Bottom line: Tencent’s new WeChat-based free voice service could stand a good chance of success, but will face challenges due to technical issues and resistance from China’s traditional telcos.
WeChat launches free voice calling service
Internet giant Tencent (HKEx: 700) has just announced new quarterly results that show slowing growth for its core social networking (SNS) and gaming units, but everyone is far more interested in the low-key launch of a new free voice calling feature on its wildly popular WeChat platform. The new function, called WeChat phone book, lets users make real-time phone calls for free by routing them over the Internet, and is similar to that offered by the much older Skype. But unlike Skype, which only allows free calls to other Skype users, the new Tencent service allows users to make free calls to anyone with a fixed- or mobile phone account. Read Full Post…
Bottom line: Minsheng Bank’s new stock incentive plan and ICBC’s Mexico expansion reflect moves to make China’s banking sector more market-oriented, providing potential upside for the lenders’ undervalued stocks.
Minsheng rolls out employee stock plan
Two big stories on the banking front are reflecting the big potential in depressed Chinese bank stocks, even as the sector faces a major bad debt crisis brought on by several years of state-ordered binge lending during the global financial crisis. The first of those will see Minsheng Bank (HKEx: 1988; Shanghai: 600016), China’s first private lender, launch a program that rewards top performing employees with stock at discounted prices. The second has leading state-run lender ICBC (HKEx: 1398; Shanghai: 601398) getting final regulatory approval to open a subsidiary in Mexico, one of the world’s largest developing economies. Read Full Post…
Bottom line: Alibaba will to focus on globalization to maintain momentum for its overvalued stock, but the shares are likely to pull back in the first half of next year due to overvaluation.
Alibaba sales jump on Double Eleven
This year’s November 11 shopping day belonged to e-commerce leader Alibaba (NYSE: BABA), even though I’m just slightly reluctant to write too much about this overhyped company. But I would be remiss if I didn’t mention some of the impressive numbers that Alibaba logged during this year’s Double-Eleven Singles Day event, led by its headline total sales of 57.1 billion yuan ($9.3 billion), up 63 percent from last year. The market didn’t seem too impressed with the growth, with Alibaba’s shares tumbling 3.9 percent in the US trading day after the end of the Chinese shopping binge. Read Full Post…
Bottom Line: Seafood producer Zhangzidao’s surprising and stunning loss of $139 million on one of its key products once again poses many questions on the governance of listed Chinese companies.
By Lu Jin
Fishy business at Zhangzidao
Over 7 billion scallops have disappeared from a 70,000 hectare, 50 meter-deep sea farm owned by top Chinese seafood firm Zhangzidao Group (Shenzhen: 002069). Some 860 million yuan ($139.9 million) was lost. And why? Because an unexpected cold water current swept into the sea in July and August.
This was the short version of what Zhangzidao told its investors in their latest financial announcement. (company announcement) The case marks the latest example of the mysteries around listed Chinese companies and also potential risks in their continued outbound investments. Read Full Post…
Lenovo’s (HKEx: 992) talkative CEO Yang Yuanqing was headline news in the microblogging realm over the past week, as the chatty executive formally launched his own account on Sina Weibo and proceeded to bombard the airwaves with a steady series of thoughts on a wide range of topics. Yang is already quite talkative in general, granting numerous media interviews and giving his thoughts on just about anything to anyone who will listen. So this kind of move isn’t really that surprising, and I expect we’ll hear lots from him in the months and years ahead.
Meantime, executives from the equally talkative Xiaomi were also full of microblogging chatter, touting their latest steal of a high-profile executive from another tech firm. In this case they were congratulating themselves for hiring Chen Tong, one of the earliest top employees at web stalwart Sina (Nasdaq: SINA). A final footnote in this week’s microblogging roundup also saw a teasing tweet from the missing CEO of online video site LeTV (Shenzhen: 300104), amid recent speculation that he may have left China to avoid criminal prosecution. Read Full Post…
Bottom line: Telefonica’s sell-down of its Unicom stake presages an exit from the investment next year, ending a decade of failed tie-ups by foreign telcos looking to tap the Chinese telecoms services market.
Telefonica halves Unicom stake
Chinese telco shares may look like a good bet for small investors hoping to profit from company stock gains, but they’re a clear dud for foreign carriers hoping to profit from China’s huge but highly protected telecoms market. That’s my latest assessment following word that Spain’s Telefonica (Madrid: TELF) is further selling down its stake in China Unicom (HKEx: 762; NYSE: CHU), in what looks like a prelude to a complete exit from this problematic investment.
