Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
Bottom line:Wanda’s decision to set up its sports division headquarters in Guangzhou is part of a diversification away from Beijing, and could presage an IPO for the unit in Hong Kong as early as next year.
Wanda sets up sports HQ in Guangzhou
A recent series of major sporting moves is back in the financial headlines as 2016 approaches, with word that real estate giant Wanda Group is setting up a new headquarters for its growing sports business in the southern city of Guangzhou. Those same reports hint at another major theme in the new year, which could see a new wave of IPOs for some of these big new sporting investments by names like Wanda.
Sporting investments have become a major theme in the current year, reflecting a sudden desire for content and related services to feed China’s fast-growing entertainment sector. E-commerce giant Alibaba (NYSE: BABA) kicked off the wave last year with its investment in a domestic soccer club, and has been joined this year by a wide range of companies that includes Wanda, electronics retailer Suning (Shenzhen: 002024) and online video operator LeTV (Shenzhen: 300104). Read Full Post…
Bottom line: The lack of news or attendance by major worldwide executives at China’s global Internet conference this week shows the country’s Internet remains relatively closed and under strict government control.
Global Internet pow-wow takes place in scenic Wuzhen
I had big hopes for the second edition of China’s World Internet Conference happening this week in the picturesque town of Wuzhen, as all of the country’s top executives are in attendance at an event intended to showcase the country’s online prowess. The list of domestic executives in attendance certainly hasn’t disappointed, and many are undoubtedly there to network with China’s top Internet bureaucrats and President Xi Jinping, who gave this year’s opening speech.
But a look at some of the comments from names like Alibaba (NYSE: BABA) founder Jack Ma and Baidu (Nasdaq: BIDU) founder Robin Li turns up mostly empty talk, mixed with the expected self-promotion. What’s more, I also find the near-absence of any major foreign names from the conference somewhat puzzling, since China is trying to bill this as a global conference. Read Full Post…
Bottom line: Jack Ma’s hubris is the main driver behind Alibaba’s purchase of the South China Morning Post, and the newspaper’s declining fortunes are unlikely to reverse under its new ownership.
Pride drives Jack Ma’s SCMP purchase
After weeks of speculation, e-commerce giant Alibaba (NYSE: BABA) has finally announced its purchase of Hong Kong’s SCMP Group (HKEx: 583), parent of one of Asia’s oldest and most influential newspapers, the South China Morning Post. Many reports are focusing on the implications of mainland Chinese ownership of a major newspaper in Hong Kong, where editorial standards are much more western and strict self-censorship policies like those required by Beijing don’t exist. But in my view, it’s more interesting to look at what this deal means commercially for Alibaba, and whether it makes sense.
Let’s begin with the news, which came as a slight surprise because it will see Alibaba buy the media assets of SCMP Group for an undisclosed price. (English article; Chinese article) That marks a shift from earlier reports, which had indicated that Alibaba founder Jack Ma would personally buy a minority interest to avoid the sensitive issue of mainland Chinese ownership of a Hong Kong newspaper. There’s no more detail on the actual transaction, though one report estimates the purchase will cost Alibaba around $100 million. Read Full Post…
Bottom line: Yahoo’s reversal of its earlier decision to spin off its 15 percent of Alibaba into a separate company will have no impact on Alibaba, which is indicating separately that it will hold onto its own big stake in Uber China rival Didi Kuaidi.
Yahoo reverses course on Alibaba stake spin-off
A couple of news items are showing that the long and complex relationship between Internet search pioneer Yahoo (Nasdaq: YHOO) and Chinese e-commerce juggernaut Alibaba(NYSE: BABA) is far from over, and how the companies may remain hopelessly entangled for a while to come. The first item made global headlines, and has Yahoo reversing its earlier decision to spin off its 15 percent of Alibaba into a separate company. The second item has Yahoo founder Jerry Yang getting named as a top adviser to Didi Kuaidi, China’s main rival to US private car services giant Uber, which counts Alibaba as one of its major stakeholders.
At the heart of this complex dance is a personal relationship between Alibaba founder Jack Ma and Yahoo’s Yang. The pair struck up a friendship more than a decade ago, and ultimately formed a major alliance that saw Yahoo purchase 40 percent of Alibaba for about $1 billion. Yahoo later sold down that stake, netting billions of dollars in profits. But it still holds 15 percent of Alibaba, which is currently worth about $30 billion. Read Full Post…
Bottom line: Richard Li’s investment in ZTE reflects the company’s improving position after an overhaul during the last 2 years, while Pony Ma’s sell-down of his Tencent stake looks like ordinary share selling by a company founder.
Pony Ma sells Tencent, Richard Li buys ZTE
A couple of stock sales are in the news as we head into the new week, led by Pony Ma’s sale of a massive HK$3.8 billion ($500 million) worth of shares in his company, social networking giant Tencent (HKEx: 700). While Ma was busy cashing out some of his stake, Hong Kong’s Richard Li, son of billionaire Li Ka-shing, moved in the other direction by boosting his stake in ZTE (HKEx: 763; Shenzhen: 000063), the telecoms company emerging from a major overhaul over the past 2 years.
