Bottom line: The large premium being offered in Trina Solar’s new buyout reflects a recent flood of private equity chasing privatization deals for US-listed Chinese firms, and could breathe new life into many previously announced bids that have become dormant.
Trina gets rich buyout offer
The homeward migration by US-listed Chinese firms has taken a turn into the new energy sector, with solar panel maker Trina (NYSE: TSL) becoming the first major player in the space to announce a management-led buyout offer. Throughout the current round of buyouts that has seen some 3 dozen US-listed Chinese companies announce privatization bids this year, few have come in the new energy sector that includes about a half dozen of China’s top solar panel makers listed in New York.
That’s not to say that New York has been a comfortable place for these companies. Most of the big names saw their shares soar in their first few years in New York, only to watch them tumble between 2011 and 2013 as panel prices plunged due to massive oversupply. That downturn saw the departure of 2 of the sector’s biggest names from Wall Street, though the exit of Suntech and LDK was prompted by bankruptcy rather than privatization. Read Full Post…
Bottom line: Beijing should make investigators be more transparent when making publicly visible moves like detaining company executives, or risk financial turmoil when markets are left to try and guess what’s happening.
Transparency needed when big execs are detained
Beijing’s anti-corruption campaign took an unexpected turn into the private sector last week with the sudden disappearance of Guo Guangchang, one of China’s richest men and chairman of one of its most successful private conglomerates, Fosun Group. Word of Guo’s disappearance sparked widespread speculation and also some panic among investors in his dozen listed companies, forcing the group to scramble for answers to avoid financial chaos.
The case highlights the need for greater transparency by anti-graft investigators as they dig deeper into China’s corporate realm to root out corruption that has become all too common in the nation’s business culture. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 15. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Fairchild Semiconductor (Nasdaq: FCS) Turns Down Higher, Unsolicited China Offer (English article)
Bottom line: Hong Kong’s IPO market will heat up in the first quarter of next year for non-financial Chinese offerings, while privatizations of Chinese firms from New York are likely to accelerate at raised offering prices.
Taomee, Wuxi Pharma join homeward migration
A series of new listings in Hong Kong and de-listings from New York are heating up the headlines as we head toward year-end, reflecting 2 of the major themes for 2015 IPOs. Hong Kong hasn’t exactly been a hotbed for new listings this year, but has been gaining recent momentum that includes news of a $300 million planned IPO by hotpot chain Haidilao. At the same time, other reports are saying that Bank of Zhengzhou has just launched its own Hong Kong IPO, spotlighting another trend that has seen a flurry of mainland Chinese banks try to tap the market to bolster their financially-stretched balance sheets.
Meantime across the Pacific in New York, children’s website Taomee (NYSE: TAOM) and drug maker Wuxi PharmaTech (NYSE: WX) have come closer to completing previously announced privatization plans, as part of a broader exodus of Chinese companies from the US. The former case has Taomee announcing it has formally signed a buyout deal to privatize the company, and Wuxi Pharma saying it has completed its own privatization. Read Full Post…
Bottom line: Jack Ma’s hubris is the main driver behind Alibaba’s purchase of the South China Morning Post, and the newspaper’s declining fortunes are unlikely to reverse under its new ownership.
Pride drives Jack Ma’s SCMP purchase
After weeks of speculation, e-commerce giant Alibaba (NYSE: BABA) has finally announced its purchase of Hong Kong’s SCMP Group (HKEx: 583), parent of one of Asia’s oldest and most influential newspapers, the South China Morning Post. Many reports are focusing on the implications of mainland Chinese ownership of a major newspaper in Hong Kong, where editorial standards are much more western and strict self-censorship policies like those required by Beijing don’t exist. But in my view, it’s more interesting to look at what this deal means commercially for Alibaba, and whether it makes sense.
