IPOs: Floodgates Open With Tencent, Sohu, Bona, Fintech Listings

Bottom line: A periodic window of IPOs that opens every 2-3 years is taking shape, with fintechs and other new categories like online literature likely to do well, while older concepts  like e-commerce could struggle for attention.

New window opens for Chinese IPOs

My long-predicted IPO floodgate has finally burst, with no less than four major offerings in the headlines as we go into the new week. The new offerings I’m referring to involve two in the US, one for fintech startup Ppdai and another that has been talked about forever for Sogou, the search engine backed by Internet superstar Tencent (HKEx: 700) and the less steller Sohu (Nasdaq: SOHU).

Meantime, one of the other IPOs also involves Tencent, with its China Reading online literature unit getting cleared by the Hong Kong stock exchange and set to file its prospectus. Last but not least is Bona Film, the formerly New York-listed company that has been cleared for a re-listing in China.  Read Full Post…

INTERNET: Battle Rages for Sina Board Seat

Bottom line: A dissident shareholder’s proxy battle for a seat on Sina’s board stands a chance of success, but the odds are probably 40 percent or lower due to large holdings by Sina’s CEO.

Sina board seat at center of proxy fight

One of the more lively investor plays to shake up an insular US-listed Chinese company is taking place at Internet stalwart Sina (Nasdaq: SINA), with a flurry of he-said-she-said statements coming from the company and dissident shareholder Aristeia Capital. This somewhat unusual development first made headlines about a month ago, when Aristeia unexpectedly announced it was nominating two people to Sina’s board to shake up the company. Sina has responded with its own series of announcements justifying why its own long-serving board members are the best fit for the company.

All of this will come to a head at Sina’s annual meeting on Nov. 3, when one of its five board members will stand for re-election. Sina wants its own long-serving candidate to win the spot, while both of Aristeia’s candidates are contesting the position. What’s interesting here is that Sina is one of the few US-traded Chinese companies where the founders and top managers really don’t have the kind of overwhelming control of its stock that you often see. That means this particular board seat could really be up for grabs, which could perhaps shake up this underperforming company. Read Full Post…

IPOs: Tencent Literature IPO Nears Take-Off, But Will It Read?

Bottom line: China Reading’s IPO should be well received when it launches its road show as soon next week, and the shares should price and debut strongly on its good profit margins and growth prospects.

China Reading set to launch IPO road show

Another hot IPO with ties to one of China’s leading Internet firms is nearing the starting line, with word that the highly anticipated listing for Tencent’s (HKEx: 700) online literature unit is finally going to kick off shortly. That means we will finally get to see some financials for China Reading, whose plans for an $800 million IPO have been discussed since as early as February.

In fact, this particular IPO has been discussed for far longer than that, since the company has gone through a number of forms in its long march to market. I’ll recount that shortly, but will begin with some quick thoughts on this offering’s chances for success. We’ve already seen in this burgeoning IPO season that having a pedigree from a name like Tencent doesn’t guarantee success, as was the case with Alibaba-backed logistics firm Best Inc. (NYSE: BSTI).  That IPO priced miserably due to stiff competition in the logistics space, and the stock is only up a modest 6 percent since it started trading in New York. Read Full Post…

PCs: Lenovo Taps Top Managers for Funds, Goes Retro

Bottom line: Lenovo’s new fund raising and roll-out of a retro commemorative ThinkPad 25th anniversary model show the company is focused on short-term fixes rather than the shock therapy it really needs. 

Lenovo celebrates 25 years of ThinkPad

With the October 1 Golden Week holiday now in the rear view mirror, we’ll jump back into the latest tech trends with a look at PC giant Lenovo (HKEx: 992), which was in a couple of headlines over the holiday that underscore its ongoing difficulties. The first of those has the company raising $500 million from a group of its core supporters, who are probably the only ones who have faith that this former superstar can right its sinking ship.

