News Digest: March 1, 2012 报摘： 2012年3月1日

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The following press releases and media reports about Chinese companies were carried on March 1. To view a full article or story, click on the link next to the headline.

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◙ Unicom (HKEx: 762) Launches “Stealth” Attack on China Telecom (HKEx: 728) iPhone (Chinese article)

◙ Spreadtrum Communications (Nasdaq: SPRD) Announces Q4 and Fiscal Year Results (PRNewswire)

◙ Apple (Nasdaq: AAPL) Says Allowing Proview to Use iPad Brand Would Harm Consumers (English article)

◙ Yingli Green Energy (NYSE: YGE) Reports Q4 and Full Year Results (PRNewswire)

◙ GOME Signs Online E-Commerce Deal With Dangdang (NYSE: DANG) – Source (Chinese article)

◙ Latest calendar for Q4 earnings reports (Earnings calendar)

China Mobile Steps Up 4G Drive 中移动4G网络建设提速 年底或推商用试点

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There’s quite a bit of telecoms news coming out this week from the city of Barcelona in Spain, where China’s telcos and equipment makers are all showing off their latest wares at the world’s biggest annual telecoms show. Most of it looks like the usual display of new gizmos and gadgets, but the item that caught my eye was a relatively detailed update on China Mobile’s (HKEx: 941; NYSE: CHL) 4G plans, which indicate that both the company and, perhaps more importantly also the government, are moving aggressively forward to build a commercial network based on a homegrown Chinese standard called TD-LTE. Equally significant is who was discussing the plans, as the comments came from a relatively youthful Li Yue, a fast rising star who recently took over as president of China Mobile’s state-run parent, rather than the company’s longtime aging Chairman Wang Jianzhou, who is getting set to retire. Li said China Mobile will move ahead with plans to expand its large-scale trials of TD-LTE to 9 cities later this year, adding Qingdao, Tianjin and most importantly Beijing, to its current trails in 6 major cities that began last year. (English article) He went on to say that the fast-growing trial network could even be ready for commercial service in the cities of Shenzhen and Hangzhou by the end of this year. Li said the handful of telcos building commercial TD-LTE networks outside China, most notably Softbank (Tokyo: 9984) in Japan and Bharti Airtel (Mumbai: BHARTI) in India, are slowing down their plans until China Mobile can bring more momentum to the standard by working with networking equipment and handset makers to develop more products and clean up technological problems. Those remarks imply that not only China Mobile, but also the government, are working hard to speed up deployment of a full-scale commercial TD-LTE network in China, as Beijing is especially keen to see a China-developed standard compete globally alongside other standards developed in the US and Europe. In one other major development in that direction, Li disclosed that Qualcomm (Nasdaq: QCOM), one of the world’s biggest chipmakers for both cellphones and telecoms equipment, has agreed to develop chips based on the standard, providing more momentum for its development. On top of all those developments, I also like the fact that Li is now speaking for the company on this issue, as he represents a younger, more aggressive generation of new leadership that China Mobile needs to breathe life back into its stagnating top and bottom lines. All these latest signs say that despite some recent delays, China Mobile’s 4G plans are moving ahead at a fast and steady pace, helped by important government support, with some first-stage commercial service potentially starting to roll out in a few cities as soon as the end of this year.

Bottom line: New comments from a top China Mobile executive indicate its 4G plans are accelerating with government support, with limited commercial service possible as soon as year end.

Related postings 相关文章:

