IPOs: Yum China Nears NY Debut, Merchants Securities Lists in HK

Bottom line: Yum China’s new stock will post moderate gains of 3-6 percent when trading begins on November 1, while Merchants Securities’ IPO shares will price in the middle of their range and debut flat to up slightly.

Merchants Securities makes HK listing

IPOs are heating up as we head into the fourth quarter of 2016 and companies race to complete offerings before the traditionally slow period between Christmas and Chinese New Year. The last week alone has seen progress on what could be the world’s 2 biggest offerings this year, being made by Postal Savings Bank of China and P2P lender Lufax. (previous post) Now 2 more mega listings are in the headlines, as brokerage Merchants Securities prepares for an IPO in Hong Kong and KFC parent Yum (NYSE: YUM) gets set to spin off and separately list its China unit in New York. Read Full Post…

TELECOMS: More Proactive Stance Needed in Telco Fraud Fight

Bottom line: Chinese companies need to become more proactive in ending practices that harm consumers, or risk facing pressure from regulators and hurting their prospects for expansion abroad.

Telcos get tough with real name registration

A campaign requiring all mobile phone users to register with their real names was in the headlines for much of last week, in the latest step to curtail rampant phone fraud in China that has grabbed recent attention due to several high-profile cases. Notably, the real-name registration drive was led by 6 government ministries, rather than the nation’s 3 major wireless carriers whose networks are the primary platform for committing most of the fraud.

Both the government and carriers have known about this kind of fraud for years, but did little to aggressively tackle the problem until the recent wave of negative publicity. Read Full Post…

China News Digest: September 27, 2016

The following press releases and news reports about China companies were carried on September 27. To view a full article or story, click on the link next to the headline.
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  • Yum (NYSE: YUM) Board Approves Separation of Yum China, Increases Dividend (Businesswire)
  • Merchants Securities (HKEx: 6099) Makes IPO, Tencent’s Pony Ma Among Investors (Chinese article)
  • Dick Clark Productions in Talks to Be Bought by China’s Wanda (English article)
  • Didi Chuxing Invests 8-digit US Dollar Sum in Bicycle Sharing App Ofo (English article)
  • Meituan Dianping Acquire Payments Company, Receives License (Chinese article)

IPOs: Lufax Kicks Off HK Listing, Xinhuanet Eyes Shanghai

Bottom line: Lufax’s Hong Kong IPO could launch by the end of this year and will get a strong reception, while Xinhuanet’s Shanghai IPO will get a similarly positive reception due to strong support from state-run investors.

Xinhuanet approved for Shanghai IPO

Just days after the stodgy Postal Savings Bank of China launched an IPO that will be the world’s biggest in 2 years, the much higher-tech P2P lender Lufax has kicked off another Hong Kong listing that’s nearly as large. More specifically, Shanghai-based Lufax has begun hiring investment banks for a listing that could raise up to $5 billion, according to new reports.

Meantime, a flurry of new domestic Chinese IPO plans is also in the headlines, led by word that state-owned online news giant Xinhuanet has been approved for a new listing in Shanghai. China stock watchers might recall that Xinhuanet’s IPO plan first surfaced in the headlines 3 years ago, but was indefinitely shelved due to repeated slowdowns and freezes for new domestic offerings due to market volatility. Read Full Post…

Shanghai Street View: Biking Revival

Mobike pedals into Shanghai
Mobike pedals into Shanghai

The fast lanes of Shanghai’s streets have been full of change these last few months, in a campaign by thousands of police and other assistants to tame our unruly traffic. But this week’s column takes us instead to the slower lanes of the streets of Shanghai, where a quieter revolution is reviving China’s bicycling tradition.

In a somewhat unusual twist, this new revolution is both high-tech and low-tech at the same time, involving the roll-out of two new Internet-based leasing services deploying thousands of very basic bikes in the city. The revolution seems to be centered in my own stomping grounds in the Hongkou and Yangpu districts, due to the high concentration of wide streets, and students and young professionals who are the primary audience for such services. Read Full Post…

China News Digest: September 24-26, 2016

The following press releases and news reports about China companies were carried on September 24-26. To view a full article or story, click on the link next to the headline.
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  • P2P Lender Lufax Taps 4 Banks for HK IPO to Raise up to $5 Bln: Sources (English article)
  • Fake Bank Documents Discovered From China Group Buying AC Milan (Chinese article)
  • Shanhai Capital to Acquire Analogix Semiconductor for Over $500 Mln (Businesswire)
  • Xinhuanet, Bank of Shanghai Among 12 Companies Approved for Domestic IPOs (Chinese article)
  • 6 Agencies Requires 100 Pct Real Name Registration for Mobile Users by Year End (Chinese article)

SMARTPHONES: Smartisan Value Dives, LeEco Sales Sputter

Bottom line: Smartisan’s plummeting value and big losses point to a possible sale or closure of the company by year-end, while LeEco’s weak smartphone sales reflect the market’s overheated condition.

