TELECOMS – VNOs Show New Signs Of Life

Bottom line: After a slow start, China’s VNO program is picking up momentum, with new operators poised to sign up a collective 50 million in total subscribers as soon as the middle of next year.

VNOs gain momentum

After a decidedly slow start in their first half year of life, China’s young crop of virtual network operators (VNOs) are starting to show some new signs of momentum, including a boost with the new awards of licenses to leading online video site Youku Tudou (NYSE: YOKU) and fast-rising smartphone maker Xiaomi. The VNO program is part of Beijing’s efforts to breathe new life into the telecoms services sector by opening it up to new private operators that can compete with the big 3 state-run telcos. But the program has been plagued with glitches since the first new services launched in the spring, with the result that progress has been slower than expected. Continue reading

NEW ENERGY: Trina Stumbles, Sinochem Shops In Norway

Bottom line: Sputtering progress for China’s solar power build-up could erode domestic panel makers’ performance, prompting some to buy more overseas assets to avoid punitive trade barriers in the west.

Sinochem unit buys REC Solar

The latest trouble signs in China’s ambitious solar power build-up are coming in newly released quarterly results from Trina (NYSE: TSL), which has reduced its annual sales targets after scrapping one of its planned new projects in the country. At the same time, China’s industry continues to look for ways to circumvent anti-dumping tariffs in the west by setting up off-shore production and purchasing foreign assets to avoid such penalties. In the latest move on that front, a unit of China National Chemical Corp, also known as Sinochem, has just announced its purchase of a major panel producer in Norway for about $640 million. Continue reading

ENTERTAINMENT – Time For China To Open Box Office Wider

Bottom line: China should completely up its film market to foreign participation, following recent liberalizing steps that have resulted in a boom in cross-border tie-ups.

The mayor of Los Angeles called on Chinese leaders to ease their restrictions on imported movies during a visit to Beijing last week, seeking better access for a product that is one of the most lucrative US exports to China.

The fact is that China has already taken big steps over the last 2 years to open its movie theaters to overseas products, as both foreign and domestic producers chase a fast-growing market that is now the world’s second largest behind only the United States. At the same time, a growing number of foreign filmmakers are getting improved access to the market through co-investments with Chinese partners, including joint ventures and joint production agreements. Continue reading

News Digest: November 25, 2014

The following press releases and media reports about Chinese companies were carried on November 25. To view a full article or story, click on the link next to the headline.
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  • Carrefour (Paris: CA) Launches Convenience Store Brand In China (Chinese article)
  • JD.com (Nasdaq: JD) To Invest 2 Bln Yuan In Dongguan Operations Center (English article)
  • China Buying REC Solar (Norway: RECSOL) For $640 Mln Avoids Trade Spat (English article)
  • Qihoo 360 (NYSE: QIHU) Reports Q3 Unaudited Financial Results (PRNewswire)
  • Temasek Sells Down Citic Securities (HKEx: 6030) Stake To 5 Pct From 8 Pct (HKEx announcement)
  • Latest calendar for Q3 earnings reports (Earnings calendar)

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.
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  • 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