Bottom line: A New York IPO by drug maker MediTech and Hong Kong listing by BOC Aviation will both meet with tepid reception and weak debuts, the former due to its small size and latter due to lack of big growth potential.
Drug maker China MediTech registers for NY IPO
A couple of IPOs are in the headlines as we head into the new week, led by a relatively sizable listing plan by drug maker China MediTech that could be the first significant new offering in New York this year by a Chinese firm. Meantime, Bank of China (HKEx: 3988; Shanghai: 601398) is also announcing plans to spin off and list its airline leasing unit, marking its latest asset sale as China’s banks scramble to raise cash to cushion their rapidly crumbling balance sheets.
Each of these listing stories is a bit different, reflecting the big differences between MediTech, a private company controlled by Hong Kong billionaire Li Ka-shing, and Bank of China, one of China’s big 4 state-run banks. MediTech’s choice of New York over Hong Kong probably reflects Li Ka-shing’s recent bearish stance on China, and also highlights the relative stability that New York offers over Hong Kong and China. Bank of China’s choice of Hong Kong reflects the preference by big state-run companies to make overseas listings in the former British colony, and Bank of China is itself also listed there. Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 5-7. To view a full article or story, click on the link next to the headline.
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Wanda’s AMC (NYSE: AMC) Theater Chain to Buy Carmike for $1.1 Bln (English article)
Tencent (HKEx: 700) to Invest $1 Bln in Sohu (Nasdaq: SOHU) Video Unit – Source (Chinese article)
Adidas (Frankfurt: ADS) to Boost China Outlets by a Third With 3,000 Stores (English article)
HutchisonChina MediTech Announces Launch of Potential US IPO of ADSs (Businesswire)
Bank of China (HKEx: 3988) to Spin Off, Separately List BOC Aviation Unit (HKEx announcement)
Latest calendar for Q4 earnings reports (Earnings calendar)
A popular restaurant chain called Memory tops the menu of this week’s Street View, with word that the local eatery is living up to its name with a sudden closure that’s sending it into the history books. Memory’s particular form of untimely death is all too common in China these days, usually occurring when an owner abruptly shutters his business and flees after piling up huge piles of debt.
The story was even more personal for me, since I was just introduced to the chain a few weeks ago when a friend suggested it for dinner one evening. I was so impressed by its innovative take on traditional Shanghai cuisine, combined with its nostalgic decor and extremely reasonable prices, that I even went back for a second helping just last week. But it seems the low prices that were one of its biggest draws were also Memory’s downfall, leading to the sudden closure. Read Full Post…
Bottom line: Guo Guangchang’s appearance at this year’s meeting of China’s legislature is a positive signal for Fosun investors, designed to ease their concerns that he might be in danger of arrest as part of an anti-corruption probe.
Fosun chief Guo attends annual Beijing political pow-wow
Local media are buzzing today with the latest thoughts from some of China’s biggest corporate leaders, many of whom are attending a big meeting in Beijing connected to the annual meeting of China’s legislature. But among all the chatter taking place on the pow-wow’s sidelines, the most interesting tidbit among companies I follow is the mere presence of Guo Guangchang, head of the massive Fosun conglomerate.
Guo’s appearance at the Chinese People’s Political Consultative Conference (CPPCC) would normally be a non-event, since he’s an official member of this group that provides advice to Chinese lawmakers. But Guo was in far more sinister headlines back in December, when he disappeared for a few days under murky circumstances and later said he was assisting in an unspecified government investigation. (previous post) Read Full Post…
Bottom line: IBM’s sale of its Lenovo shares isn’t surprising since it probably received the stock as part of a recent transaction between the pair, but still comes as the latest sign of no confidence in the struggling Chinese PC giant.
IBM dumps Lenovo shares
Things just keep getting worse for struggling PC maker and smartphone wannabe Lenovo (HKEx: 992). Just 2 weeks after new data showed the company’s smartphone sales plunged in its home China market at the end of last year, new reports are saying that US tech giant IBM (NYSE: IBM) is dumping the Lenovo shares that it received as part of a recent transaction between the pair of companies.
The amount of the sale doesn’t look that big, with IBM looking to sell about $150 million worth of Lenovo shares, the reports say. (English article; Chinese article) But it’s important to note those same shares were worth about twice as much in October 2014, which is when IBM probably first received the stock as part of a sale of its low-end server business to Lenovo for $2.1 billion. Read Full Post…
Bottom line: Alibaba’s latest $4 billion fund-raising could signal a potential deal to buy its shares currently held by Yahoo, as both companies look to remove a distracting issue that is affecting both of their stock prices.
