Journalist China

Business news from China By Doug Young.
Doug Young, journalist, has lived and worked in China for 20 years, much of that as a journalist, writing about publicly listed Chinese companies.

He is based in Shanghai where, in addition to his role as editor of Young’s China Business Blog, he teaches financial journalism at Fudan University, one of China’s top journalism programs.
He contributes regularly to a wide range of publications in both China and the west, including Forbes, CNN, Seeking Alpha and Reuters, as well as Asia-based publications including the South China Morning Post, Global Times, Shanghai Daily and Shanghai Observer

More Stumbles for Saab Rescue, 360Buy IPO 搭救萨博和京东商城IPO两计划注定命运多舛

By on

Not surprisingly, two questionable deals that I previously predicted would run into trouble are showing new signs of problems, one in the automobile space and the other in e-commerce. The former involves a dubious plan by 2 obscure Chinese companies to help rescue Swedish automaker Saab, while the latter involves an equally questionable plan by money-losing e-commerce site 360Buy, also known as Jingdong Mall, to raise up to $5 billion in a US IPO. First Saab, whose plan to get a 245 million euro rescue loan from Chinese firms Youngman Lotus and Pangda Automobile (Shanghai: 601258) looked destined to fail from the beginning, as China’s state planner was unlikely to approve such a loan. (previous post) Now foreign media are saying the Chinese pair have instead offered to buy Saab outright for a much smaller cash infusion, an offer that Saab’s owner has rejected. (English article) It’s hard to say exactly what is happening here, but my guess is that the Chinese pair modified their offer — knowing full well it would be rejected — after realizing or being told their original proposal would never get Chinese government approval. Regardless of the reason, this development probably means the end of the road for near-bankrupt Saab, whose hopes on China for a rescue never really had a serious chance of success. As to 360Buy, Chinese media are reporting more delays in the money-losing company’s planned mega-IPO, which made headlines when it suddenly leaked the news last month. (Chinese article) Just a week after word of the IPO plan first emerged, the company, whose investors include Russia’s Digital Sky Technologies, already leaked once that it was delaying the move. (previous post) This new report cites an insider saying the latest delay is due to weak market sentiment, and an IPO won’t happen until the first half of 2012 at earliest. Even that sounds extremely optimistic to me, and I wouldn’t expect to see this company raise any money from Wall Street until 2013 or later.

Bottom line: Plans for a China rescue for Saab and a mega-IPO from 360Buy are, as expected, turning out to be overly optimistic, with neither likely to happen anytime soon.

Related postings 相关文章:

◙ Message to Saab: Don’t Count on China 萨博不应指望中国注资

◙ 360Buy IPO: Let the Delays Begin 京东商城放缓IPO进程

◙ 360Buy $5 Bln IPO Plan Looks Like Desperation 京东商城50亿美元上市计划凸显绝望

 

China Mobile: Poor 3G Approach Yields Weak Results 中移动3G策略不当 拖累公司三季度业绩

By on

China Mobile (HKEx: 941; NYSE: CHL) continues to struggle under the uninspired leadership of outgoing Chairman Wang Jianzhou, with third-quarter profit growth slowing to 3.7 percent, or about half the second quarter’s rate of 7 percent. (English article) I’m probably being too tough on Wang, as clearly fierce competition for 3G subscribers with rivals China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) is the main reason for the profit slowdown. In fact, China Mobile has boosted its 3G subscriber campaign considerably in the last few months, as more phones and other devices that can run on its homegrown technology come to market. But while Wang should be commended for finally using China Mobile’s dominant market position to promote 3G, he continues to provide uninspired leadership that simply sees the new standard as a way to power cooler-looking smartphones, many of them low-cost models made by the likes of ZTE (HKEx: 763; Shenzhen: 000063) and Huawei. Instead of focusing on this lower end of the market, Wang and China Mobile should be chasing higher-end subscribers who use 3G for its powerful data transferring speeds to enable a wide range of mobile Internet applications, which provide much fatter profit margins. Instead, most of my friends here in Shanghai still overwhelmingly use 3G services from Unicom and China Mobile for their wireless web surfing, even though most complain of spotty coverage: a shortcoming that China Mobile could easily exploit to steal some of these more lucrative subscribers. It looked for a while like China Mobile might get some help at the high end with the roll-out of a 3G iPhone from Apple (Nasdaq: AAPL) for its service, but suddenly that initiative seems to have gone quiet. (previous post) As I’ve said before, Wang was an OK leader for his time, helping China Mobile consolidate its position as the country’s dominant mobile carrier during his 5 or 6 years as chairman. But he really needs to step down soon, a development that looks likely, and hand over the company to younger new leadership that really understand where the mobile world is heading.

