Bottom line: The hugely successful ChiNext IPO for video player maker Baofeng could draw more Chinese tech start-ups to consider listings at home, even though doing so will make their shares subject to huge volatility.
Baofeng sets record with meteoric stock rise
A video player maker called Baofeng (Shenzhen: 300431) is creating a storm on China’s Nasdaq-style ChiNext enterprise board, with a record-breaking meteoric rise for its shares following a late March IPO. The listing marks the end of a long path to market for Baofeng, which originally envisioned an IPO in New York but later abandoned that plan for a listing at home. The company’s hugely successful reception on the ChiNext also charts a potential major new path to market for Chinese tech start-ups, providing an attractive alternative to New York listings that have been the preferred path up until now. Read Full Post…
Bottom line: A new e-commerce joint venture by Japan’s Itochu and Thailand’s CP Group marks the latest major advance for China’s fledgling free trade zone program, whose policies should eventually expanded to the entire country.
Itochu forms new venture in Shanghai FTZ
China’s fledgling Free Trade Zone (FTZ) program got a new boost last week when a group of corporate giants from Japan, Thailand and China announced a major new retailing joint venture in the original zone in Shanghai. That news came just a week after a major expansion of the Shanghai zone, and the announcement of a plan for 3 additional FTZs in other parts of China.
This sudden expansion of the FTZ program is a welcome development for the many private companies whose growth plans have been stymied for years by China’s huge bureaucracy. That group includes not only big multinationals like Amazon (Nasdaq: AMZN) and HSBC (HKEx: 5; London: HSBA), but also a growing number of homegrown private giants like JD.com (Nasdaq: JD) and Alibaba (NYSE: BABA), which also harbor global aspirations. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 5. To view a full article or story, click on the link next to the headline.
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China Said To Probe Medical Device Firms On Bribe Suspicions (English article)
Bottom line: The revocation of global certification for Qihoo’s security software by 3 European bodies will undermine the company’s credibility and hamper its drive to go global, putting pressure on its stock for the next few months.
European bodies revoke Qihoo accreditation
Security software specialist Qihoo 360 (NYSE: QIHU) is finding itself in the middle of a global scandal, with word that several European accreditation bodies have refused to certify its core security software products due to the company’s misleading business practices. The case comes as an embarrassment to Qihoo, which is used to and largely ignores such scandals when they occur in its home market where such practices are relatively common.
But as Qihoo and its peers attempt to go global, they are quickly discovering that many of the things they do at home fall well below the standards set by global bodies, especially in the west. That won’t be too helpful for Chinese tech giants like Qihoo, Baidu (Nasdaq: BIDU), Xiaomi and Alibaba (NYSE: BABA), which are all trying to show the world and investors that they can compete outside their highly protected home market where standards are often a bit lower than in the west. Read Full Post…
Bottom line: WuXi PharmaTech’s privatization will be followed by at least 3-4 more similar buy-outs this year for US-traded Chinese stocks, including a 50-50 chance that Renren will attempt a privatization by mid-year.
Wuxi Pharma gets buy-out bid
I’m beginning to feel like I should start a betting list of Chinese candidates that may de-list from New York, following word that unappreciated drug maker WuXi PharmaTech (NYSE: WX) has become the latest company to announce a management-led buy-out. At the same time, dying social networking (SNS) site Renren(NYSE: RENN) has also announced results of its own recent Dutch auction-style share buyback plan, which also hints that it could become the next company to attempt a privatization. Read Full Post…
Bottom line: Tsinghua Unigroup is likely to win the bidding for a controlling stake in HP’s China-based networking equipment unit, and could help HP consolidate its place as one of China’s leading IT service providers.
Bidding war breaks out for HP asset sale
Hewlett-Packard (NYSE: HPQ) is finding itself in a rare position of power in China, with word that an unusual bidding war has broken out as it looks for a partner to buy a controlling stake in its locally-based networking equipment unit. The development could bring not only a windfall in terms of money HP will get for its H3C Technologies unit, but will also allow it to choose between 2 potent partners to help consolidate its place as one of China’s leading IT services providers.
