo With Coolpad Stake Buy

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) Continue reading

IPOs: Guotai Zooms, Legend Lumbers, Toncheng Eyes China

Bottom line: A probable correction in China’s stock markets could cause Tongcheng to abandon its decision to list at home, and lead to a weak debut for Legend Holdings’ Hong Kong IPO.

Toncheng eyes China IPO

When the history books are written, the latest batch of IPO news could well mark the end of a brief but unusually buoyant period that has seen many Chinese companies eschew overseas stock markets for listings at home. Leading off the news was a sizzling performance by securities brokerage Guotai Junan (Shanghai: 601211) on its trading debut in Shanghai, as it become China’s biggest domestic IPO since 2010.

Another piece of IPO news also cast a spotlight on the hot Chinese stock markets, as online travel site Tongcheng said it was eying a listing at home in the next year, in a snub to New York where most of its peers are traded. Last but not least, the lukewarm reception for Chinese listings abroad was reinforced by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which failed to attract any major international investors as it priced its Hong Kong IPO. Continue reading

INTERNET: Alibaba Ratches Up Anti-Piracy Noise

Bottom line: Alibaba will mount an intense campaign in Washington over the next 6 months in a bid to avoid major embarrassment if its name appears on a widely watched list of global Internet companies that don’t do enough to fight piracy.

Volume grows in Alibaba anti-piracy drive

Just weeks after hiring a major lobbyist to convince Washington it’s serious about fighting piracy, e-commerce leader Alibaba (NYSE: BABA) is turning up the volume in its campaign with a couple of new announcements about its commitment to combating the problem. The latest of those has seen Alibaba jointly issue an announcement with the Washington-based International AntiCounterfeiting Coalition, reaffirming an earlier tie-up aimed at stamping out the selling of fake products in Alibaba’s popular e-commerce marketplaces.

The other announcement came earlier in the week, and saw Alibaba announce it was strengthening its cooperation with a Chinese organization that fights online copyright infringement. Unfortunately for Alibaba, no one paid too much attention to these 2 announcements, with the result that its renewed anti-piracy blitz wasn’t publicized too much in mainstream media. Continue reading

News Digest: June 27-29, 2015

The following press releases and media reports about Chinese companies were carried on June 27-29. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════

  • Guotai Junan (Shanghai: 601211) Soars in Debut As China’s Biggest IPO Since 2010 (English article)
  • Didi Kuaidi Sets $2 Bln Target for Latest Fund-Raising Round (Chinese article)
  • JD.com (Nasdaq: JD) ZestFinance in JV to Expand Consumer Credit in China (GlobeNewswire)
  • Legend Holdings Sets IPO Price at HK$42.98, 45 Times Oversubscribed (Chinese article)
  • Xunlei (Nasdsaq: XNET), Xiaomi Ally to Release CDN Service Brand ‘Xingyu’ (English article)

INTERNET: New Intrigue at Qihoo With Coolpad Move, Insider Trading Charge

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. Continue reading

FUND RAISING: Bond Issues Boom at Baidu, Ctrip as Buyouts Pause

Bottom line: Chinese Internet blue chips like Baidu and Ctrip should continue to flourish on Wall Street due to their leading status, while shares of smaller names will sputter and even plunge if a recent wave of buyout offers starts to collapse.

Baidu in $1.25 bln bond offer

The last 2 days have been most notable for what hasn’t happened over that time, namely the announcement of any new buyout offers for US-listed Chinese companies. Barring any new announcements on this final day of the trading week, the second quarter of 2015 is likely to end with a record 20 such privatization bids for Chinese firms looking to de-list from New York in search of better valuations back in China.

At the same time, 2 of China’s premier US-listed Internet companies are on the cusp of issuing a combined total of nearly $2.5 billion in new bonds, reflecting a new reality for Chinese companies on Wall Street. That reality is allowing China’s leading Internet names like search giant Baidu (Nasdaq: BIDU) and top online travel agent Ctrip (Nasdaq: CTRP) to still do quite well in New York, even as the far bigger number of lesser-known companies see their shares sputter. Continue reading

MEDIA: Exaggeration Claims Teach LeTV Lesson of Gravity

Bottom line: LeTV’s shares are probably overvalued despite a recent sell-off, but the company still looks like a good long-term bet despite allegations that it may overstate some of its sales and financial data.

LeTV shares hit turbulence

Online video superstar LeTV (Shenzhen: 300104) is quickly learning the lessons of gravity, as its formerly surging shares have suddenly shifted into reverse amid claims of unusual accounting and a big share sale by its CEO. Anyone who has owned the stock over the last 52 weeks is still doing quite nicely, with the shares more than double from a year ago at their current price level.

But anyone who bought LeTV shares amid a wave of euphoria that began in April might be doing less well. That wave saw the shares more than double in just a month’s time, making the company the undisputed leader in China’s online video space, well ahead of former leader Youku Tudou (NYSE: YOKU). But since reaching a peak in May the shares have lost about a third of their value, and it’s quite possible we could see quite a bit of downside ahead for this overinflated stock. Continue reading