Bottom line: New quarterly earnings data show that China’s travel industry is on the cusp of a slowdown likely to last for at least the next 2 years, while a major new fund set up by Ctrip shows the sector still has strong longer-term growth potential.
Ctrip-backed Ocean Link launches $400 mln travel fund
A couple of items from the travel space are casting a spotlight on the risks and rewards of China’s travel sector, which has huge potential but is also susceptible to economic cycles. Highlighting the big potential is word of a new $400 million fund being launched by leading online travel agent Ctrip (Nasdaq: CTRP) and US private equity firm General Atlantic to invest in Chinese travel-related projects. Meantime, the downside was showing up in the newest results of BTG Hotels (Shanghai: 600258), whose first-half profit plunged after its recent buyout of budget hotel specialist Homeinns. Read Full Post…
Bottom line: Wanda’s recent steam of announcements for multibillion dollar deals, including the latest for a $10 billion entertainment complex in Shandong, are mostly hype, and many will never get completed.
Wanda announces new multibillion-dollar project in Shandong
It used to be that I would get quite excited on seeing the word “billion” when used in connection with new investments, since such major sums are relatively rare. But these days the word is becoming almost a cliche in China, and one of the most egregious abusers of the figure is real estate and aspiring entertainment giant Wanda Group. True to that tendency, Wanda and its increasingly chatty chief Wang Jianlin have just announced yet another multibillion-dollar investment, this time for an entertainment complex in the industrial city of Jinan in eastern China’s Shandong province. Read Full Post…
Bottom line: A Chinese group’s latest purchase of British soccer club shows China’s appetite for overseas sports teams is moving to smaller entrepreneurs and lower profile assets, in a trend that could expand to North America over the next year.
Perhaps it’s Olympic fever that’s behind China’s latest global sports purchase, with word that yet another local entrepreneur has taken over a western sports club. This time it’s UK soccer club West Bromwich Albion that’s being purchased by a Chinese group led by a local entrepreneur named Lai Guoquan that’s making headlines, in what one report is calling the first purchase of an English Premier League soccer club by a Chinese buyer. (English article; Chinese article)
Of course I’m being a bit facetious by tying this latest sports sale to the Rio Olympics, which opened over the weekend in Brazil. That’s because this latest Chinese soccer purchase has been in discussions for a while, and the team has been on sale for nearly a decade. The reports say this particular deal was actually reached back in June, and that it still requires approval from the Premier League. Read Full Post…
Bottom line: China’s anti-trust regulator is moving cautiously in approving the Marriott-Starwood merger because it involves 2 major global brands with a big presence in the high end of the market, but will ultimately approve the deal.
China extends anti-trust review for Marriott-Starwood merger
China is once again creating problems for an offshore M&A deal that would create the world’s largest hotel company, with word that it’s extending an anti-trust review period for the landmark merger of US hotel giants Marriott (NYSE: MAR) and Starwood (NYSE: HOT). Industry watchers got some brief entertainment earlier this year when Chinese insurer Anbang sparked a bidding war with its surprising offer for Starwood, operator of the Sheraton and Westin brands that had already agreed to be acquired by Marriott. Anbang later dropped that bid, but now more delays are coming from China, where the anti-trust regulator says it needs more time to review the deal. Read Full Post…
Bottom line: China Logistics’ IPO could rise 5-10 percent in its trading debut, while AirAsia could list in Hong Kong by year end and online lender Qufenqi could follow with an IPO in the first half of 2017.
AirAsia Eyes Second listing in HK
Hong Kong IPOs continue to heat up as we head into the heart of summer, with word of a major new listing from China Logistics Property and reports that budget carrier AirAsia may also be eyeing an offering in the market. Meantime, Qufenqi, the hot online lender that targets students, has just raised a hefty 3 billion yuan ($450 million) in new funding, in a prelude to what could become one of next year’s hottest IPOs. All of this comes against the backdrop of a looming mega offering by China’s Postal Savings Bank, whose $8 billion fund-raising target would make it the world’s biggest IPO since Alibaba’s (NYSE: BABA) blockbuster $25 billion offering 2 years ago. Read Full Post…
Bottom line: HNA’s bid for a major aircraft lessor and purchase of a top airline catering firm extend a buying spree that could top $10 billion and position it as a major global player for travel-related products and services.