Let’s begin with the news, which came as a slight surprise because it will see Alibaba buy the media assets of SCMP Group for an undisclosed price. (English article; Chinese article) That marks a shift from earlier reports, which had indicated that Alibaba founder Jack Ma would personally buy a minority interest to avoid the sensitive issue of mainland Chinese ownership of a Hong Kong newspaper. There’s no more detail on the actual transaction, though one report estimates the purchase will cost Alibaba around $100 million. Read Full Post…
This week we’ll take a break from the taxi wars and bike promotions shaking up the streets of Shanghai and turn instead to our city’s health care system, where a quieter revolution is taking place in our hospitals. This particular campaign has seen Shanghai’s scores of hospitals and clinics aggressively cut back on their use of antibiotics, in response to growing global concerns that over-prescription of such drugs could lead to the rise of a new generation of superbugs.
This particular campaign is long overdue, and reflects a broader Asian fascination that gives drugs an almost god-like status with the ability to cure anything from minor sniffles to far more serious ailments like chronic pain. That view contrasts sharply with the US, where drugs are revered for their ability to cure many ailments but are also seen as limited in their ability to combat more ordinary conditions like common colds and body aches. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 12-14. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Alibaba (NYSE: BABA) Buying South China Morning Post, Aiming to Influence Media (English article)
Bottom line: The detention of Fosun Chairman Guo Guangchang could signal a move into the private sector for Beijing’s anti-corruption drive, a move that would put top executives in traditional sectors like finance and real estate most at risk.
Questions hover over disappearance of Guo Guangchang
Beijing’s 2-year-old anti-corruption drive has taken an unexpected twist into the private sector, with word that one of the country’s richest men and head of the high-profile Fosun Group was taken away by police. There’s very little detail on reasons behind the disappearance of Guo Guangchang, sometimes called the Warren Buffett of China for his investing acumen. But speculation centers on his potential involvement in corruption investigations involving a major figure in his home base of Shanghai.
Up until now, nearly all of the dozens of company executives being investigated for corruption have come from the state-run sector, where officials are much more likely to use their position for personal gain. But corrupt practices like lavish gift giving and bribery are a fundamental part of doing business in China, and there’s little doubt that such practices also occur in the country’s vibrant private sector. Read Full Post…
Bottom line: New comments from OnePlus are the latest sign of a shakeout set to hit China’s smartphone sector in 2016, with at least 3-4 small to mid-sized brands likely to close up shop by the end of next year.
OnePlus trims product line
The latest signs of trouble in the overheated smartphone space are coming from newcomer OnePlus, which is detailing its own missteps and predicting a much-needed industry shakeout will intensify soon. The comments from OnePlus co-founder Carl Pei are some of the most direct I’ve seen so far about the industry’s current woes, though he’s careful to avoid any implication that OnePlus itself might fall victim of the shakeout he’s predicting.
The fact of the matter is that OnePlus is exactly the kind of player that’s likely to go belly up in the looming shakedown, and Pei’s description of his current situation paints a rather bleak picture for his company. Equally intriguing is Pei’s prediction that one or more major players may also withdraw from the space in the coming consolidation. Read Full Post…
Bottom line: A new global car services alliance led by Didi Kuaidi and Lyft won’t pose a serious threat to Uber, though the company could face ongoing challenges in China from Did stakeholders like Tencent.
Uber hits new obstacles from WeChat, Didi alliance
Uber’s road into China hasn’t been an easy one, and 2 new developments reflect the growing challenges it will face from incumbent players and their backers in what’s likely to become the world’s biggest market for hired car services. The bigger of those 2 news items has Uber’s chief China rival Didi Kuaidi forming a global alliance to counter the rapid rise of the US giant.
The latter news has local social networking (SNS) leader Tencent (HKEx: 700) locking Uber out of its hugely popular WeChat instant messaging platform for at least the second time this year. The reports cite Uber’s malicious sales practices as the reason for WeChat’s decision, and it’s true that the company is known for its aggressive tactics to win business. But it’s also noteworthy that Tencent is a major stakeholder in Didi Kuaidi, and no one would be surprised if WeChat’s move was at least partly aimed at protecting that investment. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 11. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
