New noises are coming from online video site Xunlei and e-commerce giant Jingdong Mall that indicate a US or Hong Kong IPO or other equity sale may be coming soon, as each looks for new cash to fund its money-losing operations. But that said, the latest signals from these 2 Internet companies indicate that neither will be able to tap a rare window in the offshore IPO market that appeared last week when commercially-focused social networking site YY (Nasdaq: YY) made the first successful public offering by a Chinese firm in New York in more than a year. (previous post)
Journalist China
Worried Baidu Invokes “Wolf Spirit” 百度寻找“狼性”
An internal company memo penned by Robin Li, one of China’s richest men and founder of Baidu (Nasdaq: BIDU), has been buzzing through the domestic media, which are interpreting the message as the sign of a looming crisis at the nation’s leading search engine. The theme of the memo revolves around the concept of the “Wolf Spirit”, which Li says has been lost at his company that pioneered the online search market in China. (Chinese article) In place of that spirit, Baidu has become a more complacent panda-like creature that simply enjoys its easy domination of the search space and the billions of dollars in advertising revenue it reaps each year from the business.
AIG, PICC In Uneasy Partnership AIG拟与人保集团建合资寿险公司
China’s young insurance market has proven attractive to foreign players for its huge potential, but has also been an extremely difficult place for them to do business due to numerous obstacles and competition from local players. That reality appears to be a major factor behind an uneasy alliance that has just been announced between US insurance giant AIG (NYSE: AIG) and Chinese counterpart PICC Group, who have signaled their intent to form a life insurance joint venture just as PICC is raising up to $3.6 billion in a Hong Kong IPO.
Alibaba, Sina Haggle on Weibo Value 阿里巴巴与新浪就微博估值陷入僵局
I was surprised to see reports today that Alibaba and Sina (Nasdaq: SINA) have reached an impasse in their rumored negotiations for the former to buy a strategic stake in the latter, since both sides clearly want this deal to happen as it would greatly benefit both. But then I had a closer look at the reports, and my conclusion is simply that the 2 sides are still negotiating in an attempt to place a value on Sina, whose popular and increasingly influential Weibo microblogging service lies at the heart of their planned tie-up. Such disagreement is standard for this kind of negotiation, and I fully expect the 2 sides to reach a deal that should be one of the most significant tie-ups we’ve seen for China’s Internet space since the merger of leading online video sites Youku (NYSE: YOKU) and Tudou earlier this year.
Xiaomi Box, WeChat Spar With Beijing 小米盒子、微信与中国政府的摩擦
A couple of items in the news today are shining a spotlight on the very real and unique risks of doing business in China from heavy-handed government oversight, with fast-rising smartphone maker Xiaomi and Internet giant Tencent (HKEx: 700) both sparring with Beijing in different own ways. Xiaomi’s situation looks the most serious with the “temporary” suspension of its newly launched Internet TV service, which probably reflects the company’s youth and inexperience at dealing with government bureaucrats. Tencent also appears to be playing a game of brinksmanship with Beijing by bringing its own unusual interpretation to a controversial “real name” registration requirement imposed on all social networking sites early this year.
Unicom Network Buy: Finally Some Strategy 联通向母公司收购固网资产
No one is writing very much about China Unicom’s (HKEx: 762; NYSE: CHU) newly announced plan to buy fixed-line networking assets from its parent, perhaps because people have lost all interest in this laggard telco that has been mired in management disorder for much of the last 2 years. Despite my own negative feelings about the company’s recent performance, I’m going to go ahead and actually praise Unicom for the move, as it finally looks like the company is doing something that has a small hint of being driven by a broader corporate strategy — something we haven’t seen for quite a while.
YY Opens Way For Chinese US IPOs YY为中国企业赴美上市破冰
The prolonged winter for Chinese IPOs in New York may finally be nearing an end, following the modestly successful listing of commercially-focused social media site YY (Nasdaq: YY). I am calling this listing “modestly successful” because it priced at the low end of its range and rose a modest 8 percent on its trading debut, which would be a good but not a great result under most circumstances. But against the broader background of a deep freeze in US investor sentiment towards Chinese companies over the last year and a half, this kind of performance could actually be considered a major breakthrough and triumph for the battered sector.
Baidu Seeks Excitment With Bonds 百度发债欲寻求兴奋点
If you can’t build it yourself, then go out and buy it. That looks like the message coming from leading search engine Baidu (Nasdaq: BIDU), which has just raised a tidy $1.5 billion in its first-ever bond offering that could be used in part for acquisitions as the company looks to diversify. Baidu surprised many, myself included, with this massive new bond offering, which comes as growth for its core search business shows signs of slowing sharply.
China Mobile 3G Stable, Weighs Fetion Move 中国电信三巨头3G市场份额企稳
The rapidly changing mobile landscape is creating some interesting challenges for China Mobile (HKEx: 941; NYSE: CHL), which is finally seeing its 3G market share stabilize as it reportedly may be weighing a bid to buy out the partner for its fading Fetion mobile messaging service. The 3G news is clearly the more important in this pair of news bits, and probably reflects a combination of factors that should bode well for China Mobile as Beijing gets set to issue new 4G licenses. Meanwhile, the latter rumors involving Fetion is probably more wishful thinking from Fetion’s current owners, who would like to get some money for their instant messaging platform which is rapidly being overtaken by newer smartphone applications, most notably Tencent’s (HKEx: 700) WeChat.
M&A: CNOOC Yields, AgBank Insures 中海油为收购尼克森再让步 农行收购嘉禾人寿股份获批
I’ll start the day with a look at news on 2 M&A deals, one domestic and one international, that show how difficult such transactions still are for Chinese firms. The first involves what looks like a big step forward in oil major CNOOC’s (HKEx: 883; NYSE: CEO) bid for Canadian rival Nexen (Toronto: NXY), which is controversial only because of its political overtones. The second involves Agricultural Bank of China’s (HKEx: 1288; Shanghai: 601288) receipt of regulatory approval to buy a controlling stake of an insurance company named Jiahe, though in this case what’s most interesting is the long amount of time it took to win the approval.
M&A: HSBC Dumps Ping An, Sinopec in Nigeria 汇丰拟售平保股份 中石化收购尼日利亚石油资产
Two new mega-deals on the M&A front are highlighting the fact that foreign companies are shedding assets as they look to improve their performance during the global downturn, providing both risks and opportunities for major Chinese firms. On the risk side of the equation, Ping An Insurance (HKEx: 2318; Shanghai: 601318) is learning the hard way that having a big foreign investor has both its advantages and disadvantages, as global banking giant HSBC (HKEx: 5; London: HSBA) prepares to dump its $9.5 billion stake in the company. On the positive side, oil refiner Sinopec (HKEx: 386; Shanghai: 600028) could be getting a good deal with its new $2.5 billion purchase of Nigerian oil assets from Total (Paris: TOTF) as the French oil giant looks to raise cash to boost its exploration operations.
