TRAVEL: Ctrip Revs up in Q4, Set to Soar?

Bottom line: Ctrip’s profits could double or more this year following its successful digestion of Qunar, providing some upside to its stock.

Ctrip shares set to take off?

As earnings season for US-listed Chinese stocks hits full throttle, I thought I’d take a look at the latest results from Ctrip (Nasdaq: CTRP), which are sending mixed but generally positive signals. That’s because Ctrip is in the process of digesting former archrival Qunar (Nasdaq: QUNR), which was the industry’s second largest player but is also losing quite a bit of money.

Ctrip pulled off the coup of the century a couple of years ago when it forged a deal that gave it a controlling stake of Qunar, acquiring the shares from former majority shareholder Baidu (Nasdaq: BIDU). I personally thought that deal should have received some regulatory scrutiny since it combined the top two players in the space. But the regulator apparently thought otherwise, or simply approved the deal if it was even asked. Read Full Post…

INTERNET: Baidu’s iQiyi Raises $1.5 Bln, as Investors Hedge Bets

Bottom line: iQiyi’s issue of convertible notes to raise its latest $1.5 billion shows it continues to post big losses, and investors are increasingly skeptical that it can become profitable in the next 2 years.

iQiyi lures investors with convertible notes

It seems no one is quite ready to believe that China’s cash-burning online video sites are ready for the profit column just yet. That seems to be the message coming from Baidu-backed (Nasdaq: BIDU) iQiyi, one of the leading players, which has just raised a fresh $1.5 billion via a convertible note issue. That would indicate that investors are hoping they can convert their notes into iQiyi stock when they come due, but can also simply collect back their money with interest instead. Read Full Post…

TELECOMS: VNO Movement Finally Gains Traction

Bottom line: China’s VNO program appears to be gaining momentum heading into its third year, and could reach the 200 million subscriber mark by the end of 2017.

Virtual network operators gain momentum

It’s been more than a year since I last wrote about China’s fledgling attempt to breathe new life into its telecoms services sector by creating virtual network operators (VNO), mostly because the program seemed to be sputtering in its first couple of years. But new data from the telecoms regulator seems to suggest the industry may finally be finding its legs, and could be starting to take some meaningful market share from the nation’s monopoly of 3 big state-run telcos.

The headline figure underpinning my assertion is 43 million, which appears to be the number of VNO subscribers in China at the end of last year. (Chinese article) I need to give a quick disclaimer here, as nowhere in the article is the term VNO or variant MVNO used to describe this sector, which is called the “mobile resale business”. But that term, combined with a description of the program, does seem to indicate that these are VNO subscribers. Read Full Post…

INTERNET: Weibo Nets People’s Daily, Passes Twitter

Bottom line: Weibo’s rise from the ashes is likely to be followed by a decline similar to the one after its initial rise, as the current boom in live broadcasting wanes or that part of its business gets stolen by a better product from rival Tencent. 

Weibo links with People’s Daily

A turbo-charged Weibo (Nasdaq: WB) is in a couple of headlines as the new week begins, led by a new partnership with Beijing’s powerful central media that looks eerily similar to one from about 5 years ago. At the same time, the company is also in headlines for passing its role model, U.S. social networking pioneer Twitter (Nasdaq: TWTR), in terms of market value, in a case of the offspring outrunning the parent.

The sub-story to all of this is the huge and sudden explosion of live streaming services in China, which has helped Weibo to rise from the ashes and suddenly become one of China’s hottest companies again. That same live streaming phenomenon is also helping to revive others, such as Momo (Nasdaq: MOMO), sometimes called China’s equivalent of U.S. hooking-up app Tinder. Read Full Post…

E-COMMERCE: Alibaba, JD.com Step Up Supermarket Drive

Bottom line: Alibaba could buy the RT-Mart supermarket chain this year to boost its grocery business, while JD.com’s more online-focused effort and push into smaller cities looks like a better approach to the sector.

Alibaba grocer drives into Sun Art, JD goes to small cities

The online supermarket wars that began last year between e-commerce rivals Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD) are heating up in the Year of the Rooster, though the pair seem to be taking slightly different tacks, at least based on the latest headlines. Leading those are reports that Alibaba is in talks for a tie-up of some sort with Sun Art (HKEx: 6808), operator of the popular RT-Mart supermarket chain. Meantime, JD is making its own headlines in the space, with an executive detailing the company’s plans to achieve 100 billion yuan ($14.5 billion) in sales from its operation this year. Read Full Post…

ECOMMERCE: Wanda’s E-commerce Foray Running on Empty?

Bottom line: Wanda will continue to operate its ffan e-commerce site for another year, following the departure of its CEO, but could quietly end the initiative afterwards due to lack of synergies with its brick-and-mortar shopping malls.

