Bottom line: Alibaba’s removal of the paywall from the SCMP’s website shows it may want to use the newly acquired newspaper in its bigger strategy to get more news from big data, as it seeks to boost its global influence.
Alibaba removes paywall at SCMP.com
E-commerce giant Alibaba (NYSE: BABA) is in the headlines as it wraps up its landmark purchase of Hong Kong’s leading English language newspaper, announcing it will formally remove the paywall on the South China Morning Post’s (SCMP) website as its first major strategic move. In a completely separate headline, Alibaba has also named a new head for its international public relations team, replacing a heavy-hitter it hired less than 2 years ago in the run-up to its record-breaking New York IPO.
Both of these moves reflect the rapid changes taking place not only at Alibaba, but also in the traditional media realm where the SCMP operates. Traditional newspapers like the SCMP are looking desperately for new revenue sources as they get abandoned by their traditional advertisers and subscribers who are flocking to the Internet. Read Full Post…
The following press releases and news reports about China companies were carried on April 9-11. To view a full article or story, click on the link next to the headline.
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Alibaba Affiliate Ant Financial Said to Lift Target in Record Tech Funding (English article)
240 BYD (HKEx: 1211) Electric Taxis Purchased by Nanjing Stay Stranded in Shenzhen (Chinese article)
New Didi Kuaidi Funding Round May Raise More Than $1.5 Bln (Chinese article)
China Said to Push for $1.16 Bln in Loans for Yingli (NYSE: YGE) (English article)
YTO Express to Sell Self to Shell Company for 17.5 Bln in Backdoor China Listing (Chinese article)
Bottom line: Reports of the insolvency of online grocer Yummy77 are probably correct, but the company could still engineer an emergency rescue that would see it emerge as a wholly owned subsidiary of a big backer like Amazon.
Yummy77 reportedly insolvent
Just a week after 2 major new fundings highlighted the big potential for online grocers, a new headline is shining a spotlight on the darker side of a market that has rapidly overheated as new companies rush to cash in on the trend. That headline has media reporting that 2-year-old online grocer Yummy77, which is backed by global e-commerce giant Amazon (Nasdaq: AMZN), has run out of cash and become insolvent, making it the first major casualty in the space.
Before we go any further, I should note that the news on Yummy77 is all coming from media reports that haven’t been confirmed by the company. But at least one of those reports comes from the highly reputable China Business Network (CBN), which cites a number of sources that seem to indicate the news is true. My own visit to Yummy77’s site, www.yummy77.com, showed no signs of anything unusual, and I was able to select items for sale and put them into my shopping cart as normal. Read Full Post…
Bottom line: Huawei stands a reasonably good chance of meeting its goal of becoming the world’s second largest smartphone brand in the next 3 years, while ZTE’s sell-off with the resumption of trading in its shares looks overblown.
Huawei unveils mid-range P9 at London event
Two of China’s oldest and largest telecoms names are in the headlines, though Huawei and smaller rival ZTE are moving in opposite directions as we close out the week. New data are showing that Huawei continued to pick up share in China’s smartphone market in February, as the division’s head discussed his latest timeline for overtaking global leaders Apple (Nasdaq: AAPL) and Samsung (Seoul: 005930) in the next 4-5 years. Meantime, shares of ZTE finally resumed trading, and promptly tumbled as much as 16 percent, after a difficult few weeks due to a tussle with Washington.
The 2 stories reflect the opposite recent paths of these crosstown rivals, both based in the southern Chinese boomtown of Shenzhen. Huawei’s rapid rise in the smartphone space dates back to the middle of last year. ZTE’s woes are more recent, dating back to last month when Washington punished the company for illegally selling US-made equipment to Iran. But I would caution that Huawei’s rising fortunes could quickly run out of fuel in the fast-changing smartphone world, while ZTE may be oversold following resolution of its tussle with Washington. Read Full Post…
Bottom line: Homelink’s new mega funding reflects a recent renewed boom for Chinese real estate in major cities, while Alibaba’s backing of Momo’s buyout could presage a tie-up between Momo and Weibo.
Alibaba joins Momo buyout group
A couple of big fund-raising stories are in the headlines, led by the latest mega-funding for the fast-expanding real estate agent Homelink. Meantime, separate reports are saying that e-commerce giant Alibaba (NYSE: BABA) has joined a group aiming to privatize social networking app Momo (Nasdaq: MOMO), helping to squash skepticism that the buyout offer announced last year might collapse due to insufficient funding.
The only common thread to these 2 stories is that they show big funding remains available for high-growth companies in China, fueled in part by profits being generated by China’s booming real estate market. That boom has been directly responsible for Homelink’s meteoric rise, and seems like a good place to start this discussion of these 2 new mega fundings. Read Full Post…
Bottom line: Yingli is likely to get sold or announce a major government-led restructuring, which could include bankruptcy, before a new round of 1.4 billion yuan in bonds comes due next month.
Yingli shrivels under crushing debt load
In what looks like a case of deja vu, fast-shrinking solar panel maker Yingli (NYSE: YGE) is in the headlines again as it looks set to default on 1.4 billion yuan ($220 million) worth of bonds set to come due next month. The default would be Yingli’s second within a year, after it failed to pay off part of another big bond that matured last October.