The other has the company rolling out a line of retro computers to celebrate the 25th anniversary of its ThinkPad computers, which arguably launched Lenovo on its trajectory that would ultimately take it to the top of the global PC hill. The only problem is that it’s difficult to stay king of the hill for too long in today’s cut-throat high-tech world, and also there’s the fact that PCs aren’t exactly the cutting-edge product they used to be. Read Full Post…

IPOs: ZhongAn Pops in Trading Debut, But Does It Have Legs?

Bottom line: ZhongAn should perform reasonably well over the short- to medium-term by drawing on its big-name investors for business, but faces uncertainty due to an untested business model.

ZhongAn banks on online insurance

There’s not a ton to say about the year’s first blockbuster IPO from the fintech realm, since it really went pretty much according to plan. I’m talking about the just-concluded listing for online-only insurance startup ZhongAn Online Property & Casualty Insurance, which was almost guaranteed a strong debut when its shares began trading yesterday in Hong Kong.

The bigger question for ZhongAn and its other fintech peers will be whether they can continue to thrive once the spotlights are gone and they have to do business over the longer term. Anyone can pretty up their books in the run-up to an IPO, but keeping the business flowing afterwards is often a bit more problematic. ZhongAn could be a good case in point, as its product lineup seems to be constantly evolving, as does the lineup for many of these fintech firms, due to individual and broader industry factors. Read Full Post…

FINANCE: Alipay Chases HK Consumers in JV with Local Tycoon

Bottom line: Alipay’s joint venture with Li Ka-shing targeting local Hong Kong customers looks like a shrewd approach in its first major foray of that kind, though it will face skepticism about its ability to protect user privacy.

Alipay turns up HK drive with new JV

After dancing around the globe for the last few years without too much to show for its efforts, Ant Financial’s Alipay electronic payments unit is finally taking the plunge into local currency services with a new joint venture in Hong Kong. Despite the relatively muted headlines, this story looks rather revolutionary because it represents the first time one of China’s up-and-coming private financial services companies is going after local consumers.

Nobody said the road to global recognition would be easy for Alipay, or for similarly popular electronic payment services operated by social networking giant Tencent (HKEx: 700) or the stodgier state-backed UnionPay, which has actually tried something similar without much success. But this is a step these 3 companies need to take, and post at least limited success, if anyone is going to take them seriously over the longer haul. Read Full Post…

NEW ENERGY: ReneSola, Canadian Solar Focus on Plant-Building as New US Tariffs Loom

Bottom line: Diversification moves away from manufacturing by Canadian Solar and ReneSola could bring more stability to the companies, while panel makers are likely to take a big hit from new US anti-dumping measures.

ReneSola, Canadian Solar in new diversification moves

A trio of solar energy stories are in the headlines that underscore difficulties panel makers are facing due to a recent glut that looks quite typical in this highly cyclical sector. Two of the stories reflect a trend that has panel makers trying to diversify into the less cycle-prone business of solar plant building, with major new developments from Canadian Solar (Nasdaq: CSIQ) and ReneSola (NYSE: SOL). The third has a research house predicting demand for the panels, which are the main component of such plants, could dive by up to half in the US this year, following a major new anti-dumping ruling by Washington.

Again, all of this shows that the world is still swamped with too much solar panel-making capacity and is in sore need of a downsizing. The main obstacle to that is coming from China, where many companies have slipped into the loss column but refuse to slim down due to resistance from local interests intent on staying in the business come hell or high water. It’s a bit unclear who will blink first in this battle to stay in business, though in this kind of war the market usually determines who emerges as victor. Read Full Post…

IPOs: Biotech Listing Pops, E-Commerce Flops, Fintech to Come

Bottom line: A flurry of IPOs for offshore Chinese tech firms marks the start of an upcycle following a three year lull, with fintechs likely to be the top stars.

Secoo fizzles in trading debut

After a relatively boring first eight months of the year, the IPO market has suddenly come to life with a flurry of offerings that are turning in a mixed performance. E-commerce seems to be a bit passe, though you would never guess that based on the recent run-up in the stock of sector lead Alibaba’s (NYSE: BABA) stock. Meantime, a small-ish biotech offering has wowed investors, and the best looks set to come with a couple of fintech offerings this week and towards the middle of October.

