rThe following press releases and news reports about Chinese companies were carried on February 27-29. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Said to Seek Up to $4 Bln Loan From 8 Banks (English article)
BYD (HKEx: 1211) Announces Preliminary Results for Full-Year 2015 (HKEx announcement)
While it Defies US, Apple (Nasdaq: AAPL) Abides by China’s orders — And Reaps Big Rewards (English article)
After Leaving 58.com (NYSE: WUBA) as Co-CEO, Ganji Founder Yang Haoyong Leaves as Co-Chairman (Chinese article)
Hotel Operator Jin Jiang (HKEx: 2006) Closes Purchase of Majority Plateno Stake (Chinese article)
Bottom line: Vague new tie-ups by UnionPay with Visa and American Express could be followed soon by deals that could finally allow the US financial giants to offer yuan-based credit card services in China using UnionPay’s network.
Visa, UnionPay in new strategic tie-up
Just a week after Apple (Nasdaq: AAPL) launched its Apple Pay service in China, fellow US financial giants Visa (NYSE: V) and American Express (NYSE: AXP) have just announced their own new China tie-ups with the same local partner. That partner, UnionPay, has been eager to announce a growing string of alliances with major foreign financial partners, all of whom are eagerly eyeing its status as monopoly operator of China’s only network for settling domestic financial transactions.
In this case the new separate strategic tie-ups between UnionPay and Visa and UnionPay and AmEx look mostly superficial, since the US giants clearly have far more to offer than their Chinese peer in terms of technology and experience. But Visa and AmEx are probably hoping the tie-ups could serve as a spring-board to accelerate their drive into China, as each eagerly awaits a license to offer domestic payment services in the country. Read Full Post…
Bottom line: Baidu’s shares could see some upside through the rest of the year if it executes on reported plans to spin off its money-losing businesses, while NetEase could post lackluster performance unless it gets more aggressive in M&A.
Baidu stock jumps after results
Two of China’s top Internet companies have just released their latest quarterly results that both look pretty good, even though investor reaction was quite different to the latest financials from leading search engine Baidu (Nasdaq: BIDU) and NetEase (Nasdaq: NTES), China’s second largest game operator. Baidu’s shares jumped 11 percent in after-hours trade after the release of its latest results that largely continued recent trends, while NetEase’s shares plunged 15 percent after its results came out.
In both instances, investors seem to be focused on the company’s financial strategy going forward rather than actual numbers in their latest reports. In the case of Baidu, investors are eagerly awaiting execution of a plan that will reportedly see the company spin off many of its newer non-search businesses that are losing big money. In the case of NetEase, investors may be disappointed that the company has been a non-player in China’s Internet M&A scene, even though it has quite a lot of cash in its coffers. Read Full Post…
Bottom line: Visual China’s investments in 2 major western photo suppliers could raise some concerns about censorship, but mostly reflects a broader Chinese pattern of investment in western companies in decline.
Visual China invests in photo suppliers Getty, Corbis
Two deals that are attracting relative muted attention are seeing a Chinese company take major steps into the global photo market, reflecting the difficult state of affairs in an increasingly shared economy where the value of copyrighted material is shrinking fast. At the same time, the latest investments by Visual China (Shenzhen: 000681) are also raising some concerns about censorship, since the Chinese company will have growing influence over 2 of the world’s largest photo distributors, Corbis and Getty Images.
I do find Visual China’s sudden series of investments in copyrighted photos somewhat ironic, since China is notorious for piracy that often sees media and other publishers rampantly copy each others’ materials, often verbatim and without permission. But from a broader perspective, the current difficulties confronting big names like Corbis and Getty are the result of similar global trends that are seeing many owners of copyrighted materials undermined by free equivalents on the Internet. Read Full Post…
The following press releases and news reports about Chinese companies were carried on February 26. To view a full article or story, click on the link next to the headline.
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Visa (NYSE: V) Signs MOU with China UnionPay (English article)
Baidu (Nasdaq: BIDU) Announces Q4 and Fiscal Year Results (PRNewswire)
China to Launch Commercial 5G Service in 2020 – MIIT (Chinese article)
NetEase Reports Q4 and Fiscal Year 2015 Financial Results (PRNewswire)
Wal-Mart (NYSE: WMT) to Open 30 China Stores, Upgrade 60, Build up Cross-Border E-Commerce (Chinese article)
Bottom line: Xiaomi’s new Mi 5 model is likely to get a tepid reception due to its lateness to market and a fading corporate image, and the company’s valuation is likely to shrink when it returns to market later this year for new funding.
