U.S. eyeing possibility of delisting Chinese firms from U.S. exchanges

• Bloomberg News first reported earlier on Friday that Trump administration officials are considering ways to limit U.S. investors’ portfolio flows into China, including delisting Chinese companies from American stock exchanges and preventing U.S. government pension funds from investing in the Chinese market.

U.S.-listed stocks of Chinese companies fell sharply Friday, after a report that the White House is considering a limit to Chinese companies trading on U.S. The report from Bloomberg News cited people familiar with the matter and suggests an escalation of the tensions between the two economies that are already in the midst of a trade dispute.

Among the stocks that moved lower, Huya Inc. (HUYA), a live videogame streaming platform fell 9%, electric car maker Nio Inc. (NIO)  fell 10%, iQiyi Inc. (IQ), a Netflix type service, fell 9%, Internet giant Baidu Inc. (BIDU) fell 2.6% and Luckin Coffee (LK), the 'Starbucks' of China, fell 5%. E-commerce company Pinduoduo Inc. (PDD) was down 6%. Alibaba (BABA) was down 4.4%.

• By vol:  https://finviz.com/screener.ashx?v=211&f=geo_china&ta=0&o=-volume

• By % drop  https://finviz.com/screener.ashx?v=211&f=geo_china,sh_avgvol_o300&ta=0&o=change

Qutoutiao (QTT) reported earnings on Tue 5 March 19 (a/h)

** charts before earnings **

 

** charts after earnings **

Qutoutiao Inc. (QTT) shares plunged 10% in late trading Tuesday after the Chinese news-aggregation app reported earnings that showed huge growth in revenue and users, but also larger losses. Qutoutiao reported fourth-quarter losses of 398 million renminbi, or $57.9 million, on revenue of 1.33 billion renminbi, or about $193 million, up more than 400% from the year before. After adjusting for stock-based compensation and other effects, the company claimed net losses of $53.3 million, or 22 cents a share. Analysts on average expected adjusted losses of 19 cents a share on revenue of $192.3 million, according to FactSet. The company predicted 2019 revenue of 7.5 billion to 8.5 billion renminbi, after reporting 2018 sales of slightly more than 3 billion renminbi. At current exchange rates, that would be about $1.13 billion to $1.28 billion, while analysts on average were predicting $1.26 billion in 2019 revenue for the company, according to FactSet. Qutoutiao said that daily and monthly users grew more than 200% apiece from the same quarter a year ago, though it paid $108.6 million to acquire users, up nearly 700% from the year before. Qutoutiao shares closed with a 14.2% gain at $15.65 Tuesday, then dropped to about $14 in immediate after-hours action following release of the report. The company went public last year at $7 per ADR.

-=YY (YY) reported earnings on Mon 4 March 19 (a/h)

YY beats by $0.04, beats on revs; sees Q1 revs +23.4-28% y/y

• Reports Q4 (Dec) earnings of $1.87 per ADS, excluding non-recurring items, $0.04 better than the S&P Capital IQ Consensus of $1.83; revenues rose 21.2% year/year to $675 mln vs the $651.56 mln S&P Capital IQ Consensus.
• For the first quarter of 2019, the Company expects net revenues to be between RMB4.01 billion and RMB4.16 billion, representing a year-over-year growth of 23.4% to 28.0%, without giving effect to the acquisition of Bigo Inc.
• Co announced its recent acquisition of the remaining approximately 68.3% of all the issued and outstanding shares of Bigo from the other shareholders of Bigo, including Mr. David Xueling Li, Chairman and acting CEO of YY, for an aggregate purchase price of US$1,452,778,383, comprising of US$343,061,583 in cash, 38,326,579 Class B common shares of YY issued to Mr. Li and 313,888,496 Class A common shares of YY issued to Mr. Li and other selling shareholders of Bigo.

At highest levels since August after beating consensus on Q4 EPS and revs (of US$675.0 mln) and guiding for net revenue growth of +23.4-28.0% year/year for Q1. Live streaming revenues increased +30.4% year/year in the quarter, driving total revenue growth. Co also announced its recent acquisition of the remaining approx. 68.3% of shares of Bigo for an aggregate purchase price of US$1.45 bln in cash and shares, and in its earnings press release, co noted its recent entrance into a strategic partnership with Shanghai Chuangsi, owner of one of China's leading game platforms; under the agreement, co will obtain 30% equity interest of Shanghai Chuangsi by injecting its online game business into Shanghai Chuangsi. Leads generally strong performance among Chinese mid-cap stocks.

LexinFintech (LX) reported earnings on Thu 23 Aug 18 (b/o)

LexinFintech Holdings Ltd., through its subsidiaries, operates as an online consumer finance platform for young adults in the People's Republic of China.

• Sector: Financial Services
• Industry: Credit Services
• Full Time Employees: 2,518
• Founded in 2013
• Headquartered in Shenzhen, China
• http://www.fenqile.com

** charts after earnings **

LexinFintech Holdings (NASDAQ:LX) jumps 13% in premarket trading after the Chinese online consumer finance company posts Q2 total operating revenue of $269.5M, beating consensus by $17.1M.

