A new stock exchange being planned for Shanghai ran into unexpected headwinds last week, when signals coming from Beijing hinted at delays or even a possible scrapping of the board aimed at fostering emerging industries. Observers said the setback could deal a blow to fast-growth companies like Baidu-linked (Nasdaq: BIDU) online video service Qiyi.com and Alibaba’s (NYSE: BABA) Ant Financial, depriving them of an important source for new funding to fuel their development.
But the truth is that China already has two major specialty boards to complement its two main boards in Shanghai and Shenzhen. One of those, the ChiNext, is a Nasdaq-style enterprise board launched in Shenzhen in 2009. The other is a 3-year-old Beijing-based over-the-counter style board, often called the Third Board. The older ChiNext specializes in more mature high-growth start-ups, many of which would have previously gone overseas to list, while the Third Board focuses on earlier stage companies that are often still losing money. Read Full Post…
The following press releases and news reports about China companies were carried on March 22. To view a full article or story, click on the link next to the headline.
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Marriott (NYSE: MAR) Wins Back Starwood (NYSE: HOT) With New Offer (English article)
US to Offer ZTE (HKEx: 763) ‘Temporary Relief’ on Export Curbs: Official (English article)
Alibaba (NYSE: BABA) Reaches 3 Trillion Yuan Milestone Even as China Slows (English article)
Bottom line: Mark Zuckerberg’s latest visit to Beijing and meeting with a top propaganda official show his hopes of bringing Facebook to China are still alive, and could result in announcement of a new joint venture by year-end.
Facebook’s Zuckerberg back in Beijing
Facebook (Nasdaq: FB) chief Mark Zuckerberg may not have much chemistry with Chinese President Xi Jinping, but he certainly seems quite capable of getting meetings with high-ranking Chinese Internet and propaganda officials. Just a couple of months after returning from paternity leave for the birth of his daughter, Zuckerberg was back in Beijing over the weekend to attend a government-sponsored forum, as he pursues his aim of bringing Facebook to the world’s biggest Internet market.
Zuckerberg is certainly no stranger to meetings with top Chinese officials as he pursues his goal. Last year he made headlines when he reportedly asked President Xi Jinping to choose an honorary Chinese name for his daughter during Xi’s state visit to Washington, even though his request was ultimately declined. And in late 2014, he hosted a tour at Facebook’s Silicon Valley campus for Lu Wei, minister of the Cyberspace Administration for China. Read Full Post…
Bidding wars follow certain principles, but the recent battle for US hotel operator Starwood (NYSE: HOT) between local rival Marriott (NYSE: MAR) and Chinese insurer Anbang is quickly diverging from one of the most central rules. In a move that surprised many, including myself, Anbang has suddenly upped its bid for Starwood, increasing its original offer that was already 12 percent higher than Marriott’s original and only bid dating back to last year.
In all my years of covering M&A and bidding wars, this is the first time I can recall of a company increasing its own bid that wasn’t in response to a rival counter bid. The strange move probably reflects Anbang’s worries that its original offer might get rejected by Starwood, which I previously predicted would choose Marriott as a more dependable partner despite its lower offer. Now we’ll have to wait to see if Marriott responds by raising its original offer, which is now about 15 percent lower than Anbang’s latest bid. Read Full Post…
This week’s Street View takes us to the offices of one Shanghai’s hottest Internet companies, though take-out delivery superstar Ele.me probably would have preferred to avoid the spotlight on this year’s global Consumer Rights Day that fell on March 15. But anyone who missed that story, which saw Ele.me blasted for using unlicensed restaurants, needn’t worry about accidentally missing this particular day designed to draw attention to a specific cause.
That’s because I’ve recently become aware of Shanghai’s fondness for commemorating many of the growing number of global days designed to draw attention to just about any cause imaginable. While there’s certainly no harm in using such events to raising awareness of things like environmental protection, it does seem like Shanghai’s growing obsession with these promotional days is getting slightly out of hand and may need to become a little more selective. Read Full Post…
The following press releases and news reports about China companies were carried on March 19-21. To view a full article or story, click on the link next to the headline.
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Bottom line: Anbang’s hiring of a consultant to gauge shareholder interest in its bid for Starwood indicates a lack of confidence in reaching a deal with Starwood’s management, and shows its offer is ultimately likely to fail.