Xiaomi rolls out Mi 5
If faltering smartphone sensation Xiaomi is still in business a decade from now, 2015 could well go down as a “lost year” when the company’s sales slowed sharply as its image for making cool, affordable products took a beating. A major factor behind the sudden stall was Xiaomi’s failure last year to release a new fifth generation of smartphones, which were supposed to power sales in the second half. (previous post)
Now Xiaomi is trying to play catch-up with the unveiling of its Mi 5 more than half a year after its originally intended launch date. (English article; Chinese article) It’s probably far too early to say if the Mi 5, along with another new model called the 4S, will be enough to revive Xiaomi’s fading fortunes. But I suspect the damage has already been done, and this new model will ultimately fail to find a big audience due to its late arrival to a fast-moving smartphone market where half a year is really equal to an eternity. Read Full Post…
Bottom line: China Southern’s new move to stop offering heavily discounted tickets through travel agents looks aimed at the growing clout of Ctrip, and other carriers could follow with similar policies.
China Southern takes aim at Ctrip
China’s largest airline has joined a growing uprising against increasingly dominant online travel agent Ctrip(Nasdaq: CTRP), with reports that China Southern (HKEx: 1055; Shanghai: 600029) will no longer offer its most heavily discounted tickets via third-party agents. The actual move will see China Southern offer tickets with discounts of 60 percent or more only on its own website.
The move is the latest by travel products and services providers who are unhappy with Ctrip’s growing clout in the market, following a string of deals last year that saw the company purchase strategic stakes in most of its major rivals. Since that has happened, a growing number of hotels, airlines and other travel services companies have complained they are getting squeezed by a group including Ctrip and its partners, whose position looks increasingly like a monopoly. Read Full Post…
Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
The following press releases and news reports about Chinese companies were carried on February 25. To view a full article or story, click on the link next to the headline.
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Didi Kuaidi Raising $1 Bln at Valuation of More Than $20 Bln (English article)
China Southern (HKEx: 1055) Makes Deep Discount Tickets Exclusive to Own Site (Chinese article)
Wanda Seeking $1.5 Bln Investment for Film Unit – WSJ (English article)
Vipshop (NYSE: VIPS) Reports Q4 and Full Year Financial Results (PRNewswire)
Xiaomi Announces Next-Generation Mi 5 Smartphone, Mi 4s (Chinese article)
Bottom line: Chinese buyers may be forced to abandon their pursuit of chip makers in the west and Asia, following the latest collapse of a deal for a stake in Western Digital over concerns of a national security veto by Washington.
Unigroup scraps Western Digital investment
Globally acquisitive chip makers Tsinghua Unigroup and sister company Unisplendour are quickly becoming the belles at the ball who can’t find a mate despite their huge dowries. That’s the bottom line in this tale of China’s dream of building a global semiconductor chip giant, which has just received a major setback with word that Unisplendour has formally dropped its bid to buy 15 percent of US hard drive maker Western Digital (Nasdaq: WDC).
If Unisplendour and Unigroup are the wealthy belles at the ball in this story, then the character intent on spoiling any potential unions is Washington, which worries such marriages could threaten national security by giving Beijing sophisticated technology. Taipei is also looming as another potential spoiler, as other headlines say the government there will give unprecedented scrutiny to a series of similar proposed stake purchases of local chip makers by Unisplendour and Unigroup. Read Full Post…
Bottom line: The absence of most mid-sized Chinese smartphone brands from the world’s biggest telecoms show this week in Spain reflects their inability to mount serious global campaigns, and also growing financial pressures many are facing.
Mid-sized Chinese brands skip MWC
China’s crowded field of low-cost and mid-range smartphone brands may claim to have global aspirations, but you would never know that judging by their loud absence at the world’s biggest telecoms show this week in Spain. I’ll admit that I’m not personally attending this year’s Mobile World Congress in Barcelona, so I’m dependent on the show’s website and media reports to determine who is and who isn’t attending.
But based on my own findings, including talks with spokesmen from at least one of the big domestic brands, most companies are skipping this show that has emerged in recent years as a major venue for debuting new smartphones. There are several reasons for skipping the show, but I suspect that chief among those is costs. Read Full Post…