◙ China Telcos In New Drives at Home, Abroad 中国三大电信运营商海内外发力

◙ China Mobile: Improvement Ahead Under New Leaders 新领导有望助中国移动复苏

◙ China Mobile Tries 4G Back Door in Shenzhen 中国移动试图绕过监管机构于深圳秘密规划4G网络

BYD Sputters Back to Life 比亚迪新车型助其重整旗鼓

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After seeing its business tumble starting in the second half of 2010 and through much of last year, former high-flying car maker BYD (HKEx: 1211; Shenzhen: 002594) may finally be seeing its business stabilize and even bounce back a little as it returns to basics by developing popular new models even as it pushes ahead with its ambitious green car program. The Warren Buffett-backed company has just released preliminary full-year results that, while difficult to interpret too deeply, appear to show the company is back on a growth track after more than a year of falling revenue and plunging profits that nearly saw it fall into the loss column. (earnings announcement) According to the results, the company’s full-year revenue was essentially flat, while its profit dipped 44 percent. Those numbers don’t sound too exciting on the surface, but they mark a huge improvement over the company’s results for the first half of last year, which saw revenue drop 11 percent and profit plunge 88 percent. So the latest numbers seem to indicate that BYD is once again posting healthy double-digit revenue growth and that profits may also soon return to the growth track. Of course, it’s not difficult to post both revenue and profit growth when you’re comparing your latest numbers to very weak year-ago ones, which is the case for BYD. But at least worried investors should be slightly encouraged by the results, which appear to show a bounce-back after BYD rolled out some much-needed new models  last year to replace its fast-fading F3, once one of China’s top selling cars that later ran out of gas. (previous post) BYD is putting big hopes in particular on its S6, an SUV co-developed with Germany’s Daimler, that may have posted a record 16,000 unit sales in January, accounting for more than half of its sales for the month after its launch less than a year ago. I do find it a bit ironic that BYD is relying on gas-guzzling SUVs to revive its fortunes, since it loves to tell the world how its future lies in energy saving green vehicles that it is strongly promoting but which so far have only found customers from mostly government buyers trying out the technology on a trial basis. But when you’re struggling to survive, you can’t afford to be too selective about how you do it. In the meantime, investors do seem to be excited about this early reversal of fortune, bidding up BYD’s Hong Kong shares by nearly 50 percent this year — though its price is still well below the highs it reached after Buffett originally invested in the company.

Bottom line: BYD is showing early signs of a rebound after a year of plummeting sales and profits, but needs to keep developing more new models to keep the comeback alive.

Related postings 相关文章:

◙ Car Sales: Domestics Down, But Not Out 汽车销量：国产车下降，接近拐点

◙ BYD Gets Back to Basics

◙ BYD’s New EV Plan: Hook Them With Investment 比亚迪拉美电动车之路堪忧

Sina Gets Serious on Weibo 新浪开始严肃对待微博

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After months of frustration for investors, Sina (Nasdaq: SINA) has finally laid out a detailed plan for how it will earn money from Weibo, with company executives forecasting the highly popular but unprofitable microblogging service will produce “meaningful” money by the second half of this year. Investors clearly liked what they heard, bidding up Sina’s shares by 12 percent in New York trading the day after CEO Charles Chao made his comments on a conference call to discuss Sina’s otherwise unimpressive fourth-quarter results. (English article; results announcement) I’ve had a glance at the plan, and it looks like a mixed bag of some things that are likely to work and some that probably won’t. In the first category, the most promising part is Sina’s plan to sign up enterprise customers and launch an ad display system on Weibo, which now boasts more than 250 million users. (English article) These 2 approaches look smart because they both target business customers, who are probably quite happy to pay big bucks for a chance to reach Weibo’s millions of users. Less interesting are Sina’s plans to roll out a growing number of paid services for Weibo users, including paid gaming services. In one of its few previously announced Weibo monetization initiatives, Sina said in January it would offer a premium version of Weibo for users who wanted to pay for extras like getting SMS mobile phone notifications when they received new posts to their accounts. (previous post) That announcement was greeted with mostly yawns, as everyone, myself included, knows it’s very difficult to get people to start paying for services that they’ve previous gotten for free — especially the big majority of Weibo users who are under 30 and don’t necessarily have lots of cash to spend. Of course, execution will be key in all of this, as it’s easy to say you’re going to target enterprise customers but not necessarily as easy to create products that those customers will want. Facebook has been quite successful at making this transition, though the road has been less smooth for Twitter, the global microblogging giant. In China the story is the same, with Baidu (Nasaq: BIDU) a clear leader at monetizing the huge traffic that flows through its search engine while local Facebook equivalent Renren (NYSE: RENN) has had more difficulty. Given Sina’s long history and relatively strong record at executing this kind of strategy, I would say its chances of making some significant money from Weibo by the end of this year are good. If that happens, I would look for an IPO of this high-profile unit as soon as mid-2013.

Bottom line: Sina’s plans to target corporate customers to monetize its Weibo service looks like a smart move, though plans to get money from ordinary users look more problematic.

