Anyone who has followed this series on my favorite Chinese stocks knows that all of my picks so far have come from the private sector, and that I’m generally not a fan of big state-owned enterprises (SOEs). But given the huge weight that SOEs carry in China’s economy and their preferential status in many key sectors, I feel obliged to recommend at least one such company in this series.
With that background in mind, my top pick among this group is the Hong Kong-listed Citic Ltd (HKEx: 267), one of China’s oldest conglomerates and a company often considered one of the nation’s most entrepreneurial SOEs. I particularly like Citic for its financial services focus, which includes its private equity arm, a bank and China’s leading brokerage, all of which are more commercially driven than many of China’s other big financial companies. Read Full Post…
Bottom line: Yingli’s new bank loan will be followed by a major restructuring that will force big losses on bond and shareholders, while a new asset-backed bond program to help the broader panel sector raise money will meet with tepid reception.
Beijing throws new lifelines to Yingli, solar sector
China is throwing a couple of lifelines to its struggling solar panel sector, including a relatively large rescue package for Yingli (NYSE: YGE), the player in the most precarious position. That package will see a consortium of banks, led by the policy-driven China Development Bank, provide Yingli with 2 billion yuan ($300 million) in funds as the company tries to reorganize its financially strapped balance sheet.
Word of the rescue package comes as media are reporting separately that China is preparing a much bigger lifeline for the sector, by allowing solar panel makers to sell bonds backed by the growing number of solar farms they are self-developing. Such farms provide a steady source of income from the power they generate, and thus should theoretically be more attractive to investors than directly investing in the financially-challenged solar panel makers themselves. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 28. To view a full article or story, click on the link next to the headline.
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Greater China Still Biggest Contributing Region as iPhone Sales Top Out (Chinese article)
China Cinda Said to Study Joining Yingli’s (NYSE: YGE) Debt Restructuring (English article)
Ericsson (NYSE: ERIC) Q4 Results Beat Expectations on China Rebound (Chinese article)
Qihoo (NYSE: QIHU) CEO Pledges 10 Pct Stake to Encourage Staff Entrepreneurship (English article)
TAL Education (NYSE: XRS) Announces Financial Results for Its Fiscal Q3 (PRNewswire)
The following press releases and media reports about Chinese companies were carried on December 19-21. To view a full article or story, click on the link next to the headline.
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Apple (Nasdaq: AAPL), Samsung to Enter China Payments Market With UnionPay (English article)
Qihoo 360 (NYSE: QIHU) Enters into Definitive Agreement for Going Private (PRNewswire)
Microsoft (Nasdaq: MSFT) Unveils Plans for China Joint Venture (English article)
Amazon (Nasdaq: AMZN), Oriental Pearl in Cloud Computing Partnership (Chinese article)
BOCI (HKEx: 3988) Sells Nanyang Commercial Bank to Cinda for HK$68 Bln (HKEx announcement)
Bottom line: China Postal Bank’s signing of several major global institutions as cornerstone investors reflects the attractiveness of conservative financial service firms as China’s economy slows.
Conservative Postal Bank draws big global investors
What’s likely to be this year’s biggest IPO has just moved one step closer to market, with word that Postal Savings Bank of China is near a deal to sell about 15 percent of itself to a group of mostly foreign investors ahead of a planned $20 billion new offering. This particular IPO will provide one of the most conservative choices yet to investors looking to buy into China’s financial services market.
That’s because Postal Bank historically served as a place for consumers to park their savings, and did little actual lending like traditional banks. That difference appears to be a major factor making Postal Bank so attractive now compared with more traditional lenders like ICBC(HKEx: 1398; Shanghai: 601398), which are standing on the cusp of a bad loan crisis as China’s economy rapidly slows. Read Full Post…
Bottom line: Muted interest in Great Wall Motor’s fund-raising plan and Bank of China’s sale of a major asset reflect weakening investor interest in such deals due to the slowing Chinese economy.
Weak sentiment pressures, BOC, Great Wall Motor deals
Funding for Chinese Internet companies is showing no signs of slowing just yet, but reports of weak demand for 2 other deals reflects fading investor interest in more traditional sectors as China’s economy slows. The first of those has car maker Great Wall Motor (HKEx: 2333; Shanghai: 601633) sharply reducing plans for a new issue of A-shares on China’s domestic stock markets. The second has Bank of China (HKEx: 3988; Shanghai: 601398) attracting scant interest for the sale of a major asset in Hong Kong.
