Bottom line: 58.com’s purchase of a secondary real estate trading site at a big discount looks like a shrewd move for the longer term, but could cause a short-term drag on profits due to weakness in China’s property market.
Local media are buzzing about a relatively large Internet deal that will see leading online classified advertising site 58.com (NYSE: WUBA) buy Anjuke, one of China’s largest online platforms for services involving secondary real estate. But the source of the buzz isn’t the deal itself, but rather the huge bargain that 58.com is getting compared to what Anjuke said it was worth just a year ago. That massive discount reflects the broader gloom surrounding China’s real estate market as it teeters on the edge of a major correction, and certainly doesn’t bode well for listed peers like E-House (NYSE: EJ) and SouFun (Nasdaq: SFUN). Continue reading →
Bottom line: Meizu’s rapid India expansion could provide it with some relief from the overheated China market over the short-term, but will result in new price wars over the next 2-3 years as its domestic rivals make similar moves.
Freshly infused with nearly $600 million in new capital after a major investment from e-commerce giant Alibaba (NYSE: BABA), smartphone maker Meizu is getting set to take on higher profile rival Xiaomi outside China with a major new campaign in India. In many ways, this particular move looks like China’s way of exporting the rampant price wars that have plagued its smartphone market to other countries with similar demographics. In this case, Meizu is not only eying a country that has suddenly become Xiaomi’s second largest market, but is also planning to follow its rival into Southeast Asia. Continue reading →
Bottom line: Beijing needs to roll out new rules allowing limited foreign investment in sensitive areas or risk seeing private companies like Ant Financial suffer from slower growth and artificially low valuations.
Alibaba-affiliated (NYSE: BABA) Ant Financial has been on a financial roller coaster ride over the past month, as it tries to raise billions of dollar to fund its growth en route to an IPO that will offer Chinese investors one of their first plays into the private banking sector. Some reports have said the new funding could value Ant, whose largest asset is the Alipay electronic payments service, at up to $50 billion. But others have put the figure as low as $30 billion, reflecting the intense negotiations taking place. Continue reading →
The following press releases and media reports about Chinese companies were carried on March 3. To view a full article or story, click on the link next to the headline.
58.com (NYSE: WUBA) Buys Real Estate Sales Site Anjuke For $267 Mln (Chinese article)
Britain’s Marks & Spencer (London: MKS) To Close 5 Shanghai Stores (English article)
Home Furnishings and Decoration E-tailer Jia.com Wins $160 Mln Series D Funding (English article)
New China Life Ends Plan For Strategic Stake Sale To Alibaba (NYSE: BABA) (Chinese article)
38 Online Lottery Ticket Sellers Suspend Sales, No Word On Resumption (Chinese article)
Bottom line: Ant Financial is likely to get a low valuation from its new private placement due to the exclusion of foreign investors, but could see the figure reach up to $70 billion by the time of its 2017 IPO if it can rapidly build up its new services.
Yet another report has come out about an ongoing private placement by Ant Financial, saying the financial services affiliate of e-commerce giant Alibaba (NYSE: BABA) is now planning a domestic IPO in 2017. That’s a little later than was indicated in previous reports, which were probably a little too optimistic about a company whose various businesses are mostly less than 2 years old.
But the more interesting element in this recent flurry of reports has been what valuation the new private placement will bring for Ant, which is financially separate from the New York-listed Alibaba. Some of the earlier reports indicated Ant could be valued at up to $50 billion, which admittedly looks quite optimistic for a firm at its stage of development. But now the latest reports are bringing the number down sharply, saying the new funding will value Ant at between $35 billion and $40 billion. Continue reading →
Bottom line: The absence of Xiaomi and other newer Chinese smartphone makers from the world’s leading telecoms show reflects their focus on emerging markets and limited promotional budgets due to stiff competition at home.
I’m in Barcelona this week for what has become the world’s biggest annual telecoms show, and thought I’d kick off my coverage with a look at who is attending from China this year. The list contains most of the big names you’d expect, including Huawei, ZTE (HKEx: 763; Shenzhen: 000063) and Lenovo (HKEx: 992), though Lenovo has decided to keep its name off the “made in China” list and is opting to call itself a US company.
But equally noteworthy is who isn’t on the list, at least not as an exhibitor. That list of absentees includes all of China’s newer smartphone makers, led by the fast-rising Xiaomi that has come from nowhere over the last 3 years to become the world’s third biggest brand. Others that aren’t on the list include locally well-known Chinese names Coolpad (HKEx: 2369) and Meizu, which have recently formed tie-ups with major Internet companies Qihoo 360 (NYSE: QIHU) and Alibaba (NYSE: BABA, respectively. Continue reading →
The following press releases and media reports about Chinese companies were carried on February 28-March 2. To view a full article or story, click on the link next to the headline.
China issues 4G FDD Licences To China Telecom (HKEx: 728), Unicom (HKEx: 762) (English article)
China draft Counterterror Law Strikes Fear In Foreign Tech Firms (English article)
Bottom line: Mobile data usage will grow by triple-digit amounts this year as telcos boost 4G promotions, while box office growth will start to slow and the ongoing decline in traditional SMS text messaging will accelerate.
The usual rush of Lunar New Year-related data is coming in, painting a mixed picture for traditional and new media. The clear winner in the mix is new media, whose surging popularity helped to fuel a 70 percent jump in mobile data traffic over the holiday period. Traditional movies also performed well, with China’s box office rising 36 percent during the period. It will also come as no surprise that the big loser over the holiday was traditional SMS text messages, whose volume plunged by 25 percent. Continue reading →
Bottom line: A mega IPO by Postal Savings Bank next year is likely to attract little or no interest from private investors, while an upcoming IPO by 55Tuan could do slightly better but will still get only a lukewarm reception.
A couple of unattractive IPOs are in the headlines as China gets back to work after the Lunar New Year holiday, led by a massive plan by China’s Postal Savings Bank to raise up to $25 billion as soon as next year. While that plan may be a year or more away, a more advanced listing by group-buying site 55Tuan has failed to price its shares by a previously announced target date, leading some to speculate that the deal is running into trouble. Neither of these deals looks very exciting to me, and I suspect they won’t attract much interest from private investors either. Continue reading →
The following press releases and media reports about Chinese companies were carried on February 26. To view a full article or story, click on the link next to the headline.
Lunar New Year Eve SMS Volume Down 25 Pct, Data Traffic Up 70 Pct – MIIT (Chinese article)
Bottom line: The huge success of Tencent’s hongbao promotions over the Lunar New Year reflects the growing dominance of WeChat, which could marginalize other mobile services unless regulators step in to create a more level playing field.
I remember a time not long ago when we China tech reporters used to write annual stories about the number of people who sent billions of simple Lunar New Year text greetings over their mobile phones. Those days now seem like a distant memory, and new data from Tencent’s (HKEx: 700) WeChat and Alibaba’s (NYSE: BABA) Alipay are showing just how small those earlier figures were, even though they seemed impressive at the time.
But the real story in this new tide of “red envelope grabbing wars”, known as qiang hongbao in Chinese, is the huge victory for Tencent over Alibaba, which I’ll describe shortly. That victory owes directly to the huge popularity of WeChat, which saw many of its hundreds of millions of users glued to their smartphones for much of the Lunar New Year while they ignored everything else. Instead of the usual New Year activities, they spent much of the holiday trying to “grab” millions of yuan in gift money being doled out over WeChat by their friends, bosses and also by Tencent and Alibaba themselves. Continue reading →