Bottom line: Qunar’s management overhaul marks the start of a new chapter as a partner of former arch-rival Ctrip, while its dispute with 2 major airlines reflects challenges it will face due to its open platform business model.
Qunar in management overhaul
Online travel giant Qunar (Nasdaq: QUNR) is experiencing a turbulent new year, announcing a major overhaul that will see 3 of its top managers depart. The shake-up is the first big fallout following a landmark tie-up with former arch-rival Ctrip (Nasdaq: CTRP) last year, and looks aimed at stripping Qunar of its independence as it gets set to work more closely with its former foe.
Meantime, Qunar is also feeling some turbulence due to a dispute with 2 of China’s largest airlines. That spat has China Southern (HKEx: 1055; Shanghai: 601766) and Hainan Airlines (Shanghai: 600221) both reportedly blocking their tickets from being sold on Qunar’s websites. The airlines’ noise is the latest in a growing chorus of discontent from companies whose travel products and services are sold by Qunar and its rivals. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 6. To view a full article or story, click on the link next to the headline.
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Dalian Wanda Clinches Deal for Legendary Entertainment – Source (English article)
Faraday Unveils Concept Electric Race Car with LeTV (Shenzhen: 300104) (English article)
Commerce Ministry Asks More Questions in Microsoft (Nasdaq: MSFT) Anti-Trust Probe (Chinese article)
New Huawei Mate 8 Smartphone Sells More Than 1 Mln Units in Less Than a Month (Chinese article)
Air China, China Eastern Join Airlines Parting With Qunar (Nasdaq: QUNR) (Chinese article)
Bottom line: Alibaba’s shares and Ant Financial’s new fund-raising plans will come under pressure if China’s stock markets enter a new correction, a possibility that looks high in the current environment.
China sell-off pressures Alibaba shares
E-commerce giant Alibaba (NYSE: BABA) is facing several new challenges as we head into 2016, led by a big drop in its stock on the first trading day of the year after China’s domestic stock markets plunged 7 percent. The 5.6 percent drop in Alibaba’s stock in New York on Monday wiped out around $10 billion in market value, as investors worried that US-listed Chinese stocks could get infected by a potential a new correction on China’s stock markets.
In separate headlines, Alibaba-affiliated Ant Financial is reportedly back in the market to raise at least $1.5 billion, in the run-up to a potential IPO as soon as later this year. That figure looks quite large, and I’ve previously said we’re unlikely to see many private fund-raising rounds of that size this year. But the figure is actually down quite a bit from Ant’s only other fund raising last July, reflecting growing caution from investors worried about China’s slowing economy. Read Full Post…
Bottom line: iDreamSky’s finalized buyout offer marks the start of a new wave that will see more than a half dozen US-listed Chinese firms sign similar offers by the Lunar New Year, mostly at the same prices from original privatization deals announced last year.
iDreamSky finalizes buyout bid
The New Year is kicking off with a shot of deja vu, as a wave of companies that announced privatization bids in the first half of 2015 are now returning to investors with concrete offers. In the latest chapter of this two-part wave, mobile game operator iDreamSky (Nasdaq: DSKY) has just announced its signing of a formal deal to take the company private.
iDreamSky announced its original intent to privatize last June, at the height of a wave that saw about 3 dozen such de-listing bids proposed last year, mostly in the first half. The wave of announcements skidded to a halt in mid June when China’s stock markets underwent a massive correction after an even larger rally. But with China’s markets showing signs of stability, the de-listing movement has resumed. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 5. To view a full article or story, click on the link next to the headline.
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Alibaba’s (NYSE: BABA) Ant Financial Finance Arm Said to Seek at Least $1.5 Bln (English article)
New World (HKEx: 17) to Prepare Buyout Offer for $7 Billion China Unit – Source (English article)
Qunar (Nasdaq: QUNR) Names New CEO, CFO, COO (GlobeNewswire)
Smartphone Maker Meizu Cuts 5 Pct of Headcount to Boost Competitiveness (Chinese article)
Xiaomi Co-Founder Li Wanqiang Returns to Head Xiaomi Pictures Division (Chinese article)
Bottom line: Rumors that Shanghai Media Group is in talks for a strategic stake of Baidu’s iQiyi could quite possibly be true, with an investment of about $3 billion likely in exchange for half of the company.
iQiyi talking tie-up with SMG?
The New Year is starting with a salient rumor from the online video space, with reports that the new media investment arm of Shanghai Media Group (SMG) may be eyeing a major stake purchase of Baidu’s (Nasdaq: BIDU) iQiyi. The reports aren’t being widely circulated in the Chinese media yet, which suggests they may not be accurate. The head of SMG’s China Media Capital (CMC), which would reportedly make the investment, has also previously said he’s not interested in online video assets right now.
