Tag Archives: Giant Interactive

China Tech Stocks: Dividend Plays? 中国科技股：发放股利

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Since everyone else is focusing on the rapidly slowing growth in the latest quarterly results from leading Internet company Tencent (HKEx: 700), I thought I’d take a look at a less explored part of the company’s newly issued report, namely a dividend that it quietly boosted 36 percent. The sharp increase, at least on a percentage basis, reflects a broader effort among overseas-listed China tech and Internet firms to try to rekindle investor interest in their shares, as many start to see a rapid slowdown in growth with the maturation of their markets. Let’s look at Tencent first, which saw its fourth-quarter profit rise a modest 15 percent, not exactly impressive for a company whose annual profit rose 56 percent in 2010 and which saw triple-digit gains in many previous years. (results announcement; English article) Meantime, the company announced it was raising its annual dividend to HK$0.75 per share from HK$0.55 the previous year, a 36 percent increase. In terms of actual yield, investors will still get a modest 0.4 percent return from the dividend based on Tencent’s latest closing price. But still, any return at all would be a plus for holders of Tencent shares last year, which fell 10 percent amid a broader cooling in sentiment towards overseas-listed China tech stocks after a meteoric rise in previous years. Tencent’s boosting of its dividend comes as a growing number of US-listed Chinese tech and Internet firms have rolled out first-ever dividends, with a diverse range of names including chip designer Spreadtrum (NYSE: SPRD), online game operator Giant Interactive (NYSE: GA) and real estate service specialists Soufun (NYSE: SFUN) and E-House (NYSE: EJ) all announcing dividends starting last year in a bid to support their sagging share prices. Most of these companies are relatively cash-rich and the awarding of dividends is partly acknowledgement that they don’t need the money for operations, since most are already profitable, and most don’t plan to make any major acquisitions in the near future. Furthermore, none have indicated whether these dividends will become a regular occurrence, and I suspect many will quietly retire the policy if and when their share prices start to rebound. Still, Tencent’s latest moves do reflect a new reality setting in for an increasing number of tech firms, namely that growth could slow significantly in the next few years, causing investors to look elsewhere for excitement in a market full of other high-growth stories. As that happens, look for some of the biggest names, especially cash-rich ones like Tencent, to quietly boost their dividends, providing a stable if not very exciting source of returns for investors who don’t mind the slower growth.

Bottom line: A growing number of overseas-listed Chinese tech and Internet firms will offer dividends to attract investors as their profit growth slows.

Related postings 相关文章:

◙ Real Estate Down, But E-House Jumps 房地产股票下跌，但易居上涨

◙ Soufun Looks For More Support With New Dividend 搜房网借新派息计划寻求支撑股价

◙ Shanda Plays Games With Big Dividend 盛大游戏寄望高额分红计划提振股价

Online Games: Where’s the Excitement? 中国网游企业增长有限

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A press release from ChinaJoy, China’s oldest online gaming show now celebrating its 10th anniversary, reminded me of how little I write about this once-exciting industry anymore, which has become mostly a bumper crop of companies with poor track records at innovation despite their huge home market. ChinaJoy announced its big anniversary with fanfare, unveiling a new logo and announcing a slate of its latest shows centered on the online game industry. (official announcement) But from where I sit, there’s very little to celebrate. The industry posted revenue of 32.4 billion yuan in 2010, about $5 billion, rising a respectable 26 percent from the year before but still sharply slower than growth rates 5 or 6 years ago when the hype was loudest. Perhaps the company that best illustrates the disappointment surrounding this sector is Shanda Interactive, which became the sector’s first player to go public with its Nasdaq IPO in 2004. The company then spun off its gaming unit into a separate company, Shanda Games (Nasdaq: GAME), and then finally itself went private earlier this year due in part to lackluster investor interest. (previous post) Since its listing, Shanda Games has failed to attract much investor interest and the stock now trades at about one-third of its IPO price in 2009. Other hopefuls from the sector included The9 (Nasdaq: NCTY), Perfect World (Nasdaq: PWRD) and Giant Interactive (NYSE: GA), which have all seen similar lackluster performance. One notable exception to this uninspired group has been NetEase (Nasdaq: NTES), one of China’s earliest Internet companies, which has actually done quite well in the space due to its strong ability to self-develop games that have found strong fan bases among domestic Chinese gamers. By comparison, Shanda and the others, despite their best efforts, have largely failed to create popular titles and instead rely on licensing games developed by foreign companies for most of their revenue. That model is not only less profitable, as profit margins are much smaller, but also dangerous as companies can quickly lose much of their revenue when a license expires if they fail to renew it. That case was illustrated 2 years ago when The9 saw its business disappear almost overnight when it lost its most popular game, World of Warcraft, after failing to renew a licensing deal with the game’s owner, US firm Activision Blizzard (Nasdaq: ATVI). The9 got a recent lift when it announced a new self-developed title and a global licensing deal, providing a boost to its stagnant shares. (previous post) But somewhat ironically, the title was developed by a US-based game developer purchased by The9, rather than the company’s own China-based design house. For all of these reasons, NetEase may remain the only interesting company in this once-promising space for the near future, though The9 could potentially also rise if its US-based design house can produce more successful titles.