Success evades Wanda in e-commerce

The headlines have been buzzing this week about the departure of the chief executive of the e-commerce unit Wanda Group, the real estate-turned-entertainment giant with a voracious appetite for global acquisitions. The big theme from the chatter is that the departure of Li Jinling, the unit’s third CEO in 3 years, marks a setback and possibly even presages a death knell for the Wanda initiative into the online shopping realm.

Wanda is speaking out on the subject, saying it never intended to launch a website that would compete directly with the likes of sector leaders Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD). Perhaps that’s true, though that didn’t stop Wanda and its ultra-confident chief Wang Jianlin from boasting of lofty ambitions when it signed up Internet titans Baidu (Nasdaq: BIDU) and Tencent (HKEx: 700) as partners to its ffan e-commerce site in 2014. Read Full Post…

INTERNET: Baidu Tackles Profit-Challenged Nuomi, Takeout Dining

Bottom line: Baidu could soon make big cuts at Nuomi and sell or spin off the unit by year end, while it will also put its takeout dining unit on a strict diet that forces it to show a clear path to profitability by year end.

Nuomi set for haircut in 2017?

After years of hemorrhaging money from its newer online-to-offline (O2O) businesses, leading search engine Baidu (Nasdaq: BIUD) may finally be saying enough is enough. That seems to be the message coming from new reports that say the company has launched a campaign to improve performance at its massive businesses that combine real-world services like watching movies and buying restaurant food with web-based ordering systems.

The reports point to Baidu’s Nuomi group buying site as a particular center where the clean-up campaign has begun, but I also suspect a similar move may be taking place at its equally massive and money-losing takeout dining service. That pair of new businesses are massive cash-burners at Baidu, alongside the company’s iQiyi online video service and its Qunar (Nasdaq: QUNR) online travel agent. Read Full Post…

INTERNET: Ofo Raises Another $150 Mln in Dead-End Race

Bottom line: Ofo and rival Mobike will use their hundreds of millions of dollars in new funds to buy better and more expensive bikes to flood city streets, even though neither has a sustainable business model that can justify such long-term expense.

Ofo raising $150 mln in new funds

The race for supremacy in China’s fast-moving shared bicycle realm is kicking into high gear, with word that second-place Ofo is raising $150 million with an eye on achieving a $1 billion valuation. That would come just a month after sector leader Mobike raised a larger $215 million, in a deal that also valued the company at about $1 billion.

Readers may note that I’ve called this particular contest a “dead-end race”, because I really do think there’s no winner here. That’s because I honestly believe this business is based on a model that won’t work, especially in China. The reality here is that a lack of public spirit means that many people simply use bikes and then carelessly discard them without much thought about whether they might be damaging those bikes or putting them in places that effectively take them out of circulation. Read Full Post…

SMARTPHONES: Brick-and-Mortar Xiaomi Eyes 2017 Comeback

Bottom line: Xiaomi stands a better than 50 percent chance of stabilizing this year and reversing its 2-year-old decline, based on its push into brick-and-mortar retailing and positive reviews for its newest higher-end model.

Xiaomi builds up brick-and-mortar presence

Blame it on the Internet. That seems to be the message coming from Xiaomi, the smartphone maker that’s in a bit of an identity crisis, trying to explain its rapid descent over the last 2 years following a meteoric rise in 2014. A couple of other reports are also saying the company is preparing to roll out its own processor later this year, and have charismatic chief Lei Jun criticizing rival Huawei for lacking the “internet sensibility” needed to succeed in the online era. Read Full Post…

INTERNET: Google Seeks Partner for China Return

Bottom line: Google will get permission from Beijing to open a Chinese version of its app Play Store later this year, most likely through a joint venture with NetEase or Tencent.

Google, NetEase talk China Play Store JV

The glacial return to China for Internet titan Google (Nasdaq: GOOG) is making its debut in the 2017 headlines, with word that the company is in talks to open a Chinese version of its app store with online game giant NetEase (Nasdaq: NTES). That tidbit nicely sets the stage for what’s likely to be a banner year for Google and possibly US Internet rival Facebook (Nasdaq: FB) in their race to see who can be first to plant a tent pole in China. Read Full Post…

RETAIL: Yum China Looks Flat in Maiden Report

Bottom line: Yum China’s maiden quarterly report and $300 million share buyback program highlight a company that needs to move more aggressively and take more risks to regain its footing after being spun off from its US parent.

Yum China posts unimpressive maiden quarterly report
Yum China posts unimpressive maiden quarterly report

Fast food operator Yum China (NYSE: YUM) has just put out its maiden quarterly earnings report that looks decidedly ho-hum, including a somewhat surprising announcement of a $300 million share repurchase program. The operator of KFC and Pizza Hut stores in China was formally split off from its parent, Yum Brands (NYSE: YUM), late last year, following shareholder pressure to let the unit operate more independently in the somewhat unique and fast-changing Chinese market. Read Full Post…