Smartisan value gets hammered

Separate stories from 2 of China’s decidedly second-tier smartphone brands highlight ongoing stress in the overheated sector, even though a major casualty has yet to emerge. But that could change soon, with word that the asset value of high-brow brand Smartisan has plummeted over the last year, as disclosed in a new filing by one of its investors. Meantime, online video superstar LeEco (Shenzhen: 300104) has disclosed sales figures that look quite weak for its own smartphone business, which it launched more than a year ago with big hopes.

I’ve previously predicted we would see one or two major casualties from China’s crowded smartphone sector this year, though we have yet to see any big names close or get purchased. But there are still 3 months left in 2016, so perhaps we’ll see one or two mid-tier players finally decide to call it quits. Read Full Post…

NEW ENERGY: Tesla Takes New China Hit with Driver Death Lawsuit

Bottom line: A Beijing lawsuit against Tesla over an accident that killed the driver of one of its cars is quite possibly baseless, but will add to a recent string of negative publicity for the company and China’s problem-plagued new energy vehicle sector.

Tesla sued over driver death in China

Electric car maker Tesla (Nasdaq: TLSA) is in the negative headlines in China driving into the new week, following reports of a Beijing lawsuit against the company over the death of a driver of one of its cars. I’ll be quite direct and say that the lawsuit looks a bit dubious and perhaps unrelated to Tesla’s technology, though it’s also possible that Tesla’s carefully worded statement is designed to give that impression. But even if the lawsuit is baseless, this kind of negative headline is the last thing that Tesla needs in a problem-plagued market that it once hoped would fuel its difficult drive into profitability. Read Full Post…

China News Digest: September 23, 2016

The following press releases and news reports about China companies were carried on September 23. To view a full article or story, click on the link next to the headline.
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  • US Bank Regulators Join Investigation Into JPMorgan’s (NYSE: JPM) China Hiring (English article)
  • UCar Launches Consumer Private Car Services Platform, Challenges Didi-Uber (Chinese article)
  • Carlyle Sues China ATM Firm Seeking $369 Mln Over Missed IPO (English article)
  • Smart Robot Developer Rooboo Secures $100 Mln Series A Funding (English article)
  • New Management Shakeup at Autohome (NYSE: ATHM) With Exit of Co-Founder, VP (Chinese article)

INTERNET: Tencent, Alibaba Take Bite Out of Scandal-Hit Baidu

Bottom line: Alibaba is the biggest beneficiary of business lost by Baidu after a scandal earlier this year, with search rivals Qihoo and Sogou also likely to pick up new business.

Baidu loses digital ad crown to Alibaba
Baidu loses digital ad crown to Alibaba

A couple of news items are showing how Baidu’s (Nasdaq: BIDU) core search business is coming under assault from several directions, in an ominous sign for the company’s main revenue source. The first item shows that Baidu has officially lost its crown as China’s top digital adverting platform to e-commerce titan Alibaba (NYSE: BABA), following a scandal earlier this year that wiped out up to a fifth of its revenue. In the other item, reports are saying that China’s other Internet titan Tencent (HKEx: 700) has boosted its stake in Sogou, one of Baidu’s main search rivals, to 45 percent. Read Full Post…

INTERNET: Adjusting NetEase Eyes Cloud, Has BAT Potential

Bottom line: NetEase’s move into cloud computing and closure of its forum service are part of an overhaul positioning it for future growth, and could propel it into China’s top 3 Internet companies in the next 5 years.

NetEase launches cloud service

China’s lowest-key Internet giant NetEase is making some more new adjustments, extending reports last week that it was planning to spin off or sell its old but stagnating web portal business. One of the new moves includes word that the company has shuttered its equally slow-growth web forum business. The other has the company launching a new cloud service, with plans to pump hundreds of millions of dollars into the business over the next few years. Read Full Post…