Related postings 相关文章:

◙ Sina Tests Weibo Demand With Paid Offering 新浪试水微博增值收费服务

◙ Twitter Eyeing China? Twitter想进中国？

◙ Sina’s Weibo Suffers New Setback With Lawsuit 吉林市驻京办可能起诉新浪微博

News Digest: February 29, 2012 报摘： 2012年2月29日

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The following press releases and media reports about Chinese companies were carried on February 29. To view a full article or story, click on the link next to the headline.

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◙ Sina (Nasdaq: SINA) Microblog to Start Monetizing in Q2 2012 (English article)

◙ BYD (HKEx: 1211) Announces Preliminary 2011 Results (HKEx announcement)

◙ Interstate Hotels Announces Deal for First Franchised DoubleTree by Hilton in China (Businesswire)

◙ VanceInfo (NYSE: VIT) Announces Q4 and Full Year 2011 Results (PRNewswire)

◙ Huawei Says 2011 Revenue Rose 11 Pct to $32 Bln (Chinese article)

◙ Latest calendar for Q4 earnings reports (Earnings calendar)

Confidence Crisis Easing For US China Stocks 中国概念股信任危机缓和

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While it’s never too smart to call a major market turnaround, growing signs are emerging that last year’s confidence crisis for US-listed China stocks may have finally turned a corner, with a strong rebound on the horizon if the broader market remains healthy. The first 2 months of the year have seen several positive developments for Chinese stocks in New York, following a disastrous 2011 that most would rather forget as their shares were pummeled by a series of accounting scandals that undermined the entire sector. Sensing that the worst of the crisis is over, 3 Chinese companies have filed for new US listings in the last few weeks, betting that investors will once again be interested in the China growth story. At the same time, short sellers and lawyers who seized on the crisis to make quick bucks have found far less success in some of their most recent attacks, indicating investors are once again giving Chinese companies the benefit of the doubt now that many more questionable firms have been de-listed. The nascent return of confidence is most evident in the share prices for many US-listed Chinese firms, some of which fell by 50 percent or more last year at the height of the crisis that began with attacks on 2 names, financial services company Longtop Financial and timber firm Sino-Forest. Both companies saw their shares tumble after short sellers questioned different aspects of their accounting, and Longtop was ultimately de-listed. Since bottoming out in mid December, shares of many industry stalwarts that were dragged down in the crisis have posted a strong recovery, with Internet search leader Baidu (Nasdaq: BIDU) and top web portal Sina (Nasdaq: SINA) both up about 20 percent since mid-December. Even smaller names have joined in the rally, with social networking site Renren (NYSE: RENN) and online video site Youku (NYSE: YOKU) both up by 30 or more. Equally significant has been the failure of a number of short seller attacks, which netted big bucks for companies last year. Muddy Waters, whose name became synonymous with the attacks after its successful assault on Sino-Forest last year, has found much less success with a more recent attack on Focus Media (Nasdaq: FMCN). Focus shares initially fell sharply after Muddy Waters questioned some of its data late last year, but have rallied sharply since then and are now close to their pre-attack levels. A similar attack late last year on security software firm Qihoo 360 (NYSE: QIHU) has also failed to convince investors, with the company’s stock now trading near pre-attack levels after initially falling more than 10 percent. At the same time, a series of recent investor lawsuits designed to seize on a drop in the share price of IT outsourcing firm Camelot Information Systems (NYSE: CIS) has also failed to dent the company’s stock price, again indicating investors may feel the worst is past and these Chinese companies are now more trustworthy. As the confidence creeps back, a small trickle of Chinese companies have decided to test their luck with the New York IPO market. Car rental firm China Auto was first out of the gate when it filed for an offering in January, ending several months with no major new Chinese listings. It was followed this month by e-commerce firm Vipshop and Shanda Cloudary, which initially filed for an IPO last year but had to pull the offering due to poor investor sentiment at the height of the crisis. The real test of whether the worst is really past will lie in the weeks ahead, as these 3 offerings go to market and meet with either investor interest or more skepticism. I personally think China Auto could do well, though the 2 Internet offerings could meet with more tepid interest as both are still losing money. Still, if these 3 can post even modest success, which looks like a strong possibility, it could signal the crisis has truly turned the corner, meaning a solid rally may be in store for these stocks for the rest of the year.

