Bottom line: Starwood’s board is likely to reject a new raised offer for the company from Anbang and keep its recommendation to accept a lower bid from Marriott, which offers more certainty of closing a deal and also better long-term prospects.
Anbang ups the ante in Starwood bidding war
The latest development in the bidding war for US hotelier Starwood (NYSE: HOT) looks both expected and unexpected, with word that Chinese suitor Anbang has upped its offer to top the most recent bid from rival Marriott (NYSE: MAR). I say the move looks expected based on my previous assessment that Anbang looked determined to buy Starwood at any price. But the new bid is also a bit unexpected because Chinese media reported last week that the nation’s insurance regulator was likely to veto such a deal, which seemed to show Anbang might drop its pursuit of the purchase that is now valued at $14 billion.
The latest developments also include a response from Marriott, which seems to be saying “enough already”. That would indicate Marriott doesn’t plan to raise its latest bid, which is about 6 percent lower than the new one from Anbang, and instead let Starwood’s board decide which offer to recommend. Read Full Post…
Bottom line: Trina’s new loan and BYD’s uncertain outlook for EV sales this year reflect continued reliance of new energy technology companies on state support, which could pressure them as government incentives get retired.
Trina, BYD fueled by state support
Two new energy stories are in the headlines today, reflecting the progress but also the continued reliance on government support that this up-and-coming group of companies faces. That particular reality isn’t new, though some who were hoping the industries would become commercially independent more quickly may be disappointed. But more important, this reality could challenge many of the companies in the next 2-3 years in the face of disappearing support from governments that believe they have already given enough incentives to this slowly-developing group.
The first development has solar panel maker Trina (NYSE: TSL) announcing $143 million in financing for a new plant in Thailand, with all of the money coming from local lenders that almost certainly have government ties. The second has electric car maker BYD (HKEx: 1211; Shenzhen: 002594) reporting annual results that showed a surge in its EV business last year thanks to government incentives, setting the stage for a possible rapid slowdown this year as those incentives get set to retire. Read Full Post…
After several months of going nowhere, a pilot plan aimed at reviving Shanghai’s slowly dying water transport network is quietly sailing off to the land of innovative local projects that sank after failing to find an audience. In this case the quiet closure of a ferry service connecting destinations in Hongkou District, the Bund and Lujiazui financial district was almost inevitable, since it really didn’t seem well conceived and was operating at big losses.
That said, I do have to commend the city for taking an innovative step to try to revive a dying water culture that is one of Shanghai’s most unique and picturesque assets, even though it remains largely unknown to many outsiders. Perhaps the city should send a team to study the example of Hong Kong, which has been far more successful at developing a vibrant water transport network that serves local commuters and is also a major tourist attraction. Read Full Post…
The following press releases and news reports about China companies were carried on March 29. To view a full article or story, click on the link next to the headline.
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Anbang Trumps Marriott (NYSE: MAR), Raises Offer for Starwood (NYSE: HOT) to $14 Bln (English article)
China Bank Profits Flat-Line as Bad Debts Continue to Soar (English article)
Alibaba’s (NYSE: BABA) Cainiao Logistics Arm Forms Alliances, In Same-Day Delivery Drive (Chinese article)
Shanghai Disneyland (NYSE: DIS) Sells Out for Opening Day (English article)
Bottom line: Coolpad’s sliding revenue and profits last year reflect intense competition in China’s smartphone market, and the company could become one of the first major victims of an upcoming shake-out for the sector.
Coolpad logs tough year in 2015
Fading smartphone maker Coolpad (HKEx: 2369) has just released financial results that show just how bloody China’s market was last year, with operating profits and revenue both tumbling by nearly half. The outlook certainly doesn’t look too promising for Coolpad, which was once an up-and-comer in the market but more recently has been overwhelmed by the non-stop competition. It also didn’t help that Coolpad lost an important backer last year, following a high-profile dispute with joint venture partner Qihoo 360 (NYSE: QIHU).
The year 2015 wasn’t a pretty one for Coolpad. The company benefited from its relatively early arrival to China’s smartphone market to become a leading local player, but by the end of last year had fallen out of the nation’s top 5 brands. It tried to bolster its position by signing up strategic partners that could ensure its future. But that plan backfired when one of those partners, Qihoo, became enraged after Coolpad formed another separate alliance with online video giant LeEco (Shenzhen: 300104), formerly known as LeTV. Read Full Post…
Bottom line: Saohuo’s new angel fund-raising shows that Internet companies with innovative concepts can still attract growth capital, while Great Wall’s scrapping of its new share issue shows China’s new energy car program is sputtering.
Saohuo cashes in on near-expired food
A couple of fund-raising stories are in the headlines as the new week begins, showing that Internet plays continue to be hot while older industries like cars lose their appeal. The first story brought a smile to my face because of its “only in China” nature, and has seen some significant early fund-raising by an e-commerce company that specializes in imported foods that are near their expiration date. The second story has car maker Great Wall Motor (HKEx: 2333; Shanghai: 601633) scrapping its own fund-raising plan due to lack of investor interest in China’s sputtering effort to boost new energy cars.