But such a tie-up would be quite consistent with Baidu’s recent strategy of selling major stakes in its non-core businesses to strategic partners. From SMG’s perspective, such a deal would also make sense, as it plays catch-up with both private companies and also state-owned rival Hunan Broadcasting in the fast-evolving online video space. Read Full Post…
Bottom line: ZTE’s new Suning tie-up presages an aggressive push into the China smartphone market this year, potentially helping it reach an aggressive target for 20 percent annual revenue growth over the next 5 years.
Suning buys into Nubia
Following a painful restructuring that wrapped up more than a year ago, telecoms stalwart ZTE (HKEx: 763; Shenzhen: 0000063) is heading into the New Year with a major new partnership with retailing giant Suning (Shenzhen: 000063), and a medium-term revenue target that looks quite aggressive. The signals reflect a new level of confidence at ZTE, which has returned to the profit column and is aggressively building up its smartphone business as a key plank for its future growth.
The smartphone business lies at the heart of the new tie up with Suning, which is buying a major stake in ZTE’s separately-run upscale Nubia brand. The bigger picture has a top ZTE official forecasting the company’s revenue will hit 200 billion yuan ($31 billion) by 2020, a 150 percent increase over 2014 levels. Read Full Post…
Bottom line: Baidu’s new fund raising for its O2O take-out dining service is aimed at finding strategic partners and deflecting criticism from its shareholders, while Spring Airlines new fund-raising presages an aggressive expansion into Japan.
Baidu beefs up take-out dining service
A couple of major fund-raising stories are in the headlines on this final trading day of 2015, setting the stage for what’s likely to be a busy year ahead in the take-out dining and budget air travel sectors. The larger of the 2 items has online search leader Baidu (Nasdaq: BIDU) reportedly near a deal to raise up to $500 million for its young and fast-growing online-to-offline (O2O) take-out dining service. The smaller has China’s oldest budget carrier Spring Airlines (Shanghai: 601021) in the process of raising nearly 1 billion yuan ($150 million) to fuel its expansion into nearby Japan.
These 2 deals cap a year that saw an explosion in private funding for start up Chinese companies in the first half of 2015, including several deals worth more than $1 billion. But the pace of funding has slowed sharply in the last few months due to concerns over China’s slowing economy, and these latest 2 deals are likely to become the new norm in terms of deal sizes we’ll see in 2016. Read Full Post…
Bottom line:Wanda’s decision to set up its sports division headquarters in Guangzhou is part of a diversification away from Beijing, and could presage an IPO for the unit in Hong Kong as early as next year.
Wanda sets up sports HQ in Guangzhou
A recent series of major sporting moves is back in the financial headlines as 2016 approaches, with word that real estate giant Wanda Group is setting up a new headquarters for its growing sports business in the southern city of Guangzhou. Those same reports hint at another major theme in the new year, which could see a new wave of IPOs for some of these big new sporting investments by names like Wanda.
Sporting investments have become a major theme in the current year, reflecting a sudden desire for content and related services to feed China’s fast-growing entertainment sector. E-commerce giant Alibaba (NYSE: BABA) kicked off the wave last year with its investment in a domestic soccer club, and has been joined this year by a wide range of companies that includes Wanda, electronics retailer Suning (Shenzhen: 002024) and online video operator LeTV (Shenzhen: 300104). Read Full Post…
Bottom line: Shanda Games’ privatization could de-rail again due to fraud allegations against the head of its buyout group, while scandal-plagued Hanergy could receive a management-led offer soon to de-list its shares from Hong Kong.
Shanda buyout team leader detained in fraud probe
The “Year of the Buyout” for US-listed Chinese companies is ending on a couple of interesting notes, led by the reported detention of the head of a group trying to privatize Shanda Games (Nasdaq: GAME), one of China’s oldest online game companies. Somewhat ironically, Shanda Games announced its plans to privatize nearly 2 years ago, well before the more recent flood of similar offers announced by around 3 dozen US-listed Chinese companies this year.
Meantime, controversial solar energy equipment maker Hanergy (HKEx: 566) is making its own new noises that hint of a potential privatization bid in the not-too-distant future. In this case the company has announced its founder plans to sell a sizable chunk of his shares for far below their last traded price. The shares have been suspended since May over suspicions of price manipulation, and it’s quite possible this new sale price could indicate a broader plan to take the company private at this new, significantly lower valuation. Read Full Post…
Everyone has been buzzing this past week about the new additions to Shanghai’s subway system, which has become one of the world’s biggest since its explosive expansion starting around the World Expo of 2010. But while the earlier focus was on simply opening new lines and stops at a breakneck pace, now the city is turning its attention to the more subtle art of trying to make these newest stations more artistic and individual by incorporating themes related to China and Shanghai itself.
The attempt to make our subway more attractive is part of a broader trend that has seen many Chinese cities move beyond an earlier mentality that focused solely on functionality, to one where they try to create spaces, buildings and other elements that add some local flavor. In Shanghai’s case such a move is quite easy, since the city has such a rich history and also boasts many buildings and other historical sites and relics that are still present and in relatively good condition. Read Full Post…
