Bottom line: Baidu will suffer more damage to its revenue and profits after new actions by China’s Cyberspace Administration, creating a potential opportunity for Bing or even Yahoo in China’s lucrative search market.
Baidu’s search woes offer opportunity for Bing, Yahoo
The woes for Internet search giant Baidu (Nasdaq: BIDU) continue, with word that China’s Internet censor is ordering the already hobbled company to cleanse itself of inappropriate sites in its search results. But whereas previous crackdowns have focused on politically sensitive content, this latest crackdown focuses on sites of companies that may be engaged in fraud or making inflated or bogus claims. The entire situation looks set to make a major dent in Baidu’s growth story, and could even see the company’s revenue shrink as it finds a new equilibrium.Read Full Post…
Bottom line: Washington’s 2 month extension of a temporary license for ZTE to keep buying from its US suppliers indicates a final ruling is likely by year end in a similar probe against Huawei for illegally selling US products to Iran.
US extends export license for ZTE
After a tense period earlier this year when it appeared it could lose access to some of its key suppliers, telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) has been given continued access to those suppliers under a new extension of its earlier deal with Washington. The clash stemmed from a Washington ruling that ZTE sold US-manufactured telecoms equipment to Iran in violation of trade restrictions. Washington was set to punish ZTE by cutting it off from its many US suppliers, but later relented after the Chinese company agreed to cooperate with an investigation into the matter. Read Full Post…
Bottom line: Goldman’s bet on Minsheng Bank could auger a new wave of foreign investment in depressed Chinese bank shares, on belief that Beijing will rescue the group before their bad debt becomes too heavy.
Goldman invests in Minsheng
After dumping shares of major Chinese lenders in droves after the global financial crisis, at least one major foreign investor is testing the waters again, with word that Goldman Sachs (NYSE: GS) has quietly built up a large stake in Minsheng Bank (HKEx: 1988; Shanghai: 600016). But this time Goldman’s move, which has seen it quietly buy 11 percent of Minsheng’s Hong Kong-listed shares, looks likely a pure investment play rather than a strategic tie-up. Read Full Post…
Bottom line: Autohome’s attempt at a management-led buyout failed due to difficulties financing such a large deal, and Qihoo’s new attempt to finance its buyout with crowd funding-style tactics points to similar problems.
Ping An takes over Autohome boardroom
New developments in 2 of the biggest privatizations of US-listed Chinese companies are casting a spotlight on the difficulty many of these cases face, especially bigger deals that require billions of dollars in funding to succeed. The first case has the management team at online car specialist Autohome (NYSE: ATHM) losing its battle to take the company private, following a high-profile battle with its largest stakeholder. The second has software security specialist Qihoo 360 (NYSE: QIHU) reportedly turning to crowd funding-style tactics to try and raise money for its own buyout, hinting at financing difficulties for a privatization that values the company at more than $9 billion. Read Full Post…
Bottom line: A spike in short-selling of China e-commerce stocks led by JD.com and Alibaba is cyclical and unrelated to their longer-term prospects, and a bounce-back is likely by year-end.
Short sellers gobble up JD stock
It seems even a new partnership with global retailing giant Walmart (NYSE: WMT) can’t help sagging shares of JD.com (Nasdaq: JD), China’s second largest e-commerce company, which has recently become flavor of the day among short sellers. That’s the word coming from a new Bloomberg report, which says short seller interest in JD’s stock reached a record high in mid June, after already doubling over the previous month. This story isn’t really new, as I wrote about a similar short-selling boom for shares of JD rival Alibaba (NYSE: BABA) a couple of weeks ago also. Read Full Post…
Bottom line: The MIIT should be commended for resisting pressure by China’s 3 telcos to ban free private voice services for enterprise customers, but should move quickly to show it will license such service providers like DingTalk and WeChat.
DingTalk halts free enterprise voice service
The ongoing battle between China’s big 3 state-run telecoms carriers and an emerging field of private sector challengers was in the headlines last week, when rumors emerged that the regulator was set to stop private firms from offering free voice services for business customers. The move looked set to potentially shut down popular services provided by Internet giants Tencent(HKEx: 700), Alibaba (NYSE: BABA) and others, before the regulator clarified that licenses were needed for companies to provide such voice services. (Chinese article) Read Full Post…
The following press releases and news reports about China companies were carried on June 28. To view a full article or story, click on the link next to the headline.
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Autohome (NYSE: ATHM) Shareholding Settles, With Ping An as New Chairman (Chinese article)
A Slice of Qihoo’s (NYSE: QIHU) $9.3 Bln Buyout for Sale on China Streets (English article)
Bottom line: Qualcomm and Meizu are likely to reach a new licensing agreement after the former sued the latter, pressuring Meizu’s profits, while Taipei will reach a compromise with local chip makers that would allow mainland investment in the sector.
Qualcomm sues Meizu over chip license
Two high-tech chip stories are in the headlines today, reflecting the complex dynamics now taking place in the market between China and the rest of the world. In both cases, the common theme is that China wants to build up its own manufacturing base for high-tech chips that power everything from cars to smartphones and home appliances. It’s already the world’s biggest consumers of such chips, since it manufactures many of those devices. But it doesn’t design or produce most of the actual chips, which is an extremely high-tech business that also carries high profit margins. Read Full Post…
Bottom line: Midea’s purchase of Germany’s Kuka and Italy’s Clivet, and SMIC’s purchase of Italy’s LFoundry represent a wave of opportunistic buying by Chinese firms in Europe, with more such deals to come under Beijing’s directive to go global.
Midea buys Italy’s Clivet
A sluggish European economy, made worse by last week’s shock Brexit, is providing fertile shopping ground for Chinese firms, with 3 large deals in the headlines as the new week begins. Two of those involve home appliance maker Midea (Shenzhen: 000333), whose controversial and very expensive plan to buy a big stake in German robotics maker Kuka (Frankfurt: KU2G) looks set to reach a final agreement this week. At the same time, Midea has reached another deal to buy an Italian rival in the air conditioner space. Last but not least, faded semiconductor maker SMIC (HKEx: 981; NYSE: SMI) has announced another deal in Italy to buy the smaller rival LFoundry. Read Full Post…
The dog days of summer may be descending on Shanghai, but one place that won’t be too steamy this year is the city’s annual game fest, formally known as ChinaJoy, that takes place in July. The organizer of the country’s biggest gaming trade show has thrown cold water on people who attended in the past to ogle scantily clad models, saying it will enforce a strict dress code at this year’s edition.
This particular move follows a similar ground-breaking prohibition on excessive skin at the Shanghai auto show last year, a move that was greeted with cheers from true car enthusiasts but boos from some who said it dampened the show’s festive atmosphere. I tend to side with the former group, and applaud this broader movement that’s trying to clean up our business culture here in Shanghai and make it more professional and globally respectable. Read Full Post…
Bottom line: Sanpower’s bid to become McDonald’s main China franchise partner looks like a long-shot, and China Resources or Beijing Capital Agribusiness are the most likely to emerge as winners in a deal valued at $2-$3 billion.
Sanpower eyes McDonald’s
What does global fast-food giant McDonald’s (NYSE: MCD) have in common with niche retailers Brookstone of the US and Britain’s House of Fraser? The answer: All 3 could soon become linked through Chinese conglomerate SanpowerGroup, while already owns the 2 niche retailers and is now making a much bigger bid for most of the McDonald’s stores in China and Hong Kong. Sanpower is the latest company to enter the bidding for the China McDonald’s stores, which are being sold as the US fast food giant moves to a franchise model in the market to replace its previous approach of self-owned stores. Read Full Post…
