Bottom line: Shares of Sina and Youku Tudou will continue to be laggards due to their cloudy outlooks, and Youku Tudou could face even greater pressure if it doesn’t sell itself to a larger buyer like Alibaba.
Sina’s Q3 results fail to excite
Today marks the high point of the third-quarter earnings season for Internet companies, with leading web portal Sina (Nasdaq: SINA) and top online video site Youku Tudou (NYSE: YOKU) posting results that didn’t impress investors too much. Both companies reported operating losses for the quarter, even though each managed to pare those losses from previous periods. But the bottom line for Sina was anemic growth in its core advertising revenue, while Youku Tudou’s biggest trouble sign came from ballooning costs. Youku Tudou isn’t being helped either by an ongoing government crackdown against online video operators. Read Full Post…
Bottom line: Jin Jiang is emerging as China’s first global hotel brand, but its inexperience and focus on property ownership with its first major acquisition are likely to produce poor results for the campaign.
Jin Jiang checks into Europe
Domestic hotel stalwart Jin Jiang (Shanghai: 600754; HKEx: 2006) is quickly emerging as China’s hotel company to watch on the global stage, with word that it’s on the verge of a deal to buy Louvre Hotels Group, Europe’s second largest operator. The acquisition would be the biggest so far for Jin Jiang, which is China’s only hotel operator to make any serious moves outside its home market. Frankly speaking, I’m a bit surprised that state-owned Jin Jiang is leading this particular global expansion campaign, since I would have expected one of the country’s private hotel operators to be at the forefront of this initiative. Read Full Post…
A recent brouhaha in the US over the naming of an outsider as New York’s new celebrity “ambassador” got me thinking about who could fill the role of a similar city spokesman for Shanghai. After all, such a spokesman is a great promotional tool for big cities like New York or Shanghai to outsiders, representing many positive and distinctive aspects of local culture like language, mannerisms, and general attitude.
But what happened next was quite unexpected, as queries to several friends made me realize that Shanghai doesn’t have too many people who could fill such a role, despite its status as China’s biggest city. My friends explained that most aspiring actors and musicians now gravitate to Beijing, and a Shanghai pedigree is no longer worth very much despite the city’s past as the Hollywood of the east. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 14. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Seeking $8 Bln in First US Bond Sale (English article)
China’s Tencent (HKEx: 700), Warner Music Partner For Music Streaming (English article)
Shanghai Jin Jiang (Shanghai: 600754) To Buy Louvre Hotels Group For $1.5 Bln (English article)
Sina (Nasdaq: SINA) Reports Q3 Financial Results (PRNewswire)
China’s Banks To Raise $10 Bln In Year-End Preference Share Bonanza (English article)
Bottom line: An anti-corruption crackdown at Baidu is in line with a national campaign, but is unlikely to allay suspicion that the company manipulates search results to benefit itself and advertisers.
Baidu campaign snares 5 for corruption
A new report on an anti-corruption operation that snared 5 workers at Internet search leader Baidu (Nasdaq: BIDU) caught my attention for a number of reasons. At the broadest level, this campaign casts a spotlight on the kind of corruption that is rampant at many Chinese companies, where employees often use their position to earn extra cash by accepting bribes from people they do business with.
The bust is also the latest sign that private companies are joining the growing national anti-corruption campaign led by President Xi Jinping. Last but certainly not least, this move casts a spotlight on some of the less-than-transparent things that Baidu does to earn money from advertisers, who are often eager to pay extra to see their names appear high on search result lists. Read Full Post…
Bottom line: Tencent’s new WeChat-based free voice service could stand a good chance of success, but will face challenges due to technical issues and resistance from China’s traditional telcos.
WeChat launches free voice calling service
Internet giant Tencent (HKEx: 700) has just announced new quarterly results that show slowing growth for its core social networking (SNS) and gaming units, but everyone is far more interested in the low-key launch of a new free voice calling feature on its wildly popular WeChat platform. The new function, called WeChat phone book, lets users make real-time phone calls for free by routing them over the Internet, and is similar to that offered by the much older Skype. But unlike Skype, which only allows free calls to other Skype users, the new Tencent service allows users to make free calls to anyone with a fixed- or mobile phone account. Read Full Post…
Bottom line: Minsheng Bank’s new stock incentive plan and ICBC’s Mexico expansion reflect moves to make China’s banking sector more market-oriented, providing potential upside for the lenders’ undervalued stocks.
Minsheng rolls out employee stock plan
Two big stories on the banking front are reflecting the big potential in depressed Chinese bank stocks, even as the sector faces a major bad debt crisis brought on by several years of state-ordered binge lending during the global financial crisis. The first of those will see Minsheng Bank (HKEx: 1988; Shanghai: 600016), China’s first private lender, launch a program that rewards top performing employees with stock at discounted prices. The second has leading state-run lender ICBC (HKEx: 1398; Shanghai: 601398) getting final regulatory approval to open a subsidiary in Mexico, one of the world’s largest developing economies. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 13. To view a full article or story, click on the link next to the headline.
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KKR, Citic (HKEx: 267) In $1.5 Bln Bid For United Envirotech (Singapore: UNIT) (English article)
Bottom line: Alibaba will to focus on globalization to maintain momentum for its overvalued stock, but the shares are likely to pull back in the first half of next year due to overvaluation.
Alibaba sales jump on Double Eleven
This year’s November 11 shopping day belonged to e-commerce leader Alibaba (NYSE: BABA), even though I’m just slightly reluctant to write too much about this overhyped company. But I would be remiss if I didn’t mention some of the impressive numbers that Alibaba logged during this year’s Double-Eleven Singles Day event, led by its headline total sales of 57.1 billion yuan ($9.3 billion), up 63 percent from last year. The market didn’t seem too impressed with the growth, with Alibaba’s shares tumbling 3.9 percent in the US trading day after the end of the Chinese shopping binge. Read Full Post…
Bottom Line: Seafood producer Zhangzidao’s surprising and stunning loss of $139 million on one of its key products once again poses many questions on the governance of listed Chinese companies.
By Lu Jin
Fishy business at Zhangzidao
Over 7 billion scallops have disappeared from a 70,000 hectare, 50 meter-deep sea farm owned by top Chinese seafood firm Zhangzidao Group (Shenzhen: 002069). Some 860 million yuan ($139.9 million) was lost. And why? Because an unexpected cold water current swept into the sea in July and August.
This was the short version of what Zhangzidao told its investors in their latest financial announcement. (company announcement) The case marks the latest example of the mysteries around listed Chinese companies and also potential risks in their continued outbound investments. Read Full Post…
Lenovo’s (HKEx: 992) talkative CEO Yang Yuanqing was headline news in the microblogging realm over the past week, as the chatty executive formally launched his own account on Sina Weibo and proceeded to bombard the airwaves with a steady series of thoughts on a wide range of topics. Yang is already quite talkative in general, granting numerous media interviews and giving his thoughts on just about anything to anyone who will listen. So this kind of move isn’t really that surprising, and I expect we’ll hear lots from him in the months and years ahead.
Meantime, executives from the equally talkative Xiaomi were also full of microblogging chatter, touting their latest steal of a high-profile executive from another tech firm. In this case they were congratulating themselves for hiring Chen Tong, one of the earliest top employees at web stalwart Sina (Nasdaq: SINA). A final footnote in this week’s microblogging roundup also saw a teasing tweet from the missing CEO of online video site LeTV (Shenzhen: 300104), amid recent speculation that he may have left China to avoid criminal prosecution. Read Full Post…
