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Chinese Xinlei latest Business & Financial news from Doug Young, the Expert on Chinese High Tech Market, (former Journalist and Chief editor at Reuters)

Video Sharing: Let the Tie-Ups Begin

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Just a day after Tudou’s (Nasdaq: TUDO) disappointing IPO that saw its shares drop 12 percent on their trading debut (English article), there’s buzz in the market that Tudou’s top rival, industry leader Youku (NYSE: YOKU) is in talks for an equity investment by Chinese Internet leader Tencent (HKEx: 700). (English article; Chinese article) Such a tie-up would bear a remarkable resemblance to Google’s (Nasdaq: GOOG) landmark purchase of global online video leader Youtube several years back, and testifies to the fact that online video is a much better business prospect when it has strong support from a company like Google or Tencent, which can use their wider array of services to steer traffic to these more specialized video sites. The development is also interesting because Tencent itself has already flagged video as a major focus area, pumping hundreds of millions of dollars into a business it hopes will help to jump-start its sputtering growth. (previous post) If and when it happens, such a tie-up will give money-losing Youku, which already enjoys a market cap more than 4 times the size of Tudou, an even bigger advantage in the video-sharing market, providing the clout of China’s top online game and instant messaging service provider. Such a move could leave Tudou, whose chairman Gary Wang has little or no interest in similar tie-ups, no choice but to find its own partner. Rumors of such a tie-up were already rife in the run-up to Tudou’s IPO, with talk that it was seeking investment from leading online search site Baidu (Nasdaq: BIDU), which no doubt would still be interested in such a tie-up. (previous post) Other video sharing sites like Xunlei, which had to abort a planned IPO last month as market sentiment tanked (previous post), could also be forced to search for new tie-up partners if a Youku-Tencent alliance takes shape.

Bottom line: An equity tie-up between Youku and Tencent would throw a new dynamic into the video sharing market, forcing other players to seek similar tie-ups.

Related postings 相关文章:

◙ Youku, TCL Discover Hollywood in New Tie-Ups 优酷、TCL双双联手好莱坞大品牌

◙ Tencent and Alibaba: It’s Not Easy Being Big 腾讯和阿里巴巴：想当老大不容易

◙  Tudou IPO Set to Stumble Out of the Gate 土豆上市首日难有精彩表现

Investors Feast on Sun Art 高鑫零售首日挂牌表现抢眼

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After weeks of seeing one IPO scrapped after another as market sentiment toward China listings evaporated, especially in the Internet space, it’s nice to see there’s still healthy demand for a good, solid offer like hypermarket operator Sun Art Retail Group’s (HKEx: 6808) $1 billion IPO. After pricing at the top of their range, Sun Art’s Hong Kong listed shares soared as much as 43 percent on their first trading day, in one of the best debuts this year and in sharp contrast to the many flops for Chinese companies going public in Hong Kong and the United States. (English article) Sentiment has dropped so sharply that three companies, Internet firms Xunlei, Tudou and Shanda Cloudary, have all yanked their offerings in the last week due to terrible demand as investors fret over the quality of these firms’ accounting. (previous post) Such is clearly not the case for Sun Art, which operates in a much more straightforward business running supermarkets, which also has huge potential. As China’s mid-tier and smaller cities become wealthier, supermarket operators like Sun Art, whose stores carry the RT-Mart and Auchan names, should be able to go into these areas and easily attract consumers with their stores that offer more convenience and variety to traditional food stores that now dominate most of these towns. A growing number of suburban satellite cities of major metropolises like Shanghai and Beijing should also provide good fodder for growth. Already ranking first in the hypermarket sector, just ahead of Wal-Mart (NYSE: WMT), China Resources Enterprise (HKEx: 291) and Carrefour (Paris: CAR), Sun Art seems in prime position to capitalize on China’s growing hunger for mega-supermarkets.

Bottom line: Sun-Art looks like a strong bet for China’s fast-growing supermarket space, with plenty of room for upside for its newly listed shares.

