Bottom line: The see-saw performance of iDreamSky shares after its buyout offer reflects a growing number of speculators in the market for US-listed China shares, while Legend’s Hong Kong IPO is likely to price and debut weakly.
iDreamSky gets buyout offer
As we head into the end of June, the first half of 2015 is set to set an unusual record of becoming the first such period to see a negative number of New York IPOs by Chinese companies. That fact is being driven by a record number of companies that have announced privatization plans, including the latest by mobile game developer iDreamSky (Nasdaq: DSKY). If this latest plan is successful, iDreamSky would also set a new record for shortest time ever as a New York-listed Chinese firm, since the company only made its IPO last August.
Meantime, one actual IPO that is moving forward is coming in Hong Kong, where Legend Holdings, parent of PC giant Lenovo (HKEx: 992), has set a price range, date and chosen a ticker for its offering. This particular deal appears to be getting a ho-hum reception in Hong Kong, as most investors remain fixated on a rally across the Chinese border that has seen China’s domestic stock markets more than double over the last year. Read Full Post…
Bottom line: Alibaba’s new hiring of a Washington insider to head its international government affairs reflects its attempts to look more global, and also an intense lobbying campaign to ensure its name stays off an annual US piracy list.
Alibaba bulks up in Washington
E-commerce giant Alibaba (NYSE: BABA) has just made a major new addition to its Washington lobbying team, as it gears up for what’s likely to become one of its biggest battles yet on Capitol Hill. That battle will see the company try to convince the Obama administration that it’s a strong partner in the battle against piracy, as it tries to stay off an annual list published by Washington that singles out major internet sites that don’t do enough to stamp out counterfeiting.
Alibaba’s new hire of former GE Capital executive Eric Pelletier to head its international government affairs is also part of its attempts to look more global by adding big-powered non-Chinese to its top management ranks. The move parallels similar hires by equally globally-minded companies including networking equipment giant Huawei and leading PC maker Lenovo (HKEx: 992), which are also trying to convince the world that they’re truly global players and not just Chinese companies. Read Full Post…
Bottom line: China’s securities regulator should reopen its plan for an international board amid the current stock market rally, which would make big international brands like Imax available to average local investors.
Imax China files for HK IPO
A premier global movie brand slipped away from China’s stock exchanges last week, when the Chinese unit of big-screen superstar Imax (NYSE: IMAX) disclosed it plans to make an initial public offering (IPO) in Hong Kong. The case brought back memories of a nearly forgotten plan by China for an international board for such listings in Shanghai, aimed at making big foreign names accessible to Chinese investors.
That plan was conceived more than 5 years ago, but later got put on hold as China focused on launching the Nasdaq-style ChiNext board in Shenzhen. It then got indefinitely shelved when China’s stock markets languished in the 4 years after that. Read Full Post…
Bottom line: Didi Kuaidi’s IPO could come as early as the fourth quarter, with Hong Kong, China and New York standing equal chances of winning what could be the year’s biggest China Internet listing, worth up to $2 billion.
Didi Kuaidi to list in Q4
Just days after launching a massive promotion to attract new customers to its private hired car services, Didi Kuaidi is reportedly starting the process that could end with a major IPO for China’s largest taxi app operator by year end. Such a development wouldn’t come as a huge surprise, following the company’s formation earlier this year through the merger of 2 bitter rivals to create a Chinese market leader reportedly valued at up to $9 billion.
But equally interesting will be where this fast-driving company chooses to list. Just a year ago the answer would have almost certainly been New York, which is where most of China’s top Internet companies are traded. But a recent boom in China’s own stock markets and a new program that allows mainland investors to buy Hong Kong stocks have made Chinese Internet companies start to seriously consider both of these markets for IPOs as well. Read Full Post…
Bottom line: Xiaomi’s rush into competitive western markets with beta testing of new online stores hints at internal concerns over the company’s rapidly slowing growth, and is likely to meet with a lukewarm reception.
Xiaomi eyes US, Germany, France, UK
The upwardly mobile Xiaomi is making its latest moves on the global stage, with word that it’s beta testing online stores in the US, France, Britain and Germany. The planned move into the US was previously disclosed earlier this year, with reports that Xiaomi would start by selling accessories like earphones. (previous post) But this addition of 3 major Western European markets hints that Xiaomi is moving ahead aggressively with its global expansion, and could even start selling its signature smartphones in some or all of those markets by year-end.
Xiaomi is accelerating its move into these lucrative but also highly competitive new western markets as it comes under growing pressure to maintain its breakneck growth that has given it a rich valuation of $45 billion just 5 years after its founding. That pressure is evident in a second headline, which says Xiaomi’s smartphone sales rose by just 50 percent in this year’s first quarter, far less than the triple-digit growth rates it has become used to in its relatively short life. Read Full Post…
Bottom line: Apple’s latest environmental initiative in China looks like a savvy and inexpensive way to raise local awareness of environmental protection, in a move that will please Beijing and help it improve its government relations.
