Bottom line: A major new investment in Sina by CEO Charles Chao indicates he wants to take one last try at revitalizing the company’s core portal business, and might consider a sale if a good offer emerges.
Sina CEO Chao buys big stake in company
The China Internet world has been buzzing this week with speculation over what is driving a massive new personal investment of nearly $500 million in leading web portal Sina (Nasdaq: SINA) by its longtime CEO Charles Chao. I have quite a bit of respect for Chao, who is more of a western-style, bottom line-focused CEO than many of his Chinese Internet peers who run their companies like personal fiefdoms.
But that said, I’ve also previously said that Chao lacks the kind of bigger vision that many of his peers have, and that he should consider stepping aside to make way for some new leadership. Accordingly, perhaps this latest move by Chao augers a return to his company’s core portal business, following his focus over the last few years on building up its recently-listed Twitter-like Weibo (Nasdaq: WB) unit. That could be followed by his exit in a year or two, and even a possible sale of some or all of its remaining core assets. Read Full Post…
Bottom line: Legend Holdings is likely to get a tepid reception for its new shares that could start trading by month’s end, while Focus Media is also likely to complete its backdoor listing in Shenzhen in that time frame.
Focus Media comes home to list
A new IPO, a backdoor listing and a buyout offer are all in the news today in Hong Kong, China and New York, spotlighting an emerging dynamic that is seeing Chinese companies abandon US listings for offerings closer to home. The choice of Hong Kong instead of China for the upcoming IPO by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), also reflects the difficulties that private Chinese companies continue to face when trying to list at home in Shanghai or Shenzhen.
China’s 2 main domestic stock markets have traditionally favored big state-owned companies, a big factor that prompted Legend to look to Hong Kong where it will meet with local stock exchange officials this week in the run-up to its looming IPO. At the same time, outdoor advertising specialist and formerly New York-listed Focus Media has just taken a major step towards a re-listing in China by injecting itself into a Shenzhen-listed firm. Last on our list is children’s website Taomee (NYSE: TAOM), which has just become the latest New York-listed Chinese firm to receive a privatization offer due to undervaluation. Read Full Post…
Two campaigns aimed at improving public behavior are center stage in this week’s Street View, spotlighting different ways that Shanghai is tackling the many smaller problems that come with its rapid modernization. One instance has the city using the “face factor” to promote more responsible behavior, in this case by shaming litterbugs. The city is taking a harder line in the second case, threatening black marks on credit records of people who use their properties for illegal group apartments.
Both cases target forms of behavior that need to be discouraged, but aren’t bad enough to justify legal action like arrest or even big fines that could have a more deterrent effect. That means the city has to look for other ways to combat these kinds of problems. I have to commend our officials for their creative and varied approaches, even if I sometimes doubt their effectiveness. Read Full Post…
Bottom line: Qunar’s latest quarterly results show it will continue to spend aggressively and post big losses as it competes with Ctrip, and reflect the fact that its biggest asset is its majority ownership by the cash-rich Baidu.
Qunar spurns Ctrip, raising cash
China’s highly competitive online travel landscape is rapidly shaping up as a two-horse race, with one group centered on industry leader Ctrip (Nasdaq: CTRP) and the other on up-and-comer Qunar (Nasdaq: QUNR), which is controlled by leading search engine Baidu (Nasdaq: BIDU). After Ctrip announced a flurry of major new tie-ups last week, Qunar is fighting back with new fund-raising announcements that include a nearly $1 billion cash injection through the issue of new stock and bonds.
Qunar announced the fund-raising the same day that it released its latest quarterly results, which contained the surprise disclosure that it was approached by Ctrip last month about a merger. It added that it rebuffed the advance, but it clearly needs new funds as its own cash pile remains relatively small and its losses balloon due to aggressive spending. Read Full Post…
Bottom line: LeTV’s impressive first fund-raising for its new smartphone unit reflects big hopes due to its earlier success with Internet TVs, while Lenovo’s replacement of its mobile chief reflects concerns about its smartphone unit.
LeTV mobile unit raises big cash
A trio of new smartphone stories are highlighting rapid changes in the highly competitive landscape, where a steady stream of new entrants is creating constant challenges for existing players. Many of the newest entrants aren’t really worth mentioning, as they come from state-run backgrounds and have little or no chance of success.
That’s certainly the profile for construction equipment maker Sany Heavy (Shanghai: 600031), which has no place in this smartphone race but has just unveiled its inaugural model anyhow. Meantime, the industry’s hottest new entrant is online video high-flyer LeTV (Shenzhen: 300104), whose newly formed mobile unit Leshi Mobile has just raised a cool $400 million in its first funding round. Finally there’s the struggling Lenovo (HKEx: 992), whose failure to make a strong name for itself in the space despite numerous advantages may have prompted the departure of its mobile division chief. Read Full Post…
Bottom line: China’s securities regulator should reopen its plan for an international board amid the current stock market rally, which would make big international brands like Imax available to average local investors.
