Bottom line: Qihoo is likely to soon take control of Coolpad by buying shares from its controlling stakeholder, while allegations of insider trading surrounding Qihoo’s recent buyout bid are unlikely to affect the company.
Qihoo eying Coolpad stake?
Security software specialist Qihoo 360 (NYSE: QIHU) is in a couple of noteworthy headlines as we end the week, led by an announcement that hints it could be close to buying a sizable stake in its smartphone partner Coolpad (HKEx: 2369). At the same time, Qihoo’s name has appeared in another headline that says a Guangzhou man is being accused of insider trading related to a plan announced last week to take the company private.
These 2 headlines aren’t really too related beyond the fact that they both involve Qihoo, whose aggressive business tactics and outspoken CEO have made the company a lighting rod for controversy. The Coolpad news reflects Qihoo’s recent aggressive push into smartphones, mirroring similar actions by many other Chinese Internet firms. The insider trading news is more reflective of China in general, where such dealing is rampant and largely tolerated by a securities regulator that has other larger issues on its agenda. Read Full Post…
Bottom line: Chinese Internet blue chips like Baidu and Ctrip should continue to flourish on Wall Street due to their leading status, while shares of smaller names will sputter and even plunge if a recent wave of buyout offers starts to collapse.
Baidu in $1.25 bln bond offer
The last 2 days have been most notable for what hasn’t happened over that time, namely the announcement of any new buyout offers for US-listed Chinese companies. Barring any new announcements on this final day of the trading week, the second quarter of 2015 is likely to end with a record 20 such privatization bids for Chinese firms looking to de-list from New York in search of better valuations back in China.
At the same time, 2 of China’s premier US-listed Internet companies are on the cusp of issuing a combined total of nearly $2.5 billion in new bonds, reflecting a new reality for Chinese companies on Wall Street. That reality is allowing China’s leading Internet names like search giant Baidu (Nasdaq: BIDU) and top online travel agent Ctrip (Nasdaq: CTRP) to still do quite well in New York, even as the far bigger number of lesser-known companies see their shares sputter. Read Full Post…
Bottom line: LeTV’s shares are probably overvalued despite a recent sell-off, but the company still looks like a good long-term bet despite allegations that it may overstate some of its sales and financial data.
LeTV shares hit turbulence
Online video superstar LeTV (Shenzhen: 300104) is quickly learning the lessons of gravity, as its formerly surging shares have suddenly shifted into reverse amid claims of unusual accounting and a big share sale by its CEO. Anyone who has owned the stock over the last 52 weeks is still doing quite nicely, with the shares more than double from a year ago at their current price level.
But anyone who bought LeTV shares amid a wave of euphoria that began in April might be doing less well. That wave saw the shares more than double in just a month’s time, making the company the undisputed leader in China’s online video space, well ahead of former leader Youku Tudou (NYSE: YOKU). But since reaching a peak in May the shares have lost about a third of their value, and it’s quite possible we could see quite a bit of downside ahead for this overinflated stock. Read Full Post…
Bottom line: Suning’s Japanese expansion and receipt of a new license to build and operate a private broadband network are both positive developments, but also reflect a lack of quick progress in transforming its core China-based retail business.
Suning in Japanese expansion
A couple of new reports involving Suning (Shenzhen: 002024) made me realize it’s been quite a while since I’ve written about this company that is trying to transform from a traditional retailer to a major e-commerce player. Both reports are interesting and noteworthy, though neither is related to its e-commerce drive, which doesn’t appear to be going anywhere quickly.
One of the deals involves Suning’s purchase of a money-losing Japanese electronics seller 5 years ago, and will see it now plow several billion yuan into a major expansion of the Laox chain of home appliance stores. The second deal has Suning named as one of 4 companies to receive licenses to build broadband networks to offer services under a newly announced pilot program to open the sector to private money. Read Full Post…
Bottom line: Uber’s latest mega funding from a Chinese investor demonstrates its determination to stay in China, while Yidao’s marginalization could force it to sell itself to an Uber-Baidu alliance at a bargain price.
Hillhouse eyes Uber investment
The race for supremacy in China’s hired car services market is taking several new twists, with reports that US giant Uber is close to landing a major new funding from a Chinese backer as it shows no signs of leaving the market. At the same time, intense competition could be close to claiming its first big victim, with separate reports saying Yidao Yongche has made major layoffs as it struggles to keep up with Uber and homegrown Chinese giant Didi Kuaidi.
The hired car services story in China has been a noisy one, upsetting a stodgy industry that was mostly dominated for years by traditional taxis. But a new generation of companies are taking advantage of global positioning technology to offer location based services (LBS) that allow customers to easily find and book hired private cars that are nearby and also cheaper than taxis. That potent combination has resulted in a “democratization” of hired car services, which were usually considered a semi-luxury but are now increasingly used by people as an affordable substitute for public transportation. Read Full Post…
Bottom line: China’s opening of the electronic payment services market could see PayPal and other foreign providers finally receive long-awaited licenses to operate in the market by year-end.
