NEW ENERGY – Reality Bites Into China Solar Growth

Bottom line: China is likely to fall well short of its plan for 35 gigawatts of solar power capacity by the end of next year due to profit-seeking speculation and lack of experience among plant builders and operators.

China struggles to meet solar power targets

I’ve been quite skeptical for a while about China’s ambitious plans to rapidly build up its solar power capacity, arguing that many of the plants being built are more designed to please central planners in Beijing than of real practical use. Now it seems at least one researcher at a major government institute agrees with that view, prompting him to slash his forecasts for new construction this year. That certainly doesn’t look good for big domestic names like Yingli (NYSE: YGE) and Trina (NYSE: TSL), which are hoping to keep their recent positive momentum going with big new demand from plant developers in their home market. Continue reading

LEISURE – China’s Hotel Appetite Grows With Starwood Sale

Bottom line: The record-breaking purchase of an Australian trophy hotel by a China buyer is part of a growing Chinese foreign real estate buying binge, which could ultimately produce a global bubble.

Chinese insurer buys Sydney Sheraton

China’s nascent but rapidly growing appetite for foreign hotels continues to grow, with word that another previously unknown Chinese insurer has snapped up a trophy property in Australia for a record price. In this case it’s China’s Sunshine Insurance Group that’s buying a major Sheraton property in Sydney from global giant Starwood Hotels (NYSE: HOT) for an inflated price of A$463 million, or about $400 million. This sale is the third of a major western hotel asset to a Chinese buyer in just the last 2 months, and looks a lot like similar waves from the past 30 years that saw Asian buyers purchase trophy western real estate at inflated prices. Continue reading

INTERNET – Speculators Gobble Up Alibaba Bonds

Bottom line: Strong demand for Alibaba’s newly issued bonds testifies to its popularity among investors, especially short-term traders, and the debt is likely to see high trading volumes before activity settles down next year.

Investors clamor for Alibaba bonds

It seems that anything with the Alibaba (NYSE: BABA) name is in huge demand these days, with word that a massive $8 billion bond offering by China’s leading e-commerce company was massively oversubscribed. To put things in perspective, the previous largest bond program by a Chinese Internet firm came earlier this year from social networking leader Tencent (HKEx: 700), which announced plans to raise up to $5 billion. But unlike Tencent, which had to sell the bonds in several offerings over a few months due to the big amount, Alibaba has been able to easily sell its entire $8 billion offering in a single shot. Continue reading

News Digest: November 22-24, 2014

The following press releases and media reports about Chinese companies were carried on November 22-24. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════

  • Youku Tudou (NYSE: YOKU), Xiaomi Get VNO Licenses In 4th Round Of Awards (Chinese article)
  • Disney (NYSE: DIS) Expands Shanghai Media Group (SMG) Partnership To TV (Englisha article)
  • Alibaba (NYSE: BABA) Flippers Eke Out $11.5 Mln Gain In Bond Debut (English article)
  • Oriental Pearl, BesTV Complete Merger, Become SMG’s Internet Flagship (Chinese article)
  • Los Angeles Mayor Presses China To Allow More Hollywood Films (English article)
  • Latest calendar for Q3 earnings reports (Earnings calendar)

TELECOMS – New Comments Hint At Qualcomm Settlement Soon

Bottom line: China is likely to wrap up its probe of Qualcomm by year end with a record fine of more than $1 billion and Qualcomm’s agreement to significantly change its licensing practices.

End draws near in Qualcomm probe

After filling the headlines for much of the summer, news on the flood of anti-trust investigations against major foreign firms suddenly came to a halt in the fall, giving the movement an almost seasonal feel. But the story looks set to pop back into the headlines soon, with signs that China’s National Development and Reform Commission (NDRC) is getting ready to levy a record fine for anti-competitive behavior against leading global cellphone chip maker Qualcomm (Nasdaq: QCOM). The signals are coming in new comments this week from Qualcomm’s top 2 executives, as well as from China’s Premier Li Keqiang. Continue reading

INTERNET – Ballooning Losses Slowly Killing Renren

Bottom line: Renren’s situation is likely to continue deteriorating as its core SNS business struggles and it sells off assets, with the company likely to close up shop or sell itself within the next 2 years.

Renren losses balloon

During the last boom for Chinese Internet IPOs in late 2010 and early 2011, one of the last names to make a successful listing was money-losing social networking (SNS) leader Renren (NYSE: RENN), which billed itself as the Facebook (Nasdaq: FB) of China. More than 3 years later, the company is still losing money and the figure is starting to balloon, according to Renren’s just released quarterly earnings.

