Bottom line: Alibaba’s purchase of 33 percent of Ant Financial looks like a shrewd move for both firms, making Ant more attractive in the run-up to an IPO likely to be one of the world’s biggest this year.
Alibaba and Ant back together
In what looks like a homecoming of sorts, e-commerce giant Alibaba(NYSE: BABA) has just announced it is taking back a major stake in its Ant Financial affiliate. Followers of this pair will know they have quite a long and complex relationship, and were actually once part of the same company. But they were split apart around a decade ago for political reasons, which apparently aren’t an issue anymore.
The other major plank to this story is Ant’s own story, including the unusual way in which this deal was structured. The company, whose core asset is the popular Alipay electronic payments service, is gearing up for what could be one of the biggest fintech IPOs of this year, likely to raise several billion dollars in Hong Kong. Thus this particular move could be designed to draw more attention to this lesser-known Alibaba offspring, and also to relieve it of some of its financial burden in the run-up to that offering. Read Full Post…
Bottom line: ZhongAn should perform reasonably well over the short- to medium-term by drawing on its big-name investors for business, but faces uncertainty due to an untested business model.
ZhongAn banks on online insurance
There’s not a ton to say about the year’s first blockbuster IPO from the fintech realm, since it really went pretty much according to plan. I’m talking about the just-concluded listing for online-only insurance startup ZhongAn Online Property & Casualty Insurance, which was almost guaranteed a strong debut when its shares began trading yesterday in Hong Kong.
The bigger question for ZhongAn and its other fintech peers will be whether they can continue to thrive once the spotlights are gone and they have to do business over the longer term. Anyone can pretty up their books in the run-up to an IPO, but keeping the business flowing afterwards is often a bit more problematic. ZhongAn could be a good case in point, as its product lineup seems to be constantly evolving, as does the lineup for many of these fintech firms, due to individual and broader industry factors. Read Full Post…
Bottom line: Alibaba will closely watch the performance of the newly minted Altaba over the next 1-2 years, and could make a privatization bid with Softbank if it feels the company is undermining its own stock.
Yahoo to morph into Altaba
Yahoo (Nasdaq: YHOO) co-founder Jerry Yang never would have dreamed a decade ago that the ground-breaking search engine he co-founded might someday morph into a Chinese e-commerce company called Alibaba (NYSE: BABA). But that’s pretty much what has just happened, with official word from Yang’s former baby that it will change its name to Altaba following the pending sale of its core Internet business. Read Full Post…
The following press releases and news reports about China companies were carried on October 8-10. To view a full article or story, click on the link next to the headline.
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Lenovo (HKEx: 992) in Talks to Take Over Fujitsu’s PC Business: Source (English article)
NetEase (Nasdaq: NTES) Media Arm Submits Draft Registration to SEC for US IPO (PRNewswire)
Wal-Mart (NYSE: WMT) Doubles Stake in JD.com (Nasdaq: JD) Moving Further Into China (English article)
It’s Official: LeEco (Shenzhen: 300104) Will Break US Boundaries on October 19 (English article)
Hollywood’s Digital Domain Takes Citic and SoftBank China as Strategic Investors (Businesswire)
Bottom line: Didi Chuxing’s new marriage with Uber China could quickly come under stress due to rivalries between the pair outside China, and might force them to forge a broader global alliance.
Didi, Uber set to clash outside China
A couple of new reports are spotlighting how the new mega-merger between Didi Chuxing and Uber’s China unit is creating uncertainty for existing global alliances involving the 2 former bitter rivals. The larger of the headlines has Uber’s US rival Lyft suddenly questioning its alliance with Didi less than a year after the pair formed the tie-up. The other has Didi helping to raise money for Grab, also known as GrabTaxi, a bitter rival of Uber that operates service in 30 cities within 6 Southeast Asian countries. Read Full Post…
The following press releases and news reports about China companies were carried on August 4. To view a full article or story, click on the link next to the headline.
