SMARTPHONES: Worried Apple CEO on Damage Control Trip to China

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Bottom line: An upcoming China trip by Apple’s CEO looks hastily arranged and aimed at damage control after several recent setbacks, but won’t stem the company’s recent sales plunge due to intense competition from domestic brands like Huawei.

Apple CEO books hasty trip to China
Apple CEO books hasty trip to China

As the latest China setback for Apple (Nasdaq: AAPL) ripples through the headlines, the global tech giant’s CEO Tim Cook is booking a trip to Beijing to try and halt a growing tide of bad news that has already wiped billions of dollars from his company’s stock. The latest China setback for Apple looks relatively minor, and has local media reporting recent malfunctions and the disappearance of some apps from the company’s China app store.

Those quirks may be an extension of a growing clash between Apple and China’s censors, who a couple of weeks ago shut down the company’s online book and movie services for unspecified violations. (previous post) Since then, Apple has also suffered negative publicity in China after losing a trademark battle involving the iPhone name, and most importantly from a 26 percent plunge in China sales during its latest quarterly report. (previous post) Read Full Post…

China News Digest: May 13, 2016

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The following press releases and news reports about China companies were carried on May 13. To view a full article or story, click on the link next to the headline.
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  • BOC Aviation Prices IPO, to Raise up to $1.3 Bln (HKEx announcement)
  • NetEase (Nasdaq: NTES) Reports Q1 Unaudited Financial Results (PRNewswire)
  • Gome (HKEx: 493) Issues 2 Bln Yuan in Domestic Bonds to Expand Online, Offline (Chinese article)
  • Qihoo’s (NYSE: QIHU) $9.3 Bln Buyout Said to Hit FX Regulator Impasse (English article)
  • Minsheng Bank (HKEx: 1988) to Scrap Share Subscription in HK’s Quam (HKEx: 952) (English article)

NEW ENERGY: Canadian Solar Ups Outlook, Yingli Set for Bond Default

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Bottom line: Canadian Solar’s raised revenue guidance hints at rising prices and could signal upside for the company’s profits, while YIngli’s latest signals may show it’s trying to sell itself to a healthier rival.

Canadian Solar surges, YIngli struggles

The strongest and weakest players from China’s lively solar panel sector are in the headlines today, with superstar Canadian Solar (Nasdaq: CSIQ) and the struggling YIngli (NYSE: YGE) both releasing their latest quarterly results. But whereas Canadian Solar has just announced its financials for this year’s first quarter, including a raised revenue outlook for 2016, Yingli is just now releasing its results for the fourth quarter of 2015.

Most companies typically release their quarterly results within 60 days of the quarter’s end, or 90 days at the very latest. But YIngli’s ongoing struggles have led managers to say several times the company could become insolvent, as it sits on a massive pile of maturing debt that it can’t repay. The latest of that debt comes due today, and Yingli is saying it’s unlikely to make the repayment on time. Read Full Post…

VIDEO: PPTV’s Cryptic Farewell, Xunlei Swings to Loss

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UPDATE: Since issuing its original microblog post, PPTV has issued new posts on its account that appear to indicate it won’t be closing. To view the latest posts, please click here.

Bottom line: PPTV looks set to become the first major victim of China’s online video wars after its microblog publication of a farewell message, while the money-losing Xunlei could become the second casualty.

PPTV bidding farewell?

Two of China’s major online video companies with mid-sized backers are in the headlines today, with ominous signals coming from PPTV and Xunlei (Nasdaq: XNET) that reflect the intense competition they face. The most intriguing headline has PPTV, which is owned by electronics retailing giant Suning (Shenzhen: 002024), announcing on its official microblog that it is closing, even as its actual website remains active.

The other headline has Xunlei, which is backed by smartphone maker Xiaomi, announcing its latest quarterly results that showed it swung to a loss as it battles with much larger rivals for an audience. We can probably also assume that PPTV was losing big money, and in fact just about everyone in China’s online video space is now in the red. Typical of the group is Youku Tudou, the industry leader whose net loss doubled to $70 million in last year’s third quarter before it was bought by e-commerce giant Alibaba (NYSE: BABA). Read Full Post…

SMARTPHONES: China Smartphone Contraction Chokes FIH, Xiaomi

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Bottom line: The 5 percent drop in China smartphone sales during the first quarter reflects the market’s current state of saturation, which will lead to more bankruptcies this year for suppliers and second-tier brands.

Xiaomi slips to third in China smartphone market

New data from China are shining a spotlight on the sudden slipping of global giant Apple (Nasdaq: AAPL) in the world’s largest smartphone market, as well as the slower decline of homegrown challenger Xiaomi. At the same time, the 5 percent decline in first-quarter shipments in the huge but intensely competitive China market bodes poorly for everyone. That includes a growing number of suppliers to the big brands like contract manufacturing giant FIH Mobile (HKEx: 2038), which has just warned that its profits are coming under intense pressure.