Bottom line: China Mobile’s uninspired third-quarter results are largely a result of its poor approach to the 3G market.

Related postings 相关文章:

◙ China Mobile: Where’s the 3G iPhone? 中移动4G网络稳步推进 3G版iPhone或遇阻

◙ China Mobile Shuffle: Sea Change Coming? 中移动高层变动或引发重大变化？

◙ TD-LTE Hits First Delay, More to Come? TD-LTE技术首次延期 未来还会更多？

News Digest: October 21, 2011

By on

The following press releases and media reports about Chinese companies were carried on October 21. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ China Mobile (HKEx: 941) Net Misses Estimates as Competition Cuts Margin (English article)

◙ Suntech (NYSE: STP) Responds to Solar Trade Petition (PRNewswire)

◙ Saab Owner Spurns Chinese Takeover (English article)

◙ Baidu (Nasdaq: BIDU) Receives RMB 100 Mln in Government Cloud Subsidies – Report (English article)

◙ 360Buy Slows Down US IPO Process, Still Seeking Foreign Underwriter (Chinese article)

China Solars Brace for Icy 2012 With US Trade Complaint 中国太阳能产业需直面美欧关税壁垒

By on

After a month of tough-talk on Capitol Hill blasting China’s generous subsidies for its solar sector, the inevitable has happened and a group of leading US solar panel makers has filed to have punitive tariffs leveled against their Chinese rivals. The group, led by the US arm of Germany’s SolarWorld (Frankfurt: SWV) has officially petitioned the US International Trade Commission (ITC) to level the punitive tariffs after Chinese solar makers have prospered under years of support from Beijing, which has provided a wide range of incentives like cheap costs for land and low interest loans, to create an industry that now controls more than half the global market. (complaint announcement) Chinese solar firms, already suffering in the global sector’s worst-ever downturn due to overcapacity and weak demand, saw their shares plunge to near new all-time lows on the news, with Suntech (NYSE: STP), Trina Solar (NYSE: TSL) and Yingli Green Energy (NYSE: YGE) all down 6-9 percent in New York trading on Wednesday. I have to admit that the rapid speed of this latest development has surprised even me. It was only a month ago that the US House of Representatives launched hearings into this matter (previous post), after a major firm, Solyndra, became the latest US victim to declare bankruptcy, in part due to stiff competition from China. Since then, governments in both the US and Western Europe, the world’s two largest markets for solar panels, have shown strong support for punitive tariffs, which, in the case of the US, is motivated partly by politicians’ desire to look tough on China in the year before presidential elections in 2012. With such strong Congressional backing, the filing of a complaint by US solar firms to the ITC is likely to get a quick hearing and could result in punitive tariffs being levied as soon as the end of the year, in my view. Punitive tariffs in Western Europe could follow a short time later, casting a huge chill over the Chinese sector until Beijing makes some very open moves to show it is cutting back on its generous subsidies. Either way, Chinese solar firms and their stocks are looking at a chilly climate in 2012, with no relief in sight until the second half of the year at earliest depending on how Beijing reacts.

Bottom line: China’s solar panel makers will face a chilly 2012 following the filing of an unfair trade complaint against them in the US and the likelihood of similar action in Europe.

