Bottom line: This year is likely to see 6-9 New York IPOs by Chinese tech firms, mostly in the $50-$100 million range, while Legend’s planned IPO in Hong Kong or China is likely to get a mixed reception.
Lenovo parent Legend eyes H2 IPO
A new forecast on Chinese high-tech IPOs for the year ahead is stating the obvious, namely that new listings are set to slow dramatically in 2015 after a bumper harvest in 2014. In fact, the record year for fund-raising in 2014 is a bit misleading, as it really represents about 3 years worth of offerings that accumulated during a frosty period that led to a near freeze for IPOs starting in 2011. Now that much of the backlog has been cleared, it’s not surprising that there are few major new companies that are still at the right stage of development for listings.
At the same time, another report says that Legend Holdings, parent of PC giant Lenovo (HKEx: 992), has decided to list in Hong Kong, forgoing previous plans to make an IPO in its home China market. That decision isn’t a huge surprise if it’s true, and could provide a highlight for international tech investors in this year’s muted IPO parade for high-tech firms. Read Full Post…
Bottom line: A new list of China’s top apps spotlights fast-growing names like news app Today’s Headlines, photo app Meitu and dictionary app Youdao, which could raise hundreds of millions of dollars in new funds this year.
Meitu earns place on top 10 app list
A newly released list of China’s top 10 apps for 2014 is shining a spotlight on an up-and-coming field of lesser known names that could be companies to watch, as many are much younger than stalwarts like Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700). The “BAT” trio of China’s biggest Internet firms took 4 of the top 10 spots on the list, which was compiled by Baidu. But far more interesting were some of the other names, including recently listed social networking app Momo (Nasdaq: MOMO) and news app Today’s Headlines, which made its own headlines with its meteoric rise last year. Read Full Post…
Bottom line: China Mobile’s launch of a new Internet services unit, Migu, is a good and needed move conceptually, but will fail to innovate and succeed due to a bureaucratic corporate culture.
China Mobile launches Migu Internet services unit
I have very mixed feelings on leading telco China Mobile (HKEx: 941; NYSE: CHL), which mostly seems like a slow-moving, highly protected state-run behemoth but at times also seems to have some innovative instincts. The company’s new launch of Migu, a unit dedicated to developing Internet content and services, seems to fall in the latter category, and is long overdue. But the launch of Migu is quite late and will have a lot of catching up to do, and is almost certain to be hampered by China Mobile’s slow-moving corporate culture that has little experience developing products for the fast-changing Internet market. Read Full Post…
Bottom line: UCWeb’s new India tie-up with Facebook looks like a good step that will help its global expansion, while Qihoo’s new Microsoft alliance looks mostly like inconsequential hype.
UCWeb ties with Facebook in India
A couple of new corporate tie-ups are in the headlines today, led by word of a potentially major new alliance between Alibaba-owned (NYSE: BABA) web browser UCWeb and global social networking giant Facebook (Nasdaq: FB). The other tie-up, which looks far less interesting but still potentially significant, and will see security software specialist Qihoo 360 (NYSE: QIHU) work with Microsoft (Nasdaq: MSFT) in advertising services. This second alliance is just the latest in a long recent string for Qihoo, and seems aimed at breathing life into its struggling stock that is being rapidly abandoned by impatient and disappointed investors. Read Full Post…
Bottom line: Disappointing results for fund-raising by Wanda Cinema Line and Kuaidi taxi app show a recent boom in new funding for private Chinese companies may have crested and will wane for the rest of the year.
Kuaidi fund-raising diappoints
The crest of a huge wave of new fund raising for private Chinese firms may have passed, with word that 2 major new deals that should have attracted big investor interest have instead met with weaker-than-expected response. The first of those has seen investors give a lukewarm reception to a domestic IPO for Wanda Cinema Line, the nation’s first major movie theater operator to list. The second has seen taxi app operator Kuadi raise $500 million in a private funding round, which doesn’t sound too bad. But the figure is actually quite a bit lower than Kuaidi’s earlier plan and is also lower than a similar recent fund-raising round for leading rival Didi. Read Full Post…
Bottom line: A new lawsuit against Xiaomi spotlights the lack of premium quality behind its trendy brand, though it could succeed in the shorter term as the leading maker of “fast fashion” smartphones.
