Bottom line: China Telecom’s sale of its online video business looks like an exit from the space under its new chairman, while Wanda’s purchase of an online movie site could mark the start of a major new round of investment in online video.
China Telecom sells TV189 online video unit
Just days after search giant Baidu (Nasdaq: BIDU) abandoned plans to spin off its iQiyi video unit, 2 more online video headlines are reflecting the rapid changes taking place in the space. The larger will see China Telecom (HKEx: 728; NYSE: CHA), the smallest of China’s 3 telcos, sell its online video unit TV189 to a hotel operator called Besttone Holdings (Shanghai: 600640) for 3.9 billion yuan ($580 million). The smaller will see the fast-growing Wanda Group buy the online movie site Mtime for $280 million. Read Full Post…
Bottom line: Fosun’s newest acquisitions indicate it could soon become more active in the asset management and drug sectors outside China, with a focus on emerging markets like the BRICS countries.
Fosun buys India’s Gland Pharma
Private equity giant Fosun (HKEx: 656) is in 2 separate M&A headlines in the BRICS nations of Brazil and India, purchasing an asset manager in the former and a drug maker in the latter. Pharmaceuticals and real estate have been 2 of Fosun’s focus areas in its shopping spree both at home and abroad, though the move into developing markets is relatively new.
Fosun has more traditionally focused its global buying on western markets in the US and Europe. So this latest pair of deals could signal a new focus on emerging markets, especially ones like Brazil and Russia where recent economic malaise could be pressuring some debt-laden companies to sell off assets at bargain prices to raise cash. Read Full Post…
The following press releases and news reports about China companies were carried on July 30-August 1. To view a full article or story, click on the link next to the headline.
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Giant Interactive, Alibaba’s (NYSE: BABA) Jack Ma to Pay $4.4 Bln for Game Firm Playtika (Chinese article)
China Postal Bank’s $10 Bln IPO Stirs Foreign Interest, But Valuation a Worry (English article)
Besttone Holdings to Pay 6.9 Bln Yuan for China Telecom (HKEx: 728) Online Video Assets (Chinese article)
Meituan-Dianping Roll Out New Food and Beverage Platform (Chinese article)
Fosun (HKEx: 656) to Buy Brazilian Real Estate Management Fund Rio Bravo (Chinese article)
Bottom line: Recent calls for boycotts of KFC, iPhones and McDonald’s by Chinese patriots are unlikely to result in long-term damage for any of the companies, but could become a problem if any of China’s ongoing territorial disputes escalate.
Chinese patriots call for KFC boycott
It seems China’s restless patriots are back at work following a 4 year break, venting their latest anger at the US by smashing Apple (Nasdaq: AAPL) iPhones and calling for boycotts of KFC. This particular bout of Chinese patriotism follows a ruling 2 weeks ago by an international court that found in favor of the Philippines in a territorial dispute with China. The last major bout of similar patriotism came back in 2012, and involved another territorial dispute between China and Japan. But in that instance, Beijing gave much freer rein to many of the patriots, which resulted in long-term Chinese sales declines for the big Japanese automakers. Read Full Post…
Bottom line: Xiaomi’s new move into notebook PCs looks like a necessary step toward its goal of creating an ecosystem of entertainment products and services, but is likely to suffer from weak reviews and stiff competition from established brands.
Xiaomi rolls out notebook PCs
I really want to write something positive about fading smartphone maker Xiaomi these days, but the company really isn’t giving us much suitable material with its steady string of new but uninspired products. The latest of those is a couple of new notebook PC models, marking its move into a crowded area where it will face stiff competition from established players like Apple (Nasdaq: AAPL) and Lenovo (HKEx: 992), as well as new entrant Huawei.
One could argue that while Xiaomi is coming late to the notebook PC game, such a move is still necessary since such computers will be a critical component to the company’s dream of building an ecosystem of products and services around a range of interfaces like PCs, smartphones and TVs. And Xiaomi is still ahead of the more upward trending LeEco (Shenzhen: 300104), which likes the ecosystem idea so much that it actually changed its former name from LeTV to include this recent industry buzzword. Read Full Post…
Bottom line: Geely’s sale of its EV joint venture stakes to its parent company, and BYD’s reinstatement of a major electric bus order from its hometown government, underscore how reliant the industry is on government support for its survival.
