The following press releases and news reports about China companies were carried on July 5. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
CICC (HKEx: 3908), China Investment Securities Said to Be in Merger Talks (English article)
Midea (Shenzhen: 000333) Buys Stake in Germany’s Kuka (Frankfurt: KU2) for $1.3 Bln (English article)
Fosun (HKEx: 656), Ant Financial in Strategic Partnership (Chinese article)
Kingsoft (HKEx: 3888) Makes $125 Mln H1 Provision for Losses at Xunlei, 21Vianet (HKEx announcement)
Baidu (Nasdaq: BIDU) Completes Literature Unit Sale to Perfect World, No Price Given (Chinese article)
Bottom line: M&A and IPOs by Chinese gaming companies will remain low for the next 2-3 years due to lack of investor interest, but could pick up after that if some players start losing money and have to close or sell themselves to rivals.
Investors shun gaming companies
A new report on global gaming deals in 2015 is shining a spotlight on 2 major trends in China, namely the sector’s high degree of fragmentation and also the near-freeze in IPOs by Chinese companies last year. In fact, 3 Chinese gaming companies actually privatized from New York stock exchanges last year, accounting for more than half of the sector’s global deals last year in terms of total value.
Among the big Chinese deals, the largest saw stalwart Shanda Games finally privatize in a buyout valued at nearly $2 billion, ending a 2-year process. Another big gaming firm to privatize last year was veteran Perfect World, whose buyout was valued at $1 billion. The third was China Mobile Games, whose buyout was worth about $700 million. Read Full Post…
Bottom line: A new correction in China’s stock markets could derail many of the buyout offers for US-listed Chinese firms, leaving many orphaned in New York if Chinese financial markets enter a prolonged period of stagnation.
Perfect World in backdoor listing in Shenzhen
Online game operator Perfect World has become the latest Chinese firm to return home after leaving New York, with word that the company has made a backdoor listing through an affiliate in Shenzhen. But this latest re-listing comes at the same time that China’s stock markets look set for another big correction, a development that could pour cold water on the dozens of other US-listed Chinese firms waiting to privatize.
China’s stock markets tanked by a remarkable 12 percent in the first 4 trading days of 2016, including 2 days on which trading was halted by a circuit breaker that cut off all activity after the market fell by 7 percent. Some blamed the slide on the implementation of the circuit breaker program, which just began this year and was designed to prevent the kind of volatility that is now happening. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 9. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Alibaba’s (NYSE: BABA) Ant Financial Approved for Internet Bank in South Korea (Chinese article)
Gaming Firm Perfect World Returns to China A-shares via TV Studio Affiliate (English article)
Ctrip (Nasdaq: CTRP) Announces $180 Mln Investment in Indian Peer MakeMyTrip (PRNewswire)
ZTE (HKEx: 763) Chairman Hou Weigui to Step Down at Next Board Meeting in March (Chinese article)
LeTV Sports in Partnership to Live Stream Major League Baseball Games in China (Businesswire)
Bottom line: Xiaomi’s newest product launch focused on cheap smartphones and LeTV’s scrapping of an IPO for its film-making unit reflect fading prospects for these former superstars due to stiff competition.
Xiaomi rolls out more bargain phones
Former Chinese superstars Xiaomiand LeTV (Shenzhen: 300104) are in the headlines with new setbacks, reflecting the meteoric rises and equally fast falls that China is producing in its own version of the dot-com bubble. But this bubble has distinctly Chinese characteristics, and is coming in a more mature Internet where rampant competition and copycatting make it very difficult to make profits.
The first headline has Xiaomi rolling out 3 of its newest smartphones that are decidedly low-end, representing a big setback for the company’s drive to produce higher-end models that have fatter profit margins. The second headline has LeTV scrapping a plan to make a separate listing for its filmed entertainment unit, a year after hyping a new IPO that it hoped could mimic the meteoric rise in its own stock earlier this year. Read Full Post…
Bottom line: An unexpected mid-sized transaction between Baidu and Perfect World could indicate the former is preparing to buy the latter, with an aim to building up a major new player in the online gaming and literature spaces.
Baidu eyeing Perfect World?
Leading search engine Baidu(Nasdaq: BIDU) has reportedly just sold its online literature unit to the recently privatized Perfect World, in a rare reversal for China’s big Internet companies that have been far more active as buyers over the last 3 years. The deal is relatively small, with a reported sale price of 1.2 billion yuan, or about $190 million.
