Tag Archives: Ping An

Pingan latest financial, market & economic news and analysis by Doug Young, former Reuters Chief editor and expert about Chinese companies

E-Commerce: 360Buy Explores IM, Wal-Mart Gets Serious 京东商城内测即时通讯工具,沃尔玛有意控股一号店

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There are a couple of interesting tidbits from the e-commerce space today, with 360Buy reportedly making a dubious move into instant messaging, as Wal-Mart (NYSE: WMT) prepares to boost its online presence by taking control of its Chinese online partner, Yihaodian. Let’s look first at 360Buy, also known as Jingdong Mall, which has reportedly developed an instant messaging product that it will launch later this year, according to Chinese media reports. (English article) If you had asked me 10 years ago about this move, I would have said that maybe it looked smart, as online shoppers and merchants should theoretically enjoy chatting with each other about their latest favorite products, discounts and so forth, just like any other community. The problem is, online auctions leader eBay (Nasdaq: EBAY) tried just such a move with its purchase of IM specialist Skype in 2005, in what looked like a logical move at the time. Of course, industry watchers will know that move ended in disappointment with eBay selling Skype to Microsoft (Nasdaq: MSFT) last year after failing to reap any synergies from the company. The case here is a little different as 360Buy is a B2C specialist whereas eBay is C2C. But I see no reason why the result will be any different, especially as 360Buy’s IM product will face stiff competition from existing offerings like Skype, Microsoft’s MSN Messenger and Tencent’s (HKEx: 700) popular QQ service. In the other news bit, financial services group Ping An is getting ready to sell some or all of its large stake in online retailer Yihaodian, with Wal-Mart lining up to buy more shares to become the company’s controlling stakeholder, Chinese media are reporting. (Chinese article) Wal-Mart already bought an undisclosed minority stake in Yihaodian last year (previous post), and has made it clear it intends to become a major player in Chinese e-commerce, after largely losing out in its home US market to big names like Amazon (Nasdaq: AMZN) due to its initial dismissal of the potential of online retailing. Yihaodian has already begun to boost its activity following Wal-Mart’s initial purchase, and look for it to become even more aggressive after the world’s biggest traditional retailer takes control, adding even more pressure to a space plagued by rampant competition and non-ending price wars.

Bottom line: 360Buy’s new instant messaging product is bound to fail, while Wal-Mart will add even more competition to the overheated e-commerce market by taking control of Yihaodian.

Related postings 相关文章:

◙ 360Buy Heats Up E-Books, People’s Daily Goes to Mkt 京东商城高调进军电子书,人民网开启上市进程

◙ Wal-Mart Buys Into China E-Commerce 沃尔玛进军中国电子商务

◙ Price Wars Beat Up Online Retailers 网上零售商引爆价格战

News Digest: January 12, 2012

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The following press releases and media reports about Chinese companies were carried on January 12. To view a full article or story, click on the link next to the headline.

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◙ Ping An May Sell Yihaodian Stake, Giving Control To Wal-Mart (NYSE: WMT) – Report (Chinese article)

◙ Dangdang (NYSE: DANG) Expects 20% Profit Margin on E-Books (English article)

◙ Youku (NYSE: YOKU) Signs Content Deal With Twentieth Century Fox (Nasdaq: NWSA) (PRNewswire)

◙ Motorola (NYSE: MMI), Lenovo (HKEx: 992) Sign On To First Intel-Powered Smartphones (English article)

◙ Taobao Mall Changes Name To Tianmao, Buys tianmao.com URL (Chinese article)

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

PetroChina Explores Insurance 中石油试水保险业

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Much of the world is watching China’s hunt for global resource M&A, which looks set to accelerate in 2012, but a completely different piece of news caught my eye this morning from leading oil producer PetroChina (HKEx: 857; Shanghai: 601857; NYSE: PTR), which has just announced a new venture in the completely unrelated insurance sector. (company announcement) PetroChina made headlines earlier this week with the announcement that it was buying out its partner in a Canadian oil sands project, the latest in a recent string of global acquisitions for the company and its rivals as China looks to feed its hungry economy and make itself more energy self-sufficient. (English article) But the insurance announcement seems to have gone relatively unnoticed by many major media, even though it looks rather large to me with registered capital of nearly $1 billion. Perhaps people are unimpressed by the fact that PetroChina’s partner in the venture is its state-run parent, which will hold a controlling 51 percent stake, meaning this is really just a nominal joint venture since both partners are part of the same company. It’s also a bit disappointing to see that while the venture will sell insurance in many popular areas, such as health and property, one area that’s not on the list is the most lucrative life insurance sector, meaning industry leaders China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC), Ping An (HKEx: 2318; Shanghai: 601318) and New China Life (HKEx: 1336) may not need to worry about new competition anytime soon. While this move looks a bit strange on the surface, I find it quite intriguing and perhaps even intelligent as PetroChina looks for ways to diversify beyond its core oil exploration business, which is famously subject to huge price swings globally and strict price controls at home by Beijing. I suspect that formation of this joint venture is just the first step, and that we may soon see PetroChina try to bring in a more experienced partner from the financial services sector to help it run the venture by the end of this year. If it does take that route, the right combination of PetroChina’s deep pockets and a savvy financial services partner could make this new endeavor a serious competitor in the insurance space in the next 2-3 years.

Bottom line: PetroChina’s move into insurance looks like a smart diversification play if the company can find a good partner from the financial services sector to develop the business.