Neither of these developments comes as a huge surprise due to growing worries over China’s rapidly slowing economy. Great Wall was never one of China’s top auto makers to start with, and the big reduction in its 16.8 billion yuan ($2.6 billion) fund-raising plan comes as the domestic auto market slows and investors pile out of China’s crumbling stock markets. Meantime, Bank of China has been trying to sell its Hong Kong-based Nanyang Commercial Bank for a while now, and the latest reports say only 1 interested party has emerged. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 28. To view a full article or story, click on the link next to the headline.
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Chinese Banking Giants: Zero Profit Growth as Bad Loans Pile Up (English article)
Motorola to Lead Lenovo (HKEx: 992) Mobile Unit in New Overhaul (Chinese article)
Cinda (HKEx: 1359) Only Bidder for BOC (HKEx: 3988) Bank Unit with $8.8 Bln Price (English article)
Dalian Wanda Buys Ironman Triathlon Owner for $650 Mln (English article)
Uber China Unit Wins $1 Bln in New Funding – Source (Chinese article)
Bottom line: Alibaba’s technical glitch at Alipay, the launch of its new bank and use of its Taobao platform to auction of bad loans reflect its growing clout in financial services, as it attempts to build up its Ant Financial unit for a future IPO.
Technical glitch interrupts Alipay
E-commerce leader Alibaba (NYSE: BABA) is in a trio of finance-related headlines, spotlighting its growing bet on financial services that could be a huge growth area as Beijing opens the sector to private investment. One headline has seen Alibaba get official permission from its home province to open a bank, after it became one of the first 3 entities to receive private banking licenses under a pilot program by Beijing.
The second headline has seen the company’s popular Alipay electronic payments service experience technical problems that cut off access for 2 hours earlier this week, prompting it to quickly say that no accounts were compromised. The final news bit comes in a larger story about China’s growing bad asset crisis, which will see the nation’s top bad asset management company use Alibaba’s Taobao marketplace to auction off some of those assets. Read Full Post…
Bottom line: Bank of China’s Hong Kong arm is likely to find limited interest in a sale of its Nanyang Commercial Bank unit, as a slowing Chinese economy cools offshore interest in buying Hong Kong banks.
Bank of China looks to sell Nanyang Bank
A new report about a potential major bank sale in Hong Kong made me realize that a widely expected rush to buy locally based lenders in the former British colony never materialized. This latest report that the Hong Kong unit of Bank of China (HKEx: 3988; Shanghai: 601398) is shopping its locally-based Nanyang Commercial Bank might rekindle speculation that a flurry of new sales is coming. But the potential buyers mentioned in the report make such a gold rush look unlikely, indicating local Hong Kong banks may be losing their appeal as acquisition targets for Chinese and other global lenders. Read Full Post…
Domestic and overseas investors have been feasting on a flood of sour loans being churned out by China’s economic slowdown, mostly by buying shares in big state-run firms that try to recover money from those bad assets. In the latest wrinkle of that story, 8 major institutional buyers have spent a hefty $2.4 billion to purchase 21 percent of China Huarong Asset Management, one of the leading bad asset managers.
But bad asset management isn’t always such an easy game to play, as another group of China-backed investors is learning after their ill-advised purchase 2 years ago of insolvent Swedish car maker Saab. That group, called National Electric Vehicle Sweden AB (NEV) has declared bankruptcy, signaling an end may finally be near for the Swedish car maker that probably should have died several years ago. Read Full Post…
Investors may be giving a cold shoulder to many new Chinese companies lining up to list overseas, but one name that’s not having any such troubles is Citic Group, one of China’s oldest and most entrepreneurial financial services conglomerates. Ironically, Citic isn’t even making a formal IPO as it seeks to list in Hong Kong, but instead is making a massive back-door offering using its Citic Pacific (HKEx: 267) unit as the vehicle. The latest reports say a group of top-tier global and domestic investors are lining up to buy into the new back-door listing, reflecting Citic’s attraction as an alternative for buyers looking to gain exposure to China’s financial services sector. Read Full Post…
