The following press releases and media reports about Chinese companies were carried on July 20. To view a full article or story, click on the link next to the headline.
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- Dangdang (NYSE: DANG) Responds to Rumors of Financial Problems (English article)
- Citic Securities (HKEx: 6030) to Pay $310 Mln For CLSA Stake, May Buy Rest (English article)
- New Oriental (NYSE: EDU) Announces Senior Management Share Purchase Plan (PRNewswire)
- Germany Mulls Solar Panel Anti-Dumping Suit vs China (English article)
- China Telcos Announce June 2012 Subscriber Totals (English article)
- Latest calendar for Q2 earnings reports (Earnings calendar)
A government agency has just released data showing that mobile Internet users in China have passed traditional desktop users for the first time, posing an interesting challenge for all players that have typically designed their products for people who surf the web from fixed-line PCs at home and in Internet cafes. This move reminds me of a similar shift to mobile from desktop computing now taking place worldwide that is dealing a blow to former PC giants Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT), which have long dominated the desktop computing arena but are having trouble in the mobile space.
In what should come as a surprise to no one, a deal announced last week for a little-known Chinese firm to buy bankrupt US aircraft maker Hawker Beechcraft has already hit its first turbulence with objections from a major trade union, the International Association of Machinists and Aerospace Workers. This objection is only the first of many that I expect to see in this case, not only from the US but also from skeptical Chinese regulators, meaning this deal is almost guaranteed to fail. Let’s look at this first big obstacle, which comes just a week after Superior Aviation Beijing, partly owned by the Beijing municipal government, said it was in exclusive talks to buy Hawker for up to $1.8 billion. (
In what looks like a big setback for UnionPay, the World Trade Organization has ruled that the financial services network operator has an illegal monopoly that unfairly locks rivals like MasterCard (NYSE: MA) and Visa (NYSE: V) out of the market for settling financial transactions denominated in China’s currency, the renminbi. But while this ruling may represent a victory for Visa and MasterCard in the longer term, I have no doubt that the decision will be meaningless for at least the next few years, as Beijing, even if it decides to comply with the ruling, erects bureaucratic obstacles to make sure that UnionPay maintains its monopoly status for now.
Electronics giant Suning (Shenzhen: 002024) has become the latest Internet player to fall victim to China’s bloody e-commerce price wars, issuing a profit warning as companies get set to report their second-quarter results. Suning’s warning shouldn’t really surprise anyone since these price wars have been going on for about a year now. So perhaps the 10 percent drop in Suning shares yesterday — the daily allowable maximum under China’s stock market rules — reflects investor realization of just how bad these price wars have become and fact that Suning will suffer some major profit erosion before the situation finally eases.
Embattled telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) is probably starting to feel like an ailing hospital patient, following word that it’s coming under yet another investigation in what seems like a never-ending stream of probes by western governments. The recent investigations and other setbacks in both North America and Europe are taking a growing toll on ZTE’s bottom line, with the company warning that its profit dropped sharply in the second quarter and may have even disappeared completely.
A rare piece of upbeat news from mid-sized solar cell maker ReneSola (NYSE: SOL) has had a surprisingly mixed effect on shares from this struggling sector, hinting that investors are no longer looking at news but are rather trying to figure out what lies ahead for this group of companies with deeply depressed valuations. As the sector stabilizes and gets ready to grow again after a devastating downturn that has lasted more than a year, we may start to see both companies and investors taking advantage of extremely low valuations to launch takeover and privatization bids before share prices finally start to rise again.
Beijing, determined to consolidate the nation’s fragmented cable TV industry by creating a single national operator, is promoting its plan with a new round of subsidies, a move that could ultimately not only benefit not only the new operator but also leading wireless telco China Mobile (HKEx: 941; NYSE: CHL). The fact that China Mobile could benefit from this new subsidy plan seems somewhat ironic, since China Mobile is already one of China’s richest state-run companies, and thus it has little or no need for this kind of cash subsidies from Beijing.
Five or 6 years can be an eternity in cyberspace, which is clearly the lesson that former Internet high-flyer Tom Group (HKEx: 2383) is learning as it moves one step closer to irrelevance with word that its long-time partnership with Skype is on the verge of breaking up. That divorce would represent the end of one of its last remaining tie-ups with major western media firms that helped propel the company to fame nearly a decade ago.
China’s slowing economy is taking a toll on the nation’s hotel sector, where growth has dipped solidly into the single digit percentage range in the latest preliminary results for China Lodging Group (Nasdaq: HTHT), operator of the Hanting and Starway brands. Investors were clearly unhappy about these latest results, which are likely to be reflected throughout the industry when China Lodging and its 2 main listed rivals, Home Inns (Nasdaq: HMIN) and 7 Days (NYSE: SVN), report their results in the weeks ahead.