Related postings 相关文章:

◙ US Solar Probe: Get Ready for China Bashing 美国太阳能调查：炮轰中国大潮的前奏

◙ China Brushes Off Western Protest With New Ming Yang Support 明阳获巨额融资 表明中国不理会西方反对

◙ More Solar Woes With Plunging Prices

 

China Regulors Threaten E-Commerce, Group Buying 官方监管威胁到电子商务与团购业务

By on

After standing aside and letting its online sector develop largely unhindered for the last decade, China is suddenly showing a worrisome trend of trying to regulate everything on its often unruly Internet, a move that, while needed, could also interfere with market forces. In separate developments on the same day, media are reporting Beijing is preparing to regulate both its group buying sites as well as its e-commerce sector to bring more order to these spaces that have become ultra-competitive in the last 1-2 years. (group buying article; e-commerce article) In this case the reason behind each move is unrelated. For group buying, the reason seems simply to be a desire to regulate an industry that has become ultra-competitive, with quality control virtually non-existent and many players teetering on the brink of closing. (previous post) For e-commerce, the issue is directly related to a massive fee hike last week by Alibaba’s Taobao Mall, China’s leading B2C site, that led to an uprising by smaller merchants who complained they were being targeted for elimination from the site. These two new rounds of regulation for major emerging sectors follow other recent reports that China will soon regulate the vibrant micro-blogging space, and months after it issued its first round of electronic payment licenses and as it prepares to issue online mapping licenses. There definitely seems to be a trend emerging here, which looks a bit worrisome in light of Beijing’s past record at heavy-handed interference in emerging tech sectors. In one case a few years back, Beijing’s heavy regulatory hand effectively killed a vibrant SMS industry that was once a major source of revenue for the likes of Sina (Nasdaq: SINA), Sohu (Nasdaq: SOHU) and NetEase (Nasdaq: NTES). It has also attempted to regulate online games from time to time, which may be partly responsible for that industry’s unexciting growth profile of recent years after years of explosive growth. While some form of direction is certainly needed to bring order to the unruly e-commerce and online auction sectors, it’s far from clear to me that this direction needs to come from Beijing, which instead would be better advised to provide some “guidance” and let market forces do the main work.

Bottom line: New campaigns by Beijing to regulate e-commerce and online auctions are misguided efforts that will ultimately severely hamper growth in both sectors.

Related postings 相关文章:

◙ Taobao Mall’s IPO March Collides With Merchant Uprising 淘宝商城IPO或因商户“起义”被推迟

◙ Group Buying Turmoil Grows With 55tuan Layoffs 窝窝团撤站裁员 团购业整合在即

◙ Investors Punish Sina for Slow Weibo Progress

New Oriental Results: Slowing Education Growth Story 新东方发表最新财报 中国教育服务增长减速？

By on

Leading Chinese education firm New Oriental’s (NYSE: EDU) latest results show a company heading into a new stage of slower growth, proving that no one is immune to a slowdown once it becomes big enough and that demand for even a hot product like education is limited. In reporting results for its latest fiscal quarter, New Oriental said it expects revenue for the upcoming quarter to grow by 30-35 percent, a bit of a slowdown from the 40 percent growth in the most recent quarter but a sharp drop from the last 2 years when profit and revenue were growing in the high double-digits and even triple digit percentages. (company announcement) This kind of slowdown is inevitable for nearly any company, although it’s been surprising to see how quickly it’s come for New Oriental, which just two quarters ago was reporting revenue that rose by 60 percent and net profit that doubled. (previous post) The company’s shares shed more than 10 percent after the results came out, even as Wall Street saw a broader rally, as investors realized that all good things must end, and no one is immune to growth slowdowns. Growing competition from foreign players like Disney (NYSE: DIS) and DeVry (NYSE: DV) are also making life more difficult, and Beijing’s recent efforts to cool China’s economy probably aren’t helping either. New Oriental didn’t provide any color for its guidance, but in reality this kind of slowdown is natural for any company in the industry and I suspect the Wall Street sell-off represents some profit taking from investors who have still seen strong returns on New Oriental’s shares over the last 2 years. Shares of one of New Oriental’s biggest rivals, TAL Education (NYSE: XRS) were also down more than 10 percent on Tuesday, signaling China’s education boom has probably reached its peak, and growth will enter a new slower phase.