Bottom line: Growing signs are emerging that the confidence crisis for US-listed China stocks may be over, with 3 upcoming IPOs providing a strong test of a turning point for the battered sector.

Related postings 相关文章:

◙ Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划

◙ Citron Keeps Up Qihoo Assault 香橼继续攻击奇虎

◙ Sharks Continue to Circle China Stocks 在美上市中国企业将持续面临做空和法律诉讼压力

China Puts the Brakes on Luxury Cars 中国公务车拟告别豪华车

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A new plan being floated by the central government could put the brakes on soaring sales growth for luxury brands like Audi (Frankfurt: VOWG) and BMW (Frankfurt: BMW), who have so far managed to defy a broader downturn for China’s auto sector. The shift would come as a huge blow for those names just as most are investing billions of dollars to increase their capacity to cater to China’s huge thirst for luxury brands, though I expect the final outcome will be a compromise that allows some government sales to continue. Let’s look at the facts first, which have the Ministry of Information and Industry Technology (MIIT) reportedly proposing a plan that would limit all government agencies to buying only domestic brands, in an attempt to support struggling homegrown players like Dongfeng (Shanghai: 600006) and Geely (HKEx: 175) that have steadily been losing market share to the more aggressive and resource-rich foreign names as growth sharply slows in China’s auto market. (English article) Such a step would mark a huge loss for foreign names like Audi, BMW and Mercedes, as the government now purchases about $13 billion worth of cars each year, many of those luxury models. China’s auto market zoomed in 2009 and 2010, posting growth in the healthy double digit range as Beijing offered a range of incentives to stimulate sales at the height of the global financial crisis. But now the government has ended most of those incentives, causing growth to drop to just 4 percent last year, with most foreign brands reporting low double-digit gains while many domestic ones saw their sales drop sharply. This latest government initiative seems aimed at throwing a lifeline to the domestic players. The only problem is, a big portion of those government fleet sales are for luxury brands that many higher officials prefer, and while the domestic players can provide reasonable mid-range cars, few can offer such higher-end models. One of my friends recently scoffed at the prospect of buying a Chinese-made smartphone, saying he would get laughed at by all his friends who own trendy iPhones. The same is true for many high government officials, who would probably rather walk to work than be seen getting out of a Geely or Chery automobile. At the end of the day, I suspect that cries of protest from both government officials and the foreign luxury brands themselves will get heard by central regulators at the MIIT, and both sides will reach a compromise that will allow continued purchasing of luxury cars by government agencies. But at the same time, I do expect we’ll see a slowdown for the luxury automakers as those government agencies come under pressure to buy more domestic brands, bringing growth rates for the foreign names more into line with mainstream foreign players like General Motors (NYSE: GM) and Volkswagen.

Bottom line: Foreign luxury car makers will avoid a proposed ban on sales to Chinese government agencies, but will see such sales drop sharply as the government tries to assist domestic brands.

Related postings 相关文章:

