Bottom line: A new SEC probe into Youku Tudou’s accounting, following another probe into possible disclosure breaches by Alibaba, could undermine investor confidence in big Chinese Internet firms.
SEC probes Youku Tudou accounting
Just a month after e-commerce leader Alibaba (NYSE: BABA) said it was being probed for possible violations of US securities laws, former online video high-flyer Youku Tudou (NYSE: YOKU) revealed it is also being questioned by the US stock regulator for aggressive accounting practices that may have misled investors. The nature of the potential violations are quite different in each case, but both create a worrisome larger picture since they involve 2 of China’s biggest and most trusted Internet companies. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 24. To view a full article or story, click on the link next to the headline.
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Bottom line: Bacardi’s new Tang tea-based liquor could do well despite its premium pricing and Beijing’s frugality campaign if it takes aim at affluent yuppies who like to try new things and are put off by the stodgy image of baijiu.
Bacardi rolls out tea liquor
It’s hard to get excited about a liquor story as the world returns to work at the start of a new week; but I’ll admit I’m just a bit intrigued by reports detailing a new attempt by global giant Bacardi to tackle China with a new tea-based spirit. Frankly speaking, I’m a bit surprised that no one has tried this before. That’s because such a liquor, if packaged and marketed properly, could quickly win over many of China’s urban yuppies who eschew traditional homegrown baijiu liquors but haven’t exactly embraced western alternatives like whisky and rum. Read Full Post…
Bottom line: Sogou is likely to list in the second half of the year, but will get a lukewarm reception from investors due to its status as a solid second-tier player without hopes of ever becoming a sector leader.
Sogou eyes H2 IPO
Some 3 months into the New Year, we’re still waiting for the first New York IPO by a Chinese Internet company after a blockbuster year in 2014. Now we’re getting word of a listing that could come in the second half, with news that portal stalwart Sohu (Nasdaq: SOHU) is planning an IPO for its decade-old Sougou search engine in that time frame.
The offering looks very so-so, as Sougou has failed to gain much traction despite its status as one of China’s oldest search players. More broadly speaking, we can probably expect to see more of this kind of ho-hum IPO from second-tier Chinese Internet firms for the rest of the year, since the most exciting players listed during last year’s surge in new offerings. Read Full Post…
Bottom line: Many of Alibaba’s older stakeholders are likely to sell some or all of their shares after their lock-up period ends, driving the stock down to or even below its IPO level over the coming months.
Alibaba lock-up period ends
Top managers at China’s Alibaba (NYSE: BABA) are almost certainly watching their company’s stock with acute angst this week, even as business continues as usual with word of the e-commerce leader’s latest overseas expansion into Korea. The angst is the direct result of an end to the lock-up period for Alibaba’s stock, which could technically flood the market with up to 340 million shares that were forbidden from trading for the first 6 months after its record-breaking $25 billion IPO.
Put differently, all of those shares would be worth about $29 billion at Alibaba’s current price, accounting for more than one-tenth of its total market capitalization of about $210 billion. The shares officially become eligible for trading when the lock-up period ends on Wednesday, March 18, which is exactly 6 months after the shares made their trading debut on the New York Stock Exchange. (Chinese article) Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 21-23. To view a full article or story, click on the link next to the headline.
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Bacardi Challenges Baijiu With Tea-Based “Tang” Liquor Developed For China (Chinese article)
Yidao Welcomes Cooperation With Uber, Sees No Need For Merger (Chinese article)
Sohu’s (Nasdaq: SOHU) Sougou Eyes US IPO In 2nd Half 2015, Sees Value At $3 Bln (Chinese article)
Reuters (Toronto: TR) Websites Blocked In China (English article)
Bottom line: Starbucks’ new tie-up with mass-market food maker Tingyi looks like a smart partnership that could help the pair quickly develop China’s largely untapped market for premium bottled beverages.