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Didi, SoftBank Lead $600 Mln-Plus Round for GrabTaxi (English article)
Qihoo 360 (NYSE: QIHU) to Spin Off Businesses for Future IPO in China (English article)
Fosun (HKEx: 656) Denies Under Pressure to Sell Assets (Chinese article)
China Internet Users Reach 710 Mln, 92 Pct Access Via Mobile – CNNIC (Chinese article)
Burberry (London: BRBY) to Buy Out Partner in China JV for 54 Bln Pound (Chinese article)
Bottom line: Tencent’s Supercell purchase looks like a relatively smart use of its big cash pile, and will give it access to leading-edge games and let it focus on the more important task of developing an ecosystem of products and services around WeChat and QQ.
Tencent gets $8.6 bln charge from Supercell
Internet giant Tencent(HKEx: 700) has been a victim of its own success, accumulating one of China’s largest cash pots even as it remained quite conservative as an acquirer. But now the company has taken some pressure off of itself to invest that cash, with the announcement of its purchase of a controlling stake in Finnish game maker Supercell for a hefty $8.6 billion. I haven’t done any detailed research on the purchase, but this does appear to be the largest acquisition of all time by a Chinese Internet company, and is probably worth as much as or even more than all of Tencent’s other acquisitions to date combined. Read Full Post…
Bottom line: Shares of Alibaba and JD.com will remain under pressure for the next few months from opportunistic short selling, but should rebound late this year due to strong growth prospects for their core e-commerce business.
Short sellers pressure Alibaba, JD shares
Separate reports are spotlighting a recent short-selling spree targeting China’s 2 leading e-commerce companies, Alibaba (NYSE: BABA) and JD.com (Nasdaq: JD), wiping out billions of dollars in market value over the last few weeks. But the negative sentiment also raises the question of whether there’s something systemically wrong with these companies and China’s e-commerce market in general, or whether this is a short-term phenomenon created by people looking to make some quick profits. Read Full Post…
Bottom line: Alibaba’s new self-calculated valuation of $185 billion looks realistic and even possibly low, but the stock will remain under pressure until the intentions of big stakeholders SoftBank and Yahoo become clearer.
Alibaba estimates value at $185 bln
It’s not often that you get to see a major company put a value on itself, but that’s exactly what we’re getting as a result of new information coming from this week’s sale of nearly $8 billion worth of stock in Chinese e-commerce giant Alibaba (NYSE: BABA). I’ll end the suspense right away and say that Alibaba has valued itself at about $185 billion with the latest sale of a big block of its stock held by longtime Japanese backer SoftBank. While that number looks quite impressive, it’s also noteworthy because it values Alibaba quite a bit lower than arch-rival Tencent (HKEx: 700), as the pair jostle for the title of China’s biggest Internet company. Read Full Post…
The following press releases and news reports about China companies were carried on June 4-6. To view a full article or story, click on the link next to the headline.
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Accor Gains After Report That Jin Jiang (HKEx: 2006) Aims to Increase Stake (English article)
China’s HNA Group Eyes South American Airline Groups Avianca – Sources (English article)
SoftBank Proceeds From Alibaba (NYSE: BABA) Selldown Rise to $10 Bln (English article)
Huawei Aims to Pass Samsung, Apple in 5 Years to Become Top Smartphone Brand (Chinese article)
Indian Smartphone Maker Micromax Plans to Enter China Next Year (Chinese article)
The following press releases and news reports about China companies were carried on June 3. To view a full article or story, click on the link next to the headline.
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Didi Chuxing, Uber Compete for Most Funds in Latest Drives (Chinese article)
Alibaba (NYSE: BABA) Announces Terms of Share Purchase from SoftBank (Businesswire)
China Says Midea’s (Shenzhen: 000333) German Robot Deal Shouldn’t be Politicized (English article)
Taobao Invests 28.2 Bln Yuan in Suning (Shenzhen: 002024), Becomes 2nd Largest Shareholder (Chinese article)
US Requests Documents From Huawei on Previous Trade Sanctions (Chinese article)