Bottom line: China’s online game operators will see little or no growth in the next few years except for the handful that can develop their own successful titles rather than rely on licensing deals.

Related postings 相关文章:

◙ The9 WoWs Wall Street With New Deal

◙ Shanda Delists: Thanks for the Profits 盛大网络退市：获利可喜

◙ Shanda Plays Games With Big Dividend 盛大游戏寄望高额分红计划提振股价

 

Turmoil Erupts in Perfect World

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Online game operator Perfect World (Nasdaq: PWRD) has come under attack from an anonymous blogger who may have been trying to blackmail the company, sending its prices plummeting and showing that short sellers aren’t the only ones looking to profit on the credibility crisis plaguing US-listed Chinese companies. Shares of Perfect World, which was already struggling from slowing business (previous post), have been on a roller coaster ride these last 2 days, plunging 27 percent on Monday after the anonymous posts came out (Chinese article), only to bounce back 20 percent on Tuesday after the company strongly denounced the reports. (company statement) After all that, Perfect World shares are still down 12 percent from their levels before the articles appeared, indicating this story may not be over yet and investors are still concerned about some of Perfect World’s business practices. A bit of guess work is necessary here as no one, including the company statement, is telling the complete story. But reading between the lines, it appears the anonymous blog posts questioned some transactions conducted by Perfect World CEO Chi Yufeng between companies under his control. The articles appear to imply that some of the transactions were made at favorable prices to Chi’s other companies, at the expense of Perfect World. Such practices are hardly unusual in the tainted world of US-listed Chinese firms, whose founders often use their companies as personal kingdoms to conduct transactions that may benefit themselves but aren’t always in the best interest of their other shareholders. Two other companies, Focus Media (Nasdaq: FMCN) and Giant Interactive (NYSE: GA), came under similar attack last year for dubious transactions unrelated to their core business, though in the Focus case the attack was mounted by a short seller. (previous post) In Perfect World’s case, the company implies the attacker wasn’t a short seller, but rather a blackmailer looking for money in exchange for not publishing its articles. Such blackmailing is relatively common in China, and this particular case spotlights yet another danger scandal-tainted US-listed Chinese companies will now face as they work to clean up their image.

Bottom line: An apparent attack on Perfect World by blackmailers spotlights another vulnerability for US-listed Chinese firms as they struggle with a credibility crisis over their business practices.

Related postings 相关文章:

◙ Cleanup Resumes, Facebook Sniffs Out China Investors 在美上市的中国企业将继续面临“大清洗”

◙ Short Sellers Target China in Year End Assault 做空抛盘年底将矛头对准在美上市中国企业

◙ US-Listed China Firms Fight Back — Finally 中国赴美上市公司最终还击

Cleanup Resumes, Facebook Sniffs Out China Investors 在美上市的中国企业将继续面临“大清洗”

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The new year is bringing many questions about the future of US listings for China stocks, but one thing remains quite clear: the cleanup of the sector triggered by a series of accounting scandals last year will continue into 2012, as evidenced by the latest activity. In one of the latest signs of the ongoing cleanup, China CGame (Nasdaq: CCGM) has been notified of its pending de-listing from the Nasdaq due to its failure to hold its annual meeting on time. (Chinese article) The company’s stock  currently trades at just 17 cents per share, meaning it also is well below the $1 level necessary for a Nasdaq listing. In related news, embattled Focus Media (Nasdaq: FMCN), which previously came under attack from short sellers, has come under renewed attack from Muddy Waters, which this time is questioning the company’s purchase of a ginseng plantation. (English article) Focus tried to explain the acquisition by saying it was designed to acquire assets related to its core outdoor advertising business, but that didn’t convince investors, with Focus shares losing 5.4 percent on Friday. Perhaps this transaction is really related to Focus’ core business, as the company says; but the purchase looks a bit similar to one by online game company Giant Interactive (NYSE: GA) in the completely unrelated insurance space last year (previous post), and is symptomatic of the way that many US-listed Chinese companies are run like personal fiefdoms of their founders, who use their companies to play all kinds of investment and financial games. Expect to see more such delistings and short-seller attacks this year as the cleanup continues, though I would expect most activity to end by the middle of the year. In separate unrelated Internet news, Goldman Sachs has apparently begun shopping shares of Facebook to wealthy Chinese investors via a unit of financial services group Ping An in the run-up to Facebook’s highly anticipated IPO. (Chinese article) This kind of activity certainly isn’t that unusual, as Goldman is clearly trying to start creating buzz before the offering. What’s more interesting is that it’s seeking investors in China, providing the latest indication that Facebook still aims to enter the China market and could even make a move here soon to create more buzz for its offering expected in the next few months. Stay tuned.