◙ Geely Leans on Struggling Volvo 吉利依靠处于困境中的沃尔沃

◙ Car Sales: Domestics Down, But Not Out 汽车销量：国产车下降，接近拐点

◙ China Car Sales Sputter Out of the Gate 中国汽车销售龙年遭考验

Group Buy Clean-Up Grows, E-Commerce Next 团购行业洗牌加剧，下一个是电子商务

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Growing signs are emerging that the much-needed clean-up of the overheated group buying space is well underway, with domestic media reporting a massive closure of websites in January alone, as the stalled IPO for industry leader LaShou remains nowhere to be seen. According to the domestic reports, some 117 group buying sites shut down in January, although the space still remains crowded with nearly 3,800 players still in operation. (Chinese article) Reflecting the cutthroat competition that still remains, other media reports are saying the government regulator has stepped in and limited the size of discounts on movie tickets, in the latest of a string of such moves that look designed to cool down the sector, despite cries of protest from group buying sites themselves. (English article) The latest wave of closures at mostly smaller sites follows a string of layoffs at much larger names like Gaopeng, the joint venture between global leader Groupon (Nasdq: GRPN) and Tencent (HKEx: 700), and Groupon.cn, which is unrelated to the US company. But perhaps the biggest sign of trouble has come from sector leader LaShou, which, like most other players in the space, was reportedly bleeding cash when it filed for a New York IPO last year, only to see the offering indefinitely delayed when regulators reportedly questioned some of the company’s accounting methods and asked for more information. (previous post) A couple of Chinese Internet companies have filed for New York IPOs already this year (previous post), but LaShou’s offering seems to have completely disappeared, with no news on what’s happening since the first reports of trouble first emerged in November. Rival 55tuan has also said it is going ahead with its own planned IPO, but I would be surprised to see that offering go forward until the second half of the year at earliest, if at all. Meantime, the big questions are: who will be the first big victim in the space to close shop; and who is next? In answer to the first question, the situations at Groupon.cn and Gaopeng both sound quite dire, based on the media reports, and I wouldn’t be surprised to see one of them become the first big victim of the cleanup. For the second question, the next big space in big need of a cleanup is clearly e-commerce, where competition has also grown rampant over the last year and most players are reportedly bleeding cash. Dangdang (NYSE: DANG), one top player, reported a large and widening quarterly loss last week (previous post), and news reports regularly appear about the latest company to lay off employees and close shop. Look for the e-commerce cleanup to accelerate in the year ahead, with more layoffs and the closure of one or more larger players likely as well.

Bottom line: The cleanup of the online group buying sector is picking up pace and should peak around mid-year, with e-commerce following close behind.

Related postings 相关文章:

◙ Groupon.cn Becomes 2012 First Group Buy Victim 团宝网员工被放假 中国团购业料将加速整合

◙ LaShou IPO Derails

◙ Group Buying Turmoil Grows With 55tuan Layoffs 窝窝团撤站裁员 团购业整合在即

News Digest: February 28, 2012 报摘： 2012年2月28日

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The following press releases and media reports about Chinese companies were carried on February 28. To view a full article or story, click on the link next to the headline.

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◙ Sina (Nasdaq: SINA) Reports Q4 and Fiscal Year 2011 Results (PRNewswire)

◙ 177 Group Buy Sites Close in January (Chinese article)

◙ ZTE (HKEx: 763) to Challenge Global Handset Leaders with New Handset Ranges (Businesswire)

◙ TCL (Shenzhen: 000100) Jumps 2.5 Fold on Strength of Home Electronics (Chinese article)

◙ Muddy Waters Losing Support in Market as Latest Calls Prove Inconclusive (English article)

◙ Latest calendar for Q4 earnings reports (Earnings calendar)

Unicom Trials 4G, ZTE Dusts Off Old Numbers 中国联通试验4G技术 中兴通讯旧账重提

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A couple of items from the telecoms space have caught my attention this overcast Monday in Shanghai, one containing the first news I’ve seen on 4G plans of China Unicom (HKEx: 762; NYSE: CHU), China’s second biggest telco, and the other a silly announcement from telecoms equipment giant ZTE (HKEx: 763; Shenzhen: 000063) that seems designed to divert attention from its rapidly shrinking profits. Let’s look first at Unicom, which finally appears to be thinking about the future as it puts a year of management turmoil behind. A report in the English-language Shanghai Daily cites a Unicom official at a press conference with Shanghai’s mayor saying the company will spend $1.3 billion to upgrade its systems in the city over the next few years. (English article) The list of projects contains many familiar items, such as improving broadband speeds and adding wi-fi hotspots. But the one that caught my attention was that some of the money will go to trialing 4G technology, and that Shanghai has been chosen as one of the first batch of cities where trials will take place. In my view this announcement looks quite significant, because up until now only China Mobile (HKEx: 941; NYSE: CHL), the nation’s largest telco, has moved aggressively to develop 4G, with advanced large-scale trials already taking place in a half dozen major cities. For technological reasons, Unicom and smaller rival China Telecom (HKEx: 728; NYSE: CHA) should require far less time to develop their 4G networks, meaning that if Unicom really starts trialing technology this year it could easily commercialize its 4G network around the same time as China Mobile, perhaps as early as late 2013. If the company can get organized and focus on building its business, which it may finally be doing, it could easily find itself in a strong position when the regulator awards 4G licenses. Moving on quickly to ZTE, the company issued a press release that I can only call silly late last week boasting that it achieved the world’s fastest revenue growth of 33 percent in the first three quarters of last year, according to a new report by market research firm Frost and Sullivan. (company announcement) While obviously it’s nice to be cited as a leader in such a report, the truth is that the first 3 quarters of last year are now nearly half a year in the past, meaning that much may have changed since then. But more importantly, it says nothing about ZTE’s profit, which is shrinking as quickly as revenue is growing as the company pursues a risky strategy of rapidly building up its cellphone manufacturing business by selling low-cost models for little or no profit to quickly build market share. (previous post). I’m not saying that ZTE shouldn’t be proud of its rapid revenue growth, which is coming mostly from its cellphone expansion. But if it’s smart, it will keep a careful eye on its bottom line or risk watching its profit continue to erode and possibly even disappear, wiping out any positive effects of fast-growing revenue.