Yingli is still working to repay the remaining debt from that earlier bond, which amounts to another 1 billion yuan. That means that Yingli now needs to find some $375 million in funds to repay all of its maturing debt by the time the new round of 1.4 billion yuan in medium-term notes come due on May 12. That looks all but impossible for a company that’s bleeding money, which resulted in a $500 million net loss during its latest reporting quarter. Read Full Post…
Bottom line: Ctrip’s stock could be set for strong gains over the next 12 months, thanks to strong profit growth following its recent string of equity tie-ups that have neutralized most of its major competitors.
Ctrip neutralizes rivals with string of tie-ups
In this series on my favorite China-concept stocks, leading online travel agent Ctrip (Nasdaq: CTRP) is the only one that I don’t really like in terms of corporate personality. But that fact aside, there’s still plenty for investors to like about this company that has slowly built up an enviable empire in China’s fast-growing market for travel services.
Ctrip was ahead of the curve with its establishment back in 1999 when China’s Internet and travel industry were both in their infancy. It was also one of China’s earliest Internet companies to list in the US, making a New York IPO back in 2003. Since then its prospects have soared with China’s booming travel industry, as the company faced relatively little competition for most of its first decade in business. Read Full Post…
Bottom line: ZTE’s change of leaders is a much-needed move to revive the company’s fortunes, though the choice of its former technology chief as new chairman looks a bit conservative.
ZTE gets new chairman
Following a turbulent period that saw it nearly lose access to many of its key suppliers, telecoms giant ZTE (HKEx: 763; Shenzhen: 000063) has just announced the arrival of a new chief, as it seeks fresh starts in its 2 main businesses selling networking equipment and smartphones. Many are pointing to ZTE’s recent run-in with Washington for illegally selling products to Iran as the direct reason for the departure of Shi Lirong, who was chairman for the last 6 years.
Perhaps that’s partly true, but the reality is that Shi’s tenure at the helm of ZTE has been marked by a much longer series of stumbles that has cost the company millions of dollars in sales and market value. Those missteps led ZTE to launch a major overhaul a couple of years ago that seemed to be showing results for its older networking equipment business. But more recently ZTE’s newer smartphone business has been showing signs of stumbling, and the latest Iran controversy may have driven the board’s decision to replace Shi. Read Full Post…
Bottom line: A flurry of new de-listing activity shows that well-funded privatizations will continue despite market volatility in China, and could also spread to undervalued private companies listed in Hong Kong.
Wanda Commercial Properties eyes buyout
The headlines are brimming with new moves in the buyout wave that has swept over off-shore listed Chinese stocks, which are privatizing in droves due to disappointing valuations. Leading the news are 2 former high-flyers, online video site Youku Tudou (NYSE: YOKU), which has formally completed its buyout by e-commerce giant Alibaba (NYSE: BABA); and property giant Wanda Commercial Properties (HKEx: 3699), which has announced it is exploring a potential buyout less than 2 years after its Hong Kong IPO.
That pair are joined by 2 smaller stories involving ongoing privatizations by budget hotel operator Homeinns (Nasdaq: HMIN) and the shriveling Ku6 Media (Nasdaq: KUTV). Media are saying that Homeinns has already lined up a Chinese listing vehicle to resume its life as a publicly traded company after it de-lists from New York. And Ku6 has announced it has formally signed a buyout agreement that will result in its own de-listing. Read Full Post…
Bottom line: China’s latest plan to buy Finnish chip maker Okmetic could get vetoed on national security concerns, reflecting foreign government concerns about selling technology companies to government-backed entities.
Finland’s Okmetic gets buyout bid from China
China’s ambitions of building a world-class high-tech microchip industry were in the headlines again last week, when the small Finnish chip maker Okmetic (Helsinki: OKM1V) revealed it had received a takeover bid from a government-backed company based in Shanghai. Beijing’s ambitions are understandable, since China currently buys over 60 percent of the world’s microchips to feed its vast manufacturing complex that makes everything from smartphones to computers and home appliances.
But recent resistance in the US and Taiwan has also highlighted reluctance by overseas governments to seeing their companies purchased by the big state-run vehicles that Beijing has recently set up to achieve its aims. Historically speaking, China has also achieved mixed results when the government backs big microchip projects, which often fall victim to government agendas that limit their ability to quickly respond to the fast-changing market. Read Full Post…
Bottom line: A surprise bid by China’s XIO Group for JD Power is unlikely to succeed due to lack of experience and possible concerns over a regulatory veto, but could force rival bidders to raise their offers slightly.
XIO joins bidding for JD Power
In what’s becoming an increasingly common occurrence, an obscure Chinese company has entered the bidding for a major western asset, with word that a buyout firm called XIO Group is eyeing US-based car industry consulting giant JD Power and Associates. I’m not too surprised by any of these bids these days, since many Chinese companies are flush with cash and under orders from Beijing to diversify beyond their home market.
These bids are pushing up the prices for global assets quite a bit, even as many such acquisition attempts ultimately fail. Both of those elements are present in this latest story, since Chinese bidders have become famous for attempting to buy top names like JD Power at any price, regardless of fundamentals of the acquisition target. But in the end, most of these Chinese bids are failing due to lack of experience and concerns about such foreign ownership. Read Full Post…