Bottom line: The latest delisting and short-seller attack against US-listed Chinese firms indicate the cleanup of such companies on US markets will continue through at least the middle of this year.

Related postings 相关文章:

◙ Short Sellers Target China in Year End Assault 做空抛盘年底将矛头对准在美上市中国企业

◙ Rumor Mongers Seize on Crisis With Sina Attack

◙ Despite China Rebuff, Facebook Going Back for More Facebook明知山有虎，偏向虎山行

Soufun Looks For More Support With New Dividend 搜房网借新派息计划寻求支撑股价

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When does a 31 percent dip in your share price look good? When your rivals’ share prices have fallen by even more, or at least that seems to be the thinking at real estate services firm Soufun (NYSE: SFUN), which has just announced its second dividend in the last 4 months amid a broader sell-off that has seen many US-listed China stocks tumble by even more in the last few months. Soufun’s latest plan looks even more attractive now than the first plan announced in August (previous post), as the payout amount will remain at $1 per American Depositary Share, translating to a return of about 7.5 percent based on the company’s latest share price. (company announcement) That’s up from a payout ratio of about 5 percent for the August dividend, when the company’s shares were quite a bit higher. A growing number of US-listed companies have tried the dividend approach, including chipmaker Spreadtrum (Nasdaq: SPRD) and online game specialists Giant Interactive (NYSE: GA) and most recentlly Shanda Games (Nasdaq: GAME), betting that cash payouts will appeal more to investors than traditional share buybacks. So how effective is the dividend strategy? A quick comparison shows that while Soufun’s shares are down 31 percent since it announced its first dividend, its closest rival, E-House (NYSE: EJ) is down by an even bigger 42 percent over the same period, showing the strategy may have some effect. Of course, Soufun’s recent posting of solid third-quarter results, even in the face of China’s rapid real estate slowdown, may also be helping its stock. (previous post) For all of those reasons, Soufun may indeed look like a nice play going forward. Dividends may be good for short-term investors, helping to support stock prices and provide some definite returns in uncertain markets. But for longer term investors, there’s still no replacement for solid company fundamentals and growth prospects, meaning it still pays to check a company’s bottom line no matter how nice the dividend.

Bottom line: The dividend approach being tried by many US-listed China firms is providing some short-term support for share prices and quick returns for investors.

Related postings 相关文章:

◙ Shanda Plays Games With Big Dividend 盛大游戏寄望高额分红计划提振股价

◙ Investors Pocket Spreadtrum, Giant Dividends and Run

◙ Sofun’s New Strategy: Dividend Wave Ahead? 搜房网新策略：中国概念股派息潮即将来临？

Shanda Plays Games With Big Dividend 盛大游戏寄望高额分红计划提振股价

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Shanda (Nasdaq: SNDA) head honcho Chen Tianqiao, lacking any major news to boost languishing shares prices of his 2 public companies, is resorting to playing games to lift their stocks, first through a privatization plan for one and now with a massive special dividend for the other, Shanda Games (Nasdaq: GAME). (company announcement) The only problem is, another online game operator, Giant Interactive (NYSE: GA) tried a similar plan earlier this year with mostly disappointing results. So let’s have a look at Shanda Games’ new plan, which will see it offer a one-time cash dividend of $1.02 per American Depositary Share (ADS) on December 20, translating to roughly a 25 percent payout based on its price of about $4 when the announcement came out. Shanda shares jumped just $0.43 per share, or around 11 percent, after the announcement came out, or less than half the amount of the special dividend, indicating investors think the company’s share price may already be overvalued. Chen’s ploy looks especially risky in light of Giant’s experience earlier this year, when it offered a massive special dividend that amounted to 40 percent of its share price at the time. (previous post) Giant shares jumped a little after the announcement, though nowhere near the amount of the special dividend, but then crashed after the actual payout and now trade nearly 20 percent below their levels when it first announced the dividend. There’s no reason to believe that Shanda Games’ dividend won’t see a similar outcome, with investors boosting the stock to collect the one-time payout and then quickly selling it once the dividend passes. Of course this new move from Chen comes just a week after he launched a bid to privatize his other listed company, Shanda Interactive, whose shares are also in the doldrums along with those of many other US-listed China stocks. (previous post) Instead of playing these kinds of deal-making games, Chen needs to sit down and create an exciting roadmap for his companies to convince investors they have strong long-term growth potential, which will do much more to boost their share prices.