随着市场对中国上市企业情绪转弱，数周来各公司纷纷取消IPO计划，尤其是在互联网领域。很高兴还能看到市场对像大卖场运营商高鑫零售有限公司<6808.HK>等好企业的股票需求强劲。高鑫零售IPO价格定在招股区间上限，规模为10亿美元。高鑫零售上市首日飙升43%。是今年上市首日表现最好的股票之一，与在香港和美国上市的其他中国企业股票的下跌形成鲜明对比。市场人气急转直下，以致迅雷、土豆和盛大文学三家企业均在上周搁置上市计划，因投资者担心各公司财务问题，认购情况不好。但高鑫零售很明显未受此影响。随着中国二线和较小城市日益富裕，高鑫零售等大卖场运营商应该能打入这些地区，并能轻易地吸引消费者。北京、上海等大城市周围日益增加的郊区卫星城市也将为其增长提供机遇。作为中国国内最大的大卖场运营商，高鑫零售似乎在中国超大型超市的发展中占得了先机。

一句话：在中国快速发展的超级市场行业，高鑫零售看似非常有潜力，其股票还有很大上升空间。

Related postings 相关文章:

◙ China’s Drive to the Suburbs: A Nice Supermarket Play 中国年轻人郊区购房 超市势将获益

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

◙ Belle, Baidu See Beauty in Online Shoe Store 百度和百丽投资优购网或为明智之举

News Digest: July 27, 2011

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The following press releases and media reports about Chinese companies were carried on July 27. To view a full article or story, click on the link next to the headline.

══════════════════════════════════════════════════════

◙ Xunlei, Shanda Cloudary Aborted IPOs Create Domino Effect for Tudou, Others (Chinese article)

◙ Sun Art Retail Gains in Gray Market Ahead China Hypermarket Chain’s Debut (English article)

◙ TAL Education (NYSE: XRS) Announces Results for the Quarter Ended May 31 (PRNewswire)

◙ UPS (NYSE: UPS) Launches Express Flights to Fast-Growing Chengdu (Businesswire)

◙ Nissan’s China Venture to Invest $7.8 Billion to Boost Output, Gain Sales (English article)

Wall Street Clean-Up Underway Amid Accounting Crisis 会计危机中华尔街展开清理行动

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The first signs of a clean-up of some of the smaller US-listed Chinese firms is underway, with two announcing in the last week that they have fallen out of compliance with Nasdaq listing rules due to late filing of annual reports. The pair, AutoChina International (Nasdaq: AUTC) and CDC Software (Nasdaq: CDCS), both issued the same generic statements, each saying it was notified of being out of compliance with Nasdaq rules for failing to file its annual report by the required deadline. (AutoChina announcement; CDC Software announcement) These are two of the bigger US-listed China companies, which is why they’ve made these public announcements, but I’m certain that many smaller companies with market value of less than $1 million have also probably fallen out of compliance for the same reason, namely that no accountant wants to certify their results for fear they contain inaccurate and misleading information. I wouldn’t be surprised if either AutoChina or CDC is ultimately de-listed, and would expect many of the smaller companies to be de-listed as well by this time next year. Meantime, the confidence crisis has claimed yet another victim, this time Shanda’s (Nasdaq: SNDA) already dubious IPO for its Cloudary literature unit, according to Chinese media reports. (Chinese article) Suspension of the Cloudary plan follows the similar pulling of an IPO by video and audio sharing site Xunlei last week, after demand evaporated for the offering. (previous post) Xunlei may come back to market in the next 2-3 months, but don’t expect to see Cloudary, a much less interesting offering, coming back for a listing until next year at earliest.

Bottom line: A clean-up of smaller New York-listed Chinese firms has begun, with many likely to de-list by this time next year due to accounting issues.

华尔街清理一些较小型在美上市中资企业的信号开始浮现。上周两家企业宣布，因未能按时提交年度报告，被警告违反了纳斯达克上市规则。开元汽车(AUTC.O)与中华网软件(CDCS.O)双双发布声明称，因没有在截止日期前按时提交年度报告，被通知违反了纳斯达克规定。他们是在美上市的两家较大中资企业，这也是其发布公开声明的原因。但我肯定还有很多市值不到100万美元的小企业可能也因同样的原因违反规定，也就是说，因害怕报告中含有不准确、误导性信息，没有会计人员愿意为其审计报告结果。如果两家企业最後被摘牌，我也不会感到意外，而且我预计到明年这个时间很多小一些的企业将会被摘牌。同时，又有新企业因信任危机倒霉了。这次是盛大网络(SNDA.O)旗下子公司盛大文学海外，其纽交所IPO进程宣布暂停，而上周迅雷也决定推迟赴美IPO，因认购不足。迅雷未来两三个月内或许会重启IPO进程，但是盛大文学就未必了，最早可能也要等到明年了。