Shenzhen reinstates big electric bus order for BYD
A couple of electric vehicle (EV) stories are in the headlines, spotlighting just how dependent the sector is on government subsidies for its survival in China. I’ve written about this over-reliance on state-support frequently, including just last week when a government report said the sector had become bloated with mediocre players without any chance for commercial success. (previous post) Both of the latest headlines reinforce that theme, including one from smaller player Geely (HKEx: 175) and the other from stalwart BYD (HKEx: 1211; Shenzhen: 002594). Read Full Post…
Bottom line: LeEco’s latest mega purchase will throw a lifeline to the struggling Vizio TV brand, as its latest issue of new shares at a big discount reflects growing investor fatigue and skepticism with the company.
LeEco throws lifeline to Vizio
Acquisitive online video superstar LeEco(Shenzhen: 300104) is back in the headlines for its latest mega-purchase, signing a deal to buy Vizio, a US-based TV brand that is at once one of the nation’s largest and also most obscure. At the same time, LeEco, formerly known as LeTV, is in separate but somewhat related headlines in a big cash-raising exercise through a new share issue. The company has become quite adept at such cash raising these days, often using its overvalued stock to bring in new money. Read Full Post…
Bottom line: Huawei’s eroding profit margins and slowing smartphone sales growth reflect stresses being felt both at home and abroad in an overheated industry showing rapid signs of global saturation.
Huawei announces H1 results
The latest financial results from Huawei are showing how smartphones are at once becoming a growth engine but also a drag on the telecoms giant. The company’s fast-growing smartphone business was one of the main engines behind a 40 percent surge in sales during the first half of this year, as Huawei consolidated its position as the world’s third largest brand behind only Samsung (Seoul: 005930) and Apple(Nasdaq: AAPL). But at the same time, fierce competition in the sector also sharply eroded Huawei’s profit margins. Read Full Post…
Bottom line: Wanda may need to raise its offer price again to buy Carmike, while a plan to privatize its property unit stands a good chance of winning shareholder approval.
Wanda ups Carmike bid
Conglomerate Wanda Group is in a couple of a major headlines, one involving its traditional real estate business and the other for the newer entertainment unit it’s building up as part of a diversification drive. The real estate headline centers on Hong Kong-listed property developer Dalian Wanda (HKEx: 3699), which has just received an endorsement from a major shareholder in its bid to go private. The second item centers on Wanda’s fast-growing cinema business, and has the company boosting its offer for US theater operator Carmike (Nasdaq: CKEC) after minority stakeholders complained a previous bid was too low. Read Full Post…
Bottom line: Baidu could get a new higher offer for iQiyi later this year after a former deal collapsed due to undervaluation, while a new Chinese group led by deal maker Sonny Wu is likely to buy a majority stake of AC Milan later this year.
Baidu’s iQiyi sale collapses
Online search leader Baidu(Nasdaq: BIDU) is in a couple of major headlines, each marking a setback in the company’s aspirations to diversify into entertainment. In the larger item, Baidu’s previously announced sale of its iQiyi online video unit has collapsed, after a minority investor complained the sale price was too low. The second headline has Baidu chief Robin Li’s name suddenly disappearing as leader of a group trying to buy European soccer club AC Milan, with reports that another major Chinese deal maker has emerged as head of the group. Read Full Post…
Bottom line: Baidu’s rapid expansion of its global mapping services is mostly targeted at Chinese traveling abroad, and is unlikely to attract many local users because better services are already available in most markets.
Baidu maps South America
Still suffering from a spate of negative news at home, leading search engine Baidu (Nasdaq: BIDU) is trying to draw attention to the more upbeat subject of its global expansion that is slowly inching forward. The company has squarely focused its global drive on emerging markets, and is continuing that trend with word that it’s launching new editions of its mapping services for most of South America. Baidu has already launched a version of its core search business in Brazil, and many will probably view this move to launch mapping services in 13 countries as a prelude to future launches for search service in those markets. Read Full Post…