Tencent ADR falls nearly 10% pre-market after its largest shareholder announces plan to reduce stake

The ADR of US-traded Chinese social media and gaming giant Tencent Holdings fell nearly 10 percent pre-market after its largest shareholder Prosus announced plans to sell HK$114.1 billion worth of its holdings.

The Amsterdam-listed firm said Wednesday it will sell 191.9 million Tencent shares, equivalent to 2 percent of Tencent’s issued share capital, at an asking price of HK$575-595 per share through subsidiary MIH TC Holdings.

After the sale is completed, Prosus’ stake in Tencent will drop from about 30.9 percent to 28.9 percent, remaining the company’s top shareholder.

Prosus said it intends to use the proceeds of the sale to increase its financial flexibility to invest in growth, plus for general corporate purposes.

Prosus has committed not to sell any further Tencent shares for at least the next three years, in line with its long-term belief in the potential of the business, the company said.

In response to the move, Tencent said Prosus had informed it of its intention to sell its stake, which was understood and supported.

On March 22, 2018, Prosus’ parent company Naspers had reduced its position in Xun at $405 per share, cutting its stake from 33% to 31%, with a commitment not to reduce its stake for three years.

Now that the 3-year period has passed, Naspers has chosen to continue its placement to reduce its holding in Tencent shares.

Naspers’ subsidiary MIH entered China in 1997. From 2001 to 2002, MIH acquired 45.5% of Tencent from Tencent’s major investors, making it the largest single shareholder of Tencent and the most successful investment by MIH Group overseas to date.

MIH’s investment in Tencent cost approximately $32 million and brought a total return to shareholders (including dividends) of nearly 7,200 times in US dollar terms.

MIH’s stake has since declined due to factors such as equity issuance, but it remains Tencent’s largest shareholder. In the decade or so since Naspers’ investment, Tencent’s business has continued to expand and its share price has soared.

Tencent’s Q4 revenue up 26% year-on-year to RMB 133.67 billion, in line with expectations

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GAC expected to unveil battery technology with range of up to 1,000km on Friday

Chinese auto giant GAC announced Wednesday that it will showcase its super-fast-charging battery technology as well as its silicon cathode battery technology at the annual GAC TECH DAY event on April 9.

Earlier this year, GAC released a teaser image of its new battery showing that its graphene-based super-fast-charging battery can charge up to 80 percent in 8 minutes, making charging as convenient as refueling.

On top of that, its silicon negative battery can give EVs an NEDC range of 1,000 kilometers.

With its annual event coming up, the company is expected to announce details of both technologies at that time.

GAC previously mentioned its battery technology in a vague way, saying it could achieve an 8-minute charge to 80 percent and a range of 1,000 kilometers.

This was subsequently seen as an exaggeration and accused by industry experts of being impossible to achieve.

In the face of questioning, GAC AION general manager Gu Huinan responded that graphene-based super-fast-charging batteries and long-range silicon cathode batteries are two different battery technologies.

GAC also said at the time that the so-called “fast charging” and “long-range” features would be reflected in the two batteries separately, not in one battery with both features.

Graphene-based fast-charging technology will be the first to be used in the Aion V model, and can achieve 80% charging in 8 minutes and a range of 500km, and is expected to go into production in September.

The silicon anode technology battery is expected to be used in the Aion LX model, which can achieve a range of 1,000km and is expected to go into production this year.

Top Chinese academic suggests GAC’s graphene battery a scam

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Chinese cryptocurrency firm Ebang surges pre-market after denying short-selling allegations

A short-selling report on Tuesday caused Chinese cryptocurrency company Ebang International’s ADRs traded in the US market to plunge about 13 percent. Now, the company has refuted the allegations and its shares surged in pre-market trading.

On April 6, short-seller Hindenburg Research published a report claiming that Ebang transferred funds illegally through insider trading.

As a result, the US blockchain sector plunged. By the close of trading, Ebang was down 12.91% at $5.53 per share, Marathon Patent was down 7.27% and Riot Blockchain was down 4.92%.

Notably, just a day before Hindenburg released its short-selling report, Ebang announced the establishment of a cryptocurrency exchange.

On Wednesday, Ebang said Hindenburg’s report contained numerous errors, unsubstantiated speculation, and inaccurate interpretations of events.

“The company’s board of directors has also been made aware of the events of the Hindenburg shorting report. The board and its audit committee will further review these allegations and false information and will take all necessary and appropriate actions to protect the interests of shareholders,” the company said.

