Word from Chinese firms with Japan operations is slowly trickling back after the devastating earthquake, with tech firms showing the most vulnerability. In the universe of companies we follow, two IT services firms, HiSoft (Nasdaq: HSFT) and Camelot Information Systems (NYSE: CIS) have both issued statements saying they expect no serious impact to operations from the quake. (HiSoft release; Camelot release). We have yet to hear from other big tech names like Alibaba (HKEx: 1688), Baidu (Nasdaq: BIDU) and Lenovo (HKEx: 992), all of which have relatively small but still sizable operations in the country. While all these companies could suffer some small negative effects in the short run, some could actually benefit in the longer term as Japan Inc seeks their goods and services to rebuild following the disaster.
Bottom line: Look for small disruptions in the near-term for names like HiSoft, Camelot and Alibaba in Japan, but a nice business bump could come when rebuilding gets underway.
U.S. listed Chinese companies issued the following releases on March 15. To view the full releases, go to www.prnewswire.com and enter the company’s name in the search box.
** HiSoft (Nasdaq: HSFT) Announces All Employees Safe and Facilities Undamaged in Japan Earthquake
** Camelot (NYSE: CIS) Does Not Expect Impact from Japan Earthquake on Overall Business
** Camelot (NYSE: CIS) to Conduct Non-deal Roadshow in U.S.
Time for my latest comment on China’s homegrown automakers, and how they’re not quite ready for global prime time despite making noises in that direction. The latest to make such rumblings is indy superstar Chery, which has entered the Australia market with plans to sell — gasp — a whopping 5,000 cars there this year! (English article). Granted that Rome wasn’t built in a day, but 5,000 is hardly going to give these guys a jump start in Oz anytime soon. If we were going to handicap this race to export to the West, I’d have to give Beijing Automotive Industry Corp (BAIC) and perhaps Geely (HKEx: 175) pole position, perhaps followed by a weaker SAIC (Shanghai: 600104) and maybe BYD (HKEx: 1211), all of which have some kind of foreign connection. Chery may see the global market as ripe for its picking, but sophisticated Western buyers might find this offering, with a cheap price tag but little else in its favor, still a bit green.
Bottom line: Chery’s foray into Australia won’t go anywhere fast, with BAIC and Geely standing the best shot at being first to penetrate Western markets.
Time to turn our attention to Disney (NYSE: DIS), which was has been the subject of a slew of recent media reports on its plans to build a park in Shanghai. (English article) Most of those quote Shanghai Mayor Han Zheng as saying the park’s initial phase will cost just under $4 billion, though none says how much of those funds will come from Mickey and how much will come from Shanghai. But given Shanghai’s near fanatical zeal to land this project and one-up rival Beijing, I wouldn’t be surprised to see the next Disneyland’s host city forking out the lion’s share of money for this project, similar to what an overly zealous Hong Kong did about a decade ago. This is brilliant strategy by Disney, which gets something like 40 percent of its profit from its theme parks, in taking advantage of the huge popularity of its characters in China. I see major contributions from this park to the company’s bottom line once it opens, as hordes of Mickey fans from throughout China make the pilgrimage to Shanghai to see their favorite mouse in person.
Bottom line: The hype surrounding China’s first Disneyland in Shanghai is just getting started, with handsome rewards in store for Disney down the road.
It’s a relatively quiet news day here in China this Monday, but one of the few stories making headlines is the abrupt departure of CEO and founder Li Shanyou, also known as Kevin Li, from his video sharing site Ku6 Media (Nasdaq: KUTV) as the result of differing views with its major shareholder Shanda Interactive (Nasdaq: SNDA) chief Chen Tianqiao. (English press release; Chinese report) Now I’ll be the first to admit I know very little about KU6 and Li, beyond the fact that it’s a small company that used too be called Hurray Holdings. But I do know a bit about Chen and what a difficult and headstrong person he can be to work for or with. His past victims have included Tang Jun, another self-confident wonk in China’s tech world, and I have no doubt there have been many others. What this means for Ku6 is unclear, though I doubt it can be good. What it does reflect, however, is that Shanda’s Chen remains a difficult person with a big vision he is happy to articulate but doesn’t seem able to execute. Look for more waves for Shanda down the road as long as Chen is in charge, which seems likely to be a long while to come.
