Bottom line: Tencent’s sudden pulling of a popular game just days after its release shows no one is exempt from Beijing’s recent online entertainment clampdown, which could weigh on stocks of related company for the next few months.
Tencent gets wrist slapped by regulator
A new statement from leading online game operator Tencent(HKEx: 700) is dripping with contrition, following the sudden yanking of a new hit game from its platform that apparently didn’t pass muster with the regulator. This latest Tencent news, combined with some downbeat earnings from live broadcasting specialist Huya (Nasdaq: HUYA) and its parent YY (Nasdaq: YY), have cast a chill over Chinese gaming and video stocks, which took a beating in Tuesday trade.
Tencent has been leading the crowd, shedding 3.4 percent on Tuesday and down another 3.2 percent in early trade on Wednesday. Those two declines have collectively wiped out more than $4 billion in market value from one of the world’s most valuable Internet companies. The bloodbath was felt among the broader realm of Chinese companies that provide any form of video content over the Internet, be it games, live broadcasting or even traditional moves and TV shows. Read Full Post…
Bottom line: Jumei could formally abandon its stalled buyout plan soon, putting more downward pressure on its stock, while iKang needs to enter serious negotiations with two bidders for the company.
Jumei, iKang under pressure over stalled buyouts
Ever wonder what happened to a handful of buyout plans for US-listed Chinese companies that were announced more than two years ago but never got completed? That’s certainly not a question that keeps most of us up at nights, but it’s suddenly popping into the headlines with a series of scathing letters from a minority investor called Heng Ren, which is criticizing two of the unfinished deals.
Specifically, Heng Ren is blasting online cosmetics seller Jumei International (NYSE: JMEI) and clinic operator iKang (Nasdaq: KANG), which both announced plans to privatize quite a while ago but have yet to complete those. These aren’t the only two whose privatization plans, which were part of a wave in the first half of 2015, failed to get completed. But most of the others that failed to complete their buyouts, including YY (Nasdaq: YY) and Momo (Nasdaq: MOMO), made specific announcements that they were abandoning their plans. Read Full Post…
Bottom line: Stellar earnings by Weibo and new funding for services from Toutiao and YY reflect the rapid rise in live broadcasting and short videos, in the latest boom for China’s internet that will end with a bust in around 2 years.
Live streaming sucks up big funds
A trio of stories in the headlines are nicely spotlighting the oh-so-typical Chinese pattern of industries that suddenly become hot, leading people to pump huge amounts of cash into them in a fight for market share. Internet watchers will probably guess that I’m talking about the recent crazes in live broadcasting and short videos , which have thrust three companies, YY (Nasdaq: YY), Toutiao and Weibo (Nasdaq: WB) all into the headlines.
Leading those headlines are the latest results from Weibo, whose profit has risen nearly 7-fold in its quarterly report, igniting a 25 percent rally for its already-inflated stock. The other two headlines have YY and Toutiao pumping big new funds into their live broadcasting and short video services, $70 million and $140 million to be exact, respectively. Read Full Post…
Bottom line: Lei Jun’s resignation as YY chairman to focus on his struggling Xiaomi reflects his own fading star power, while Huawei is unlikely to reach its goal of taking 10 percent of the India smartphone market by the end of next year.
Lei Jun steps down as YY chairman
A couple of smartphone stories are in the headlines on this final day of the work week, capping a flurry of industry news that reflects the turmoil in China’s overheated market. Both items are relatively second-tier news, led by the resignation of Lei Jun from his position as chairman of social networking site YY (Nasdaq: YY) to focus on reviving his ailing Xiaomi smartphone empire. The other item has market leader Huawei hyping India, where it is getting set to launch a manufacturing facility and has ambitious plans for taking 10 percent of the market. Read Full Post…
Bottom line: The scrapping of a buyout offer for Momo could reflect growing obstacles to re-listing in China, and could presage the abandoning of more similar buyout bids for US-listed Chinese companies.
Momo abandons privatization bid
In a relatively surprising development in the wave of privatization bids for US-listed Chinese companies, social networking app operator Momo (Nasdaq: MOMO) has just announced a group proposing to buy out the company has withdrawn its offer. No reason was given for the reversal, and instead Momo used the official announcement to focus on its latest financial results and outlook. The move came as a surprise because the buyout deal had very strong financial backing from a group that included e-commerce giant Alibaba (NYSE: BABA) and venture capital giant Sequoia Capital. Read Full Post…
The following press releases and news reports about China companies were carried on August 19. To view a full article or story, click on the link next to the headline.
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Momo (Nasdaq: MOMO) Announces Withdrawal of Privatization Offer (GlobeNewswire)
Lei Jun Resigns as YY (Nasdaq: YY) Chairman to Focus on Xiaomi Revival (Chinese article)
Bottom line: 21Vianet could get a new privatization offer from Tsinghua Unigroup by year end, following withdrawal of a previous bid; while Xiaomi chief Lei Jun may start selling non-core assets to raise money for his struggling company.
Buyout group scraps 21Vianet bid
Data center operator 21Vianet (Nasdaq: VNET) has finally done the inevitable and formally scrapped its de-listing plan, becoming the second company to do so among some 40 US-listed Chinese firms trying to privatize from New York. This particular move has been coming for a while now, and signs appeared as early as May that 21Vianet was abandoning its privatization plans. But new Chinese media reports are casting some light on why this particular bid collapsed, and it appears the reasons are linked to struggling smartphone maker Xiaomi, whose chief and co-founder Lei Jun was helping to finance the deal. Read Full Post…
The headlines last week were littered with signs of growing unrest and chaos among the dozens of US-listed Chinese companies trying to privatize from New York and return to China in search of higher valuations. One of the biggest items saw signs of a new bidding war break out for private clinic operator iKang (Nasdaq: KANG), while another saw data center operator 21Vianet (Nasdaq: VNET) mount what increasingly looks like a stealth privatization campaign. A third saw social media website operator YY (Nasdaq: YY) become the first to abandon its privatization bid altogether, casting doubt on many of the other similar pending offers that have gone for months without any progress. Read Full Post…
Bottom line: YY’s abandonment of its privatization plan and concurrent share buyback look like savvy moves to build confidence and attract attention from investors, and could soon be followed by similar withdrawals by other big buyout candidates.
YY abandons privatization
Following a steady stream of signals hinting at new obstacles for US-listed Chinese stocks trying to privatize, social networking site YY (Nasdaq: YY) has become the first to formally abandon its plans to abandon New York. I’ve been predicting that up to half or more of the 40-odd privatization plans announced since the start of last year could ultimately collapse, and have to commend YY for being brave enough to be the first to openly discuss the abandonment of its buyout offer. The original buyout group led by YY’s chairman and CEO could have easily just remained quiet on the subject until everyone assumed the offer was dead. But in this case they’ve taken the more responsible route of admitting to failure. Read Full Post…
The following press releases and news reports about China companies were carried on June 16. To view a full article or story, click on the link next to the headline.
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The following press releases and news reports about China companies were carried on March 22. To view a full article or story, click on the link next to the headline.
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Marriott (NYSE: MAR) Wins Back Starwood (NYSE: HOT) With New Offer (English article)
US to Offer ZTE (HKEx: 763) ‘Temporary Relief’ on Export Curbs: Official (English article)
Alibaba (NYSE: BABA) Reaches 3 Trillion Yuan Milestone Even as China Slows (English article)
