Bottom line:Alibaba’s stock is likely to face downward pressure through the end of the year, but could see a modest rally of up to 20 percent in 2016 as speculators pile out and founder Jack Ma enters a period of relative silence.
Jack Ma heading for hibernation after bearish year?
Many are taking advantage of the one-year anniversary of Alibaba’s (NYSE: BABA) record-breaking IPO to reflect on the past 12 months and what the future might hold for the company, especially for its stock that has gone on a roller coaster ride in that period. Many are quite subdued and even bearish on the stock, citing bad investments and a slowing Chinese economy. But I would actually take a contrarian view and say the shares could be poised for a modest rebound next year after China’s stock markets settle from their current turbulence.
My theory is rather simple. Alibaba’s stock became the plaything of speculators in the first year of trading after its $25 billion New York IPO last September became the biggest offering of all time. First it was the bulls who piled in, buying into the hype that Alibaba happily dished out about the explosive growth potential of China’s e-commerce market. More lately the bears have moved in, seizing on slowing growth, questionable investments and a piracy scandal to make some short-selling profits on the overvalued stock. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 23. To view a full article or story, click on the link next to the headline.
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LSE’s Sale of Russell Investments to Citic Securities (HKEx: 6030) May Collapse (English article)
58.com (NYSE: WUBA) to Invest in 100 O2O Firms This Year, May Lose $200 Mln – CEO (Chinese article)
Boeing (NYSE: BA) Plans 737 Plant in China, Pledges No US Layoffs (English article)
LightInTheBox (NYSE: LITB) Caught in Whirlpool of Unpaid Bills (Chinese article)
China Three Gorges Weighs $2.3 Bln Wind Investments (English article)
Bottom line: Carrefour’s new foray into upscale, lifestyle-oriented convenience stores could stand a reasonable chance of success and breathe some new life into its struggling China business.
Carrefour expands Easy convenience store concept
After tinkering with a new convenience store concept for the last year, global retailing giant Carrefour (Paris: CA) has finally come up with a smaller-store model it likes and is planning a big expansion for its new chain of Carrefour Easy convenience shops. The move is part of Carrefour’s broader overhaul of its poorly performing China operations, which the company even considered selling at one point.
I do find this particular move somewhat contrary to industry trends, since Chinese are clearly buying more and more of their products online over popular services like Alibaba’s (Nasdaq: BABA) Tmall and JD.com (Nasdaq: JD). But that said, there will always be a place for traditional shops in the bigger retailing landscape, especially convenience stores whose main audience is usually impulse buyers looking for a quick drink, a bite to eat or just a place to quickly surf the web. Read Full Post…
Bottom line: Huawei’s new push into IT services could do well due to the company’s strong background in telecoms products, and could see it form a major partnership in the area with a big global player.
IT services tie-up ahead for Huawei?
Networking equipment giant Huawei is continuing its diversification, with word that it’s planning a major push into the market for information technology (IT) services that could put it into direct competition with such giants as IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ). But perhaps more intriguing is the possibility that Huawei could form a major partnership with one of the big foreign names, amid a rise in such pairings due to restrictions on foreign firms under China’s new national security law.
Huawei began its life as a maker of networking equipment for big telecoms carriers, but more recently has tried to diversify as the global market for those products slows. It has pushed into networking equipment for enterprises, and more recently has found growing success with smartphones. But IT services has remained a relatively small portion of the business, expected to reach $2 billion in sales this year. That would be just a tiny portion of the 288 billion yuan, or about $45 billion, that Huawei posted in revenue last year. Read Full Post…
Bottom line: Recent moves by Baidu, SouFun and 7 Days reflect frustration by Chinese companies at lack of understanding by western stock buyers, but also spotlight the need for these companies to better educate investors about their stories.
Better investor education needed from Chinese companies
A trio of headlines last week highlighted the growing financial alternatives for high-growth Chinese companies that have lately felt unappreciated by global stock buyers. The news was quite varied, led by a threat from online search leader Baidu (Nasdaq: BIDU) to privatize its shares from New York, and a large new investment by 2 major private equity firms in online real estate services giant SouFun (NYSE: SFUN). Meantime, the formerly New York-listed 7 Days hotel chain was in headlines as it sold itself to Shanghai’s Jin Jiang International (HKEx: 2006; Shanghai: 600754).