Somewhat surprisingly, Renren still has a market value of $1 billion, even as it shows every sign of becoming a bargain buy for an acquirer or going out of business completely. But this is China, and Internet stocks that normally wouldn’t get any attention from US investors can still get noticed when they carry the “made in China” label. Continue reading

Shanghai Street View: Absent Autumn

No autumn leaves on Hunan Lu
No autumn leaves on Hunan Lu

It seems that old habits die hard when you’re among the thousands of sweepers clad in signature blue smocks who work tirelessly to keep Shanghai clean. That’s the lesson I learned when I took to our city’s streets this week to check out an innovative program to enhance the autumn atmosphere in the former French Concession area.

The new program was simple and quite creative, attempting to create a feeling of fall by allowing fallen leaves to accumulate throughout the day on several tree-lined streets. Such leaves are typically cleared away by sweepers within minutes of touching the ground, keeping our streets spotless but also deprived of much local color. Continue reading

News Digest: November 21, 2014

The following press releases and media reports about Chinese companies were carried on November 21. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════

  • Alibaba (NYSE: BABA) Sells $8 Bln Of Bonds In Company’s Debut Sale (English article)
  • Renren (NYSE: RENN) Announces Unaudited Q3 Financial Results (PRNewswire)
  • China Mobile (HKEx: 941) Says Won’t End Handset Subsidies (Chinese article)
  • Tencent (HKEx: 700) Invests In Wi-Fi Solutions Provider ‘WiWide’ (English article)
  • BMW (Frankfurt: BMWG) China CEO Sees Margins Narrowing, Expects To Beat Market (English article)
  • Latest calendar for Q3 earnings reports (Earnings calendar)

INTERNET – Google Eyes China App Store, Hardware Coming?

Bottom line: Google is likely to get Beijing’s permission to open a China version of its app store that could launch next year, paving the way for the roll-out of its smartphones in the market.

Google eyes China app store

A flurry of new reports are saying that global Internet giant Google (Nasdaq: GOOG) is planning to re-enter China by opening an app store there, in what would be a major strategic turnaround for the company. The real story of Google in China is quite complex, and to say it withdrew from the market in 2010 after a high profile spat with Beijing over censorship is quite an oversimplification. The more accurate story is one that’s seen Google diversify from its core desktop-based Internet services to an increasingly mobile portfolio that also includes a growing hardware component. That hardware element of its diversification could well be the focal point for a new China foray if the latest reports about Google’s plan to open a China app store are true. Continue reading

INTERNET – E-Commerce In Bloody Sell-Off On Ho-Hum Results

Bottom line: The post-November 11 sell-off for Chinese e-commerce shares will persist for the next few months until most trade at or slightly below their IPO levels, and then shares will trade mostly sideways next year.

E-commerce shares under presssure

Black Friday may only be a week away in the United States, but the landscape for China’s high-flying e-commerce companies was notably red with blood in the latest Wall Street trading session after a number of players issued new financial results. The numbers weren’t all that bad for the red-hot Vipshop (NYSE: VIPS), though people were probably expecting more from this company whose shares have exploded 40-fold since their IPO 2 and a half years ago. The picture was far more mixed for second-tier e-commerce players Jumei (NYSE: JMEI) and LightInTheBox (NYSE: LTIB), which also isn’t surprising due to the stiff competition in the market. Continue reading

FINANCE – HK-Shanghai Link Could Spark Brokerage Tie-Ups

Bottom line: The latest M&A in China’s brokerage sector involving Essence Securities could presage a new wave of tie-ups between Chinese and foreign brokerages, boosted by the Hong Kong-Shanghai stock exchange link.

Essence joins brokerage consolidation trend

A new reverse takeover involving a major Chinese brokerage is shining a spotlight on the potential for new deals in the sector following this week’s launch of a ground-breaking program linking the Hong Kong and Shanghai stock exchanges. This particular deal involves Essence Securities, which is becoming a publicly traded company following its purchase by Shanghai-listed textile firm Sinotex Investment (Shanghai: 600061). But more intriguing is the very real possibility that major foreign brokerages may start to look for tie-up opportunities with Chinese peers in anticipation of synergistic partnerships to take advantage of the new Hong Kong-Shanghai Connect program. Continue reading