Hindenburg said Tuesday that Ebang has raised about $374 million from US investors through four share offerings since it went public in June 2020.

While the company had said it would use most of the IPO financing to grow its business, an investigation found that Ebang moved money out of the company through a series of unusual transactions with insiders and unidentified buyers, the report said.

You can view the full Hindenburg report here: here.

At one point in Wednesday’s pre-market trading session, Ebang was up nearly 12.6% and is now up 6%.

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Geely's Zeekr brand's first model could be unveiled this month and go on sale in August

The Zeekr 001, the first model of Geely’s premium electric car brand Zeekr, will be unveiled on April 15 and go on sale in August-September, local media Pcauto.com.cn said Wednesday.

The model, previously known as the Lynk ZERO, is priced between RMB 300,000 ($45,838) and RMB 500,000 and will open for pre-sale at the Shanghai Auto Show on April 19, the report said.

The car’s pricing makes it a potential competitor to the NIO ET7, which is priced from RMB 448,000 before subsidies for delivery in the first quarter of 2022.

The car features a fully automatic air suspension, hidden door handles, frameless power doors and cut-through taillights.

As an electric luxury coupe, the car uses a suspended dashboard, widescreen HUD and eco-friendly seats inside.

The Zeekr 001 has a length of 4950mm, a wheelbase of 2999mm and is equipped with Bosch’s braking system.

The Zeekr 001 is equipped with dual front and rear electric motors with a combined maximum power of 400kW and peak torque of 768N⋅m.

The acceleration time from 0-100km/h is 3.8s and the top speed is over 200km/h.

The vehicle has a maximum charging voltage of 800 volts, a range of 120km in 5 minutes of charging and a combined NEDC range of over 700km.

Zeekr is jointly invested by Geely Automobile Holdings and Geely Holding Group, with the former holding a 51% stake and the latter a 49% stake.

Geely announces new firm to focus on forward-looking EV technologies

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Auto expert now expects chip shortages to take nine months to a year to ease

From traditional car companies like Volkswagen to emerging car companies like NIO, all are facing the impact of chip shortages this year. Now it seems that the supply and demand imbalance may last longer than originally expected.

Li Shaohua, deputy secretary-general of the China Association of Automobile Manufacturers, previously expected the shortage of automotive chips to be eased in another six months, but now he expects the time to be extended to nine months to a year.

The Beijing News quoted him as saying on April 7 that multiple factors have combined to cause the conflict between supply and demand for chips to erupt during this period, but there is no need to panic too much and should be treated calmly.

For China’s auto production and sales this year, the first half of the year was relatively more affected, and the situation will gradually ease in the second half of the year, Li said.

COVID-19 led to an information mismatch between the automotive industry and the chip industry, so that manufacturers have a very large deviation in future expectations, which led to the chip shortage, Li said.

The tight capacity of 8-inch wafers in recent years is also a chip shortage inevitable factor, he said.

Li believes that because automotive chips account for a relatively small proportion of the overall cost of the car, the shortage of chips will not cause an increase in the price of automotive end products.

This chip shortage provides a very good opportunity for the development of China’s local automotive chips, giving manufacturers the opportunity to catch up with foreign companies, Li said.

The chip shortage has led to a cumulative production cut of 1.157 million units in the global auto market, and the global auto market is expected to cut production by more than 2 million units this year because of it, according to AutoForecast Solutions.

William Li, the founder, and chairman of NIO, said earlier Wednesday that the current supply-demand imbalance in automotive chips involves mostly basic chips, which pose short-term pressure on the industry.

He expects the chip shortage to be more challenging for NIO in the second quarter and will ease by the third quarter.

SAIC reportedly cutting production by 200,000 vehicles due to chip shortage

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NIO's William Li says confident that sales in Chinese market will exceed 1 million

William Li, founder and chairman of NIO, said he is confident that the Chinese electric car maker will become the smart electric car brand with sales exceeding 1 million in China.

Li made the remarks at a media event at the Hefei plant on April 7, when NIO is expected to see its 100,000th mass-produced vehicle roll off the production line.

He also mentioned that Jianglai, a joint venture with JAC, was not established to create a new brand, but to solidify the existing cooperation model with a new mechanism to make it easier to manage the supply chain.

Li said the current capacity of NIO’s Hefei manufacturing base is 400 units per day, and based on 25 working days per month, the monthly capacity can reach 10,000 units.

But affected by the supply chain of chips and batteries, there is now pressure to achieve a monthly production capacity of 7,500 units, he said.

Li said the auto chips that are currently experiencing a supply-demand imbalance are mostly basic chips, which pose a short-term pressure on the industry.