Bottom line: New Oriental’s latest results and outlook show that boom times for education services firms have come to an end, to be replaced by slower growth in the next 2 years.

Related postings 相关文章:

◙ Education: DeVry Deal Showcases Corporate Opportunity

◙ New Oriental Shows Why Education Pays 新东方告诉你为何教育会有回报

Kaxin Buys Time With Tencent Tie-Up 开心网与腾讯合作堪称一箭双雕

By on

Kaixin, one of China’s top social networking service (SNS) sites, has discovered that Wall Street doesn’t necessarily like money-losing companies and has turned instead to Internet titan Tencent (HKEx: 700) for a cash infusion that looks like a shrewd move as China’s Internet bubble shows signs of correcting. A company spokesman has confirmed receiving the investment, though he wouldn’t elaborate on the size or nature of the tie-up. (English article) From my perspective, this is exactly the kind of investment that all money-losing Chinese web firms should be seeking, rather than rushing to make IPOs that simply tell the world how much money they are losing and forcing them to focus more on becoming profitable rather than building their business. The new tie-up with Tencent comes after another Chinese Internet leader, top web portal Sina (Nasdaq: SINA), has already invested in the company, giving Kaixin two very potent partners to help it build up its SNS business, whose growth founder Cheng Binghao previously said is starting to slow. (previous post) Like many of its Internet peers, Kaixin was previously gearing up to make a New York IPO, even though it was still losing money; but this Tencent investment appears to signal it has shelved those plans for the moment in favor of building up its business and waiting for sustained profitability before going public. Kaixin’s main rival, Renren (NYSE: RENN), was among a group of money-losing China web companies that went public starting late last year when their shares were in big demand from investors keen to buy into the China Internet growth story. Since then, however, sentiment has cooled considerably to all US-listed China firms, partly due to realization that China’s Internet was a bit overhyped. After jumping 30 percent on its trading debut in May, Renren’s shares have moved steadily downward and are now trading 60 percent below their IPO price. By bringing in Tencent as a new investor, Kaixin is not only giving itself more time to become profitable, but once it does go public should also avoid the kind of volatility that Renren has seen.

Bottom line: Kaixin’s new investment from Tencent looks like a good tie-up, and will give it more time to become profitable and avoid an unfriendly IPO market for China Internet stocks.

Related postings 相关文章:

◙ Gaopeng, Kaixin Spotlight China Internet Turmoil 高朋网、开心网凸显中国互联网混乱现状

◙ Renren Results: A Mixed Bag for Everyone 人人网业绩：苦乐参半

◙ Sina’s Latest Weibo Move Looks Like SNS 新浪似要发展社交网站

盛大拟退市：是动真格还是虚晃一枪？

By on

科技行业今日头条绝对是盛大网络<SNDA.O>宣布其创始人兼总裁陈天桥计划将公司私有化。过去几个月，由於信任危机，赴美上市的中国企业股价大跌。问题是，陈天桥是否要动真格，如果确实如此，其它公司或将仿效，争取其他投资者看好其股票。陈天桥给出的美国存托股（ADS）回购价为每股41.35美元，较其上周五收盘溢价24%。我预计，在很大程度上，这是一个噱头，陈天桥实际上无意执行。此举显然不具约束力，也印证了市场猜测，上述消息公布後，盛大网络股价上涨14%，但周一收盘价仍为38.33美元，远低於陈天桥提出的回购价格。中国一些观察人士称，盛大网络在国内市场更知名，陈天桥或是为盛大回归A股做准备，何况国际板或在明年前後上市。这也可能是个长期过程，盛大可能要耐心等待一段时间，因为中国移动<0941.HK; CHL.N>、联想<0992.HK>、汇丰控股<0005.HK; HSBA.L>等许多大公司也在推进国际板上市，并可能获得优先权。另外，盛大没理由不能同时在中美上市，因此其在美国退市更没必要。总之，陈天桥喜欢得到关注，私有化会让盛大暂时黯淡，他无疑不希望这样。那麽，最近盛大拟私有化的动向更像一场作秀，尽管目前市场人气不利，盛大及其他在美上市的中国企业不会从海外退市。