Media are focusing on the fact that Baidu paid far less when it bought the literature unit for a reported 190 million yuan from the same Perfect World just 2 years ago, meaning Baidu earned quite a nice profit on the investment. But more intriguing is the possibility that this move could presage an acquisition of Perfect World by Baidu, which looks quite logical for a number of reasons I’ll describe shortly. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 12. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Alibaba (NYSE: BABA) Generated $14.3 Bln GMV on Global Shopping Festival (Businesswire)
Perfect World to Reaquire Online Literature Unit from Baidu (Nasdaq: BIDU) – Source (Chinese article)
Bottom line: Shanda Games’ imminent de-listing could be followed by a behind-the-scenes consolidation by one or more savvy private equity firms to create a major new online game firm capable of challenging NetEase or even Tencent.
Shanda Games heads for de-listing door
Faded online gaming pioneer Shanda Games (Nasdaq: GAME) is finally heading for greener pastures, releasing what’s likely to be its final earnings report as its shareholders get set to vote on a plan to privatize the company. Shanda Games’ road to privatization has been long and tortured, and is only now finally coming to completion after its initial announcement nearly 2 years ago. (previous post) But that said, I do have to commend Shanda’s strong-willed founder and chief Chen Tianqiao for finally getting the job done.
From a broader perspective, Shanda’s departure continues a trend that has seen online game companies de-listing en mass, after their stocks struggled for years due to stiff competition. In an interesting twist to that trend, these gaming laggards have been one of the few groups to actually complete privatizations among the 3 dozen US-traded Chinese companies that announced such buyouts earlier this year. Read Full Post…
Bottom line: Giant Interactive is likely to achieve a backdoor listing in China over the next 12 months, while Qihoo could receive a new, lowered privatization offer by the end of this year.
Giant eyes China backdoor listing
Early signs of stabilizing on China’s stock markets are breathing new life into the nascent migration by Chinese tech firms that are abandoning overseas listings to re-list back at home. The latest signals of new movement are coming from formerly New York-listed Giant Interactive, which is eyeing a backdoor listing in Shenzhen, and from Qihoo 360 (NYSE: QIHU), which is indicating its faltering plan to de-list from New York is still alive.
Both of these deals have a bit of history, and are part of a broader wave that saw 3 dozen US-listed Chinese firms announce plans to privatize in the first half of this year. Most of those plans came when China’s domestic stock markets were rallying sharply. Backers of the bids were betting that companies whose shares had languished in New York could get much higher valuations from investors in their home China market. Read Full Post…
Bottom line: China’s gaming market remains stubbornly fragmented and unprofitable despite its huge potential, with no clear signs of much-needed consolidation coming anytime soon.
Gamers continue to struggle
As much of China bakes under a summer heatwave, a major trade show this week in Shanghai is casting a different spotlight on the overheated state of the nation’s gaming industry. One report is saying that only 2 percent of companies in the emerging mobile gaming space can generate big profits, and the situation may not improve anytime soon due to a stubborn state of fragmentation.
The problem has led many of China’s US-listed gaming companies to launch privatization drives over the last 2 years, including Giant Interactive, a large but decidedly second-tier player that de-listed a year ago. Giant’s talkative chief Shi Yuzhu is blaming US investors for failing to appreciate his company, with the latest reports saying he thinks Chinese stock buyers will value his firm at more than 5 times what it was worth when it de-listed from New York. Read Full Post…
Bottom line: Investors are regaining confidence that some of the bigger, recently announced buyouts for US-listed China companies could be completed, but believe many smaller deals will ultimately collapse.
Perfect World completes buyout
Online game operator Perfect World (Nasdaq: PWRD) has formally completed its management-led buyout, offering us a good opportunity to check the status of dozens of other pending offers that look shaky due to recent turbulence in China’s stock markets. Perfect World was one of a handful of companies that launched their privatization drives before May, when a wave of new bids fueled by speculative money from China’s frothy stock markets suddenly began.
I’ve previously said that many of the earlier bids like Perfect World’s are likely to succeed, as their funding sources seemed more solid. But some of the other bids may run into trouble due shaky money sources that may rapidly disappear as China’s stock markets show signs of heading into another tailspin. Read Full Post…