Bottom line: Shanda Games’ new offer of a large one-time dividend is the latest bid by founder Chen Tianqiao to boost the company, but is ultimately bound to disappoint.

Related postings 相关文章:

◙ Shanda Moves Ahead With Privatization 投资者对盛大私有化仍持保留态度

◙ Giant Fires CFO, Offers Dividend to Placate Investors 巨人网络CFO辞职 高额分红以安抚投资者

◙ Grentech Follows Shanda in Privatization Ploy 国人通信赴盛大网络後尘宣布私有化

Investors Pocket Spreadtrum, Giant Dividends and Run

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It’s going to take more than dividends and buy-backs to win investors back to China stocks, or at least that’s the message that markets are sending to online game operator Giant Interactive (NYSE: GA) and cellphone chipmaker Spreadtrum (Nasdaq: SPRD). Let’s look at Giant Interactive first, which raised investor wrath last month when it disclosed it had made investments in the insurance sector completely unrelated to its core online games business, and then forced out its CFO and offered a massive dividend worth more than 30 percent of its share price to try and make amends. (previous post) Its share moved up marginally when it announced the dividend, and then plummeted after it made the award on September 11, falling from $7.80 the day before it distributed the $3 per share award to a close of $4.61 afterwards. Since then, its shares have tumbled even further to its latest close of $3.48 per share, about a third of their 52 week high. Now the company has just announced a share buy-back, again with little affect on its price. (company announcement) Clearly investors are still not convinced that this company is anything more than the personal play toy of its chairman Shi Yuzhu, reflecting the broader credibility crisis facing US-listed China stocks. Spreadtrum’s case looks similar, though not quite as extreme. After successfully fending off a short-seller attack in June (previous post), the chipmaker has now announced it will award a modest quarterly dividend of 5 cents per American Depositary Share, equaling an annual yield of just 1 percent if it really keeps paying the dividend on a quarterly basis. (company announcement). Not surprisingly, shareholders greeted the news with indifference and perhaps even a little disdain, bidding Spreadtrum shares down marginally in Monday trade, even as the Dow and Nasdaq both rallied more than 2 percent. In Spreadtrum’s case the issue is clearly size, as the dividend is nearly meaningless even though the company itself looks strong. In Giant’s case much more fundamental issues are at stake, namely its lackluster position in the China’s tough online gaming space and its credibility in general. In both cases, investors are saying it will take stronger performance, and not just quick dividends, to win back their interest.

Bottom line: The dividend strategy from several US-listed Chinese companies is falling flat, with investors looking for stronger bottom lines before returning to these firms.

Related postings 相关文章:

◙ Giant Fires CFO, Offers Dividend to Placate Investors 巨人网络CFO辞职 高额分红以安抚投资者

◙ Spreadtrum On Cusp of Putting Out Short-Seller Fire 展讯力抗卖空方

◙  Sofun’s New Strategy: Dividend Wave Ahead? 搜房网新策略：中国概念股派息潮即将来临?

Tidbits: UMPay, Giant Interactive, China Telecom

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Today marks the launch of a new item consisting of occasional tidbits that aren’t big enough for individual articles but look interesting nonetheless, along with a thought or two on what it all means.

— UMPay: Chinese media are reporting that this joint venture between industry powerhouses China Mobile (HKEx: 941; NYSE: CHL) is applying for a license to provide electronic payment services. (English article) Given the two venture partners’ dominant position in both of their spaces, such a venture could quickly become a major player, threatening smaller e-payments companies as well as bigger ones like Alibaba’s Alipay.

— Giant Interactive (NYSE: GA): The company has announced a payout date of September 9 for its massive one-time dividend of $3 per share, which amounts to a whopping 36 percent of its latest closing share price. (company announcement) Its stock has risen about 50 cents a share since it announced the dividend early this month, clearly far less than the size of the dividend. I’ll be watching closely to see how the shares trade on September 12, after the dividend is paid.

— China Telecom (HKEx: 728; NYSE: CHA): Chinese media report the company recently launched a tender for more than 3 million set-top boxes — the clearest sign yet that China’s leading fixed-line carrier is close to a major launch for a video-on-demand type service that it has long talked about but has yet to appear. (English article) Such a service could provide a major source of new income, as the company struggles with steady declines for its fixed-line phone business.

