The following press releases and news reports about China companies were carried on October 8-10. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) in Talks to Take Over Fujitsu’s PC Business: Source (English article)
NetEase (Nasdaq: NTES) Media Arm Submits Draft Registration to SEC for US IPO (PRNewswire)
Wal-Mart (NYSE: WMT) Doubles Stake in JD.com (Nasdaq: JD) Moving Further Into China (English article)
It’s Official: LeEco (Shenzhen: 300104) Will Break US Boundaries on October 19 (English article)
Hollywood’s Digital Domain Takes Citic and SoftBank China as Strategic Investors (Businesswire)
Bottom line: Yum and McDonald’s are likely to complete spin-offs of their China units by year end, offering a new business template for multinationals that should be encouraged with incentives from Beijing.
Yum names board for China unit
Separate plans by fast food giants KFC and McDonald’s (NYSE: MCD) to spin off their China businesses into separate companies were in the headlines last week, in a new trend that could see other big multinationals take similar steps to address the market’s huge size and unique qualities. Each company is using a slightly different strategy, with KFC parent Yum Brands (NYSE: YUM) choosing a key strategic partner and separate listing for its China unit. By comparison, McDonald’s is simply selling its China stores to a strategic partner in a franchise-style arrangement, while maintaining control of its bigger China operations. Read Full Post…
Bottom line: The collapse of a cross-investment between China’s Citic Bank and Taiwan’s CTBC Financial reflects growing cross-strait tensions, and could signal a chill in major new cross-strait investments over the next 4 years.
Citic Bank scraps Taiwan investment
In a troubling sign for companies doing business across the Taiwan Strait, an equity swap between China’s Citic Bank (Shanghai: 601988) and Taiwanese peer CTBC Financial (HKEx: 2891) has collapsed due to regulatory issues. In this case it appears that Taiwan scuttled the deal for reasons I’ll explain shortly, though a Citic spokesman emphasized no politics were involved. But regardless of the stated reasons, this particular development seems to reflect growing tensions between Taiwan and China under a new Taiwanese administration that’s far more wary of Beijing than its predecessor. Read Full Post…
The following press releases and news reports about China companies were carried on May 4. To view a full article or story, click on the link next to the headline.
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Tencent (HKEx: 700) Venture Poaches Google Talent as Chinese Techs Pile into Autos (English article)
SAIC Begins Mass Production for Car Jointly Produced With Alibaba (NYSE: BABA) (Chinese article)
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: CMC’s purchase of a stake in the parent of the Manchester City soccer club looks at least partly political, and could be followed by similar purchases by Alibaba or LeTV next year as companies try to earn goodwill from Beijing.
CMC buys into global soccer
Anyone who thought the entrepreneurial China Media Capital (CMC) might represent a new breed of market-oriented Chinese investors will be disappointed to learn the company’s latest purchase looks quite political and aimed at pleasing Beijing. That investment has the Shanghai-based CMC teaming up with the financial giant Citic Group, another highly political animal, to buy 13 percent of a company whose prize asset is the Manchester City soccer club.
I’m probably being slightly unfair in calling this move purely political, since China is certainly a soccer-crazy country that could benefit from the expertise that CMC will get through its investment in City Football Group (CFG). But the timing of this deal looks quite suspicious, as it comes just weeks after Chinese President Xi Jinping visited the team during a tour of Britain, where he released a plan to turn China into a soccer powerhouse. Read Full Post…
Bottom line: Baidu’s new joint venture bank with Citic could help it catch up to stumbling private banks backed by Tencent and Alibaba, which are struggling due to restrictions on their operations by Beijing.
WeBank seeks new funding
Two headlines are highlighting the opportunities and challenges that private banking is presenting for China’s Internet giants. The larger of the news items has online search leader Baidu(Nasdaq: BIDU) forming a joint venture with traditional banking giant Citic Bank (HKEx: 998), as it plays catch-up with Internet rivals Tencent(HKEx: 700) and Alibaba(NYSE: BABA). The second headline involves Tencent’s recently formed WeBank online bank, which is reportedly looking to raise $1 billion nearly a year after its official launch.
