Bottom line: Lenovo’s longtime CEO Yang Yuanqing should resign or be replaced to make way for new leadership to turn around the company’s struggling mobile unit that will be critical to its future.
Lenovo attends Mobile World Congress
The global smartphone spotlight is in Barcelona this week, as industry giants including China’s Huawei and ZTE (HKEx: 763; Shenzhen: 000063) unveil their latest new models at the world’s biggest telecoms show. But one company that’s unlikely to generate much buzz is PC stalwart Lenovo (HKEx: 992), which has disappointed for the last 2 years by failing to gain traction in a smartphone business that will be critical to its future.
To the contrary, Lenovo saw its smartphone sales tumble last year in its home China market, which accounts for about half of its total revenue. The dramatic plunge is all the more worrisome since Lenovo was hoping for a surge last year after its purchase of Motorola, which once enjoyed a reputation as a global leader but later fell onto hard times. Read Full Post…
Bottom line: Lenovo chief Yang Yuanqing is likely to resign or get replaced as company head by the end of this year as sales continue to stumble, possibly by recently named President Gianfranco Lanci from its European operations.
Lenovo looks at tough year ahead
If there’s a single word to summarize the latest quarterly results from struggling PC giant Lenovo (HKEx: 992), it’s “down”. Just about every major metric in its just-released results was down, though the company did manage to boost its net profit for the quarter thanks to recent aggressive cost cutting. But lowering costs isn’t a long-term formula for success, and investors are clearly worried about the prospects for Lenovo’s shriveling core PC business and a sputtering mobile device unit that is supposed to be its new growth driver.
Investors were clearly most spooked by Lenovo’s top line revenue, which shrank 8 percent to $12.9 billion in its latest quarter. That was the first time Lenovo has posted such a revenue decline in more than 6 years, and nicely summarizes the company’s struggles in just about all of its major product areas. Lenovo did achieve one notable milestone as its mobile device unit finally climbed from the loss column to break even. But even that is hardly an accomplishment since cost cutting was most likely the main driver behind that movement. Read Full Post…
Bottom line: The arrest of a leading private equity executive for insider trading and Jin Jiang’s new fund-raising represent the latest efforts to clean up China’s unruly stock markets and make them more attractive to international investors.
Private equity giant detained for insider trading
I don’t normally write too much about China’s domestic stock markets due to their chaotic nature, but a couple of news items are shining a spotlight on the ongoing major task of cleaning up these unruly venues as they try to become more international. The larger of the 2 stories is making big waves here in China, where the one of the nation’s best-known private equity chiefs has been detained for insider trading. The second item has recently acquisitive hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600574) preparing for a major new fund raising, as it tries to clean up its own financial house in a bid to become China’s first global hotel operator.
Each of these items is quite different, though both are focused on different aspects of cleaning up a domestic stock market that often seems more like the Wild West than a place for serious investors. Share price manipulation is common practice in the market, which is reflected in the insider trading story. The Jin Jiang story reflects the murky relationships that often exist between listed companies and government entities, making it nearly impossible for serious investors to clearly understand a company’s financial health. Read Full Post…
Bottom line: The current fund-raising frenzy reflected in a recent round of buyouts for US-listed Chinese companies and large IPOs like the one for Legend Holdings is likely to quickly fizzle if China’s stock market sell-off continues.
KongZhong gets buyout offer
The China fund-raising machine has continued to rumble ahead despite the recent stock market sell-off in Shanghai, with yet another privatization offer coming for a New York-listed firm and a lethargic but respectable debut for newly listed Legend Holdings (HKEx: 3396). The former item saw shares of game operator KongZhong (Nasdaq: KZ) jump after receiving a buyout offer, even as most New York-listed Chinese shares slumped in line with the big sell-off in Shanghai. The latter item saw Legend shares finish down slightly in their Hong Kong trading debut, which doesn’t sound too exciting but was still far better than the 3.3 percent decline of the Shanghai benchmark index. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 30. To view a full article or story, click on the link next to the headline.
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Wanda Cinema (Shenzhen: 002739) to Raise 2.2 Bln Yuan for 16 Purchases (Chinese article)
Legend Holdings (HKEx: 3396) Edges up in HK Debut After $1.96 Bln IPO (English article)
Didi Kuaidi Operator to Invest in Southeast Asian Taxi App ‘GrabTaxi’ – Source (English article)
KongZhong (Nasdaq: KZ) Receives Proposal to Acquire the Company (PRNewswire)
Putian Hospital Association Restarts Ad Buying on Baidu (Nasdaq: BIDU)
Bottom line: A probable correction in China’s stock markets could cause Tongcheng to abandon its decision to list at home, and lead to a weak debut for Legend Holdings’ Hong Kong IPO.