News Digest: August 31, 2011

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The following press releases and media reports about Chinese companies were carried on August 31. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ UnionPay, China Mobile‘s (HKEx: 941) UMPay Aims For Payment License by 2011 (English article)

◙ Sina (Nasdaq: SINA) Buys $66.4 Million Tudou (Nasdaq: TUDO) Stake (English article)

◙ ZTE (HKEx: 763) Records 21.52% Increase in Revenue to RMB37.3 Bln in H1 (Businesswire)

◙ Giant Interactive (NYSE: GA) Announces Date of Sept 12 for Special Cash Dividend (PRNewswire)

◙ Group Buying Sites Evading More Than 500 Mln Yuan in Taxes – Report (Chinese article)

Giant Fires CFO, Offers Dividend to Placate Investors 巨人网络CFO辞职 高额分红以安抚投资者

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There’s nothing like a big fat dividend to say you’re sorry, or at least that seems to be what online game operator Giant Interactive (NYSE: GA) is telling investors by becoming the latest US-listed Chinese firm to offer a dividend after coming under fire for some of its accounting practices. The company also announced the resignation of its CFO, again in an apparent attempt to mollify investors about one of its investments in an insurance business. But first the dividend. Just a week after real estate services firm Soufun (NYSE: SFUN) offered wary investors a 5 percent dividend (previous post), becoming the first major US-listed Chinese firm to offer such a dividend, Giant has come out with its own offering of a dividend of $3 a share, according to its latest results announcement. (company announcement) That translates to a yield of a whopping 40 percent, one of the highest rates I’ve seen in recent years, based on Giant’s latest closing price. At the same time, the company also announced the resignation of its CFO, who is being replaced by another person whose credentials include a stint at global accounting firm PricewaterhouseCoopers. (company announcement) Reading between the lines seems relatively simple here: Giant’s chairman used the company as his personal investment vehicle to buy an insurance company, a move that no doubt was approved by a CFO who was eager to please his boss even though insurance was completely unrelated to Giant’s core gaming business. When investors found out, they protested by selling off Giant shares, which tumbled 30 percent in the last 3 months. To win investors back, Giant is offering this generous dividend and has fired its CFO as a scapegoat. This is exactly the kind of shenanigan that has led to a broader confidence crisis over the accounting practices of US-listed Chinese companies. If I were an investor, I would certainly consider buying Giant for the short term simply for the dividend. But longer term, I’d still be quite wary of this and many other US-listed Chinese companies.

Bottom line: Giant Interactive’s awarding of a generous dividend and firing of its CFO is an attempt to mollify investors over accounting concerns, which will continue to weigh on the company’s stock.

要想表达歉意，没什麽能比提供一份丰厚的分红更好的了——至少近来因会计事宜而遭遇批评的网络游戏公司巨人网络是想通过这种方式来与投资者沟通。巨人网络还宣布首席财务官(CFO)辞职，很明显这也是就一笔保险生意的投资来安抚投资者。就在一个星期前，搜房网(SFUN.N: 行情)决定给投资者5%的分红，这是第一家这麽做的在美国市场上市的中国公司，而巨人网络则紧随其後，提供每股3美元的分红，这意味将40%的利润用来分红，这是近年来我看到的分红力度最大的一次。同时，巨人网络还宣布了新的CFO上任，此人曾经在普华永道工作。解读这一系列事件，其中隐含的意思其实很简单：巨人的董事长将这家公司作为其个人投资工具，购买了一家保险公司，而CFO为了讨好自己的老板，就毫不犹豫地批准了，没有顾及到保险业务是与巨人的核心游戏业务完全无关的。投资者发现後，通过抛售巨人股票以示抗议，巨人股票在过去三个月就大跌30%。为了安抚投资者，巨人提出分红并解雇CFO。但实际上这会让人们对巨人的财务状况产生更大的信任危机。如果我是投资者，我肯定会短期内买巨人的股票，来获得分红，但从较长期投资角度而言，我会对巨人公司和其他在美国上市的中国公司持警惕态度。

一句话：巨人网络公司提供丰厚分红，解聘其CFO，是为了安抚投资者对会计问题的担心。

Related postings 相关文章:

◙ Sofun’s New Strategy: Dividend Wave Ahead? 搜房网新策略：中国概念股派息潮即将来临？

◙ 55tuan Scraps Listing Plan After Banks Get Cold Feet 各投行临阵退缩 “窝窝团”放弃赴美上市

◙ Wall Street Clean-Up Underway Amid Accounting Crisis 会计危机中华尔街展开清理行动