Xiaomi sued in Shanghai court
I had to smile on reading about the latest scandal surrounding Xiaomi, which came in a media report on a new lawsuit accusing the smartphone sensation of false advertising claims. This kind of overinflated claim has become a symbol of Xiaomi, reflecting the kinds of hype it regularly generates even as its actual products are described as quite ordinary and even sub-par.
Xiaomi’s hype contrasts sharply with its primary role model, Apple (Nasdaq: AAPL), which has built a hugely loyal following based on products that most users agree are superior to those from its rivals and worth the big premiums that Apple charges. A separate news item shows the hype factor is still enough to attract big-name investors, with word that social networking (SNS) giant Facebook (Nasdaq: FB) previously sought to invest in Xiaomi. Read Full Post…
Bottom line: Unbecoming behavior by people like Alibaba’s Jack Ma and JD.com’s Richard Liu reflect poorly on China’s corporate sector, and reflects a lack of professional standards.
Alibaba’s Ma, JD’s Liu on bad behavior
Alibaba’s (NYSE: BABA) charismatic founder Jack Ma is known for speaking his mind, but he was on the defensive last week after inflammatory remarks he made about rival JD.com (Nasdaq: JD) were published in a book. JD.com graciously accepted Ma’s rare apology for the remarks, even as its founder Richard Liu was also in the Internet gossip columns for his own controversial behavior related to a rumored break-up with his longtime young girlfriend. Read Full Post…
Bottom line: Alibaba’s new forays into India and South Korea look like good choices for its first major drive into foreign markets, as such markets are more similar to and have stronger links with China.
Alibaba eyes India investment
It’s been interesting to watch where China’s top Internet firms are placing their bets as they embark on an international expansion to show the world they can compete outside their home market. India is emerging as one destination of choice, with word that e-commerce leader Alibaba (NYSE: BABA) is following smartphone sensation Xiaomi into the market with a major new acquisition target. At the same time, other media reports are saying that Alibaba is also in talks for another major investment in South Korea. Read Full Post…
Bottom line: 55Tuan’s listing plan stands a 50 percent chance of succeeding due to its modest size and broadly positive market sentiment, but could ultimately fail due to its loss-making status.
55Tuan files for Nasdaq IPO
I spent much of December predicting we’d see the first listing of a Chinese group buying site this year, and now that may happen with the first official IPO filing by a Chinese Internet company in 2015. But my prediction that the listing would come from sector leaders Dianping or Meituan was off the mark, and now it appears that 55Tuan may take the prize as China’s first listed group buying site. It’s still not completely certain that 55Tuan will be the first, since the company made previous attempts at such an offering but ultimately had to scrap the deal due to lack of interest. Read Full Post…
Bottom line: JD.com CEO Richard Liu needs to behave more professionally in his business and personally lives, or risk seeing the reputation of his company suffer.
JD.com CEO love saga buzzes in cyberspace
China’s high-tech world is filled with colorful personalities, but few have managed to capture the public’s imagination like JD.com (Nasdaq: JD) founder Richard Liu, or Liu Qiangdong, whose love life has been the source of major headlines this week. I personally find such this kind of chatter entertaining but don’t usually write about it, because it’s not really related to the companies these executives represent. But in this case Liu’s antics are an increasing embarrassment to JD.com, and don’t seem fitting for an e-commerce giant that generated nearly $5 billion in revenue in its latest reporting quarter and has a market value of $34 billion. Read Full Post…
Bottom line: Ctrip’s latest M&A reflects the growing scarcity of good acquisition targets for cash-rich Chinese Internet firms, which could pressure them to issue dividends or launch share buy-backs.
Ctrip makes UK acquisition
A new overseas purchase by leading online travel agent Ctrip (Nasdaq: CTRP) is drawing yawns from investors, reflecting the very real fact that Chinese Internet firms have far too much cash in their coffers and no place to spend it. This particular dilemma is one that most western companies would love to have, since excess cash can be used for not only M&A and organic expansion, but also to pay dividends or buy back shares. But in the case of Chinese companies, a big chunk of the cash has been raised in a series of massive bond and share offerings over the last 2 years, meaning it would be strange to turn around and return the money to investors through a dividend or share repurchase. Read Full Post…