一句话：盛大网络管理层计划进行公司私有化，此举更多只是一个噱头，不会真的发生，在美上市的其它中国企业不大可能采取类似行动。

相关文章:

◙ 中华网打开赴美上市公司破产魔盒

◙ 在美上市中资股遭抛售 迈入股价修正新阶段

◙ 中国赴美上市公司最终还击

China Brushes Off Western Protest With New Ming Yang Support 明阳获巨额融资 表明中国不理会西方反对

By on

If China plans to cut back its subsidies to its alternate power sector in response to complaints from the West, it sure isn’t showing its intentions in a new announcement about a massive new loan support program for leading wind power equipment maker Ming Yang. (company announcement)  According to the announcement, China Development Bank, a major government policy lender, will provide Ming Yang with up to $5 billion in financing to help its customers both at home and abroad purchase its wind generation equipment. This is exactly the kind of state-backed subsidy that is at the center of a debate in both the US and Europe over solar energy, which has seen Western governments finally sit up and take notice of China’s massive support for its alternate energy sector. Punitive tariffs against China’s solar sector look almost inevitable as a result of Beijing’s huge support policies (previous post), and this kind of announcement of yet even more support for Ming Yang, even though its focus is wind and not solar power, will hardly help China’s case if it really wants to avoid such punitive tariffs, which would send a chill through its solar firms already suffering through their worst-ever downturn. If this kind of high-profile announcement is Beijing’s way of saying it has no intent to stop offering strong backing for its alternative energy makers, I would look for new punitive tariffs to come sooner rather than later and for a drawn-out standoff as neither the West nor China yields to pressure to compromise. Of course, there’s also the possibility that Ming Yang’s announcement is just very poorly timed, and China might still be willing  to curb its support for its solar energy firms. Time will tell. Meantime, one of the many struggling solar firms, Canadian Solar (Nasdaq: CSIQ) has just issued updated guidance that is very mixed. (company announcement) It says it will meet its unit sales targets for the third quarter, but that its margins will come in well below previous guidance due to stiff competition that has resulted in sharply falling prices. All this means the crisis could be easing, but it’s not over yet and it could heat up all over again if either the US or Europe issues punitive tariffs.

Bottom line: A new announcement of massive state loan support for a top Chinese wind power firm indicates China will keep strongly supporting its alternate energy sector despite Western protests.

Related postings 相关文章:

