The following press releases and media reports about Chinese companies were carried on November 21-23. To view a full article or story, click on the link next to the headline.
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Google (Nasdaq: GOOG) Aims for China Launch of App Play Store Next Year: Sources (English article)
China Restarts IPO Process for 10 Companies as Stocks Stabilize (English article)
Bottom line: Jack Ma’s meeting this week with Barack Obama and quick followup with major funding commitments for entrepreneurs are part of Alibaba’s efforts to improve its government relations and lay a stronger foundation for future growth.
Alibaba’s Ma hobnobs with Obama
Alibaba’s(NYSE: BABA) outgoing founder Jack Ma is quickly becoming China’s business ambassador to the west, following recent meetings with British Prime Minster David Cameron last month and now this week with US President Barack Obama. I’m usually slightly skeptical of such efforts, which seem more intended to grab headlines and hype Alibaba rather than to do anything substantive.
But even I was impressed at how quickly Alibaba has followed up with its pledge to help young entrepreneurs during the Obama meeting, with its new announcement of more than $400 million in assistance to start-up business owners in Hong Kong and Taiwan. It’s quite likely that these 2 programs were already in the works when Ma met with Obama on Wednesday in Manila, on the sidelines of the annual Asia-Pacific Economic Cooperation summit that brings together world leaders from the Pacific Rim. Read Full Post…
Bottom line: Major new financing for Recurrent Energy and Apple’s growing partnership with SunPower reflect technology advances that are making solar power plants increasingly competitive with traditional sources.
Recurrent wins financing for major new solar plant
Two solar power plant builders are in the headlines today, reflecting a shift that is seeing this new generation of companies take the spotlight from older solar panel makers that are desperately seeking new buyers for their products. The first headline has solar panel maker Canadian Solar (Nasdaq: CSIQ) announcing that its Recurrent Energy plant-building unit has secured financing for a major new US project, as Recurrent gets set for its own New York IPO as a separate company. The second story has US-based SunPower (Nasdaq: SPWR) emerging as the main partner for Apple’s(Nasdaq: AAPL) recent ambitious plans to build solar power plants in China.
The bigger picture behind both of these stories is that plant builders like Recurrent and SunPower could emerge as the next hot tickets in the solar energy sector. That’s because these companies are quickly gaining expertise in the field of solar plant construction and operation, and could benefit from a future boom when such plants should finally become commercially competitive with plants powered by traditional fossil fuels. Read Full Post…
Bottom line: Momo may be reconsidering its de-listing plan as it approaches profitability and becomes comfortable in New York, while Shanda’s final de-listing testifies to the resourcefulness and tenacity of founder Chen Tianqiao.
Shanda NY listing nears end game
Two companies aiming to de-list from New York are in the headlines as the weekend approaches, led by word that Shanda Games (Nasdaq: GAME) is finally packing its bags and heading home after a long and difficult privatization process lasting nearly 2 years. At the other end of the spectrum is social networking app maker Momo (Nasdaq: MOMO), which was aiming to capture the record for shortest life as a US-listed company when it announced a privatization bid in June just 7 months after its Nasdaq IPO.
I’ve written quite a few times about Shanda Games’ imminent de-listing, only to see the buyout derail for different reasons. But this time it really does look final after shareholders approved a buyout deal that has now formally closed. (company announcement) Meantime, Momo has just announced quarterly results that show it is almost profitable. But what’s perhaps equally interesting is the lack of any mention of its own previously announced buyout offer in the report, which could perhaps imply a change of direction. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 20. To view a full article or story, click on the link next to the headline.
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Bottom line: Baidu’s new joint venture bank with Citic could help it catch up to stumbling private banks backed by Tencent and Alibaba, which are struggling due to restrictions on their operations by Beijing.
WeBank seeks new funding
Two headlines are highlighting the opportunities and challenges that private banking is presenting for China’s Internet giants. The larger of the news items has online search leader Baidu(Nasdaq: BIDU) forming a joint venture with traditional banking giant Citic Bank (HKEx: 998), as it plays catch-up with Internet rivals Tencent(HKEx: 700) and Alibaba(NYSE: BABA). The second headline involves Tencent’s recently formed WeBank online bank, which is reportedly looking to raise $1 billion nearly a year after its official launch.