Starbucks, Tingyi tie on bottled drinks
Following its phenomenal success in China’s retail dining market, US coffee giant Starbucks (Nasdaq: SBUX) is taking aim at bottled beverages in a new tie-up with one of the nation’s leading food product makers. The pairing is a big odd on the surface, bringing together the premium-minded Starbucks with Tingyi (HKEx: 322), a Taiwanese company whose main Master Kong brand is synonymous with tasty but decidedly low-end instant noodles.
But then again, nobody ever dreamed that Starbucks could overcome the huge odds against it by not only convincing tea-minded Chinese to drink coffee, but also getting them pay handsomely for the privilege. Accordingly, I would give the company a fairly strong chance for working similar magic in the highly competitive bottled beverage space, which would provide a huge new source of revenue from its China business. Read Full Post…
Bottom line: Qihoo’s new smartphones, including its self-developed mobile OS, could perform well due to its strong software development record, potentially bringing some excitement back to its stock later this year.
Qihoo prepares mobile OS
I don’t usually have lots of positive things to say about Qihoo 360 (NYSE: QIHU), but I’ll admit I’m quite intrigued by the latest word that the security software specialist is preparing to roll out its own mobile operating system (OS). The new system, to be called 360 OS, will be based on Google’s (Nasdaq: GOOG) popular Android OS, so in that regard it will vie with many other Android variations in the market. But regardless of that, I would expect this new OS could quickly become a major player in the fiercely competitive space, drawing on Qihoo’s record as one of China’s savviest and oldest software and Internet product developers. Read Full Post…
Bottom line: The exclusion of foreign tech giants from criticism in a prominent annual consumer rights show is unrelated to the broader bias they are facing from Beijing, and they will continue to come under fire for the next 1-2 years.
Foreign techs not targeted on annual consumer rights show
Top China officials at global tech giants like Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN) are probably breathing a sigh of relief today, after their companies weren’t targeted for attacks in an annual consumer rights show that has become a famous for creating public relations nightmares for its victims. Instead, this year’s edition of the investigative Consumer Rights Day program on China Central Television (CCTV), broadcast on March 15 each year, singled out China’s 3 major telcos for criticism in the tech sector.
Multinationals weren’t completely spared from attack, with a number of car makers including Vokswagen (Frankfurt: VOWG), Nissan (Tokyo: 7201) and Daimler (Frankfurt: DAIGn) coming under fire for things like abusive after-sales practices. (English article) But for now at least, China’s central media seem to be backing away from new attacks on foreign tech companies, following recent criticism that Beijing has unfairly targeted such firms for everything from monopolistic practices to posing national security risks over the last year. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 20. To view a full article or story, click on the link next to the headline.
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China Mobile (HKEx: 941) Reports 2014 Profit Of 109 Bln Yuan, Down 10 Pct (Chinese article)
Coolpad (HKEx: 2369), Qihoo 360 (NYSE: QIHU) To Roll Out Own Mobile OS (Chinese article)
Lenovo (HKEx: 992) Names Gianfranco Lanci As Company President (HKEx announcement)
Ctrip (Nasdaq: CTRP) Reports Unaudited Q4 And Full Year 2014 Results (PRNewswire)
Bottom line: Yahoo’s closure of its Beijing R&D center marks its final withdrawal from China, in a shift mostly related to internal issues but also reflecting the difficulties foreign Internet firms face in the tightly controlled market.
Yahoo closes Beijing R&D center
Nearly 2 years after shuttering its Chinese email service, faded US search giant Yahoo (Nasdaq: YHOO) looks finally set to completely leave the China market, with word that it’s preparing to close up its sizable R&D shop in Beijing. I’m not intimately familiar with Yahoo’s current China assets, but it does appear that this move represents the shuttering of the company’s last major Chinese operation. The move also comes as Yahoo prepares to spin off its sizable stake in Chinese e-commerce giant Alibaba (NYSE: BABA) into a separate company, bringing an end to the company’s decade-long marriage with China. Read Full Post…
