Bottom line: Huawei’s aggressive H2 targets for its Honor sub-brand hint that sales for its core Huawei smartphones may be stumbling, while rumors of a wave of executive departures at Smartisan also hint at dire financial conditions at the company.
Huawei calls on Honor to boost smartphone sales
New distress signals are coming from China’s overheated smartphone sector in the form of headlines involving leader Huawei and smaller niche player Smartisan. Before I detail the headlines, I should note that some may disagree with my interpretation, since neither news item directly confirms any trouble. But that said, nobody ever wants to admit to bad news, and in both cases the headlines appear to confirm earlier signs of stress at each company. Read Full Post…
Bottom line: Wanda will use AMC as its flagship for building a global entertainment empire, which will include its newly purchased European Odeon theater chain and could also include a revised higher bid for US operator Carmike.
Wanda’s AMC in deal to buy UK’s Odeon
The acquisitive Wanda Group is in a couple of major headlines in its quest to build a global movie theaters empire, led by a new blockbuster acquisition that will see it buy Britain’s Odeon and UCI CinemasGroup for about $1.2 billion. But while it advances in Europe, the company is hitting more resistance in the US, where Wanda already owns top player AMC Entertainment (NYSE: AMC). Wanda is trying to expand its US base by buying smaller operator Carmike Cinemas (Nasdaq: CKEC), but now new reports are saying the company is unlikely to raise its bid to a level that investors are demanding. Read Full Post…
Bottom line: Autohome’s shares will come under pressure after a mass defection of its middle management, most likely to start a rival company, while Ku6 is likely to close shop within the next 2 years following its de-listing from New York.
Mid-level managers leave Autohome en masse
A couple of new twists are bubbling through the headlines in a wave of buyout offers for US-listed Chinese companies, led by the latest signs that a privatization for online car site Autohome (NYSE: ATHM) is effectively dead. Those signs are coming in reports of a wave of resignations by mid-level company executives, following a failed management-led buyout bid. Meantime, online media site Ku6 Media (Nasdaq: KUTV) has formally completed its own buyout offer, meaning this insignificant player that was once a leader in China’s new media space will probably de-list very soon and could disappear completely within the next 2 years. Read Full Post…
This week we travel from the streets of Shanghai to some of our city’s many parks, which are getting a little friendlier by extending their opening hours during the summer. The move isn’t particularly new and comes every year, but still reminds me each time how different Chinese parks are from the big, open spaces that most westerners enjoy in North America and Europe with mostly unlimited access.
This outdoor story did see one additional new wrinkle here in China last week, when the massive Zhongshan Park in Changning District become the latest in the city to stay open 24 hours. That broke with the earlier practice for nearly all parks in China of closing during the night, supposedly for safety reasons. Read Full Post…
Bottom line: China Logistics’ IPO could rise 5-10 percent in its trading debut, while AirAsia could list in Hong Kong by year end and online lender Qufenqi could follow with an IPO in the first half of 2017.
AirAsia Eyes Second listing in HK
Hong Kong IPOs continue to heat up as we head into the heart of summer, with word of a major new listing from China Logistics Property and reports that budget carrier AirAsia may also be eyeing an offering in the market. Meantime, Qufenqi, the hot online lender that targets students, has just raised a hefty 3 billion yuan ($450 million) in new funding, in a prelude to what could become one of next year’s hottest IPOs. All of this comes against the backdrop of a looming mega offering by China’s Postal Savings Bank, whose $8 billion fund-raising target would make it the world’s biggest IPO since Alibaba’s (NYSE: BABA) blockbuster $25 billion offering 2 years ago. Read Full Post…
Bottom line: Coolpad’s latest loss forecast shows it is struggling due to intense competition, and will need to sell more of itself to LeEco in the next 6 months to keep funding its operations.
