Bottom line: Nio’s shares are likely to debut flat to down slightly in a lackluster New York trading debut, capping an IPO process pockmarked by investor skepticism.
Investors fail to charge Nio IPO
Wall Street investors will get a taste of a new flavor of Chinese company very soon, when homegrown electric vehicle maker Nio makes its trading debut on Wednesday. But based on all the signals so far, this offering for a company that some have likened to China’s answer to Tesla (Nasdaq: TSLA) could be a major flop. That would be somewhat appropriate given all of the real Tesla’s current woes, which point to the difficulties of building up a major new car maker from scratch.
Nio’s road to New York has been pockmarked with negative signposts pretty much all of the way. The latest of those has media reporting the company has priced its IPO American depositary shares (ADSs) at the very bottom of their range, at a price of $6.25 apiece, raising a total of $1 billion. (English article) That compares with an initial target of up to $1.8 billion, and I’ve heard that even that figure was trimmed back from initial hopes of more like $2 billion. (English article) Read Full Post…
Bottom line: BYD’s new order from Shenzhen shows its continued reliance on state support for new energy vehicle sales, while its new monorail product could become a cash cow in 1-2 years if the technology works well.
BYD gets new order from Shenzhen, launches monorail
Futuristic transport company BYD (HKEx: 1211; 002594) is in a couple of headlines as the new work week begins, seeking to show its potential and justify why people like billionaire investor Warren Buffet should buy and hold its shares. One headline has the company announcing a major new contract for its core electric vehicles from its hometown government of Shenzhen. The other has the company formally launching its newest business helping cities build monorails.
I’ll admit I wasn’t even aware of the company’s monorail plan, which apparently is aimed at providing cheaper mass transit alternates for big cities to traditional subways and light rail. The idea certainly sounds interesting, though we would probably require a more seasoned urban transport expert to talk about the pros and cons of such systems. Still, it does show the company is trying to innovate and stay ahead of the curve. Read Full Post…
Bottom line: Beijing should mete out stiff punishment, including big fines and jail sentences, for companies that fraudulently obtained subsidies under the government’s program to promote new energy vehicle development.
Chery accused of fraud in new energy car scandal
What started as a wave of criticism against new energy car makers for producing mediocre products that nobody wanted is rapidly becoming a major scandal, with reports that many of those companies submitted fake information in order to get lucrative government subsidies. The scandal netted major car makers King Long and Chery last week, and reports have emerged that even industry leader BYD (HKEx: 1211; Shenzhen: 002594 )may be suspected of illegally obtaining government grants.
Such trickery is an extension of another trend that sees Chinese companies rush into unfamiliar sectors that Beijing has targeted for development, often resulting in a flood of mediocre or inferior products into the market. Such rushes not only create big market disruptions, but also result in huge sums of wasted investment and slow down development of emerging industries. Read Full Post…
The following press releases and news reports about China companies were carried on September 10-12. To view a full article or story, click on the link next to the headline.
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Banks Asked Not to Stop Lending to Troubled Firms (English article)
LeEco (Shenzhen: 300104) Partners with AT&T (NYSE: T) on Super Bike Promotion in US (Chinese article)
LMVH Opens Stores for Guerlain Luxury Brand on Alibaba’s (NYSE: BABA) Tmall (Chinese article)
BYD (HKEx: 1211) Says Hasn’t Been Notified of Fine for Cheating at Tianjin Unit (Chinese article)
Victor Koo Rumored Stepping Down as CEO of Youku Tudou (Chinese article)
Bottom line: Geely’s sale of its EV joint venture stakes to its parent company, and BYD’s reinstatement of a major electric bus order from its hometown government, underscore how reliant the industry is on government support for its survival.
