Bottom line: Qudian’s IPO will get a moderately warm reception in New York, drawing interest due to its status as a major private fintech firm but also wariness owing to many uncertainties in the young sector.
Qudian moves closer to IPO
Anything involving movement of money has always been slightly problematic in China. Be it paying for things online, paying to play computer games, or even borrowing small sums to buy something like a smartphone, nothing has ever been easy for Chinese consumers. That’s mostly due to the creaky financial system they inherited when the country began its march into the modern era starting in the 1980s and ’90s.
That lack of services has been a godsend for a new generation of companies that are now making their way to market by supplying some of the many basic financial services that consumers crave. An IPO by one of the largest of those looks set to happen in the next 3 months, with word that microlender Qudian has made its first private filings for a New York listing to raise up to $1 billion. Read Full Post…
Bottom line: Foundering prospects of cross-border tie-ups involving DreamWorks and Paramount shows the love affair between Hollywood and China may be entering a new phase of lowered, more realistic expectations.
DreamWorks Animation eyes sale of China JV stake
The old saying says that what goes up must come down, and that certainly appears to be the case with new reports of the unraveling of two more China-Hollywood tie-ups. The latest reports say that US giant DreamWorks Animation is looking to sell out its stake in Oriental DreamWorks, its landmark China animation joint venture that was launched with fanfare 5 years ago. At the same time, another report is saying a $1 billion film production tie-up between two Chinese partners and Paramount is reportedly running into trouble due to turmoil at the Hollywood studio.
The unraveling of these two major deals comes just weeks after another deal involving Wanda Group’s planned purchase of Dick Clark Productions also appears to be coming unglued. In that case the culprit is China’s recent currency controls, which were preventing Wanda from getting the necessary funds outside the country to complete the $1 billion purchase. But Wanda was apparently also worried it was overpaying for the asset. Read Full Post…
Bottom line: Oppo’s major new cricket sponsorship deal shows its commitment to India, but may have to be renegotiated if and when the company’s fortunes decline in the next 1-2 years following its meteoric rise.
Oppo in India cricket deal
Smartphone high-flyer Oppo is trying to show the world it’s serious about India, with word it will pay 1.1 billion yuan ($160 million) for rights to sponsor the nation’s national cricket team. News of the deal comes just three months after China’s top smartphone brand announced plans to build a production facility in the hotly contested India market, which has become a magnet for Chinese brands over the last year.
All that raises the question of whether Oppo is for real, or just another passing fad in China’s constantly changing smartphone landscape. That landscape has seen players like Lenovo (HKEx: 992), Xiaomiand Huawei become dominant players in the world’s largest smartphone market one day, only to rapidly fade the next. It’s obviously still too early to say if Oppo will follow in that trajectory, though my educated guess would be the answer to that question is quite possibly “yes”. Read Full Post…
Bottom line: Legoland’s new Shanghai theme park spotlights the growing lure of China’s leisure travel market, while Royal Caribbean’s removal of South Korean ports from its China-based trips spotlights how political tensions can affect tourism-reliant businesses.
Legoland coming to China
A couple of Shanghai-based leisure stories are spotlighting two very different trends in China’s leisure travel sector, where a burgeoning middle-class is seeking new and interesting vacation ideas. On the more upbeat side, one of Europe’s top theme park developers is expressing a major vote of confidence in the market, with word that the developer of Legoland theme parks will open one of its mega-resorts in Shanghai. But on the downside, the country’s largest cruise operator, Royal Caribbean (NYSE: RCL), has removed South Korean ports from its China-based trips amid growing frictions between Beijing and Seoul over a controversial missile defense system. Read Full Post…
Bottom line: ZTE’s settlement with the US over illegal sales to Iran will help the company focus on the future, as it advances with plans to move away from low-margin businesses and find more promising new growth areas.
ZTE settles US accusations of illegal sales to Iran
After a year of living in a state akin to suspended animation amid a US probe against it for illegal sales to Iran, telecoms giant ZTE (HKEx: 763; Shenzhen: 000063) is finally seeing some light at the end of the tunnel, with word that it has finally reached a settlement in the matter. The company previously indicated the settlement would be no small deal, and the nearly $900 million fine it will have to pay proves that’s certainly the case.
But more important is the fact that ZTE has finally settled the case, meaning it can now get on with business without this major distraction hanging over its head. Before the settlement, ZTE had faced the possibility that it might get cut off from its key US suppliers as punishment for illegally selling US-made equipment to Iran in violation of earlier US sanctions against the country related to its nuclear program. Read Full Post…
Bottom line: This year is likely to see at least a half dozen privately owned financial services companies make public listings in the U.S., Hong Kong and China, with Lakala and Lufax likely to be among the first.