Of these 2 moves, the latter is probably more significant since it marks a vote of confidence in the turnaround story of ZTE by Li, whose investment decisions are fairly well respected though nothing like those by his much better-known father. Pony Ma’s sell-down of his stake looks more routine, though it’s still a relatively large portion of his sizable holdings in China’s second most valuable Internet company, with a market value of $180 billion. Read Full Post…
Bottom line: Jack Ma is unlikely to tamper with content at the South China Morning Post if he buys a stake in the iconic Hong Kong newspaper, but instead will look for ways to leverage its content using more dynamic new media platforms.
Jack Ma eyes HK newspaper stake
A sketchily-sourced report from 2 weeks ago is suddenly getting major new credibility, with word that Alibaba(NYSE: BABA) founder Jack Ma is near a deal to take a major stake in Hong Kong’s SCMP Group (HKEx: 583), publisher of one of Asia’s oldest and most profitable English language newspapers. The biggest twist in the latest reports is that Ma himself and not Alibaba would invest in SCMP, owner of the South China Morning Post newspaper.
The earlier reports were based on a story citing vague rumors that Ma was in talks with the SCMP, leading me to say that such a move looked logical even if sourcing in the reports was quite shaky. (previous post) The newest report has far more solid sourcing and comes from the reputable Bloomberg, meaning the chances are high that a deal is really happening. Read Full Post…
Bottom line: Jack Ma’s meeting this week with Barack Obama and quick followup with major funding commitments for entrepreneurs are part of Alibaba’s efforts to improve its government relations and lay a stronger foundation for future growth.
Alibaba’s Ma hobnobs with Obama
Alibaba’s(NYSE: BABA) outgoing founder Jack Ma is quickly becoming China’s business ambassador to the west, following recent meetings with British Prime Minster David Cameron last month and now this week with US President Barack Obama. I’m usually slightly skeptical of such efforts, which seem more intended to grab headlines and hype Alibaba rather than to do anything substantive.
But even I was impressed at how quickly Alibaba has followed up with its pledge to help young entrepreneurs during the Obama meeting, with its new announcement of more than $400 million in assistance to start-up business owners in Hong Kong and Taiwan. It’s quite likely that these 2 programs were already in the works when Ma met with Obama on Wednesday in Manila, on the sidelines of the annual Asia-Pacific Economic Cooperation summit that brings together world leaders from the Pacific Rim. Read Full Post…
Bottom line: Alibaba could make a bid for Weibo in the next 6 months, in a deal that would share many similarities with its newly launched blockbuster offer for Youku Tudou.
Weibo next on Alibaba’s M&A menu?
China’s Internet is buzzing over the industry’s biggest acquisition to date with Alibaba’s (NYSE: BABA) offer for Youku Tudou (NYSE: YOKU), but that deal could presage an even higher-profile one that sees the fading Twitter-like Weibo (Nasdaq: WB) follow a similar fate. Or even more intriguing, Alibaba could make a potential play for Weibo’s parent and founder Sina (Nasdaq: SINA), in a move that would spell the end for China’s leading web portal and one of its oldest Internet firms.
There would be many similarities between such a deal and the Alibaba offer for leading online video site Youku Tudou deal announced late last week. Investors appear to also believe such a deal could possible, based on stock reactions to the blockbuster deal that would see Alibaba pay $4.6 billion for the more than 80 percent of Youku Tudou it doesn’t already own. Weibo shares leaped 13.4 percent after the deal was announced, second only to Youku Tudou’s own 22 percent jump. Read Full Post…
Bottom line: Alibaba needs to take a more low-key approach to improving its government relations, rather than making a big spectacle of cultivating better ties with Beijing.
Alibaba govt relations campaign in overdrive
Alibaba(NYSE: BABA) founder and chief cheerleader Jack Ma has never really understood the meaning of the word “moderation”, which is all too clear with his sudden interest in cultivating better relations with Beijing. Ma has been pulling all the stops in a bid to be closely associated with this week’s US trip by Chinese President Xi Jinping, appearing at related events and announcing a new donation that synchronized nicely with a concurrent speech by Xi.
All that schmoozing certainly looks understandable, and Ma was actually just one of many US and Chinese tech leaders trying to share the stage with China’s president on his first state trip to the US. But Alibaba’s public relations machine was taking things just a bit too far when it joined the Beijing love affair and began promoting stories related to US-Chinese themes from the official Xinhua news agency, often considered the mouthpiece of the Chinese government. Read Full Post…
Bottom line: Alibaba’s establishment of a dual headquarters in Beijing for its Tmall unit looks like a smart move to improve relations with government regulators, and should help to avoid future clashes over issues like piracy.
Alibaba’ss Tmall opens second HQ in Beijing
Embattled e-commerce giant Alibaba (NYSE: BABA) is finally realizing that only the passage of time will the ease the weight of negative sentiment dogging the company, and is moving on to the important business of laying a more solid foundation for its future development. That’s my interpretation based on the company’s latest major move, which has Alibaba’s Tmall online marketplace set to establish a second headquarters in Beijing.
Media have been buzzing with rumors about the move for much of this week, with some saying Tmall might be preparing to relocate its headquarters completely to Beijing from Alibaba’s hometown of Hangzhou. But the reputable China Business Network (CBN) says it has finally gotten to the bottom of the story, and that Alibaba’s intent is to have Tmall co-headquartered in both Beijing and Hangzhou. Read Full Post…
