Sinopec retail sale is key to topping up its value 23 Apr 2014 The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.
Graft purges don’t hurt shareholders – insiders do 22 Apr 2014 The sacking of China Resources’ chairman will worry other state company bosses. But shareholders in Chinese groups have less to fear from government crackdowns on powerful individuals than the culture of treating outside investors as an afterthought. This remains unaddressed.
Missing inflation could make Asian bonds frothier 21 Apr 2014 Prices of goods in the region are rising more slowly than expected. Inflation drives bond yields up; a lack of it could send them downward, even though the U.S. Fed is threatening to edge up rates around the world. Asian debt is already pricey – it may get yet more expensive.
Chinese internet TV makes investors boggle-eyed 21 Apr 2014 Valuations are soaring despite a global tech sell-off, as companies eye an audience that could hit 77 million by 2015. But it’s unclear how China’s couch potatoes will generate profit: investors like Alibaba founder Jack Ma are ploughing in time and money for uncertain returns.
Asia push to in-house M&A forces advisers to adapt 17 Apr 2014 From China’s CITIC to Singapore’s Temasek, Asian acquirers are increasingly relying on in-house talent to get deals done. The loss of potential deal flow in an already tough market means big banks will have to work harder to prove their worth.
China cosmetics IPO part growth, part gloss 17 Apr 2014 Online beauty retailer Jumei could command a $3 billion valuation, judging by high-valued peers like Vipshop. It has positive earnings too, unlike rival JD.com. With low barriers to entry and a brief track record, the question is how Jumei will fare as the market matures.
CITIC’s $37 bln merger hints at SOE reform task 16 Apr 2014 The union of the Chinese giant with its Hong Kong-listed subsidiary offers rare visibility into China’s sprawling state conglomerates. CITIC Pacific shareholders get mostly listed assets at a discount – and if all goes well, a potentially profitable ringside seat in the cleanup.
China’s 7.4 pct growth just enough to save face 16 Apr 2014 Though it hasn’t been slower since 2009, the pace of expansion in the world’s second-biggest economy is still rapid enough to avert the need for a humiliating stimulus. The big exception is real estate, where some kind of meddling to ease a funding crunch looks unavoidable.
China travel merger could mean liftoff for Baidu 16 Apr 2014 A potential $11 bln tie-up of booking sites Ctrip and Qunar sounds dandy. But the real break may be for search engine Baidu. As Qunar’s biggest shareholder, it could get a first-class seat in the merged duo, with room to take a bigger stake when valuations come back to earth.
WH Group’s quick pork flip serves up meaty return 15 Apr 2014 The private Chinese pork producer hasn’t had much time to justify the fat premium it paid for Smithfield last year. Yet relisting the enlarged group in Hong Kong implies the value of the U.S. business has risen at least 21 percent. Others will be tempted to try a similar trick.
U.S. stalls IMF reforms at risk of own ambitions 14 Apr 2014 Finance ministers meeting in DC blasted Congress’ refusal to back more lending power for the fund and a bigger voice for the likes of China and Brazil. Harsh words alone won’t do much. But votes against Ukraine loans and other plans would inflict a high price on foot-dragging.
Glencore $5.9 bln asset sale remoulds China’s MMG 14 Apr 2014 Buying the metals trader’s Peruvian copper project will turn the Chinese group into a focused copper miner, and double its size. MMG’s state-owned parent will help secure the considerable leverage needed. Minority shareholders get to share the ride, but it’s not without risk.
China’s car joint ventures aren’t built to last 14 Apr 2014 A boom in mainland sales has mostly boosted foreign brands and their local joint venture partners. But the alliances look increasingly unstable. Foreign groups would like a bigger say, while Beijing wants more competitive local brands. The tension could lead to future break-ups.
China’s water crisis to test “decisive” markets 11 Apr 2014 China’s urban water bills are rising. It’s a nod towards curbing overuse, but too little to defuse a brewing crisis. A real fix requires market prices for thirsty industrials and agriculture. This will be a trial by water for the country’s supposed market reforms.
Time to bust China’s “omniscient regulator” myth 10 Apr 2014 The country’s dueling financial watchdogs are undeniably smart. But as shadow banking runs amok, they have limited tools to fight problems they didn’t create. Some reforms are beyond their power, others are tied up in red tape. It undermines the theory that China is crisis-proof.
China’s big pork IPO could be fat or lean 10 Apr 2014 Pig processor WH Group is hoping to raise as much as $7.1 billion in Hong Kong. But the range is huge: the maximum share price is 41 percent above the minimum. It suggests the group’s private equity backers, its 29 banks, and public investors may struggle to agree on a valuation.
Alibaba triangular dealmaking adds to IPO quirks 9 Apr 2014 The e-commerce group is lending one of its founders $1 billion to invest in a digital TV company with which Alibaba has signed a partnership. The deal offers a glimpse of the way tech company insiders mix public and private interests. It’s a red flag for future investors.
China tech rout sifts IPO haves from don’t-needs 9 Apr 2014 Volatility in internet stocks is a nuisance for those with plans to list. Alibaba is big and profitable enough to wait. Rival JD.com needs the money but has rich backers. Most exposed is microblog Weibo, which has the weakest business model and least reason to go public.
Open Britain offers China a shopping bonanza 7 Apr 2014 Mainland conglomerate Sanpower has put House of Fraser in its shopping basket for 450 million pounds. The UK’s welcome mat for Chinese buyers is well trodden. Some targets are cheap; some are venerable brands, others look like trophies. The department store is a mix of all three.
Weibo’s subdued IPO is no more attractive 7 Apr 2014 China’s Twitter has cut its offering from $500 to $380 mln amid a sector-wide drop in Chinese tech stocks. Investors may be right to question sky-high valuations. But a comparable drop in value in Weibo’s parent makes the spin-off, now valued at $3.9 bln, no more compelling.