VENTURE FOCUS: Tiger Brokers Feeds on China Appetite for US Stocks

Bottom line: Tiger Brokers could see strong growth by banking on Chinese demand for US and Hong Kong stocks, but also faces some risk if Beijing decides to regulate the company as a financial firm.

Tiger eyes Chinese with appetite for US, HK stocks
Tiger Brokers eyes Chinese with appetite for US, HK stocks

I’m kicking off my new series on noteworthy venture-backed companies with the fast-growing Tiger Brokers, which is feeding off a Chinese love of stocks and growing demand for access to overseas markets. In the current climate where China’s own stock markets have become quite volatile and prone to big sell-offs, Tiger’s gateway to the US and Hong Kong stock markets could prove a potent draw to Chinese traders looking to diversify their portfolios with international stocks from more mature markets.

In a small but highly symbolic footnote to this story, Tiger is also finally giving Chinese investors access to many of China’s hottest companies that are traded overseas, including the Internet “big 3” of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700). That could ultimately provide some upside for many of those stocks over the longer term, since Chinese investors are likely to boost trading volumes for many of these homegrown companies whose shares previously languished due to lack of familiarity among western investors. Read Full Post…

BUYOUTS: Rival Bid Worries Heat Up Zhaopin, Autohome Deals

Bottom line: Zhaopin’s slight raising of its privatization price could reflect minority investor complaints about undervaluation, while Autohome’s buyout price could rise up to 20 percent in a game of strategic maneuvering with Ping An.

Zhaopin raises buyout price

Minority investors have long complained that a wave of privatization bids for US-listed Chinese companies are grossly undervalued, and now the companies may finally be responding to those grievances. That’s my assessment based on the latest reports that say online recruitment site Zhaopin (Nasdaq: ZPIN) has quietly raised the bid price for its privatization plan, as valuation questions also threaten to derail a similar plan by online car site Autohome (NYSE: ATHM).

Minority investor complaints about undervaluation center on the fact that top managers often control a majority of their companies’ shares through direct and indirect relationships. That means they can choose whatever bid price they want and be assured of its acceptance at shareholder votes. But threats of lawsuits and rival bids, and also perhaps worries about being seen as greedy and unethical are forcing some of the management-led buyout groups to rethink their prices and offer more. Read Full Post…

TELECOMS: Fourth Telco Finally Launches Amid Low Hopes

CBN gets telecoms license

Some 4 years after disappearing from the headlines, a fourth telecoms carrier formed from China’s numerous regional cable TV companies is finally making a formal debut with its receipt of an official license to offer telecoms services. That means the new company, China Broadcasting Network Co (CBN), could theoretically shake up China’s laggard telecoms services industry that has been monopolized for years by the trio of state-run giants, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).

But anyone hoping for big change shouldn’t get too excited, since CBN is cut from the same cloth as the existing 3 state-run telcos. What’s more, the new company is likely to be plagued with internal power struggles, at least initially, since it was created from a patchwork of provincial cable TV companies whose former stakeholders may still try to exert some influence. Read Full Post…

China News Digest: May 6, 2016

The following press releases and news reports about China companies were carried on May 6. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) Announces March Quarter and Full Fiscal Year 2016 Results (Businesswire)
  • Zhaopin (Nasdaq: ZPIN) Announces Receipt of Non-Binding Privatization Proposal (PRNewswire)
  • China Grants Nation’s 4th Teleco License to New Carrier China Broadcasting Network (Chinese article)
  • Lenovo (HKEx: 992) Establishes $500 Mln Robotics, AI, Cloud Computing Fund (English article)
  • Former Autohome (NYSE: ATHM) Executive Denounces Ping An as ‘Cattle Dealer’ (Chinese article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

NEW ENERGY: Foreigners, Locals Coast on China Green Support

Bottom line: Strong response to Tesla’s latest EV in China and a major new solar plant plan from SolarReserve reflect Beijing’s strong promotion of new energy, which is also creating big waste by attracting unqualified companies to the sector.

SolarReserve in major new China initiative

A series of new reports is showing how Beijing’s strong support for new energy technologies is benefiting both domestic and foreign companies, as China tries to become a global leader in this emerging area. But the reports also spotlight the dangers that come with such aggressive support, which often leads to abuse of subsidies and other preferential policies that can lead to big waste and market distortions.

One of the reports centers on US new energy car superstar Tesla (Nasdaq: TSLA), and quotes an executive saying that China has become the second largest market for its newest and first relatively affordable electric vehicle (EV). The second report comes from the solar energy sector, and has US solar plant developer SolarReserve LLC in a major new partnership to build more than $2 billion worth of solar farms in China. Read Full Post…

SMARTPHONES: Apple Loses Trademark Case, in New China Setback

Bottom line: Apple’s new loss in a China trademark dispute marks a minor setback, but is more symbolically significant as the latest in a sudden series of negative developments for the company in its second largest market.

Apple loses China trademark dispute

After a relatively long winning streak in China, Apple’s (Nasdaq: AAPL) fortunes are suddenly looking much less certain in its second largest market. First the tech giant posted a big drop in quarterly China sales during its latest reporting quarter, and now it has just lost a trademark dispute with a local company over use of its iPhone brand.