Q2 total loan originations RMB 16.6B, up 68% from a year ago.

Q2 non-GAAP EBIT RMB 353.4M ($53.4M) vs. RMB 210.8M in Q1 and RMB 79.8M a year ago.

Q2 adjusted net income RMB 502.3M ($75.9M) vs. RMB 173.7M in Q1 and RMB 57.3M a year ago.

Sees FY2018 total loan origination of RMB 65B-RMB 75B, compared with RMB 80B guidance given on May 21. The Chinese government's recent actions to reduce financial risks have tightened liquidity in the P2P market, which has led to smaller players’ exiting from the industry, the company says.

-=Yum China Holdings (YUMC) to be acquired by private equity?

HONG KONG (Reuters) - Investment firms are exploring a buyout of Yum China Holdings Inc. in what could be one of Asia's biggest M&A deals this year, sources close to the situation told Reuters.

Yum China, which has a current market cap of $13 billion, was spun off from the KFC and Pizza Hut owner Yum Brands! Inc in 2016 and later listed on the New York Stock Exchange.

The firm itself has been discussing internally about switching to the Hong Kong bourse for a listing, because of the city's proximity to the Chinese market, potentially higher valuation and its convenient timezone for executives, a separate source with knowledge of the plan told Reuters.

Chinese investment firm Hillhouse Capital Group is planning to lead a consortium to buy the KFC and Pizza Hut operator in China, said four of the people. The firm, which has received commitments of over $10 billion for a new fund, has tapped lenders for potential financing of the deal and other investors to join them in the bid, two of them said.

Global investment house KKR & Co and Hong Kong-based regional firm Baring Private equity Asia are also weighing up investing in the buyout, according to two sources, who added that no final decision has been made.

Bloomberg first reported on investors in the Yum China buyout on Tuesday. The report said Chinese sovereign fund China Investment Corp (CIC) and DCP Capital, the investment firm run by former KKR & Co. senior executives, are part of the Hillhouse consortium, adding that Primavera Capital Group, a current investor in Yum China, could also join the bidding group.

Reuters could not independently verify if the investors are all working as one bidding group. A separate source with knowledge of the situation said there could be more than one consortium of bidders.

A spokesman for Yum China said the company does not comment on market rumours or speculation when asked about the buyout intent and the Hong Kong listing plan. Yum Brands did not immediately respond to a request for comment.

Hillhouse and Baring declined to comment. KKR, CIC, DCP and Primavera did not immediately respond to requests for comments.

Chinese investment firm Primavera Capital and Ant Financial Services Group bought a minority stake in Yum China for $460 million as part of the spin-off deal in September 2016. Both are still shareholders in the company. Ant declined to comment.

Two sources said a KKR-led consortium, which included Baring, CIC and Chinese investment firm Hopu Investments, had discussions with Yum Brands! about taking a controlling stake in its China business two years ago but failed to get a deal done.

Yum China shares are down 15 percent this year but its Monday's closing price - $34.22 per share, is still above its listing price at $24.51 on Nov. 1 2016. It has lost about $1 billion in market cap since reports about the potential buyout first came out in late July.

Its second-quarter net income increased 13 percent year-on-year but Pizza Hut continued to face challenges in China's competitive casual dining space, its CEO said on Aug. 1.

Former Yum China chairman and chief executive officer Sam Su, who was pivotal in the company's expansion in China, now serves as an operating partner at Hillhouse Capital.

Bilibili (BILI) reported earnings on Wed 23 May 18 (a/h)

** charts after earnings **

 

** 1 week later **

SHANGHAI, China, May 23, 2018 (GLOBE NEWSWIRE) -- Bilibili Inc. (BILI), a leading online entertainment platform for young generations in China, today announced its unaudited financial results for the first quarter ended March 31, 2018.

First Quarter 2018 Financial and Operational Highlights:

• Total net revenues  reached RMB868.0 million (US$138.4 million), a 105% increase from the same period in 2017.
• Net loss was RMB57.8 million (US$9.2 million) and net loss margin was 7%, compared to net loss of RMB67.4 million and net loss margin of 16% in the same period in 2017.
• Adjusted net loss was RMB3.2 million (US$0.5 million) and adjusted net loss margin was 0.4%, compared to adjusted net loss of RMB59.6 million and adjusted net loss margin of 14% in the same period in 2017.
• Average monthly active users (MAUs) reached 77.5 million, a 35% increase from the same period in 2017. Mobile MAUs represented 82% of MAUs.
• Average monthly paying users reached 2.5 million, a 190% increase from the same period in 2017. Average monthly paying users for mobile games reached 0.8 million, a 79% increase from the same period in 2017.

-=Changyou (CYOU)

Changyou.com ltd operates online games, primarily massively multiplayer online games, in China. Originally a division of Chinese Internet company Sohu, Changyou was spun off and went public in 2009.

Headquarters: Beijing, China
Founded: August 6, 2007
Parent organization: Sohu
Avg. daily volume 207,693
changyou.com