HNA chases aircraft lessor, buys Swiss caterer
The recently acquisitive HNA Group is continuing its global buying spree, with reports that it’s a leading contender to buy one of the world’s leading aircraft lessors, and that it’s agreed to purchase a top global airline caterer. The first deal has HNA bidding for the aircraft leasing business of CIT Group (NYSE: CIT), which is valued at $3-$4 billion; while the second has HNA agreeing to buy Gategroup for $1.5 billion. These latest deals come just months after HNA has made major investments and purchases in the travel sector in Australia, South America and Europe. Read Full Post…
Bottom line: Qunar looks like the latest Chinese buyout candidate to become involved in a contested bidding war, while Autohome is unlikely to succeed in efforts to stop the sale of a stake in the company by its largest shareholder.
Qunar gets surprise buyout offer
A flurry of headlines from the wave of privatizations by US-listed Chinese companies are in the news as the week winds down, led by word that online travel site Qunar (Nasdaq: QUNR) has become the latest to get a buyout offer. Qunar wasn’t the only one lining up to leave New York, as game specialist Sky-mobi (Nasdaq: MOBI) also announced its own plan to go private. Meantime, a hotly contested privatization by online car specialist Autohome (NYSE: ATHM) has taken a few new twists, and wind power equipment maker Ming Yang (NYSE: MY) says it has just completed its own previously announced privatization. Read Full Post…
Bottom line: The new Shanghai Disneyland may ultimately need to lower prices and control admittance to avoid negative publicity that could hurt its image, forcing analysts to lower some earlier bullish forecasts for the resort.
Shanghai Disney opens with fanfare
I do feel like I’ve written just a tad too much about the new Disney (NYSE: DIS) Resort here in Shanghai, which has just held its carefully scripted grand opening with surprisingly few glitches or negative publicity. But then again, the $5.5 billion investment is likely to be the largest for China this year, and Disney has averaged less than one new park per decade since opening its first Disneyland in Los Angeles in 1955. And based on previous experience, the new Shanghai Disney resort may also land at the center of at least a few minor scandals before it finally finds a more stable long-term footing, which could include a tempering of initial bullish profit forecasts. Read Full Post…
Bottom line: Reluctance to transfer its technology killed CRI’s breakthrough deal to build the first US high-speed rail line, showing that emerging Chinese tech leaders must be more open to such transfers if they hope to succeed globally.
CRI’s high-speed train to US derails
The story that has seen China’s rapid modernization using western technology took an unusual twist last week, when a US firm aiming to build America’s first high-speed rail line abruptly canceled its tie-up with a Chinese partner over technology transfer issues. The US builder of the line connecting Los Angeles and Las Vegas was quite direct, blaming its decision on Washington’s condition requiring that rail cars for the project be locally manufactured. Read Full Post…
Bottom line: China Lodging’s revenue growth could slip into single digits by the end of the year and could start to contract in 2017, as China’s hotel industry corrects after years of strong growth.
China Lodging assists franchisees
Overbuilding and a slowing economy are taking a toll on one of China’s leading hotel operators, which has just revealed it is slashing some of the fees it charges to its franchising partners as they struggle for business. The revelations by China Lodging Group (Nasdaq: HTHT), also known as Huazhu, bode poorly for China’s broader hotel industry, which is suffering a hangover following explosive growth over the last 2 decades. Investors greeted the downbeat news by selling off China Lodging shares, which closed down 2.4 percent and have lost more than 12 percent of their value since the end of March. Read Full Post…
Bottom line: Shanghai Disneyland will suffer from teething problems in its first year, most notably negative publicity due to high prices in the park, but will gradually overcome that resistance to become one of Disney’s most profitable resorts.
Shanghai Disney set for strong opening
Everyone is buzzing about the looming opening of Disney’s first mainland China resort, so I thought I’d weigh in with my own forecast for the $5.5 billion Shanghai Disneyland set to formally open this Thursday. In addition to all the facts and figures flying about, my assessment includes a personal visit to the newest Disneyland over the past weekend for a preview visit ahead of the grand opening. I thought the crowds would be restricted during the preview period to give a good impression to visiting reporters and VIPs, but was slightly surprised to find the place quite packed. But more on that shortly. Read Full Post…