一句话：华尔街对较小中资企业的清理行动已经启动，到明年这个时间或许有很多企业会因会计问题被摘牌。

Related postings 相关文章:

◙ Xunlei’s Shrinking IPO Disappears 迅雷无限期推迟IPO时间

◙ Latest Solar Audit Resignation Hints at Major Issues Ahead 中国太阳能行业再现审计人员辞职：昭示问题还在前方

◙ China Confidence Crisis Separates Wheat from Chaff 中国企业信任危机 对不同公司各有利弊

 

Xunlei’s Shrinking IPO Disappears 迅雷无限期推迟IPO时间

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Yesterday I wrote that video- and music-sharing site Xunlei’s New York listing plan was fast shrinking, and today it looks like it’s disappeared completely, the victim of a perfect storm of market- and company-related factors. In a tersely worded statement, Xunlei said simply that it had delayed the offering “due to market conditions”. (company announcement) The offering’s downfall came swiftly, and marks a stunning turnaround for a company that just over a month ago said that it hoped to raise up to $200 million. (previous post) It already boasted Baidu (Nasdaq: BIDU) and Google (Nasdaq: GOOG) as previous backers, and went on to add News Corp (Nasdaq: NWSA) media mogul Rupert Murdoch to the list, though that backing may have lost some importance in light of the current scandal surrounding Murdoch’s newspapers in the UK. But then shaky accounting practices at Chinese companies became a major concern in the market over the last month, and Xunlei’s own confession that weak accounting practices could constitute an investor risk did little to help its case. Add to that a lawsuit by seven major global record labels over music piracy (previous post), and the offering quickly shrank by more than half, from the previous $200 million to about $75, by the time  Xunlei finally decided to scrap the deal, at least for now. The company is likely to relaunch this offering when market sentiment improves, and would be well advised to clean up its accounting books and the content traded on its site before it makes such an attempt. Of course, those kind of clean-ups could be costly — wiping out substantial amounts of revenue and significantly shrinking the company’s prospects. Still, I would expect to see Xunlei return to market in the next 2-3 months, this time in a much lower-key offering and probably seeking a much lower valuation than it previously hoped for.

Bottom line: Xunlei’s withdrawal of it IPO reflects both company and market issues, but it is likely to make a second, more low-key, lower-valued bid in the next 2-3 months.

昨天，我写了一篇关於视频和音乐分享网站迅雷纽约上市计划迅速缩水的文章，而今天，迅雷看似将彻底无限期推迟IPO，成为市场和公司因素“完美风暴”的受害者。迅雷在一份简要声明中称，鉴於目前的市场情况，该公司决定推迟上市时间。迅雷IPO急转直下，而一个月前该公司还表示，希望融资规模能达到2亿美元。迅雷曾宣称，其支持者包括百度<BIDU.O>、谷歌<GOOG. O>及新闻集团<NWSA.O>媒体大亨默多克，鉴於默多克因窃听丑闻缠身，这种支持似乎已不那麽重要了。过去一个月来，中国赴美上市企业会计丑闻成为市场的主要关注点，而迅雷承认，会计问题或构成投资者风险对其亦无益。此外，全球七大唱片公司起诉迅雷侵权。该公司IPO规模迅速缩水逾一半，从先前的2亿美元降至迅雷最终决定暂停IPO计划时的7,500万美元左右。  如果市况转好，迅雷或将重启IPO，并可能会被建议提前清理会计账本和网站内容。当然，这种清理行动成本可能很高，会使其营收大幅减少，并导致公司前景大打折扣。不过，我预计迅雷未来两三个月将重归IPO轨道，届时迅雷料将更为低调上市，并可能大幅下调融资规模预期。

