Bottom line: A Yidao Yongche merger with Uber China continues the rapid consolidation in China’s hired car services, which could be followed soon by a successful bid by Uber and Baidu for Nokia’s digital mapping division.
Yidao Yongche to merge with Uber China
Rapid consolidation is taking place in China’s hired car services market, with word that a new alliance is shaping up between major local player Yidao Yongche and an existing tie-up between global giant Uber and local Internet search leader Baidu (Nasdaq: BIDU). As a longtime Chinese Internet watcher, I’m quite surprised at the sudden and rapid speed of consolidation in this particular sector, since such consolidation in other areas tends to be a slow and painful process that often takes years.
A major factor behind this sudden and rapid consolidation could be the participation by all 3 of China’s top Internet players, including Baidu, alongside social networking giant Tencent (HKEx: 700) and e-commerce leader Alibaba (NYSE: BABA). Two of those companies are also involved in a related headline that is seeing Baidu and Tencent making separate bids for the digital mapping division being sold off by former cellphone giant Nokia (Helsinki: NOK1V). Read Full Post…
Bottom line: China Mobile Games could be combined with Shanda Games if buyouts for the 2 companies succeed, followed by a re-listing in China that could gain strong interest from local investors.
China Mobile Games joins de-listing queue
The latest news that China Mobile Games (Nasdaq: CMGE) has received a buyout offer won’t surprise anyone, as it becomes the latest New York-listed Chinese Internet firm to receive such a bid due to its low valuation. What does come as a slight surprise is investor reaction to the bid, which saw China Mobile Games’ share price drop to well below the offer price. The could reflect some skepticism about the quality of this particular bid, which is coming from a Chinese securities brokerage.
This deal marks the latest in a long string of similar buyouts for US-listed Chinese firms whose shares have often languished in New York due to lack of interest from western investors who are unfamiliar with these names. Many of the companies are eying quick re-listings in their home China market, where they believe they can get valuations that are as much as double what they were worth in New York. Read Full Post…
Bottom line: China’s largest corporations need to face stiffer regulatory penalties to ensure their compliance with Beijing rules, as part of a campaign to clean up the country’s business climate.
More strictness needed in Alibaba, telco cases
Some of China’s leading high-tech firms were in the headlines last week for foot-dragging in response to government calls to change their business practices, in separate cases that show why Beijing needs to get more aggressive about enforcing its rules among big domestic corporations.
The first case saw e-commerce giant Alibaba (NYSE: BABA) sued by one of the world’s top makers of luxury goods for allegedly refusing to clean up its popular sites of trafficking in pirated goods. The second saw critics accuse China’s 3 major mobile carriers of taking largely empty steps to improve their mobile data pricing and speeds, after Beijing called on them to take such action. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 20. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
Uber Joins Baidu (Nasdaq: BIDU) As Nokia’s Maps Unit Draws Multiple Bidders (English article)
Bank of Communications (HKEx: 3328) Agrees To Buy 80 Pct Of Brazil’s BBM (English article)
China’s Unigroup Says Wins Bid To Buy 51 Pct Stake In HP (NYSE: HP) Unit (English article)
Bottom line: Focus Media could complete its backdoor listing in Shenzhen within the next month, kicking off a new wave of similar migrations by formerly US-listed Chinese firms looking for higher valuations from local investors.
Focus Media to list in Shenzhen via Hongda
Faded outdoor advertising specialist Focus Media is inching towards its goal of becoming China’s first formerly New York-traded firm to re-list in its home market, with reports that it has selected a Shenzhen-listed company to make a backdoor IPO. This particular migration has been in the works for more than a year now, and could end soon with this backdoor IPO that would see Focus take over the public listing of Hongda Building Materials (Shenzhen: 002211). Read Full Post…
Bottom line: Yingli is in increasing danger of defaulting on its heavy debt load, which could result in a rapid and disorderly bankruptcy if its hometown government fails to provide support.