Lakala files for ChiNext IPO
We’re already three months into the new year, and still awaiting the first of what looks set to be a bumper crop of IPOs by a new generation of privately owned financial services firms that are far more dynamic than their state-run peers. Two more of those are in the headlines today, led by China Rapid Finance, a peer-to-peer (P2P) lender that says it’s eyeing a $100 million IPO in New York. At the same time, the popular Lakala electronic payments service has filed to make a listing on the Nasdaq-style ChiNext board in Shenzhen.
That pair are joining a few other notable names that are reportedly aiming to list in the not-too-distant future. That group includes Lufax, which bills itself as China’s largest P2P lender and is aiming to list in Hong Kong. Then there’s Qudian, a microlender that is looking to raise hundreds of millions of dollars with a New York listing. And of course, the granddaddy of them all is Ant Financial, which could raise more than $1 billion with a listing in Hong Kong or dual listing in Hong Kong and China. Read Full Post…
Bottom line: NetEase’s new global expansion could stand a good chance of success due to its strong record with self-developed titles, which could help it pass Baidu in market value over the next 1-2 years.
NetEase holds developer forum in San Francisco
The company that made its name from a series of games based on the famous Chinese novel Journey to the West is trying to turn that story into reality, as NetEase (Nasdaq: NTES) eyes expansion outside its home market. The West contained in NetEase’s latest announcement is quite different from the West in the classic novel, the former referring to North America and Europe while the latter refers to India.
But other similarities between the novel and this new global expansion do abound in NetEase’s new announcement that it has just held its first-ever developer’s forum in the West. In both cases, the main character is traveling into unfamiliar terrain in pursuit of major rewards. And in both cases, each faces big challenges before attaining those goals. Read Full Post…
Bottom line: LeSport’s reported default on payments for Asian Football Confederation soccer games marks the start of the popping of a bubble for sports broadcasting rights dating back to last year.
LeSports soccer drive on the skids
In what could be the first domino to fall in China’s overinflated market for sports broadcasting rights, the sports unit of cash challenged LeEco (Shenzhen: 300104) has reportedly defaulted on payment for one of several high-priced packages it purchased last year. In this case, it appears that fans of Asian Football Confederation soccer games won’t be able to watch their favorite pastime on LeSports, which reports are saying has been stripped of its broadcasting rights after missing a payment. Read Full Post…
UPDATE: After publishing this earlier this morning, a source in Barcelona informs me that Oppo is indeed attending and is holding a press event to show off their newest products. Headline and photo caption changed to reflect Oppo’s attendance, but the rest of the original post remains the same.
Bottom line: The absence of Oppo and Vivo from the world’s top telecoms trade show in Spain this week reflects their overwhelming reliance on China sales, while Xiaomi’s absence from the show could be a cash conservation move.
Vivo, Xiaomi absent from top telecoms trade show
Most eyes from the telecoms world will be focused on Barcelona this week, where an annual show that’s arguably the world’s most important for smartphones is taking place. That seems like a good opportunity to look at who from China’s crowded smartphone arena is attending this year’s Mobile World Congress (MWC) in Spain, even though I’m personally not at the show.
Attending the event is by no means cheap, which is probably why some companies may choose the skip the affair. But the decision to attend or not does provide some insight as to what companies are thinking, since you would expect anyone with truly global aspirations to make an appearance at this showcase for the newest telecoms products. Read Full Post…
Bottom line: Ctrip’s profits could double or more this year following its successful digestion of Qunar, providing some upside to its stock.
Ctrip shares set to take off?
As earnings season for US-listed Chinese stocks hits full throttle, I thought I’d take a look at the latest results from Ctrip (Nasdaq: CTRP), which are sending mixed but generally positive signals. That’s because Ctrip is in the process of digesting former archrival Qunar (Nasdaq: QUNR), which was the industry’s second largest player but is also losing quite a bit of money.
Ctrip pulled off the coup of the century a couple of years ago when it forged a deal that gave it a controlling stake of Qunar, acquiring the shares from former majority shareholder Baidu (Nasdaq: BIDU). I personally thought that deal should have received some regulatory scrutiny since it combined the top two players in the space. But the regulator apparently thought otherwise, or simply approved the deal if it was even asked. Read Full Post…
Bottom line: iQiyi’s issue of convertible notes to raise its latest $1.5 billion shows it continues to post big losses, and investors are increasingly skeptical that it can become profitable in the next 2 years.
iQiyi lures investors with convertible notes
It seems no one is quite ready to believe that China’s cash-burning online video sites are ready for the profit column just yet. That seems to be the message coming from Baidu-backed (Nasdaq: BIDU) iQiyi, one of the leading players, which has just raised a fresh $1.5 billion via a convertible note issue. That would indicate that investors are hoping they can convert their notes into iQiyi stock when they come due, but can also simply collect back their money with interest instead. Read Full Post…