Bottom line: Ku6’s Li Shanyou is another victim in Chen Tianqiao’s hubris-filled wake, boding poorly for Chen’s Shanda flagship as he tries to build it into a diversified media powerhouse.
U.S. listed Chinese companies issued the following releases on March 12. To view the full releases, go to www.prnewswire.com and enter the company’s name in the search box.
** AsiaInfo-Linkage (Nasdaq: ASIA) Announces Resignation of COO
** Camelot (NYSE: CIS) Expects Renewal of Delivery Center Agreement
** Mindray Medical (NYSE: MR) to Present at Credit Suisse Asian Investment Conference March 21-25
** Apexigen Announces the Filing by its Partner, Simcere Pharmaceutical Group (NYSE: SCR) of First IND
Anyone who doubts that China’s property slowdown is real need look no further than the latest quarterly results from real estate services firm E-House (NYSE: EJ) (results announcement). Revenue was up by 7 percent due to strength from non-brokerage services, but brokerage revenue actually fell 9 percent and operating profit tumbled by more than 30 percent. Interestingly, the company guided to first-quarter revenue growth of about 15 percent, without providing any reason for the pickup amid all the sector uncertainty. Given that admittedly small bright spot in an otherwise gloomy landscape, coupled with a recent share sell-off that has left its valuation well below that of more service-oriented rivals Soufun (NYSE: SFUN) and E-House subsidiary China Real Estate Investment Corp (Nasdaq: CRIC), E-House itself could look like a nice buy at the moment while the market waits for more clarity on the future of Chinese real estate.
VERDICT: E-House looks like a nice short-term buy vs rivals based on valuation, guardedly positive outlook, and recent sell-off
A new race looks to be shaping up to be first to market in China’s wildly hot group buying space. First I wrote last month about a company named Dianping that was moving toward what looks like an IPO in the latter half of this year, (previous post). Now we’re hearing about another company called Lashou making similar moves (English article; Chinese article). According to one report, Lashou is getting a major round of late stage venture money around mid year, which looks suspiciously like pre-IPO funding. This looks a lot like the race that developed late last year between video sharing sites Youku (NYSE: YOKU) and Tudou, which was ultimately won by Youku. It’s probably too early to say who’s ahead this time, though Dianping may have an early lead due to the more advanced stage of its venture funding. Look for some nice returns to whoever makes it first.
VERDICT: Look for a race between Dianping and Lashou to be China’s first group buying site to make an overseas IPO this year, with Dianping having a slight early lead.
It’s a relatively slow news day, so I thought I’d start off with another “seeing is believing” story, this one on Sina’s (Nasdaq: SINA) wildly popular microblogging Weibo service. Sure, we’ve all heard about how Weibo is becoming the Twitter of China, but yesterday I got to see the real thing in action and it was quite impressive. Within literally 2 or 3 minutes of an acquaintance posting an item on his Weibo site about my blog, the “news” had been rebroadcast by at least 3 or 4 of his followers, and a woman sitting behind us in the coffee shop where we talking, whom neither of us knew, came over and said hello. Granted, none of this resulted in a significant increase in traffic to my blog, but that’s really beside the point. Clearly lots of people with not enough to do are spending time on this thing, which a savvy Sina should easily be able to monetize and use to generate handsome revenues and profits. The way this thing is growing, with a current user base of over 100 million, I see spin-off and IPO not far down the line, and another feather in Sina’s cap as it tries to become a diversified Web company.
VERDICT: Weibo looks really sharp, and is likely to IPO in the next couple of years bringing handsome returns for its parent and founder, Sina.
U.S. listed Chinese companies issued the following releases on March 11. To view the full releases, go to www.prnewswire.com and enter the company’s name in the search box.