Coolpad falls sharply into the red
The woes continue to mount for former smartphone high-flyer Coolpad (HKEx: 2369), which has just announced a profit warning that will see it drop sharply into the red in the first half of this year. The move was almost inevitable due to the overheated state of China’s smartphone market, as Coolpad finally ran out of tricks to hide its mounting losses. The company did admit its sales were plunging in its last earnings report for the year 2015, even as its profit quadrupled that year. But this latest profit warning for the first half of 2016 shows the company is now squarely in the loss column. Read Full Post…
Bottom line: Telefonica is likely to finalize its divorce with Unicom in the next 2 years, following the latest halving of its holdings in its Chinese partner to 1 percent as part of a sell-down of non-core assets.
Telefonica dumps more Unicom shares
For some reason that’s not completely clear to me, Spanish telco Telefonica (Madrid: TELF) doesn’t want to admit that its decade-long marriage with China Unicom (HKEx: 763; NYSE: CHU) was a dud and is headed for divorce. That’s my latest assessment, following reports that the Spanish carrier has further sold down its stake in its Chinese partner, leaving it with a miniscule 1 percent of Unicom’s shares. This particular sale was probably driven mostly by a need for cash. But I really don’t understand why Telefonica didn’t just completely dump the rest of its shares and finally end this marriage that never produced anything useful for either side. Read Full Post…
Bottom line: Wanda’s first half report shows that entertainment continues to be the company’s focus going forward, and could hint at an eventual IPO for the entire group similar to Alibaba’s record offering 2 years ago.
Wanda’s Commercial Property unit posts H1 decline
The fast-rising but privately held Wanda Group has just released first-half results in English for the first time that I can recall, in a report that has plenty of room for improvement due to its highly selective disclosure. But the report does provide some color on Wanda’s overall makeup, including the fact that its original real estate business now accounts for just half of overall revenue. One intriguing footnote to this new reporting trend is the company’s growing efforts to reach an international audience, which could hint at plans for an eventual IPO by one of China’s largest privately owned groups. Read Full Post…
Bottom line: HNA’s bid for a major aircraft lessor and purchase of a top airline catering firm extend a buying spree that could top $10 billion and position it as a major global player for travel-related products and services.
HNA chases aircraft lessor, buys Swiss caterer
The recently acquisitive HNA Group is continuing its global buying spree, with reports that it’s a leading contender to buy one of the world’s leading aircraft lessors, and that it’s agreed to purchase a top global airline caterer. The first deal has HNA bidding for the aircraft leasing business of CIT Group (NYSE: CIT), which is valued at $3-$4 billion; while the second has HNA agreeing to buy Gategroup for $1.5 billion. These latest deals come just months after HNA has made major investments and purchases in the travel sector in Australia, South America and Europe. Read Full Post…
Bottom line: Huawei’s new lawsuits against Samsung in China and T-Mobile in the US are designed to show the company is now a major global player, and could also be preemptive to deflect attention from upcoming bad news.
Huawei files new suits against Samsung, T-Mobile
China’s latest smartphones superstar Huawei is suddenly getting quite aggressive in the courtroom, with word the company has filed new lawsuits against global leader Samsung (Seoul: 005930) and US wireless carrier T-Mobile (Nasdsaq: TMUS). Those reports are coming as new data show that Huawei boosted its position as China’s leading smartphone brand with 17.3 percent of the market in the second quarter. (English article) Huawei’s sales surge continues an ongoing trend, though the sudden courtroom aggression is relatively new for the company, which was more used to getting sued in the past than suing other companies over patent violations. Read Full Post…
Bottom line: Skepticism by Nevada’s treasurer could kill LeEco’s plans for a $1 billion car plant in the state, and such doubts are justified due to the company’s lack of transparency and reliance on an inflated stock price to raise money.
Nevada treasurer wary of LeEco car plant financing
Plans by online video superstar LeEco (Shenzhen: 300104) for a new energy car plant in Nevada have hit a speed bump, with word that the state’s treasurer is skeptical of using loans backed by the company’s stock to finance the $1 billion project. The fact that LeEco is hitting this resistance in Nevada is somewhat ironic, since the state is famous for its embrace of gambling. But in this case I do have to applaud Nevada treasures Dan Schwartz for his skepticism, since I personally think LeEco has built its sudden entertainment empire on a hugely speculative pile of debt and hype about China’s Internet. Read Full Post…