Apple tries forest management
Just 3 weeks after capturing local headlines with its plans to invest in solar farms in China, global gadget leader Apple (Nasdaq: AAPL) is rolling out more environmentally friendly initiatives in an attempt to woo both consumers and government officials in one of its most important markets. This latest initiative probably won’t get much attention in western media, as it looks mostly like a publicity ploy even though it does lay out big goals. But foreigners were never Apple’s real target with this announcement, which instead is part of its recent campaign to win over Beijing as well as a broader base of Chinese consumers. Read Full Post…
Bottom line: Tsinghua Unigroup is likely to win the bidding for a controlling stake in HP’s China-based networking equipment unit, and could help HP consolidate its place as one of China’s leading IT service providers.
Bidding war breaks out for HP asset sale
Hewlett-Packard (NYSE: HPQ) is finding itself in a rare position of power in China, with word that an unusual bidding war has broken out as it looks for a partner to buy a controlling stake in its locally-based networking equipment unit. The development could bring not only a windfall in terms of money HP will get for its H3C Technologies unit, but will also allow it to choose between 2 potent partners to help consolidate its place as one of China’s leading IT services providers.
HP is in the process of splitting itself into 2 as part of a broader restructuring announced last fall. In this case the China-based H3C networking equipment venture would almost certainly go into its new HP Enterprise unit, focused on products and services for corporate customers. The other main unit under the break-up will include HP’s older PC and printer businesses, which will go by the name HP Inc. Read Full Post…
Bottom line: CICC’s IPO later this year will attract lukewarm investor interest due to its fading prospects, forcing it to scale back its plan to raise up to $1 billion.
CICC to get lukewarm reception in HK
A new story on homegrown investment bank CICC is casting a spotlight on the kind of interesting but also somewhat uninspiring Chinese companies that are likely to make offshore IPOs this year, after last year’s bumper crop of offerings that included a far more exciting field of candidates. Yesterday I wrote about Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which wants to raise $2-$3 billion through a listing in Hong Kong. Like Legend, China International Capital Corp (CICC) is a company that’s unlikely to excite investors but could still draw a some interest as a decidedly second-tier player. Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 16. To view a full article or story, click on the link next to the headline.
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Legend Group Files For Hong Kong IPO, 2014 Profit Reaches 4.1 Bln Yuan (Chinese article)
Alibaba Injects $2.5 Bln Online Pharmacy Business Into Alibaba Health (HKEx: 241) (English article)
Bottom line: Tsinghua Unigroup’s pending purchase of a controlling stake in H3C could mark the start of a new partnership with HP in routers, but is unlikely to affect its older partnership with Intel in the telecoms chips.
HP eyes router stake sale to Unigroup
Semiconductor company Tsinghua Unigroup was already a name to watch after a string of major deals last year including a tie-up with Intel (Nasdaq: INTC), and now it’s adding to its allure with word of a major new alliance with Hewlett-Packard (NYSE: HPQ). This latest deal would trump the earlier one from Intel in size, and would see Unigroup buy a controlling 51 percent stake of HP’s China-based H3C unit, which makes routers and switches that compete with US giant Cisco (Nasdaq: CSCO).
It’s not completely clear how much Unigroup would pay for the stake, though the amount would almost certainly be more than the $1.5 billion that Intel paid last year for 20 percent of a new company that Unigroup created through its merger of 2 of China’s leading telecoms chip designers. I’m no telecoms expert, but I’ll admit this latest deal is leaving me just a bit puzzled due to the very different natures of the businesses of H3C and the earlier tie-up involving Intel, which revolved around telecoms microchips. Read Full Post…
Bottom line: Xiaomi’s sales growth will slow this year as it faces stronger competition outside China, while recent momentum by Huawei could position it as the country’s solid number-two manufacturer.
Huawei shakes up Honor brand
I previously gave Xiaomi my award for China’s top tech company of 2014, and now the smartphone superstar has cemented that title by formally unseating global giant Samsung (Seoul: 005930) as last year’s leading Chinese brand. In a separate smartphone news bit, the stodgier and older Huawei has changed the chief for its Honor brand, in one of a series of recent developments that could position the company to become China’s second best-selling manufacturer this year.
As a regular writer about the China smartphone market, I’ve watched the many twists and turns in the rapid development of both Xioami and Huawei, which have emerged as my 2 major players to watch this year. Rivals Lenovo (HKEx: 992) and ZTE (HKEx: 763; Shenzhen: 000063) are also names to keep an eye on; but if I had to bet money, I would say Xiaomi and Huawei are likely to end 2015 as China’s 2 largest smartphone makers by a comfortable margin. Read Full Post…