He expects the chip shortage to be more challenging for NIO in the second quarter, and will be eased by the third quarter.

Li also said that the pressure on 100-degree battery pack capacity is expected to ease in June and July.

NIO expects to see its 100,000th production vehicle roll off line on April 7

(Photo: CnEVPost)

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Holiday economy, Dingdong Maicai secures $700 million round: Retailheads

A three-day weekend witnessed increased spending on domestic travel and entertainment. Online grocery delivery platform Dingdong Maicai secured a hefty $700 million round. Re-commerce site Zhuanzhuan received $390 million in funding, while rival Xianyu expects gross merchandise volume to surge 70% year on year in 2021. A merger between power bank companies Jiedian and Soudian will create the largest player in the sector.

Retail
headlines

China’s e-commerce and retail market offers a fire hose of products, choices, business models, rapidly changing content, and more. Here’s what you need to know about China’s online retail market for the week of April 1–7.

Holiday economy

• Data from China’s Ministry of Culture and tourism shows that tourist sites received 102 million domestic visitors during the Tomb-Sweeping Day three-day weekend, which ended April 5. This marks a 144.6% year on year increase, and a 94.5% recovery from the same period in pre-pandemic 2019. Domestic tourism revenue during the period increased 228.9% year on year to RMB 27.2 billion ($4.2 billion), or 56.7% from the same period in 2019. (21th Century Business Heard, in Chinese)


• Travel orders made through online travel platform Trip.com surged over 300% year on year during the three-day holiday, on par with figures for the same period in 2019. (Jiemian, in Chinese)


• China’s box office takings topped RMB 821 million during the holiday. (Xinhua)

Community group-buy cash-in

• China’s online grocery delivery platform Dingdong Maicai has secured $700 million D round led by DST Global and Coatue to invest in business expansion, supply chain and team. The other investors joined the round include Tiger Global Management, General Atlantic, CMC Capital Partners, and Sequoia Capital. (International Finance News, in Chinese)


• Dai Shan, a partner of Alibaba Group, says in an internal letter that the core mission of Alibaba’s “MMC” department is to support the digital upgrading of China’s more than 6 million “mom and pop” stores. The newly established unit is widely regarded as the e-commerce platform’s response to the red-hot community group-buy model. The company has not said what, if anything, MMC stands for. While the most popular group-buy businesses rely on “group heads”—usually owners of offline stores, housewives, or white collars workers with a side gig—to promote products to their neighbors, MMC focuses on providing product souring and supply chain management to owners of small stores, according to Dai. (Donews, in Chinese)


• Chinese fresh food chain operator Qiandama is heading for an Hong Kong initial public offering as soon as this year, Bloomberg reported, citing people familiar with the matter. One of the sources says the offering could raise $400 million to $500 million, in addition to a planned pre-IPO round of about RMB 2 billion. (Bloomberg)

Crossing the streams

Alibaba is planning to bring its re-commerce service Xianyu, or Idle Fish, on Tencent’s WeChat mini-app platform, shortly after embedding bargain app Taobao Deals in the rival app. (Jiemian, in Chinese)

Re-commerce platforms

• Zhuanzhuan, there-commerce platform owned by classifieds giant 58.com, has raised a combined $390 million funding from Greater Bay Area Homeland Development Fund and Qingyue Fund. This is the first funding the firm received since its merger with electronics recycling platform Zhaoliangji in April last year. The company says its revenue has increased over 200% year on year in 2020, making it the third straight year to double its revenue. (Shanghai Morning Post, in Chinese)


• Alibaba-backed re-commerce platform Xianyu expects to record RMB 500 billion gross merchandise volume (GMV) this year, local media reported. That will be a nearly 70% year-on-year surge based on the business’ RMB 200 billion GMV from last year as revealed by Alibaba’s annual earning report. (Lanjing, in Chinese)

READ MORE: China re-commerce faces tug of war between growth and trust

When our power banks combine…

Power bank rental companies Jiedian and Soudian announced a merger Thursday, the same day rival Energy Monster went public on the Nasdaq market. The new company says it will have a combined 360 million users—which is more than Energy Monster’s 219 million. (Ebrun, in Chinese)

Logistics

Alibaba logistics arm Cainiao announced Tuesday an agreement with US-owned air cargo company Atlas Air to launch a flight operation program linking Hong Kong, China to Bogota, Colombia and Lima, Peru, with Santiago, Chile or Sao Paulo, Brazil as the connection point. (Cainiao statement)

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