Much has been written about the effects that intense competition are having on Chinese smartphone brands, many of which are either barely profitable or are even losing money. But the toll has been even bigger on many of their suppliers like FIH, which makes phones for the likes of Xioami and Sony (Tokyo: 6758) and are coming under even bigger pressure due to slowing orders and cries from their customers for lower prices. Read Full Post…

China News Digest: May 12, 2016

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The following press releases and news reports about China companies were carried on May 12. To view a full article or story, click on the link next to the headline.
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  • PPTV Posts Farewell Microblog Message, Website Remains Active (Chinese article)
  • Canadian Solar (Nasdaq: CSIQ) Reports Q1 Results, Raises Annual Revenue Guidance (PRNewswire)
  • Wanda Group Reconsiders De-Listing Property Unit: Sources (English article)
  • LeEco (Shenzhen: 300104) Joins Forces with Twitter for Global Brand Expansion (Businesswire)
  • Alibaba (NYSE: BABA), Gree (Shenzhen: 000651) Launch Smart Air Conditioner (Chinese article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

BUYOUTS: Regulator Re-think Boosts Privatizing China Stocks

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Bottom line: The CSRC’s reported plans for a backdoor listing quota for companies returning to China from New York should restore confidence that well-conceived buyout plans by big names like Qihoo will succeed.

Regulator reopens gate for backdoor listings in China

After a massive sell-off at the beginning of the week on concerns of a major new roadblock to their homecoming plans, Chinese companies privatizing from New York have seen their shares rebound sharply on reports of a regulatory compromise that would allow them to re-list in China. The story is mostly based on rumors about an internal debate within the China Securities Regulatory Commission (CSRC), China’s stock regulator, which is worried about a potential future flood of backdoor listings by local companies now privatizing from New York.

The sell-off for companies like Qihoo (NYSE: QIHU), Momo (Nasdaq: MOMO) and 21Vianet (Nasdaq: VNET) at the start of this week came after reports emerged saying the CSRC might halt all such backdoor listings, which typically see a company inject its assets into an existing listed shell company. The regulator took the unusual step of saying it was simply studying the issue, but that didn’t ease concerns that New York privatization bids for Qihoo and others might collapse if backdoor re-listing route in China was closed. Read Full Post…

INTERNET: Baidu Cleans Up Search Site, Eyes Values

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Bottom line: Baidu’s new policy of greater transparency in its search results is long overdue, and is unlikely to have a major impact on its business due to lack of other choices for advertisers in the China search market.

Baidu cleans up search site

What a difference a week makes. After coming under unprecedented assault for putting profits above everything else, leading search engine Baidu (Nasdaq: BIDU) has just done a major overhaul of its core search service to make it more transparent and useful. The overhaul was long overdue but was hardly voluntary, and only came after the company faced the biggest crisis since its founding in 2000.

It’s somewhat ironic that this particular crisis took so long to come, since the kinds of misleading practices at the center of the controversy are widely known and central to Baidu’s huge profitability. Those practices include selling preferred positions on search results pages to advertisers who pay the highest prices, even though that fact was never clearly conveyed to Internet users. Read Full Post…

INTERNET: Facebook Makes Name in China with Trademark Win

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Bottom line: A favorable court ruling in a trademark dispute is the latest positive step for Facebook in China, and reinforces a view that it could get permission to open a Chinese service within the next year.

Facebook wins trademark ruling in Beijing

Social networking giant Facebook (Nasdaq: FB) may be absent on the China Internet, but a new victory in a local trademark dispute shows its name is gaining traction in the Chinese legal system. Some are pointing out that Facebook’s victory against a beverage maker that tried to register its trademark contrasts sharply with the loss in a similar case last week for US smartphone giant Apple (Nasdaq: AAPL). (previous post)

While both decisions came from courts in Beijing, it’s probably a bit unfair to compare the 2 since each has to be considered based on individual facts and evidence. But this latest trademark victory does appear to show that Facebook founder Mark Zuckerberg’s strategy of currying favor with Beijing may be producing results, as he pursues his ultimate goal of launching a Chinese version of his social networking service (SNS). Read Full Post…

China News Digest: May 11, 2016

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The following press releases and news reports about China companies were carried on May 11. To view a full article or story, click on the link next to the headline.
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  • Baidu (Nasdaq: BIDU) Responds to Stricter Rules Concerning Healthcare Advertising (English article)
  • Qihoo (NYSE: QIHU) Leads China Going-Private Target Rebound in US Trading (English article)
  • Alibaba Pictures (HKEx: 1060) Invests 1 Bln Yuan in Cinema Firm Convertible Bonds (Chinese article)
  • Unicom (HKEx: 762) Makes Major Personnel Adjustments at Group, Provincial Levels (Chinese article)
  • China Q1 Smartphone Sales Fall 5 Pct, Huawei in First, Apple (Nasdaq: AAPL) Fifth (Chinese article)
  • Latest calendar for Q1 earnings reports (Earnings calendar)

BUYOUTS: Privatizing Shares Tank on Talk of Homecoming Chill

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Bottom line: Many privatization bids by Chinese firms hoping to re-list in China could collapse if the CSRC cracks down on backdoor listings, though de-listing plans backed by big private equity names could still succeed.

Privatizing shares tumble on CSRC rumors

Rumors that they might get a chilly reception from China’s securities regulator has sparked a major sell-off for shares of US-traded companies trying to privatize and re-list at home in search of higher valuations. The dive is one of the largest I’ve seen for any single group in quite a while, and could present a great buying opportunity for anyone who believes these companies can still successfully privatize and re-list in China.

But in this case I might be more inclined to agree with the pessimists, since China’s securities regulator is quite conservative, even though I’ve said it should continue to allow these re-listings. (previous post) In this case the China Securities Regulatory Commission (CSRC) may also be acting under direct orders from Beijing, which is already worried about another major sell-off on domestic stock exchanges like one early this year. Read Full Post…