Related postings 相关文章:

◙ Ping An Returns to Market With Second Big Fund Request 中国平安拟发大规模可转债

◙ 2012: The Year of China Resource M&A? 2012：中国企业的资源并购年？

◙ AIG’s Greenberg Returns to China With Dazhong Tie-Up AIG前执行长格林伯格借投资大众保险重返中国

Ping An Returns to Market With Second Big Fund Request 中国平安拟发大规模可转债

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There’s some troubling news coming from the insurance sector, where Ping An Insurance (HKEx: 2318; Shenzhen: 601318), the nation’s second largest insurer, has announced a plan to raise up to 26 billion yuan, or more than $4 billion, through the issue of convertible bonds to shore up its capital base. (English article) The move comes just 8 months after Ping An raised another $2.5 billion through a private placement in Hong Kong (previous post), meaning it will have raised more than $6 billion this year. Ping An said in announcing the latest fund-raising plan that the money would be used to replenish its capital, as it cited the Eurozone debt crisis and economic uncertainty at home for the move. It’s hard to comment too much without seeing a detailed list of Ping An’s investments, but the company, second only to China Life (HKEx: 2628; Shanghai: 601628; NYSE: LFC) in the domestic insurance market and ahead of recently listed New China Life (HKEx: 1336; Shanghai: 601336), is known as a relatively aggressive player in the industry. Accordingly, I wouldn’t be surprised if it has unusually high exposure to China’s stock market, which has lost 20 percent this year, and to funding for the thousands of infrastructure projects launched by local governments under Beijing’s 4 trillion yuan stimulus plan during the global financial crisis. Industry watchers say many of those infrastructure projects were dependent on land sales to repay loans, but with China’s real estate market showing signs of a major correction many local governments may have trouble selling land to make their repayments. Likewise, China’s stock market’s tumble to 2-year lows means Ping An may have to take some big write downs for its stock investments as well. In many ways, the troubles now being faced by Ping An look a lot like those faced by China’s big banks, which all raised major capital 2 years ago after a 2009 lending spree that left their portfolios bloated with questionable real estate and infrastructure deals. Insurance companies aren’t subject to the same requirements as banks and have more diversified investments, which may explain why Ping An could wait longer to raise its funds. Given all the weakness in markets both in and outside China, I wouldn’t be surprised to see similar fund raising in the next few months by even more conservative insurers like China Life.

Bottom line: Ping An’s new $4 billion capital raising plans reflects trouble in the insurance industry, where companies face exposure to weakness in China’s real estate and stock markets.

Related postings 相关文章:

◙ Ping An, Beggars Cup in Hand, Looks Worrisome

◙ AIG’s Greenberg Returns to China With Dazhong Tie-Up AIG前执行长格林伯格借投资大众保险重返中国

◙ Beijing’s Financial Shufflle: Bankers or Regulators? 中国金融高层“大换血”

News Digest: December 21, 2011

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The following press releases and media reports about Chinese companies were carried on December 21. To view a full article or story, click on the link next to the headline.

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◙ Ping An Insurance (HKEx: 2318) to Sell Up to 26 Billion Yuan of Convertibles (English article)

◙ China Telcos Announce November 2011 Subscriber Totals (English article)

◙ Xiaomi Lands USD 90 Mln in New Funding (English article)

◙ Canadian Solar (Nasdaq: CSIQ), TransCanada Corp In Deal For 86MW Solar Project in Ontario (PRNewswire)

◙ Mindray Medical (NYSE: MR) to Acquire a Controlling Stake in Hunan Changsha TDR Biotech (PRNewswire)

Wal-Mart Finds Bargain in China’s Internet Bubble

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Yihaodian, the online merchant that made headlines earlier this year when it got an investment from global retail giant Wal-Mart (NYSE: WMT) (previous post) looks like the latest company to show signs of distress in China’s growing Internet bubble, following a report that gives it a surprisingly low valuation. According to the report, which cites an unnamed industry source, Wal-Mart, which bought an unspecified stake in the online retailer earlier this year, recently bought another 20 percent for a relatively modest $65 million. (English article) Some simple math will show this puts Yihaodian’s value at about $325 million if the report is correct. The same report cites Yihaodian’s chairman saying reports that Wal-Mart will take over the company are incorrect and that the size of the stake purchase is incorrect as well. But even if the numbers are slightly off, this market valuation for what is presumably an up-and-coming online retailer looks tiny compared to numbers being mentioned for other e-commerce firms, most notably an estimated $10 billion valuation given earlier this year by investors in 360Buy, China’s second biggest online merchant which is now hiring an investment bank for an IPO to raise up to $5 billion. (previous post) I realize that Yihaodian is much smaller than both 360Buy as well as leading online retailer Taobao Mall, owned by Alibaba Group. Still, this $325 million valuation looks like a real bargain for Wal-Mart, and no doubt represents an attempt by the worried seller of the stake, in this case Yihaodian’s controlling shareholder Ping An Insurance (HKEx: 2318; Shenzhen: 601318), to get back some of its investment before China’s Internet bubble bursts. As the Internet bubble swells and starts to pop, look for more of these sales at bargain prices as investors try to recoup some of their investments before it’s too late.

Bottom line: Wal-Mart’s purchase of 20 percent of online retailer Yihaodian for a bargain price will be followed by similar sales, as investors try to recoup their money before China’s Internet bubble bursts.

Related postings 相关文章:

◙ 360Buy $5 Bln IPO Plan Looks Like Desperation 京东商城50亿美元上市计划凸显绝望

◙ Wal-Mart Buys Into China E-Commerce 沃尔玛进军中国电子商务

◙ Gaopeng, Kaixin Spotlight China Internet Turmoil 高朋网、开心网凸显中国互联网混乱现状