Toncheng eyes China IPO
When the history books are written, the latest batch of IPO news could well mark the end of a brief but unusually buoyant period that has seen many Chinese companies eschew overseas stock markets for listings at home. Leading off the news was a sizzling performance by securities brokerage Guotai Junan (Shanghai: 601211) on its trading debut in Shanghai, as it become China’s biggest domestic IPO since 2010.
Another piece of IPO news also cast a spotlight on the hot Chinese stock markets, as online travel site Tongcheng said it was eying a listing at home in the next year, in a snub to New York where most of its peers are traded. Last but not least, the lukewarm reception for Chinese listings abroad was reinforced by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), which failed to attract any major international investors as it priced its Hong Kong IPO. Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 27-29. To view a full article or story, click on the link next to the headline.
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Guotai Junan (Shanghai: 601211) Soars in Debut As China’s Biggest IPO Since 2010 (English article)
Bottom line: Legend Holdings is likely to get a tepid reception for its new shares that could start trading by month’s end, while Focus Media is also likely to complete its backdoor listing in Shenzhen in that time frame.
Focus Media comes home to list
A new IPO, a backdoor listing and a buyout offer are all in the news today in Hong Kong, China and New York, spotlighting an emerging dynamic that is seeing Chinese companies abandon US listings for offerings closer to home. The choice of Hong Kong instead of China for the upcoming IPO by Legend Holdings, parent of PC giant Lenovo (HKEx: 992), also reflects the difficulties that private Chinese companies continue to face when trying to list at home in Shanghai or Shenzhen.
China’s 2 main domestic stock markets have traditionally favored big state-owned companies, a big factor that prompted Legend to look to Hong Kong where it will meet with local stock exchange officials this week in the run-up to its looming IPO. At the same time, outdoor advertising specialist and formerly New York-listed Focus Media has just taken a major step towards a re-listing in China by injecting itself into a Shenzhen-listed firm. Last on our list is children’s website Taomee (NYSE: TAOM), which has just become the latest New York-listed Chinese firm to receive a privatization offer due to undervaluation. Read Full Post…
Bottom line: This year is likely to see 6-9 New York IPOs by Chinese tech firms, mostly in the $50-$100 million range, while Legend’s planned IPO in Hong Kong or China is likely to get a mixed reception.
Lenovo parent Legend eyes H2 IPO
A new forecast on Chinese high-tech IPOs for the year ahead is stating the obvious, namely that new listings are set to slow dramatically in 2015 after a bumper harvest in 2014. In fact, the record year for fund-raising in 2014 is a bit misleading, as it really represents about 3 years worth of offerings that accumulated during a frosty period that led to a near freeze for IPOs starting in 2011. Now that much of the backlog has been cleared, it’s not surprising that there are few major new companies that are still at the right stage of development for listings.
At the same time, another report says that Legend Holdings, parent of PC giant Lenovo (HKEx: 992), has decided to list in Hong Kong, forgoing previous plans to make an IPO in its home China market. That decision isn’t a huge surprise if it’s true, and could provide a highlight for international tech investors in this year’s muted IPO parade for high-tech firms. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 20. To view a full article or story, click on the link next to the headline.
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Legend Holdings To Make $2-$3 Bln Hong Kong IPO In H2 – Source (Chinese article)
Chinese Dot-com IPOs Fading In 2015 After Record Year (English article)
ZTE (HKEx: 763) To Post 94.2 Pct Growth In Full-Year Profit (Businesswire)
Tumblr, Still Not Blocked In China, Soon To Offer Chinese Version (English article)
Online Classifieds Site Baixing Wins $100 Mln Investment (English article)
Technology giant Legend Holdings has grabbed headlines in recent days with news of a record investment by its private equity arm in a leading British pizza chain, its first major overseas foray. The deal saw Legend’s Hony Capital agree to pay $1.6 billion for the PizzaExpress chain, as part of a growing trend by Chinese firms to invest in the overseas food and retail sectors.
The purchase comes as Legend gears up for an IPO as early as later this year, offering investors a chance to buy into a diversified group whose biggest asset is its controlling stake in PC giant Lenovo (HKEx: 992). But the bigger headline in the Legend story is reports that the company is strongly considering staging its listing in Hong Kong rather than its native China. Read Full Post…