Imax China files for HK IPO
A premier global movie brand slipped away from China’s stock exchanges last week, when the Chinese unit of big-screen superstar Imax (NYSE: IMAX) disclosed it plans to make an initial public offering (IPO) in Hong Kong. The case brought back memories of a nearly forgotten plan by China for an international board for such listings in Shanghai, aimed at making big foreign names accessible to Chinese investors.
That plan was conceived more than 5 years ago, but later got put on hold as China focused on launching the Nasdaq-style ChiNext board in Shenzhen. It then got indefinitely shelved when China’s stock markets languished in the 4 years after that. Read Full Post…
Bottom line: The latest EU anti-dumping probe into Chinese solar panels is likely to find that manufacturers violated a previous agreement, which could result in new punitive tariffs by the end of this year.
EU launches new probe into Chinese solar panels
In a move that will surprise to no one, the European Union has formally launched a probe into Chinese solar panel makers who are being accused by European rivals of violating a landmark agreement that averted anti-dumping tariffs. I should really stop using the word “landmark” to describe the 2013 deal between the Chinese panel makers and EU that avoided a trade war. In fact, it’s becoming increasingly obvious that a better word to describe the deal would be “foolish”, since it appears many of the Chinese panel makers never really intended to follow the spirit of the agreement to begin with. Read Full Post…
Bottom line: Effects of the short-seller attack on Vipshop are likely to die down soon and the stock should stabilize, while Jiayuan is likely to get bought out for a figure close to its latest stock price following receipt of a new bid.
VIP short seller attack continues
New developments are occurring in 2 stories involving less-followed Chinese Internet companies, led by a fresh assault in an ongoing short-seller attack that is eroding shares of discount e-commerce site Vipshop(NYSE: VIPS). Meantime, shares of online matchmaking site Jiayuan (Nasdaq: DATE) have soared, after it announced it has received new buy-out bids for the company. That development would come nearly 2 months after Jiayuan received an initial buy-out offer that some complained vastly undervalued the company. Read Full Post…
Bottom line: Priceline’s new China foray with Ctrip will get off to a positive start, but will run into problems and ultimately collapse due both sides’ inability to gain much from the partnership.
Ctrip boosts Priceline alliance
Just days after global online travel giant Expedia (Nasdaq: EXPE) announced its withdrawal from China, rival Priceline (Nasdaq: PCLN) is moving in the other direction with a significant boost to its partnership with local sector leader Ctrip (Nasdaq: CTRP). I’ve previously been quite skeptical of this particular partnership, after previous similar tie-ups failed due to the fiercely independent nature of Ctrip’s top management. I’m still quite skeptical, though a string of other major tie-ups by Ctrip recently seem to show it’s realizing it needs to be more flexible to fend off the growing threat from fast-rising local rival Qunar (Nasdaq: QUNR). Read Full Post…
Bottom line: Thursday’s hacking attack on Ctrip brings a sour end to its week of major new tie-ups, but isn’t too unexpected for a company of its size and should have a relatively limited impact on its operations and reputation.
Ctrip shut down by hackers
I’ve been writing a lot about leading online travel agent Ctrip (Nasdaq: CTRP) these last few days after it signed a couple of major deals, so it seems fitting that we end the week with news of a major hacking attack that took the company offline for most of Thursday. I’m a longtime user of Ctrip and am generally a big fan of the company, whose good management and focus on its core travel business have allowed it to maintain its market-leading position for a decade despite numerous challenges.
Against that backdrop, this hacker attack seems like a relatively minor issue, though one that could be potentially worrisome as it exposes one of Ctrip’s biggest vulnerabilities. Then again, Ctrip is certainly not the only company to come under such attacks, and many much larger and more experienced western giants like US retailer Target (NYSE: TGT) and Hollywood studio Sony Pictures (Tokyo: 6753) came under much higher-profile and more damaging outside assaults last year. Read Full Post…
Bottom line: Alibaba’s technical glitch at Alipay, the launch of its new bank and use of its Taobao platform to auction of bad loans reflect its growing clout in financial services, as it attempts to build up its Ant Financial unit for a future IPO.
Technical glitch interrupts Alipay
E-commerce leader Alibaba (NYSE: BABA) is in a trio of finance-related headlines, spotlighting its growing bet on financial services that could be a huge growth area as Beijing opens the sector to private investment. One headline has seen Alibaba get official permission from its home province to open a bank, after it became one of the first 3 entities to receive private banking licenses under a pilot program by Beijing.
The second headline has seen the company’s popular Alipay electronic payments service experience technical problems that cut off access for 2 hours earlier this week, prompting it to quickly say that no accounts were compromised. The final news bit comes in a larger story about China’s growing bad asset crisis, which will see the nation’s top bad asset management company use Alibaba’s Taobao marketplace to auction off some of those assets. Read Full Post…