◙ More Solar Woes With Plunging Prices

◙ US Congress Turns Up Heat in China Solar Debate

◙ Tech, Environmental Issues Cast New Clouds Over Solar Firms

Shanda’s Private Ploy: For Real or Market Manipulation? 盛大拟退市：是动真格还是虚晃一枪？

By on

The big news of the day from the tech world is most certainly the announcement by online game operator Shanda Interactive (Nasdaq: SNDA) that its founder and chairman Chen Tianqiao may take the company private, in the latest development for US-listed China shares that have seen their prices plummet in the last few months amid a broader confidence crisis. (company annoiuncement) The real questions, of course, is whether Chen is really serious, and, if he is, will we see other companies follow his lead as they search for investors who better appreciate their shares. My prediction is that Chen’s offer, which would give shareholders $41.35 per ADS, or a 24 percent premium to their last closing price, is largely a stunt that Chen has no intention of actually executing. The offer is explicitly non-binding, and, in a nod to the market’s skepticism, Shanda’s shares rallied 14 percent after the announcement but still finished on Monday at $38.33, or well below the privatization offer price. Some Chinese observers said perhaps Chen wants to bring his shares back to China to list in his home market where the company is better known, perhaps on a new international board for overseas-registered firms expected to launch in the next year or so. (Chinese article) This could be a long-term possibility, although Shanda might have to wait a while, as many other bigger-name firms like China Mobile (HKEx: 941; NYSE: CHL), Lenovo (HKEx: 992) and HSBC (HKEx: 0005; London: HSBA) are already cuing to list on this new high-profile international board and will probably be given priority. In addition, there’s no reason that Shanda can’t list its shares both in the US and China at the same time, which makes a privatization of its US shares even less necessary. At the end of the day, Chen loves the spotlight and any privatization would move his company back into the shadows for a while, which he would no doubt dislike. Instead, this latest move to privatize looks largely like a show, and Shanda and other US-listed China firms will continue to maintain their overseas listings despite current negative sentiment.

Bottom line: A management-led plan to privatize Shanda Interactive is most likely just a stunt that will never happen, and other US-listed China firms are unlikely to follow with similar actions.

Related postings 相关文章:

◙ CDC Kicks Off China Bankruptcy Parade 中华网打开赴美上市公司破产魔盒

◙ US China Stocks: Bloodbath Becomes Correction 在美上市中资股遭抛售 迈入股价修正新阶段

◙ US-Listed China Firms Fight Back — Finally 中国赴美上市公司最终还击

Watch Out China Energy Majors, Here Comes India 能源公司注意：印度来了

By on

China’s energy majors may soon discover they’re not the only ones out in the international marketplace looking for assets to feed their hungry home economy, just as life at home also becomes more difficult as their domestic operations face more scrutiny over environmental issues. First a look at what’s happening overseas, where India has approved new rules allowing its state-run energy giants to pursue global M&A without first seeking government approval. (English article) The move will help to streamline a process that can delay overseas M&A bids by months, and is clearly aimed straight at economic rival China, whose CNOOC (NYSE: CEO; HKEx: 883), PetroChina (NYSE: PTR; Shanghai: 601857; HKEx: 857) and Sinopec (HKEx: 386; NYSE: SNP) have been particularly active on the global M&A scene these past few years in Beijing’s quest to make the country more energy self sufficient. As state-run companies, the China majors never bid against each other, though they frequently do come up against competition from major Western firms and aren’t afraid to overpay for assets, as exemplified by Sinopec’s plan announced this month to buy Canada’s Daylight Energy for double its market value when the deal was announced. (previous post) Look for this kind of premium to shoot even higher as Indian firms enter the fray, boding well for owners of energy assets but poorly for other big energy producers. Meantime at home, CNOOC is facing more production woes with its latest admission that one of its pipelines in the Bohai Bay had a “minor” leak and had to be shut down to make repairs. (company announcement) People who follow CNOOC will know the company and ConocoPhillips (NYSE: COP) used the word “minor” to describe a problem at one of their co-owned oilfields in Bohai Bay, even though the problem was later described by some environmental officials as a disaster. It’s probably still too early to say if this latest problem will rise to the “disaster” level. But one thing is clear, namely that CNOOC, PetroChina and other energy exploration companies in China will no longer have the rights that they had for most of the last 60 years to quietly cover up their accidents that cause major environmental damage and will have to behave more responsibly, which will ultimately hit their bottom lines.

Bottom line: India’s loosening of restrictions on foreign energy M&A means CNOOC, PetroChina and others will soon face a well-funded new competitor in the global market for energy assets.

Related postings 相关文章:

◙ Pricey M&A, Cheaper Gas Undermine Sinopec 溢价收购和成品油降价 中石化面对双重利空

◙ CNOOC Woes Spotlight Environmental Perils

◙ CNOOC’s Latest M&A: A Shaky Oil Sand Castle 中海油收购加国油砂生产商或招来更多麻烦