China’s Internet companies have rushed into financial services over the last 2 years, as Beijing tries to breathe new life into a stodgy sector previously dominated by big state-run firms. Both Tencent and Alibaba have been at the forefront of the movement, with each getting licenses to open private banks earlier this year under a new pilot scheme. But the transition has been filled with obstacles, partly due to lack of regulation but also because of resistance from the traditional banks. Read Full Post…
Bottom line: Ctrip’s recent series of equity tie-ups, including a new rumored deal with Tuniu, could prompt the anti-monopoly regulator to take action to preserve competition in China’s online travel market.
Ctrip eyes new travel tie-up with Tuniu
A strong earnings report from online travel titan Ctrip (Nasdaq: CTRP) and word of a potential new business alliance with a major rival has ignited the company’s shares, which soared 14 percent after it released its latest financials. Ctrip has become a master at the strategic tie-up, buying stakes in most of its rivals over the last 2 years without actually acquiring any of them.
That strategy seems designed to make sure its rivals act more friendly and aren’t competitors, which will help support its profits by reducing the constant price wars that have plagued the industry for much of the last 2 years. The only problem is that such actions have distinctively anti-competitive overtones, and could well draw the attention of China’s anti-monopoly regulator. Read Full Post…
Bottom line: Chinese buyers will lose out to world-class rivals in bidding for top global M&A targets over the next 5-10 years, and credit ratings for the second-tier assets they do acquire will fall after ownership changes.
Two major new deals are showing why China’s credit remains low when it comes to global M&A, hobbled by factors like lack of experience, unknown brands and a growing reality that Beijing may not provide bail outs if their business runs into trouble. The first deal comes in the high-tech chip sector, and has seen the credit rating of Singaporean heavyweight Stats ChipPac (Singapore: STAT) take a hit after being purchased by a Chinese buyer. The second deal has leading Chinese hotelier Jin Jiang (HKEx: 2006; Shanghai: 600574) being snubbed in its bid for US giant Starwood (NYSE: HOT), operator of the Sheraton and Westin Brands.
Neither of these developments comes as a big surprise, but they do reflect the very real challenges that Chinese companies will face as they try to become players on the global M&A scene. Many of these Chinese names have access to big cash from their state-run connections, though converting that to foreign currency and getting necessary government approvals is sometimes challenging. More importantly, these companies have little or no track record at running a major global company, which makes creditors wary and other more experienced suitors often look more attractive. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 19. To view a full article or story, click on the link next to the headline.
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Tongwei Group Plans World’s Biggest Solar-Cell Plant in Sichuan (English article)
Bottom line: Weak share reactions to upbeat news from Trina, ReneSola and Ming Yang reflect investor skepticism towards new energy stocks, as they face lingering issues of overcapacity and phasing out of government subsidies.
Investors pour rain on upbeat new energy news
A flurry of upbeat news is in the headlines today from 3 of China’s largest new energy equipment makers, led by a return to the profit column for solar panel maker ReneSola (NYSE: SOL) after a year in the red. At the same time, wind power equipment maker Ming Yang (NYSE: MY) also announced its latest quarterly results that were quite upbeat, and solar panel maker Trina (NYSE: TSL) said it obtained a modest new financing from some major global lenders.
But contrary to expectation, investors greeted the string of upbeat news by dumping shares of all 3 companies, reflecting a high degree of skepticism in the market. Ming Yang led the downward migration, with its shares slipping 3.7 percent after it announced its latest quarterly results. Its shares now trade more than 17 percent below the price for a previously announced buyout bid to take the company private. Read Full Post…
Bottom line: Innovation Works’ China OTC IPO plan shows the year-old small-cap board is rapidly becoming a popular place to list for money-losing companies that might have previously gone to New York.
Innovation Works files for China OTC listing
China’s year-old over-the-counter (OTC) market is suddenly becoming the hot place for new listings by young tech firms, with word that the technology incubator founded by Google’s (Nasdaq: GOOG) former China head has become the latest in a recent string of companies to file for listings there. The OTC application by Innovation Works highlights a new path to market for money-losing Chinese companies that might have previously chosen to list in New York.
The main stock exchanges in China and Hong Kong don’t allow money-losing companies to list, with the result that many private start-ups used to go to New York where profitability isn’t a requirement. But New York investors are also increasingly showing lack of interest in money-losing Chinese firms, causing their shares to languish and some like online video site Youku Tudou (NYSE: YOKU) to sell themselves and de-list. Read Full Post…