China’s economic slowdown is putting a definite damper on older industries like steel and autos, where rapid build-ups over the last few years have led to overcapacity and plunging profits. But there’s still plenty of room for growth in the Internet space, as online companies and app makers use innovative concepts and business models to steal business from more traditional players like banks and brick-and-mortar retailers. Read Full Post…
Bottom line: Lenovo’s latest overhaul looks promising by combining its older PC unit with its smartphones under a capable leader, but its longtime CEO could still get forced out if the plan doesn’t show signs of success in the next 6 months.
Lenovo in new corporate overhaul
A series of new stories are highlighting the growing rivalry between fast-rising gadget maker Huawei and the older Lenovo (HKEx: 992), which has just launched a major overhaul as it tries to right its fast-sinking ship. The overhaul looks like a last-ditch effort by longtime CEO Yang Yuanqing to save both his company and his own job, following a series of missteps over the last year in the critical smartphone space.
Meantime, other reports are showing how Lenovo is also trying to maintain its globally-leading position in the PC arena with the recent launch of a new series of models from its core ThinkPad series. That launch comes as Huawei gets set to roll out its first-ever rival notebooks. Lenovo actually unveiled its new ThinkPad X1 series back in January, though the actual products are just now beginning to find their way into the market. Read Full Post…
The following press releases and news reports about China companies were carried on March 26-28. To view a full article or story, click on the link next to the headline.
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Data Rollover Policy Shift Costs China Telecom (HKEx: 728) 2 Bln Yuan in 2 Months (Chinese article)
As Revenue Dives, Coolpad (HKEx: 2369) in Survival Mode Amid Awkward Transformation (Chinese article)
Samsung Pay (Seoul: 005930) to Launch in China at End of March (Chinese article)
Tencent (HKEx: 700) in Animation Tie-Up with Bilibili, 4 Others (Chinese article)
Great Wall Motor (HKEx: 2333) Terminates Share Sale Plan on China Market Volatility (English article)
Bottom line: Microsoft’s development of a special Windows 10 China government edition reflects efforts western tech firms are making to comply with Beijing’s year-old national security law.
Microsoft makes special Windows 10 edition for Beijing
US software giant Microsoft (Nasdaq: MSFT) is sending the latest sign that foreign tech firms are bending to Beijing’s national security concerns, with word that it has created a special version of Windows 10 just for the Chinese government. This kind of a move looks relatively bold, and sharply contrasts with Apple’s (Nasdaq: AAPL) recent refusal to assist the US government in its drive to unlock a terrorist’s iPhone.
But Microsoft’s move isn’t completely unprecedented either, since the software giant also made a similar move more than a decade ago when it released the source code for Windows to Beijing. Since then, Microsoft has continued to share its Windows source code with Beijing for newer versions of the operating system, reflecting the importance the company places on the huge China market. Read Full Post…
Bottom line: Huge interest in a new mega funding for Wanda Pictures reflects confidence in the company and China’s entertainment industry, though Wanda may have to raise its price to complete its proposed US acquisition of Carmike Cinemas.
Wanda’s Carmike bid draws chilly reception
The hyperactive Wanda Group is in a couple of entertainment headlines as we round out the week, reflecting the company’s recent drive to diversify beyond its roots as a real estate company. The larger of the pair has Wanda’s recently launched film-making unit raising a cool $2.4 billion in its maiden fund-raising, an impressive figure for a company that has little experience in the area. The second involves an acquisition plan by Wanda’s related theater arm, and is seeing the company’s plan to buy US chain Carmike Cinemas (Nasdaq: CKEC) hit some opposition from shareholders who say the bid is too low.
This pair of stories reflects 2 different themes in China’s corporate world over the past year. The first shows how easy it has become for big names like Wanda to raise major new funds, often topping $1 billion, from investors excited about China’s fast-growing Internet and entertainment sectors. The second reflects a growing resistance by US shareholders to Chinese acquisitions of New York-listed companies, with many complaining the bids grossly undervalue such companies. Read Full Post…
Bottom line: ZTE will avoid major fallout from its clash with Washington over illegally selling products to Iran, though its shares could drop 5-10 percent when trade resumes after its April 6 results announcement.
ZTE seals plea agreement with Washington
It’s not often that I write about earnings date announcements, but in this case one such announcement from telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) appears to show it believes it has found a long-term resolution to its recent run-in with Washington. ZTE was originally set to publish its fourth-quarter results on Wednesday this week, but hastily scrapped that plan after the clash began with Washington earlier this month.
Now ZTE has just published an announcement detailing what it hopes will be a long-term resolution to the clash, which began when Washington find it guilty of selling US equipment to Iran in violation of a ban. As a result, ZTE has announced a new date of April 6 for releasing its fourth-quarter and full-year results. (HKEx announcement) Read Full Post…