China’s Internet companies have rushed into financial services over the last 2 years, as Beijing tries to breathe new life into a stodgy sector previously dominated by big state-run firms. Both Tencent and Alibaba have been at the forefront of the movement, with each getting licenses to open private banks earlier this year under a new pilot scheme. But the transition has been filled with obstacles, partly due to lack of regulation but also because of resistance from the traditional banks. Read Full Post…
Bottom line: New financing deals for Canadian Solar and Trina reflect the growing role of solar panel makers as power plant builders, and could provide some stability to the sector by providing a more reliable stream of new projects.
Trina, Canadian Solar get new financing
Two big new financing deals are shining a spotlight on a major shift taking place in the solar panel sector, with manufacturers increasingly moving into the field of solar farm development. The shift is seeing solar panel makers become their own best customers, buying up panels for use in solar farms that they build themselves. The latest headlines have Canadian Solar (Nasdaq: CSIQ) and Trina (NYSE: TSL) securing major new financing for such construction, in 2 deals that are both quite large but also very different in nature.
Solar panel makers have been building their own plants for several years now, though the trend has accelerated in the last year. The traditional model was for them to build solar farms using their own panels, and then sell those plants to longer-term buyers. But in an interesting twist to that story, solar panel makers may be looking to hold those farms themselves and put them into separate units, my sources say. Those units could then be spun off later into separate publicly listed companies, in a play that would look like a new energy version of traditional power utilities. Read Full Post…
The following press releases and media reports about Chinese companies were carried on October 29. To view a full article or story, click on the link next to the headline.
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Mobile Restaurant Queuing App ‘Delicious No Wait‘ Wins $100 Mln Series C (English article)
Bottom line: Wal-Mart’s loss of China Resources as one of its major Chinese partners reflects rapid changes in the traditional retailing market, and could prompt Wal-Mart to accelerate an overhaul of its broader China strategy to focus more on e-commerce.
China Resources dumps Wal-Mart JV stake
Just 3 months after sacking the founders of its China e-commerce site, US retailing giant Wal-Mart (NYSE: WMT) has suffered yet another blow in the huge but difficult market with the loss of a major local partner for its traditional brick-and-mortar stores. That move is seeing China Resources, one of the country’s biggest and oldest consumer names, dump shares worth $515 million in a number of Wal-Mart stores that it jointly owns with the US retailing giant.
The move isn’t all that surprising for a number of reasons, but still doesn’t look too good for Wal-Mart in the fast-changing Chinese retailing market. For starters, China Resources is already a major owner of smaller supermarket chain called Vanguard. It also moved into the hypermarket business 2 years ago when it effectively took over the China-based operations of British giant Tesco (London: TSCO) through a joint venture. (previous post) Read Full Post…
Bottom line: Major new funding raising by Uber, its Chinese equivalent, and Alibaba’s logistics arm reflect continued interest in such leading Internet firms by major global Investors, though funding will slow sharply for smaller, less known players.
Three new Internet deals raise $5 bln
It seems my earlier forecast was incorrect that major fund-raising for Chinese Internet companies could be cooling due to waning investor sentiment during the recent market volatility. The latest headlines include 3 major new deal close to completion, worth a collective $5 billion. The largest has Didi Kuaidi, the homegrown Chinese equivalent of private car services giant Uber, on the cusp of new a funding deal worth $3 billion. The second has the actual Uber also near a deal to raise $1.2 billion for its Chinese business, as it prepares to spin off the unit into a separate company.
Meantime, the smallest of the deals has e-commerce leader Alibaba ‘s(NYSE: BABA) Cainiao logistics unit also on the verge of a deal to provide hundreds of millions of yuan for a small logistics company. In this case the move appears aimed at helping Cainiao to build up its stable of partners providing logistics service. The addition of such outsiders would also help to validate Alibaba’s 2-year-old program to plow 100 billion yuan into its logistics capabilities.
