Bottom line: As many as three-quarters of privatizing US-listed Chinese firms could see their buyout offers revoked, but many of their stocks may be oversold due to excessive investor worries during the latest trading session.
Orphan stocks look oversold after sell-off
What started as a wave of euphoria by US-listed Chinese firms looking to make some quick money by de-listing from New York and returning home is rapidly turning into chaos, with shares of many of those companies tumbling in the latest trading session. The fall is directly tied to China’s own rapidly crumbling stock markets, which was where most of these US orphans were hoping to re-list to get better valuations than they had in New York.
But now those plans have been thrown into doubt, and at least one analyst is joining my previous prediction that many of the record 27 companies to receive privatization offers this year could ultimately see those offers revoked. That means many of these companies may be forced to remain listed in the US, where they were punished by angry investors in the latest trading session. Read Full Post…
Bottom line: The next 2 weeks could see another 3-5 US-listed Chinese companies announce buy-out bids, but the number will slow after that and many deals could collapse if China’s stock market rally falters.
3 more names join buy-out queue
Another 3 companies have joined the fast-growing privatization queue over China’s long holiday weekend, leading me to create the temporary tag of “buyouts” for headlines describing this brief but explosive story. For anyone who hasn’t followed that story closely, the current quarter has now seen 19 privatizations unveiled by US-listed Chinese firms, including the 3 latest announcements from video surveillance specialist Vimicro (Nasdaq: VMIC), advertising specialist AirMedia (Nasdaq: AMCN) and IT services provider China Information Technology (Nasdaq: CNIT).
In related news, leading web portal Sina (Nasdaq: SINA) has announced it is joining a group making a previously announced privatization bid for E-House (NYSE: EJ), one of China’s leading real estate services companies. That particular move looks related to an existing alliance between the 2 companies, and thus probably just marks a continuation of that relationship that I’ll describe below.
The following press releases and media reports about Chinese companies were carried on June 20-23. To view a full article or story, click on the link next to the headline.
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SMG’s Oriental Pearl (Shanghai: 600637) Enters Internet TV After Reorganization (Chinese article)
Sina (Nasdaq: SINA) Joins Consortium in E-House (NYSE: EJ) Privatization Plan (PRNewswire)
Hershey (NYSE: HSY) Cuts Annual Profit Forecast After China Growth Slows (English article)
JD.com (Nasdaq: JD) Responds to Short Seller Attack, Calls Report Misleading (Chinese article)
AirMedia (Nasdaq: AMCN) Announces Receipt of “Going Private” Proposal (PRNewswire)
Bottom line: A new strategic investment in LightInTheBox by a major shoemaker is a vote of confidence in its turnaround story, while Bona Film’s buyout offer caps a week of record privatization activity for US-listed Chinese firms.
LightInTheBox gets new strategic partner
Last week’s privatization frenzy for US-listed Chinese firms saw one more company join the queue on the final day of the week, with movie maker Bona Film (Nasdaq: BONA) adding its name to the list of companies looking to end their relationship with fickle New York investors. That final offer brought the number of US-listed Chinese firms receiving buyout offers last week to 5, which must surely be a record for such bids in a single week.
Meantime, another interesting deal has seen underperforming e-commerce company LightInTheBox (NYSE: LITB) receive its own big new investment from one of China’s leading shoemakers. That deal saw Aokang Shoes (Shanghai: 603001) buy about a quarter of LightInTheBox’s shares, hinting at a major new direction for the foreign-focused e-commerce company and also implying it’s unlikely to de-list from New York anytime soon. Read Full Post…
Bottom line: A new management-led privatization bid for Homeinns and many other similar recent plans could stand a 50-50 chance of failing if they don’t complete the process before China’s stock market rally ends.