Yingli struggles under heavy debt
After sending out a steady series of distress signals over the last few weeks, solar panel maker Yingli (NYSE: YGE) has sent out its strongest trouble sign yet as it struggles under a huge debt load. The most recent signal comes in a new filing with the US securities regulator, in which Yingli says its big debt could threaten its ability to survive, potentially making it the latest casualty in a clean-up of China’s bloated solar panel sector. Such an outcome would see Yingli follow in the footsteps of former high-flyers Suntech and LDK, and would raise the question of whether others may soon follow down a similar path. Read Full Post…
Bottom line: The accelerating pace of deals by Alibaba and its founder Jack Ma could be cause for concern, potentially overwhelming the company and Ma and creating headaches as they work to integrate so many new tie-ups.
Alibaba in new deal frenzy
It’s no secret that e-commerce giant Alibaba (NYSE: BABA) has been on a buying binge over the last 2 years, snapping up billions of dollars worth of smaller companies and forging new alliances as it tries to get into just about any Internet and media business it can find. But even a veteran industry watcher like myself is getting dizzy this week by the accelerating series of deals, which has seen the company and its charismatic founder Jack Ma in at least 4 headlines involving major new tie-ups in a wide variety of spaces.
One of those is coming in the logistics space, with Alibaba announcing its purchase of a stake in a major Chinese parcel delivery service. Another comes in entertainment, where the company is reportedly in talks for a smart TV joint venture with PC giant Lenovo (HKEx: 992). Yet another deal is in finance, with Jack Ma reportedly buying a stake in the Hong Kong-listed Reorient Group (HKEx: 376). And all of those deals are coming a day after media reported that Ma has become a new investor in the sports entertainment unit of online video services high-flyer LeTV (Shenzhen: 300104). Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 19. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════════════
Focus Media Eyes Backdoor Listing Using Hongda New Materials (Chinese article)
Yingli (NYSE: YGE) Falls On Saying ‘Substantial Doubt’ It Will Continue (English article)
Xiaomi Opens Its Online Accessory Shop In The US And Europe (English article)
China Mobile (HKEx: 941) Establishes Mobile Internet Partnership (HKEx announcement)
JD.com (Nasdaq: JD) Invests $170 Mln For 10 Pct Of Software Maker Kingdee (Chinese article)
Bottom line: Netflix may be in talks to enter China through a joint venture, but is unlikely to reach a deal for at least the next 1-2 years due to regulatory turbulence and tough restrictions in the rapidly changing market.
Netflix eyes China
Investors are getting excited about reports that leading US video streaming site Netflix (Nasdaq: NFLX) is in talks to come to China, in what would be the first such move by a major foreign video operator. The prospect of such a move would indeed be exciting, especially since it could come in partnership with a company closely tied to Chinese e-commerce leader Alibaba (NYSE: BABA). But I would caution that this particular market is a very tricky one due to China’s strict censorship policies, and also recent resistance to private companies from traditional state-owned TV stations. Read Full Post…
Bottom line: Shares of Youku Tudou and Vipshop are likely to remain stable over the next few weeks, as the former moves towards a rumored merger with iQiyi and the latter fends off a short seller attack.
Vipshop likely to fend off short seller attack
Two stories with big implications for individual company stocks are in the news as we begin the new week, led by a denial from Baidu-backed (Nasdaq: BIDU) online video site iQiyi that it’s in talks for a merger with large rival Youku Tudou (NYSE: YOKU). The other big news has high-flying discount e-commerce site Vipshop (NYSE: VIPS) coming under a short-seller attack, prompting it to issue not one but two separate statements denying the allegations. The week ahead could be bumpy for both of these stocks, which is why I’m weighing in with my own view of what may be happening behind the scenes. Read Full Post…
A growing number of Chinese and foreigners in Shanghai know the story of European Jewish refugees who fled to the city during World War 2, thanks to frequent media coverage and other publicity for this unusual wartime story. But far fewer know that this tale that saw more than 20,000 Jews escape Nazi persecution in Shanghai almost had a far more sinister ending.
Strangely enough, it was the Japanese military, which brought so much suffering to others in China and Asia during the war, which was the unlikely hero in this case. As people around the world observe the 70th anniversary of the end of World War 2, it seems only fitting that we remember not only the many tales of tragedy and bravery, but also the many smaller strange twists and turns that often can mean the difference between life and death during wartime. Read Full Post…