** E-House (NYSE: EJ) Reports Fourth Quarter and Full Year 2010 Results and Declares Cash Dividend
** Canadian Solar (NYSE: CSIQ) Reports 4Q10 and FY2010 Financial Results
** ReneSola Ltd (NYSE: SOL) Prices Offering of US$175 Million of Convertible Senior Notes
One of my well-placed sources informs me that China Mobile (NYSE: CHL; HKEx: 941) will announce a major expansion of its 4G trials shortly after the National People’s Congress wraps up in Beijing in a week or two. China Mobile Chairman Wang Jianzhou has been talking openly at the NPC about the expansion of trials to seven major cities in the near future, and each of the big equipment suppliers — Huawei, ZTE (HKEx: 763), Nokia Siemens Networks, Ericsson (Stockholm: ERCb; Nasdaq: ERIC) and Alcatel Lucent (Paris: ALUA) is likely to get one city to showcase what it can do with TD-LTE, the homegrown 4G standard that China Mobile is developing. With early signs that China may actually be able to export this standard, the stakes are surely higher here than they are with TD-LTE’s predecessor, the dog known as TD-SCDMA. Still, given the fact that most of China is just getting started with 3G after years of delays, I don’t see the telecoms regulator issuing 4G licenses anytime soon, perhaps late 2012 at the very earliest. China Mobile’s earnest pressing ahead with 4G trials, at least in my mind, is probably more wishful thinking, as the company loses some of its colossal market share in the 3G space to smaller rivals China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 762; NYSE: CHT).
VERDICT: China won’t give out 4G licenses until late 2012 at earliest, and in the meantime China Mobile will continue to lose market share due to its inferior 3G technology
hardly going to give these guys a jump start in Oz anytime soon. If we were going to handicap this race to export to the West, I’d have to give Beijing Automotive Industry Corp (BAIC) and perhaps Geely (HKEx: 175) pole position, perhaps followed by a weaker SAIC (Shanghai: 600104) and maybe BYD (HKEx: 1211), all of which have some kind of foreign connection. Chery may see the global market as ripe for its picking, but sophisticated Western buyers might find this offering, with a cheap price tag but little else in its favor, still a bit green.
It’s a relatively quiet news day here in China this Monday, but one of the few stories making headlines is the abrupt departure of CEO and founder Li Shanyou, also known as Kevin Li, from his video sharing site Ku6 Media (Nasdaq: KUTV) as the result of differing views with its major shareholder Shanda Interactive (Nasdaq: SNDA) chief Chen Tianqiao. (
admittedly small bright spot in an otherwise gloomy landscape, coupled with a recent share sell-off that has left its valuation well below that of more service-oriented rivals Soufun (NYSE: SFUN) and E-House subsidiary China Real Estate Investment Corp (Nasdaq: CRIC), E-House itself could look like a nice buy at the moment while the market waits for more clarity on the future of Chinese real estate.
A new race looks to be shaping up to be first to market in China’s wildly hot group buying space. First I wrote last month about a company named Dianping that was moving toward what looks like an IPO in the latter half of this year, (
late stage venture money around mid year, which looks suspiciously like pre-IPO funding. This looks a lot like the race that developed late last year between video sharing sites Youku (NYSE: YOKU) and Tudou, which was ultimately won by Youku. It’s probably too early to say who’s ahead this time, though Dianping may have an early lead due to the more advanced stage of its venture funding. Look for some nice returns to whoever makes it first.
It’s a relatively slow news day, so I thought I’d start off with another “seeing is believing” story, this one on Sina’s (Nasdaq: SINA) wildly popular microblogging Weibo service. Sure, we’ve all heard about how Weibo is becoming the Twitter of China, but yesterday I got to see the real thing in action and it was quite impressive. Within literally 2 or 3 minutes of an acquaintance posting an item on his Weibo site about my blog, the “news” had been rebroadcast by at least 3 or 4 of his followers, and a woman sitting behind us in the coffee shop where we talking, whom neither of us knew, came over and said hello. Granted, none of this resulted in a significant increase in traffic to my blog, but that’s really beside the point. Clearly lots of people with not enough to do are spending time on this thing, which a savvy Sina should easily be able to monetize and use to generate handsome revenues and profits. The way this thing is growing, with a current user base of over 100 million, I see spin-off and IPO not far down the line, and another feather in Sina’s cap as it tries to become a diversified Web company.
regulator issuing 4G licenses anytime soon, perhaps late 2012 at the very earliest. China Mobile’s earnest pressing ahead with 4G trials, at least in my mind, is probably more wishful thinking, as the company loses some of its colossal market share in the 3G space to smaller rivals China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 762; NYSE: CHT).