PayPal may finally get China green light
Foreign financial companies came a step closer to realizing a long-awaited goal last week, when Beijing announced it would allow them to open fully-owned electronic transaction processing ventures for e-commerce services in the year-old Shanghai free trade zone. The move comes after years of lobbying by foreign companies like PayPal, MasterCard (NYSE: MA) and Visa (NYSE: V), which have watched enviously at the rapid growth of a domestic financial system that China committed to open when it joined the World Trade Organization (WTO) in 2001. Read Full Post…
Bottom line: Momo’s plan to privatize just 6 months after its IPO could set a new record, while Focus Media’s latest delay in its China re-listing plan should serve as a warning for others considering similar backdoor listings.
Momo unveils de-listing plan
The privatization story for US-listed Chinese companies has gained yet another member, with word that social networking app operator Momo (Nasdaq: MOMO) has become the latest name to receive a management-led buyout offer. The offer comes just 6 months after Momo made its trading debut in New York, and if it succeeds Momo could win the new record for a Chinese company with the shortest life as a US-listed company.
It’s worth noting that Momo’s announcement is the only one we’ve seen over the last 24 hours, which perhaps marks a slowdown from the 3 companies that made similar announcements over the long Chinese holiday weekend. (previous post) Many of the firms that are trying to de-list are eying re-listings at home in China, where their shares might be more appreciated by local investors. Read Full Post…
Bottom line: Alibaba’s decision to sell one of its early US e-commerce sites just a year after the launch looks smart and decisive for new ventures that aren’t performing well, while its new China-based dining services site will face stiff competition.
Alibaba tries dining services with Koubei
Acquisitive e-commerce leader Alibaba (NYSE: BABA) is throwing up a rare white flag of surrender in the US, selling off its 11 Main site just a year after launching the e-commerce platform. That surrender looks relatively minor, as Alibaba never really gave the site much time to develop. But the quick decision to call it quits reflects the challenges Alibaba will face as it tries to show investors that it can be competitive outside its home China market, which will be critical to its future growth.
Meantime, Alibaba was in another separate headline that looks much more typical for the company, announcing a new mega tie-up worth nearly $1 billion that will take it into the dining services category. That initiative looks squarely aimed at Dianping, often called the Yelp (NYSE: YELP) of China, and Dianping’s major backer Tencent (HKEx: 700). Read Full Post…
Bottom line: Alibaba’s new fund-raising activities are relatively small but provide insight about its future direction, hinting at a major pushes into the gadget and financial services spaces.
Alibaba, Foxconn invest in Pepper
A couple of new fund-raising headlines involving e-commerce giant Alibaba (NYSE: BABA) show company founder Jack Ma engaged at one of the things he does best, namely making deals and forging new partnerships. Neither deal is particularly big in terms of dollar investment, but both provide some insight on the kinds of partners and tie-ups that Ma is pursuing for both the New York-listed Alibaba and its separate but affiliated Ant Financial unit. Read Full Post…
Bottom line: Oriental Pearl’s new purchase of a stake in a set-top box and TV maker is part of a broader series of recent moves that could help position it to emerge as a viable rival to China’s private online video companies.
SMG buys into TV maker MTC
State-run broadcaster Shanghai Media Group (SMG) is wasting no time telling the world who it sees as its main rivals, with word that the company is buying a major stake in a TV and set-top box maker after completing an overhaul of its own digital TV assets. Anyone who follows the industry will know that the high-flying LeTV (Shenzhen: 300104) appears to be the major target of this new SMG tie-up, which is seeing the company’s newly launched Oriental Pearl (Shanghai: 600637) digital video unit purchase a major stake in a Shenzhen-listed company called MTC (Shenzhen: 002429) for 2.2 billion yuan ($350 million). Read Full Post…
Bottom line: The next 2 weeks could see another 3-5 US-listed Chinese companies announce buy-out bids, but the number will slow after that and many deals could collapse if China’s stock market rally falters.
3 more names join buy-out queue
Another 3 companies have joined the fast-growing privatization queue over China’s long holiday weekend, leading me to create the temporary tag of “buyouts” for headlines describing this brief but explosive story. For anyone who hasn’t followed that story closely, the current quarter has now seen 19 privatizations unveiled by US-listed Chinese firms, including the 3 latest announcements from video surveillance specialist Vimicro (Nasdaq: VMIC), advertising specialist AirMedia (Nasdaq: AMCN) and IT services provider China Information Technology (Nasdaq: CNIT).
In related news, leading web portal Sina (Nasdaq: SINA) has announced it is joining a group making a previously announced privatization bid for E-House (NYSE: EJ), one of China’s leading real estate services companies. That particular move looks related to an existing alliance between the 2 companies, and thus probably just marks a continuation of that relationship that I’ll describe below.