Homeinns joins privatization queue
Leading budget hotel chain Homeinns (Nasdaq: HMIN) has become the latest US-listed Chinese company to receive a buyout offer, capping a record week that has seen at least 4 such bids. In the past, 4 privatizations in a 6-month period would be considered big, even though such bids have been coming at a slow trickle over the last 3 years for Chinese companies whose shares have languished on Wall Street. But that tickle has turned into a flood these last 2 months, fueled mostly by greed, as company owners look enviously at China’s rallying stock markets that have more than doubled over the last year. Read Full Post…
Bottom line: The ongoing privatization wave of Chinese firms abandoning New York listings is likely at or near a peak, with gaming and solar companies as some of the likeliest candidates to make new announcements.
E-House heads for exit door
The exodus from New York by neglected Chinese companies marches on this week, with online real estate company E-House (NYSE: EJ) becoming the latest to receive a management-led buyout offer. At the same time, online dating site Jiayuan (Nasdaq: DATE) has announced that a suitor who made a similar offer for the company in March has sharply raised its bid, following complaints that the original offer grossly undervalued the company.
When the history books are written, the second quarter of 2015 could well go down as the height of a wave of privatization bids for New York-listed Chinese firms, whose shares have languished in the last few years due to lack of interest from US investors. At the same time, many of those companies are casting an envious eye on China’s rallying stock markets, and are almost certainly hoping to re-list at home in the future. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 10. To view a full article or story, click on the link next to the headline.
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Bottom line: Online real estate stocks could resume their rebound if their latest forecasts are accurate, while Youku Tudou shares are holding steady despite widening losses on hopes for a merger deal with iQiyi.
Online real estate stocks drop on weak earnings
This week marks the height of earnings season for US-listed Chinese stocks, prompting me to look at a quartet of struggling companies in the real estate and online video spaces that have just reported results. The former category has seen the trio of SouFun (NYSE: SFUN), E-House (NYSE: EJ) and Leju (NYSE: LEJU) all release their earnings over the last 2 days, revealing gloomy results as an ongoing correction shows no signs of easing in China’s real estate market. Meantime, former online video leader Youku Tudou’s (NYSE: YOKU) latest results also look weak, showing the company’s losses ballooned as it continues to search for an elusive model for long-term profitability. Read Full Post…
The following press releases and media reports about Chinese companies were carried on May 20. To view a full article or story, click on the link next to the headline.
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Uber Joins Baidu (Nasdaq: BIDU) As Nokia’s Maps Unit Draws Multiple Bidders (English article)
Bank of Communications (HKEx: 3328) Agrees To Buy 80 Pct Of Brazil’s BBM (English article)
China’s Unigroup Says Wins Bid To Buy 51 Pct Stake In HP (NYSE: HP) Unit (English article)
Bottom line: An IPO plan for Jupai could raise up to $100 million and perform relatively well if it can sell itself as an asset manager well positioned to profit from China’s real estate downturn.
E-House grooms Jupai for IPO
The year’s first IPO for a Chinese company in New York could finally be in the pipeline, with word that an asset management firm controlled by real estate services firm E-House (NYSE: EJ) has made its first filing for a listing. The plan comes in a broader announcement by E-House, which has transferred its asset management business to a third company called Jupai, which in turn has submitted a draft registration to the US securities regulator in preparation for a proposed IPO.
If the plan goes forward, it could become the first listing for a Chinese company in New York this year, stealing the distinction from another IPO plan by group buying site 55Tuan. IPO watchers will know that 55Tuan filed its listing plan back in January, but missed several deadlines for unexplained reasons without formally saying it is scrapping the plan. (previous post) Read Full Post…
The following press releases and media reports about Chinese companies were carried on April 8. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU) Retreats on Chinese Private Hospital Advertising Boycott (English article)
Express Mobile Files Patent Infringement Claims Against Alibaba (NYSE: BABA) (PRNewswire)
BYD (HKEx: 1211) Announces Sale of Electronic Component Unit For 2.3 Bln Yuan (HKEx announcement)