Alibaba eyeing Yahoo stake?
Chinese e-commerce giant Alibaba (NYSE: BABA) just can’t seem to get enough money. Despite having more than $18 billion in its coffers at the end of last year and access to billions more in credit, the company is reportedly back in talks with a group of banks to raise another $4 billion. That raises the question of why exactly it needs all this money.
Alibaba has certainly been an aggressive acquirer over the last 2 years, spending billions on a wide range of companies in industries from entertainment, to hired car and social networking services and many others. Two weeks ago the company was in yet another major M&A headline, when it disclosed it had quietly purchased more than 5 percent of faded group buying giant Groupon (Nasdaq: GRPN) in the open market. (previous post) Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 4. To view a full article or story, click on the link next to the headline.
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Bottom line: Minsheng Bank’s $1 billion deal to buy Quam could be on the brink of collapse, the victim of rapidly tumbling sentiment towards Chinese and Hong Kong brokerages amid China’s stock market sell-off.
Minsheng’s HK brokerage buy on brink of sinking?
What a difference a year makes. At this time last year stock brokers in China and nearby Hong Kong were a hot ticket, attracting billions of dollars as investors bet on their huge growth potential tied to booming stock markets in both places. But that enthusiasm has quickly evaporated as China’s stock markets undergo a massive correction, which may be a major factor behind the sputtering of a major acquisition in the space.
The deal I’m referring to is the previously announced purchase of Hong Kong brokerage Quam (HKEx: 952) by Minsheng Bank (HKEx: 1988; Shanghai: 601988), China’s oldest privately owned bank. Minsheng has just announced that a deadline for it to close the Quam investment, worth nearly $1 billion, has passed without closure, hinting the deal may be on the brink of collapse. Read Full Post…
Bottom line: Cautionary comments from Caixin and Ele.me about investments from Alibaba and its affiliates reflect a growing wariness from companies at accepting money and yielding control to the e-commerce giant.
Alibaba’s Ant invests in Caixin
The voracious Alibaba (NYSE: BABA) is in 2 new M&A headlines as we head into the end of the week, led by word that its Ant Financial affiliate was an investor in a new fund-raising round in Caixin, one of China’s best respected financial media. A second headline has take-out dining pioneer Ele.me denying reports that Alibaba, which is already one of its biggest shareholders, will devour the company completely. Instead, Ele.me is saying it will continue working closely with Alibaba’s own take-out delivery service called Koubei.
Both headlines reflect a growing resistance by founders of these companies to outright ownership by Alibaba-related companies. In the first case, Caixin was quick to issue a statement saying Ant was only one of several new investors in its new funding round. Ele.me’s case is similar, quashing earlier speculation that it would ultimately get swallowed up by its cash-rich backer. Read Full Post…
Bottom line: Vipshop looks like a strong bet due to its position as a focused e-commerce leader among consumers who are most interested in bargains and less concerned about famous brands.
Vipshop trives on bargain focus
So far this series on my favorite Chinese stocks has focused on big names like Tencent(HKEx: 700) and Fosun International (HKEx: 656), which are sector leaders with strong, focused management. But hiding behind these giants are a field of lesser-known second- and third-largest players in their sectors offering even better growth potential because they are far smaller and at an earlier stage in their development.
One such name is Vipshop (NYSE: VIPS), which has carved out a place as China’s third largest e-commerce company by honing in on shoppers who are more interested in bargains and less concerned with big-name brands. While some may call this area a niche, it’s really more of a focus since it encompasses quite a large segment of the Chinese shopping population. Read Full Post…
The following press releases and news reports about Chinese companies were carried on March 3. To view a full article or story, click on the link next to the headline.
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Qualcomm (Nasdsaq: QCOM) Fined $7.5 Mln in US for Bribery in China, Denies Charges (Chinese article)
Jack Ma’s Ant Financial Said to Be in Talks for Caixin Stake (English article)
Sina (Nasdaq: SINA) Reports Q4 and Fiscal Year Results (PRNewswire)
Deadline Expires for Minsheng Bank (HKEx: 1988) in Talks for HK Broker Quam Stake (HKEx announcement)
Ele.me Says Working with Alibaba (NYSE: BABA) on Take-Out Dining, Denies Merger (Chinese article)