This particular spurt looks at least partly tied to the Chinese National Day holiday that will see the entire country basically close for all of next week, prompting companies that have been waiting to list to speed up the process to finish beforehand. Last week we saw logistics specialist Best Inc (NYSE: BSTI) deliver an offering to tepid response, followed by a much better result for money-losing biotech start up Zai Lab (Nasdaq: ZLAB). The week ended with a fizzle for luxury e-commerce firm Secoo on the Nasdaq. This week before the holiday, we could see debuts for the year’s first $1 billion-plus offerings from fintech firm ZhongAn Insurance. That should be followed by another fintech mega-deal by Qudian in mid-October . Read Full Post…

SMARTPHONES: HTC Ties Up With Google, or Does It?

Bottom line: Google’s purchase of HTC’s Pixel assets is a sign of no confidence in HTC’s chances of longer-term survival as an independent smartphone maker.

Google’s HTC purchase: reason for optimism or pessimism

Everyone is giving their two cents about the big new tie-up between Taiwan smartphone maker HTC (Taipei: 2498) and Google (Nasdaq: GOOG), so I figured I’d weigh in as well on this deal that has quite a few threads. From where I sit, the deal marks the latest distress sign coming from an overcrowded smartphone field here in China, even though HTC is technically based in Taiwan.

Equally or even more interesting is the question of whether Google is a white knight riding to HTC’s rescue, or rather trying to protect its own interests from what it sees as a fast-sinking ship. I tend to think the case might be the latter, which I’ll explain shortly, even though both Google and HTC would probably vehemently deny such a conclusion. Read Full Post…

IPOs: Fintech Hot, Logistics Not in New Listings for Qudian, Best

Bottom line: ZhongAn’s and Qudian’s IPOs are likely to price and debut strongly over the next few weeks on excitement about China fintech, while Best’s will debut to indifference following the slashing of its size.

ZhongAn, Qudian IPOs look hot

Three companies likely to list in New York and Hong Kong by the end of this month are setting the tone for what’s set to be a busy fall for similar new offshore offerings from Chinese companies. Two of those are coming from the hot fintech sector, where online microlender Qudian and online insurance seller ZhongAn appear to be drawing strong interest in IPOs that could each raise north of $1 billion. But logistics company Best Inc is moving firmly in the other direction, with the announcement that it has just slashed the size of its fund-raising plan by nearly half.

Neither of these themes is completely surprising, since fintech has become a hugely lucrative area in China due to the relatively greenfield nature of the sector. Until only very recently, nearly all financial services in China were dominated by state-run companies, which aren’t exactly known for their innovation and embrace of technology. That’s also partly true for logistics, though in that case the industry has quickly become a bit of a bloodbath plagued with cutthroat competition among around 10 major players. Read Full Post…

M&A: Cowen, MoneyGram Deals Wait for US Nod, Xinhua Lectures Trump

Bottom line: The US could veto the purchase of brokerage Cowen by a Chinese energy firm, and could also block Ant Financial’s purchase of MoneyGram under tougher scrutiny by the Donald Trump administration.

US set to block more Chinese purchases?

Just days after President Donald Trump made his first veto of a Chinese deal in the US, two other deals appear to be running into trouble for similar reasons, though it’s too early to call either dead just yet. In both instances, the buyers, Ant Financial and CEFC China Energy, have refiled proposals to regulators for their purchases of two financial services firms, MoneyGram (NYSE: MGI) and Cowen Inc. (Nasdaq: COWN), respectively. Both need approval from the powerful Committee on Foreign Investment in the United States (CFIUS), which reviews all such cross-border deals for national security considerations.

The regulatory stalling of those two deals comes just days after Trump officially killed another deal for a China-backed bid to buy Lattice Semiconductor (Nasdaq: LSCC), (previous post). So now people are trying to draw connections between these developments. Since that veto, China’s official Xinhua news agency has come out with an editorial over the weekend saying Trump is only hurting America by blocking such deals, which are part of the natural ebb and flow of global trade. Read Full Post…