Shenzhen reinstates big electric bus order for BYD
A couple of electric vehicle (EV) stories are in the headlines, spotlighting just how dependent the sector is on government subsidies for its survival in China. I’ve written about this over-reliance on state-support frequently, including just last week when a government report said the sector had become bloated with mediocre players without any chance for commercial success. (previous post) Both of the latest headlines reinforce that theme, including one from smaller player Geely (HKEx: 175) and the other from stalwart BYD (HKEx: 1211; Shenzhen: 002594). Read Full Post…
Bottom line: BYD’s latest new share issue, including a sale to Samsung, reflects a dire need for cash as its electric vehicles fail to gain traction, and could be followed by more fund raising in the next 12 months.
BYD issues more new shares
Sputtering electric car maker BYD (HKEx: 1211; Shenzhen: 002594) is making some big adjustments in a bid stabilize its financial footing, with word of a major new share sale that includes the addition of Korea’s Samsung (Seoul: 005930) as a stakeholder. At the same time, that same new share issue has further diluted one of the company’s oldest and most loyal stakeholders, US billionaire investor Warren Buffett. Following this latest shift, Buffett’s holdings in the company are about half of what they were when he first purchased nearly 10 percent of BYD in 2008, when it looked poised to become a new energy car superstar. Read Full Post…
Bottom line: Beijing needs to overhaul its new energy vehicle policies to reward companies that truly innovate and manufacture cars that buyers are really driving.
BYD loses bulk of big bus order
A series of headlines last week showed how fat and even corrupt China’s booming electric vehicle (EV) sector has become in a very short time, spotlighting an urgent need for reform. The sector’s rapid evolution to its current state repeats a familiar pattern, which sees huge amounts of wasted investment and other inefficiencies emerge when local governments and inexperienced companies flock to industries targeted by Beijing for rapid development. Read Full Post…
The following press releases and news reports about China companies were carried on July 14. To view a full article or story, click on the link next to the headline.
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China’s Wanda Buys Britain’s Odeon Cinema Group for $1.2 Bln (English article)
BYD (HKEx: 1211) Loses Bulk of $270 Mln Electric Bus Order in China (English article)
Huawei, Midea (Shenzhen: 000333) Team Up in Smart Home Devices (Chinese article)
Ku6 Media (Nasdaq: KUTV) Announces Completion of Merger (PRNewswire)
Aluminum Distributor Fubang Jingye to Buy Mobile Game Firms Crimoon, Skymoons (English article)
Bottom line: Reluctance to transfer its technology killed CRI’s breakthrough deal to build the first US high-speed rail line, showing that emerging Chinese tech leaders must be more open to such transfers if they hope to succeed globally.
CRI’s high-speed train to US derails
The story that has seen China’s rapid modernization using western technology took an unusual twist last week, when a US firm aiming to build America’s first high-speed rail line abruptly canceled its tie-up with a Chinese partner over technology transfer issues. The US builder of the line connecting Los Angeles and Las Vegas was quite direct, blaming its decision on Washington’s condition requiring that rail cars for the project be locally manufactured. Read Full Post…
Bottom line: A new report spotlighting suspicious sales by BYD shows that last year’s EV explosion in China was fueled by people seeking to pocket government subsidies, while Yingli looks set to receive a government bailout from Beijing.
Yingli set to get new government rescue
A couple of stories from China’s new energy sector, one from the car space and the other from solar panels, are shining a spotlight on the challenges companies are facing after becoming too reliant on government support. One recounts a twisted tale involving electric car maker BYD (HKEx: 1211), and shows how its boom in sales last year may have been largely due to big government rebates for buyers. The other has Beijing telling one of the nation’s biggest policy lenders to provide money for struggling solar panel maker Yingli (NYSE: YGE) before it defaults on a bond payment due next month.
Let’s begin with BYD, which has experienced a rocky road over the last few years as its dream of a future filled with new energy vehicles failed to take off. That seemed to change last year, as new energy vehicle sales suddenly exploded at the company backed by billionaire investor Warren Buffett. BYD and industry boosters said the sales explosion showed that Beijing’s years of support for the sector was finally bearing fruit. 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)