If Telefonica does indeed completely dump Unicom, it would mark the end of a decade-long courtship that saw some of the world’s top telcos invest heavily in their Chinese counterparts. All of those investments ended in divorce, with the foreign carriers selling their shares when they failed to get any strategic benefits from the tie-ups. Read Full Post…
Bottom line: The Commerce Ministry should mediate an industrywide settlement over Alibaba’s claims to the Double Eleven Trademark to prevent the dispute from disrupting the nation’s e-commerce development.
Regulator should mediate Double Eleven dispute
As the buying frenzy builds to a crescendo on this year’s November 11 Singles Day, e-commerce giant Alibaba (NYSE: BABA) should be commended for turning an ordinary day of the year into a shoppers paradise that now generates more sales than any other major retailing day in the world. (company announcement)
But this year’s binge-buying day has also seen some controversy, as Alibaba’s flagship Tmall shopping site reportedly made behind-the-scenes threats to some media warning them not to run advertisements featuring the Double Eleven moniker. Tmall reportedly said such ads violated its trademarks, and indeed Alibaba has registered several trademarks related to the “Double Eleven” name that is a Chinese shorthand for the eleventh day of the eleventh month each year. (previous post) Read Full Post…
Bottom line: Solar consolidators like GCL-Poly and Shunfeng will suffer short-term pressure due to difficult acquisitions, but could be longer-term beneficiaries as they earn government goodwill for their actions.
Outlook turns cloudy for Poly-GCL
The latest deal involving an insolvent solar panel maker is seeing a group led by GCL-Poly Energy (HKEx: 3800) take control of bankrupt Chaori Solar, in a takeover that looks slightly ominous but also potentially interesting for investors. The ominous element comes from the fact that these bankruptcy proceedings are occurring Chinese courts, where local politics are often more important than forging deals that make commercial sense.
But the interesting element comes from the fact that many of these insolvent companies enjoy strong backing from their local governments. That means that once all the finances are cleaned up for these insolvent firms, they could actually become good longer-term assets for their new owners. Read Full Post…
Bottom line: Bright Food’s overseas IPO plans for its British Weetabix and Australian Manassen brands could get lukewarm response due to investor skepticism about their growth prospects.
Bright eyes offshore IPOs for Weetabix, Manassen
I’ve watched with interest over the last 2 years as Shanghai-based Bright Food has quietly gobbled up a stream of high-profile global investments, positioning the company to potentially become one of China’s first international consumer brands to rival giants like Procter & Gamble (NYSE: PG) and Kraft Foods (Nasdaq: KRFT). Now we’re getting further details of Bright’s growing global aspirations, with word that it’s planning a series of international IPOs including potential major listings in Hong Kong and London. Read Full Post…
Bottom line: Shanda is likely to sell a controlling stake of its Cloudary online literature unit to an outside buyer, possibly Tencent, as part of a drive to hand over management of its major units to strategic partners.
Shanda’s Cloudary in rumored sale
The slow-motion break-up of former online entertainment high-flyer Shanda Interactive is back in the headlines, with reports the company has sold its online literature unit to Internet heavyweight Tencent (HKEx: 700). This particular rumor looks logical enough for reasons I’ll give shortly. But I’ve heard so many rumors about sale of part of all of Shanda over the past year that I’ll only believe this latest report when we hear an official confirmation. What’s clear from these latest reports is that Shanda founder and chairman Chen Tianqiao continues to look for opportunities to sell part or all of his company, as he reportedly grows restless with his lackluster businesses whose growth has stalled. Read Full Post…
After years of living with too many things that were anything but entertaining on our city streets, I was pleasantly surprised this week to read about a new initiative to bring some true entertainment to the streets of Shanghai. This new initiative could eventually see dozens or even hundreds of semi-professional performers begin plying our sidewalks, parks and other outdoor pedestrian areas, providing some fun and different entertainment for people moving about the city in their daily routines.
Some further on reflection on the subject made me realize just how often I write about the many nuisances and even dangers that lurk in the many public places like sidewalks, parks and subways used by Shanghai’s millions of pedestrians. This weird hodgepodge of obstacles runs the range from beggars and cars that park on our sidewalks, to noisy singers and dancers who fill our parks. Read Full Post…