Each of these stories is quite different, but all reflect a growing arsenal of tools that high-growth private Chinese companies have to boost their profiles and valuations as they become more skilled at playing in global financial markets. At a more fundamental level, each of these moves also represents a form of education for investors, which is critical to helping outsiders understand a group of companies from China’s vibrant but still largely unknown private sector. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 22. To view a full article or story, click on the link next to the headline.
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Carrefour (Paris: CA) to Double China Convenience Stores by Chinese New Year (Chinese article)
Suning (Shenzhen: 002024) Logistics Begins Delivery Service for Tmall Supermarket (English article)
Xiaomi Caught in New Switcharoo Scandal for Redmi 2A Screen (Chinese article)
China’s Sky Solar (Nasdaq: SKYS) Soars After Signing $100 Mln Funding Pact (English article)
TAL Education (NYSE: XRS) to Acquire Firstleap Education (PRNewswire)
Bottom line: Qihoo’s settlement of its dispute with Coolpad could ultimately see the former buy out their joint venture, leaving the latter open to a takeover by LeTV.
Qihoo, Coolpad settle JV dispute
Security software specialist Qihoo 360 (NYSE: QIHU) and smartphone maker Coolpad (HKEx: 2369) have announced a settlement in the spat over their troubled joint venture, though this hardly looks like the end of an entertaining story that has captivated China’s high-tech world for the last few months. This kind of settlement seemed likely, after Qihoo tried to forcibly sell its stake in the joint venture to Coolpad over claims that the latter had violated an anti-compete clause in their agreement.
Qihoo and Coolpad formed their joint venture last year, and Qihoo made its complaint after Coolpad later formed another smartphone manufacturing partnership with online video company LeTV (Shenzhen: 300104) in June. Now Qihoo says it has settled its dispute by agreeing to boost its stake in the Coolpad joint venture to 75 percent, giving it clear control of the enterprise. Read Full Post…
Bottom line: The bankruptcy of Tianwei signals Beijing will allow a new round of failures for weaker solar panel makers, with YIngli and ReneSola the most likely to come under pressure.
Future looks bleak for Tianwei
News that solar panel material maker Baoding Tianwei is on the brink of collapse has sent shudders through the entire sector, as everyone guesses who might be next to fall in a looming new clean-up of China’s bloated industry. Tianwei has been in trouble for a while now, after the company became the first state-run firm to ever default on a domestic bond interest payment back in April.
That development certainly didn’t bode well for Tianwei, but it remained unclear if the local government or Beijing would ultimately step in to bail out the company and save its investors. Now we finally have the answer to that question, following media reports that Tianwei and 3 of its business units are formally filing for bankruptcy. (English article; Chinese article) Read Full Post…
Three headlines involving pets in and around Shanghai are shining a spotlight on just how fast dogs and cats have multiplied on our city streets, and the many conflicts arising as a result. As someone who grew up with both dogs and cats in my home, I can certainly understand the attraction of having pets as part of a household environment with children.
But that said, some Shanghai residents seem to be taking the pet phenomenon to levels unseen in the west, putting themselves in growing conflict with people who would prefer to return to a pet-less past that was the norm in China until recently. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 19-25. To view a full article or story, click on the link next to the headline.
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Bottom line: Didi Kuaidi’s Lyft investment looks smart but will disappoint those hoping for a more aggressive move into the US, while a new taxi app backed by 2 Beijing fleet operators is unlikely to pose a major challenge to private rivals.
Didi Kuaidi drives into US with Lyft investment
Anyone with big hopes for Chinese hired car services leader Didi Kuaidi following its latest mega fund-raising will be disappointed to hear the company’s highly anticipated move to the US is coming through a minor investment that’s unlikely to yield much results. Many were hoping for bigger things from this aggressive Chinese company, but instead Didi Kuaidi looks set to enter the US through an investment and strategic tie-up with local partner Lyft, a rival of the more high-profile and very aggressive Uber.
My view that many will be disappointed by this move is sincere, but at the same time I would also add that Didi Kuaid’s decision to avoid the US for now looks quite shrewd. History has shown that Chinese start-ups have far better prospects when they make developing markets the first stop on their global expansion road maps, rather than focusing on western markets that are lucrative but also far more competitive. Read Full Post…