Starwood preparing to reject Anbang?
Chinese insurer Anbang is quickly learning that money can’t buy you everything, following its surprise mega-bid for US hotel giant Starwood (NYSE: HOT), operator of the Sheraton and Westin brands. That’s my latest interpretation, following reports that Anbang has hired a professional proxy solicitor to gauge investor sentiment towards its $12.8 billion bid for Starwood that trumped a previous offer by US hotel giant Marriott (NYSE: MAR).
I said earlier this week that Starwood’s board and management were ultimately likely to reject the Anbang bid, and opt for a union with a partner like Marriott that could ensure its longer-term future. (previous post) This latest move implies that Anbang may be getting a cool reception from Starwood’s management, and is testing the waters to potentially take its bid directly to Starwood’s shareholders in what would become a hostile takeover bid. Read Full Post…
Bottom line: WeChat’s growth will continue to fuel strong revenue gains for Tencent but could also create a drag on profits, while China Mobile’s profits are likely to be flat as savings from slower infrastructure spending are offset by big 4G promotions.
Transactions boom on WeChat
High-tech leaders Tencent (HKEx: 700) and China Mobile (HKEx: 941; NYSE: CHA) are providing a nice contrast with their latest earnings reports, pitting one of China’s most innovative private companies against one of its biggest state-run laggards. The results cast a painful spotlight on China Mobile, China’s largest mobile carrier, whose profits sagged in the fourth quarter as it lost business to more nimble companies like Tencent. Meantime, Tencent’s profits and revenue posted healthy gains, as it provided data to generate excitement about its fast-growing but money-losing WeChat social networking service.
Shares of both companies reacted much as one would expect, continuing recent trends. China Mobile shares dipped 2.1 percent after its results came out, and are down about 15 percent over the last year. Tencent’s results came out after the market closed, but I expect they will rally in the new trading day. Over the last year they are up 5 percent, which is quite impressive when one considers the main Shanghai index is down 19 percent during that time. Read Full Post…
Bottom line: Domestic buyers are likely to comprise most of the investors in Ant Financial’s latest fund raising, though the use of foreign advisers indicates some overseas participation may also be allowed.
Ant Financial raises new funds
Ant Financial, the financial services arm of e-commerce giant Alibaba (NYSE: BABA), is going back to investors for a new mega fund-raising, just a year after taking money from private investors for the first time. But any foreigners hoping to buy into Ant will probably be disappointed, since it appears this new funding round will be mostly open to Chinese institutional buyers. Likewise, Ant’s IPO that could come as soon as next year is likely to happen on one of China’s domestic stock markets, again locking out foreign investors.
Perhaps it’s only fair that foreign investors stand on the sidelines in Ant’s high-growth story, since such investors already have easy access to some of China’s top private companies that are listed overseas. By comparison, domestic Chinese investors have little or no access to shares of Alibaba, Baidu (Nasdaq: BIDU) or Tencent (HKEx: 700), even though that trio of corporate giants derive nearly all their money from China’s booming Internet market. Read Full Post…
The following press releases and news reports about China companies were carried on March 18. To view a full article or story, click on the link next to the headline.
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Bottom line: LeEco’s new alliance with 6 car makers and rapid expansion of its sports programming unit look like shrewd moves to position itself as a major player in 2 big new growth areas.
LeEco in new car tie-up, fund raising
Following a relatively quiet period for one of China’s more talkative companies, online video leader LeEco (Shenzhen: 300104), formerly known as LeTV, is back in the headlines with 2 relatively large deals in the auto and sports sectors. The first has LeEco signing an alliance with some of China’s leading car makers, who have agreed to use its entertainment system in their vehicles. The second has LeEco’s sports unit raising 7 billion yuan ($1.1 billion) in its latest fund-raising round.
The pair of stories highlight 2 focus areas for LeEco, one of China’s oldest online video companies and the only one that has remained independent as others all got purchased by bigger Chinese Internet companies. LeEco is trying to move aggressively beyond its original area as an online video specialist by obtaining more exclusive content, and also by offering its products and services over the growing number of channels that consumers use to access entertainment and information. Read Full Post…