HP is in the process of splitting itself into 2 as part of a broader restructuring announced last fall. In this case the China-based H3C networking equipment venture would almost certainly go into its new HP Enterprise unit, focused on products and services for corporate customers. The other main unit under the break-up will include HP’s older PC and printer businesses, which will go by the name HP Inc. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 1-4. To view a full article or story, click on the link next to the headline.
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Walmart (NYSE: WMT) To Boost Sam’s Club China Stores By 60 Pct Over 3 Years (Chinese article)
WuXi PharmaTech (NYSE: WX) Announces Receipt Of Buyout Proposal (PRNewswire)
Itochu, CP Group In E-commerce Venture With Chinese Firms In Shanghai FTZ (English article)
ZTE (HKEx: 763) Taps Japan To Help Sell 60 Mln Handsets Globally (English aritcle)
‘Cheating’ Chinese Antivirus Firm Qihoo 360 (NYSE: QIHU) Blames Cultural Differences (English article)
Bottom line: Yingli appears to be in financial distress but will avoid defaulting on debt obligations coming due next week, while China’s broader solar panel sector is likely to face new anti-dumping tariffs in Europe later this year.
Yingli assures investors on bond payment
The solar panel sector has become quite a turbulent place these days, riding high one day on reports of major new plant construction, only to stumble the next on signs of conflict and financial distress. This kind of conflicting news reflects the fact that the industry is still in the midst of a major overhaul that could ultimately see a few more companies get closed down or purchased, leaving a smaller field of the biggest, best-run players to survive over the longer term.
The latest signs of distress are coming from Yingli Green Energy (NYSE: YGE), one of China’s largest players, which has just announced it has the necessary funds to pay off a bond that will mature next week. Some may see such an announcement as a sign of strength; but the fact that Yingli is taking the unusual step of making an announcement seems aimed at allaying market concerns that it might not make the payment. The other big distress sign is coming from reports that indicate Europe could soon re-launch an anti-dumping probe into Chinese solar panels, following complaints that the Chinese are violating an earlier agreement designed to avoid punitive import tariffs. Read Full Post…
Bottom line: Baidu could be entering a period of profit erosion that will put pressure on its stock, while Tencent’s latest investment hints it could be preparing to roll out a global gaming platform by the end of this year.
Baidu profit drops
China’s Internet “Big 3” of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700) are often in the news on any given week, but we’re seeing a rare instance where all 3 are in the headlines on this final work day before the May 1 break. Baidu is leading off the BAT headlines with the release of its latest quarterly earnings that are led by a rare profit decline due to soaring expenses.
Rising costs may have also been a factor in the Alibaba news, which has the company freezing its global headcount for the rest of the year as it tries to rationalize itself after a period a breakneck growth. Last but not least is Tencent, whose relatively large purchase of a stake in a US gaming firm hints at the direction it will take in its overseas expansion. Read Full Post…
Bottom line: TVB’s choice of a Shanghai-based traditional broadcaster as its mainland partner looks like a bad selection to ensure its future, as such traditional media rapidly get overtaken by more nimble Internet-based players.
TVB places bets on Shanghai Gang
Hong Kong has been buzzing this past week over the latest mainland encroachment on its media sector, which is seeing leading broadcaster TVB (HKEx: 511) sell a stake in itself to a Chinese investor. But few have gone past the headlines to see what’s really behind this deal, and whether it can help to ensure the longer term survival of a company that has long dominated Hong Kong’s broadcasting scene. In a nutshell, TVB is placing its bets on a group of Chinese media high-flyers that I like to call the “Shanghai Gang”, because they are rooted in China’s largest media market and have strong ties to the city’s monopoly broadcaster, Shanghai Media Group (SMG). Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 30. To view a full article or story, click on the link next to the headline.
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