This latest setback doesn’t look that big for Apple in terms of money, since the winner in the dispute is a leather goods maker that will presumably use the iPhone trademark on products like wallets and clothing. But the loss is symbolic for a global giant that until just a few weeks ago was riding high in China on the back of a string of positive developments and media coverage. Read Full Post…

INTERNET: LeEco Treads on Yahoo’s Silicon Valley Turf

Bottom line: LeEco’s plan to develop a major Silicon Valley office on land purchased from Yahoo reflects the rapid rise and global ambitions of the former, and the accelerating decline of the latter. 

LeEco eyes new Silicon Valley home

A new report involving a Silicon Valley land deal is shining a spotlight on Chinese Internet giant LeEco (Shenzhen: 300104) and US counterpart Yahoo (Nasdaq: YHOO), illustrating the rapid rise of the former and accelerating descent of the latter. The deal itself is rather mundane, involving a 48.6 acre plot of undeveloped land that Yahoo bought a decade ago for $100 million near its Silicon Valley headquarters. LeEco is reportedly eyeing the land for development of a new campus, some 2 years after it set up its original dual US headquarters in Silicon Valley and Los Angeles.

LeEco, formerly known as LeTV, is one of China’s fastest rising online entertainment companies that is increasingly moving into a wide array of new product areas. Two of those are e-commerce and smart cars, and I suspect the Silicon Valley expansion would house both of those initiatives. LeEco is also moving into film production, though that element of its US efforts is probably based out of its Los Angeles office. Read Full Post…

China News Digest: May 5, 2016

The following press releases and news reports about China companies were carried on May 5. To view a full article or story, click on the link next to the headline.
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  • Apple (Nasdaq: AAPL) Loses China Trademark Case for ‘iPhone’ on Leather Goods (English article)
  • Lackluster Chinese Box Office Posts Weak 5 Pct Gain Over May Day Holiday (Chinese article)
  • SolarReserve Partners With Shenhua (HKEx: 1088) on $2 Bln China Solar Projects(English article
  • Telsa (Nasdaq: TSLA) Says China 2nd Largest Market for Model 3, Eyes Suzhou Plant (Chinese article)
  • China’s YOU On Demand (Nasdaq: YOD) in JV with LA-Based Frequency Networks (PRNewswire)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

INTERNET: Alibaba Drives with SAIC, Uber; Tencent Hijacks Google

Bottom line: A new global tie-up with Uber marks a major advance for Ant Financial’s Alipay, while new Internet car initiatives by Tencent and Alibaba are unlikely to find big audiences despite getting big resources from their backers. 

Alibaba, Tencent car initiatives drive ahead

A series of stories involving Alibaba (NYSE: BABA) and Tencent (HKEx: 700) reflect the growing importance China’s leading Internet firms are placing on cars, which could be the next major battleground for web-based services. Alibaba is in 2 related headlines, including one that says its affiliated Ant Financial unit has signed a major tie-up that will allow anyone in the world to use its Alipay electronic payments service to pay for Uber hired cars.

The other 2 headlines both involve car manufacturing, including one that says mass production has begun for the first Internet-equipped model co-produced through a tie-up between Alibaba and SAIC (Shanghai: 600104), China’s leading car maker. The other headline says a car-making venture backed by Tencent has been quietly poaching workers from the likes of Google (Nasdaq: GOOG) and Germany’s Daimler (Frankfurt: DAIGn), as it gears up for its own production. Read Full Post…

INTERNET: Hospital Gives Baidu Headaches, Qihoo Checks Out

Bottom line: A hospital scandal surrounding Baidu could shave as much as another 3-5 percent off its stock over the next week, but will fade afterwards and have relatively little longer term impact.

Hospital scandal continues to rock Baidu

A scandal involving exaggerated claims by one of its advertisers continues to consume Internet search leader Baidu (Nasdaq: BIDU), which has fired a top executive in response to a story that has wiped out $6 billion from its market value. At the same time, Qihoo’s (NYSE: QIHU) rival search engine has announced it will no longer do business with hospitals like the one at the center of the scandal, nor with other sellers of medical products and services.

The government has taken the unusual step of assembling inter-agency task forces to investigate the case involving a young cancer patient who claimed he was misled by both Baidu and the Second Hospital of Beijing Armed Police Force. (Chinese article) As the scandal picked up momentum late last week, media are reporting that Baidu fired vice president Wang Zhan for harming the company.(Chinese article) Read Full Post…

NEW ENERGY: Beijing in Right Approach with Tesla, Wrong One with Yingli

Bottom line: Beijing should promote cutting-edge companies like Tesla that can help advance its new energy agenda, while abandoning ones like Yingli that use old technology to make cheap copycat products.

Tesla nearing China plant?

Two green energy stories were in the headlines last week, spotlighting China’s drive to become a global leader in the new technology and also the right and wrong ways to achieve that aim. An item involving US electric vehicle (EV) powerhouse Tesla (Nasdaq: TSL) represented the right approach, with reports that the company might near a deal with Beijing to build a manufacturing plant in China. Meantime, former solar panel heavyweight Yingli (NYSE: YGE) was in the wrong approach column, announcing that its ill-conceived model of using old technology and cheap prices to do business had pushed it to the brink of insolvency, despite ongoing local efforts to rescue the company.

Beijing should take note of these 2 examples and do more to promote companies like Tesla that can develop cutting-edge technology for use in widely-respected products that the market wants. At the same time, it should abandon copycats like Yingli that don’t innovate and can only compete by offering cheap products using old technology. Read Full Post…