一句话：迅雷暂停IPO计划是出於公司和市场原因，但未来两三个月，该公司很可能会再次筹备上市，但将更低调，融资规模更小。

Related postings 相关文章:

◙ Xunlei’s Incredible Shrinking IPO 迅雷IPO规模缩水 纽约首秀或破发

◙ Xunlei’s Rich Parentage List Grows 迅雷投资方阵容强大

◙ Xunlei Marches Down IPO Aisle 迅雷迈向IPO之路

Xunlei’s Incredible Shrinking IPO 迅雷IPO规模缩水 纽约首秀或破发

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What once looked like one of the year’s hottest China IPOs, that of video and music sharing site Xunlei, is rapidly looking like one of the biggest failures, the victim to negative publicity about both the company itself and questionable accounting practices of Chinese firms in general. Chinese media are reporting that Xunlei has lowered the price range for its offering, originally set for Wednesday in the US but now moved to Thursday, to $12-$14 per share from a previous $14-$16 due to weak demand. (Chinese article) At that new range, it would raise around $78 million, far less than the $100-plus million it was originally targeting. So what happened on the road to market to derail such a once-promising company, whose backers include local and global search leaders Baidu (Nasdaq: BIDU) and Google (Nasdaq: GOOG)? At the company level, Chinese media reports that seven major record labels, including Sony Music (Tokyo: 6758) and Warner Music (NYSE: WMG) are suing Xunlei for 20.5 million yuan surely isn’t good. (Chinese article) That figure translates to a relatively small $3 million. but the bigger picture is that China is pushing its major Web sites to rid themselves of pirated music and video, as evidenced by big content deals between the major global media companies and leading online video site Youku (NYSE: YOKU) and Baidu over the last two weeks. Xunlei has much less resources than these two sector leaders, and investors are probably scared that a clean-up of pirated material from the site could lead to a big drop in traffic. From a broader perspective, the IPO is coming to market as sentiment toward Chinese companies has chilled in recent weeks over a recent series of accounting scandals that have undermined investor confidence. With all that going against it, Xunlei is facing strong headwinds as it prepares to join the ranks of US-listed China firms.

Bottom line: Xunlei’s upcoming IPO will struggle out of the gate, and is likely to fall in its New York trading debut amid weak sentiment and a major lawsuit against it.

视频和音乐分享网站迅雷IPO原本是中国今年最热门的IPO之一，受该公司负面报导和中国赴美企业会计丑闻影响，迅雷IPO看似将迅速成为最大败笔之一。中国媒体报导称，由於认购情况不佳，迅雷已将发行价区间从之前的14-16美元下调至12-14美元，并将IPO时间从周三推迟至周四。按照新的发行价区间计算，其融资额将降至7,800万美元左右，远远低於原先上亿美元的目标。迅雷上市进程中到底发生了什麽，致使这样一个曾前途无量、获百度<BIDU.O>和谷歌<GOOG. O>支持的公司陷入当前困境？从公司层面上来看，中国媒体报导称，索尼音乐<6758.T>和华纳音乐<WMG.N>等七大唱片公司起诉迅雷侵权，索赔2,050万元，此事自然对迅雷影响不好。索赔金额换算一下不过300万美元，但该事件的大背景是，中国正敦促国内各大网站清除盗版音乐和视频，优酷<YOKU.N>和百度在过去两周分别与大型全球媒体公司签署内容协议即是例证。迅雷的资源远远少於优酷和百度，投资者或担忧，清除盗版内容，或导致其访问量大幅下降。从更广泛的角度来看，中国赴美企业近期系列会计丑闻重挫投资者信心，迅雷IPO适逢市况不佳之时。综上所有不利因素，迅雷赴美上市将面临强劲阻力。

一句话：迅雷赴美IPO路途多舛，由於市况不佳，并遭大唱片公司侵权起诉，迅雷纽约首秀或将破发。

Related postings 相关文章:

◙ China, US Move to Ease Confidence Crisis 中美合作解决在美上市中国企业的信任危机

◙ Xunlei’s Rich Parentage List Grows 迅雷投资方阵容强大

◙ Youku, TCL Discover Hollywood in New Tie-Ups 优酷、TCL双双联手好莱坞大品牌