Bottom line: Unicom’s launch of 4G trials means it could quickly catch up to China Mobile, while ZTE needs to pay equal focus to both its top and bottom lines as it builds up its cellphone business.

Related postings 相关文章:

◙ New Developments, Including iPhone Deal, Heat Up 3G, 4G 中国电信iPhone销售和日益升温的3G、4G最新进展

◙ ZTE Faces More Profit Erosion With Latest Low-Cost Moves 中兴通讯以低价机抢占市场恐损及获利

◙ Baidu, ZTE Earnings: More of the Same 百度和中兴财报：看上去没变化

Outlook Cloudy As Shanda Refiles for Literature IPO 盛大文学重启赴美IPO计划

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I wasn’t too surprised to read that online entertainment firm Shanda Interactive has refiled to make a New York IPO for its Cloudary online literature unit, which it had to postpone last summer after market sentiment tanked amid a series of accounting scandals at US-listed Chinese companies. (Chinese article) What’s more intriguing is another report saying that Bank of America’s (NYSE: BAC) Merrill Lynch unit, one of the original underwriters, has resigned from the case, and has been replaced by CICC, China’s leading investment bank. (Chinese article) Of course it’s difficult to interpret too much from this kind of development, but we saw similar resignations in several cases last year, most notably from leading group buying site LaShou, after the original investment banks on the offering reportedly had strong reservations about accounting practices at those companies. Shanda Cloudary’s case could be slightly different, as the media reports say the other underwriter, Goldman Sachs (NYSE: GS), is still on the deal, and it’s common knowledge that Merrill Lynch has gone through quite a bit of turmoil since its hasty acquisition by Bank of America at the height of the global financial crisis in 2008. So let’s take a quick look at this deal, which becomes the third New York IPO filing for a Chinese company this year, following previous applications by car leasing firm China Auto (previous post) and Internet e-commerce firm Vipshop. (previous post) Media reports indicate that Shanda hopes to raise up to $200 million in the offering for a literature unit whose revenue rose 78 percent last year to 700 million yuan, or just over $100 million. But the unit is still losing money, posting a net loss of 36 million yuan, marking the second consecutive year of narrowing losses. Fierce competition on China’s Internet has meant that many companies are now losing money, with even formerly profitable e-commerce leader Dangdang (NYSE: DANG) reporting a rapidly widening quarterly loss last week. (previous post) Online literature is a hot area, and Shanda was one of the earlier players in the space, meaning it’s quite possible Cloudary could become profitable in the next year or 2 if competition doesn’t get overheated. But I do sense that Shanda is hurrying this offer before the timing is ideal, probably to raise funds to help pay for the $700 million privatization of the parent company, Shanda Interactive, that just wrapped up earlier this month. Taking everything into account, I would look for this new offering to finally make it to market in the next few weeks, unlike the Vipshop offering which is likely to run into trouble. But even if it does get to market, look for a cool investor reception and a flat to negative trading debut for the stock.

Bottom line: Shanda’s revived IPO for its online literature unit is likely to make it to market, but will meet with cool to negative investor sentiment on its trading debut.

Related postings 相关文章:

◙ Shanda Delists: Thanks for the Profits 盛大网络退市：获利可喜

◙ Shanda Moves Ahead With Privatization 投资者对盛大私有化仍持保留态度

◙ Shanda Cloudary Returns to Market, Worth a Look