The following press releases and news reports about China companies were carried on May 18. To view a full article or story, click on the link next to the headline.
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Midea (Shenzhen: 000333) Said to Plan Takeover Offer for Germany’s Kuka (English article)
Dangdang (NYSE: DANG) Receives Revised Proposal to Acquire Company at $6.50 per ADS (PRNewswire)
SAIC Motor (Shanghai: 600104) Unit Said to Pick Banks for at Least $500 Mln IPO (English article)
Alibaba (NYSE: BABA) Reiterates Commitment to Anti-Counterfeiting Partnership (company announcement)
Bottom line: The latest China trip by Apple’s CEO is designed to spotlight the company’s new mega-investment in Didi Chuxing and show its continued relevance for local app makers, as it seeks positive media coverage to halt a recent series of negative news.
Apple CEO looks for positive news on China trip
Less than 2 weeks after media first reported plans for a new China trip by Apple’s (Nasdaq: AAPL) CEO, Tim Cook has appeared in Beijing for the eighth visit to his company’s second largest market. This particular visit comes at a sensitive time for Apple, which has experienced a number of China setbacks recently, led by a sharp drop in sales during the first 3 months of the year.
Against that backdrop, I previously said that Cook’s new trip looked partly aimed at damage control, though we should also note that he was already a frequent visitor to the country. In keeping with the past, Cook was relatively low key this time and didn’t even announce his arrival in China until he was spotted at a meeting with some of the company’s local app development partners in Beijing. (Chinese article) Read Full Post…
Bottom line: Questions about the valuation for its filmed entertainment unit and a new real estate acquisition reflect an increasingly ambitious LeEco, which could cause future problems if some of its decisions turn out to be flawed.
Stock exchange queries LeEco on film unit
Two new headlines are casting a spotlight on the increasingly diverse ambitions of online video giant LeEco (Shenzhen: 300104), led by reports that the company formerly known as LeTV is making a major move into real estate. At the same time, another report involving a potentially inflated valuation for the company’s filmed entertainment unit is casting a spotlight on the murky finances behind LeEco, spotlighting the kinds of financial shenanigans that often take place behind the scenes at many hot Chinese companies.
I’ve been saying for a while now that LeEco looks quite overvalued at its current stock price that gives it a market value of nearly $17 billion. Like many Chinese firms, LeEco mostly puts profitable assets into its publicly traded company and maintains its loss-making units as separate private entities, making it difficult to figure out whether the overall company is making or losing money. Read Full Post…
Bottom line: A strong field of cornerstone investors indicates BOC Aviation’s IPO could post moderate gains in its trading debut, while Didi’s IPO plan shows that New York remains an attractive option for Chinese firms that are leaders in their sectors.
Fosun, Boeing buy into BOC Aviation
A couple of major IPOs are in the headlines today, led by some encouraging signs for an upcoming listing from BOC Aviation, the aircraft leasing arm of Bank of China (HKEx: 3988; Shanghai: 601398) that’s in the process of making a $1.1 billion offering in Hong Kong. Meantime, we’re getting some of the first concrete signals of the IPO plans for Didi Chuxing, the homegrown Chinese equivalent of Uber, which is reportedly eyeing a US listing in 2018.
Let’s jump right in with BOC Aviation, which looks like an attractive IPO to me since it should benefit from China’s booming demand for air travel. Yet despite that potential, the offer has stumbled somewhat since Bank of China first announced its plans to make a separate listing for the unit back in March. BOC Aviation was initially hoping to raise up to $1.5 billion, but pared the amount back to the current $1.1 billion after meeting with lukewarm demand due to recent market volatility. Read Full Post…
The following press releases and news reports about China companies were carried on May 17. To view a full article or story, click on the link next to the headline.
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Chinese Ride-Hailing Giant Didi Plans US IPO in 2018: Source (English article)
Apple (Nasdaq: AAPL) CEO Cook in China, Engages in Banter at Developer Meeting (Chinese article)
BOC Aviation IPO Raises $500 Mln from Cornerstone Investors, Set for June Debut (English article)
Terex (NYSE: TEX) Sells off Assets to Pave Way for Purchase by Zoomlion (HKEx: 1157) (Chinese article)
Bottom line: A brouhaha that has seen Alibaba suspended from an anti-counterfeiting group just a month after joining is an embarrassment but won’t have a major longer-term impact on the company’s stock.
Tiffany quits anti-piracy group after Alibaba joins
A brouhaha over the admission of Alibaba (NYSE: BABA) to a leading US anti-piracy coalition has taken a somewhat strange twist, with word that the group has formally suspended the e-commerce giant just a month after it joined. The development occurred after several of the International Anti-Counterfeiting Coalition’s (IACC) members quit after the group accepted Alibaba, including the latest defection last week by Tiffany & Co.
Tiffany’s defection followed earlier withdrawals from the IACC by 2 other luxury goods makers, Michael Kors and then Gucci a short time later. (previous post) The coalition’s members were unhappy because of Alibaba’s previous status as operator of marketplaces with rampant trafficking in counterfeit goods, even though the company has pledged to strongly step up its fight against such trade. Read Full Post…
Bottom line: Apple’s new $1 billion investment in Didi Chuxing is a smart way to show its commitment to China and pursue car-based services, while avoiding intellectual property theft that might come if it set up its own R&D facility.
Apple invests in Didi Chuxing
I’ve been saying for years that Apple (Nasdaq: AAPL) needs to make a major investment in China to show its commitment to the market, but was quite surprised to read it was finally taking such a step with plans to pump $1 billion into local hired car services giant Didi Chuxing. But after some more thought, I realized this particular investment actually has a certain form of logic that I’ll explain shortly. And it also shows Apple’s commitment to the market.
This particular announcement also comes as Apple experiences a sudden series of setbacks in China, following a good streak that saw it do quite well over the last 2 years. Those setbacks were led by Apple’s disclosure last month that its Greater China sales plunged 26 percent in the first quarter of this year. That bad news was followed by the company’s loss in a local trademark dispute involving the iPhone name, and after its China book and movie services were blocked for unspecified reasons. (previous post) Read Full Post…
Baidu, Beijing hospital at center of medical scandal
A scandal involving leading search engine Baidu (Nasdaq: BIDU) has been making national headlines for much of the last 2 weeks, but a smaller similar story this week in Shanghai showed just how bad the problem of false and misleading advertising claims has become in China. Both cases had their roots in the ultra-competitive medical industry, where hospitals, drug and device makers are constantly boasting of miracle cures and spectacular results for anyone who will listen.
In many ways this particular landscape is reminiscent of the US in the early 20th century, when similar “snake oil salesmen” peddled all kinds of dubious drugs and elixirs that claimed they could cure everything from common colds to digestive ailments. Now it seems that China is going through similar growing pains due to its relatively late arrival into a competitive environment where people have many choices for medical products and services. Read Full Post…
The following press releases and news reports about China companies were carried on May 14-16. To view a full article or story, click on the link next to the headline.
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Anti-Counterfeiting Group Suspends Alibaba (NYSE: BABA) After Member Outcry (English article)
Apple (Nasdaq: AAPL) Invests $1 Bln in Chinese Ride-Hailing Service Didi Chuxing (English article)
Stock Exchange Queries LeEco (Shenzhen: 300104) Over Film Unit’s High Value (Chinese article)
Bottom line: Qihoo’s privatization from New York is likely to move ahead after it resolves a temporary impasse with the foreign exchange regulator, while Wanda’s privatization is also likely to proceed on its belief it can make a quick backdoor re-listing in China.
Qihoo shares fall on latest buyout obstacle
New ripples are spilling through the realm of Chinese companies seeking to return to China after getting lukewarm receptions with offshore listings, reflecting the complexity and difficulty of such deals. Two of the largest such deals are in the headlines as we round out the week, led by word that a privatization plan by software security specialist Qihoo 360 (NYSE: QIHU) may be running into trouble due to China’s strict foreign exchange controls. The other major deal has real estate giant Dalian Wanda (HKEx: 3699) reportedly moving ahead with a plan to privatize the company, after indicating earlier this week it might abandon its original plan.
It’s becoming quite a challenge to write about this so-called “homecoming trend” by Chinese firms these past 2 weeks, since new obstacles seem to be popping up almost daily on this road back to China. The process was never an easy one, and involves raising hundreds of millions or sometimes even billions of dollars to take a company private. Then the buyout groups, usually led by company managers, must convince New York or Hong Kong shareholders to sell their stock, often at modest premiums. Read Full Post…
Bottom line: BOC Aviation and 51Talk are likely to post moderate performances in their upcoming IPOs in Hong Kong and New York, as investors welcome their growth stories but also show concerns about China’s broader slowing economy.
BOC Aviation IPO gets lukewarm reception
Privatizations and de-listings have been making headlines among overseas listed Chinese firms these days, but a couple of upcoming new IPOs shows that New York and Hong Kong remain attractive options for at least some companies. In the bigger of the 2 plans in the headlines today, Bank of China’s (HKEx: 3988; Shanghai: 601398) BOC Aviation unit has filed updated plans for its IPO first announced in March, which includes a final pricing. The other deal has English language instruction specialist 51Talk filing to make a New York IPO to raise up to $100 million.
This latest pair of deals in some ways reflect the constant state of uncertainty in China’s own stock markets, which is where many of these Chinese companies would prefer to list due to higher valuations. IPOs in China are always tough because of a huge waiting line that means new applicants can wait 2 or 3 years or even more. The problem is worsened by political conservatism that often sees the regulator slow or freeze all new offerings when markets become volatile like they are now. Read Full Post…
