Consumer Products and Services

Europe’s $50 bln payment upstarts can justify hype

10 Sep 2018

Investors can’t get enough of groups like Wirecard, which is replacing Commerzbank in Germany’s main stock index. As with peer Adyen, the risk is that a crowded sector caps growth. To hit their targets, the pair need to double their share of the payments pie. That’s doable.

Farfetch IPO carries luxury price tag

6 Sep 2018

The deluxe clothing website may be valued at $4.6 billion. That makes sense if it can outgrow rivals. A model that links buyers and boutiques potentially means higher profit, but gives it less control over stock and prices. Well heeled customers may be tempted to go elsewhere.

Sodexo’s recovery plan looks half-baked

6 Sep 2018

After a profit warning in March, the French catering giant wants to boost sales and profitability. Its targets still lag those of peer Compass. And boss Denis Machuel hopes to grab market share in the United States, where Compass has an edge, and staff costs are rising.

China 5G ambitions cross wires with M&A logic

5 Sep 2018

Beijing might merge wireless carriers China Unicom and China Telecom, creating a $70 bln-plus telco giant - and a market duopoly. As with T-Mobile and Sprint, consolidation could accelerate development of ultra-fast networks. But industrial policy will limit financial benefits.

ICBC capital hike hints at more debt pain ahead

3 Sep 2018

China's largest commercial bank will raise $30 bln by 2020. Its bad loan ratio looks healthy enough on paper, but weak credit is getting rolled over. Stronger reserves will help it come clean as regulators tighten up. Its smaller rivals, though, will struggle to follow suit.

Meituan Dianping IPO demands a nemesis discount

3 Sep 2018

As China’s takeaway-to-taxis unicorn seeks up to a $55 bln valuation, former investor Alibaba is intensifying the rivalry. It began a loyalty plan to get customers spending more and brought in SoftBank to back its Ele.me delivery service. Bad blood should be priced into the deal.

Coca-Cola pays big price for global coffee fix

31 Aug 2018

The soda giant is spending $5.1 bln on the Costa chain of cafes. Justifying the frothy 16 times EBITDA multiple requires Coke to order up new markets for hot drinks. It’s another reminder of consumer groups’ lust for coffee. Investors in seller Whitbread are the big winners.

Tencent’s big battle goes from fantasy to reality

31 Aug 2018

The “Honour of Kings” maker lost another $20 bln in market value on a fresh videogames crackdown. This time, Chinese officials say they’re worried about myopic kids. It leaves investors exposed to nearly unpriceable risks and Tencent’s failure to build new businesses fast enough.

Huawei’s hang-ups open 5G line for Samsung

31 Aug 2018

Japan may soon echo U.S. and Australian restrictions on the Chinese telecom equipment maker and peer ZTE. That should help South Korea’s $280 bln titan make a move in the markets. Nokia and Ericsson will challenge for share, too, but Samsung’s heft and stamina give it an edge.

Campbell lukewarm sale pitch is begging for a cook

30 Aug 2018

The $12 bln soup and snack company plans to sell its fresh and international food brands, and step up cost cuts on stagnant core brands. It’s leaving the door open for a sale, but that’s unlikely to appease activists like Dan Loeb. A focused auction would be a better approach.

Market dominance defends China’s Didi from murder

29 Aug 2018

The $56 bln ride-hailing app is in big trouble after a driver killed a female passenger. With #MeToo gaining traction in China and an IPO in the pipe, the timing is terrible. Didi’s near-monopoly protects it from a shutdown, but tighter regulation could punish profitability.

Yum China will struggle to get a fancier takeout

29 Aug 2018

The U.S.-listed KFC operator has rejected a buyout bid worth nearly $18 bln from a group led by Hillhouse. The deal already builds in supersized prospects and a hefty debt burden. A sweetened offer, given hints of weaker spending ahead, would be demanding.

Consumer giants have bigger problems than Turkey

28 Aug 2018

Unilever and Nestlé can resist a crisis in Turkey, which accounts for little of their revenue. But both will suffer if troubles spread across emerging markets, which account for about half of group sales. All the more so since Western shoppers are unlikely to take up the slack.

P&G’s WTF move misses the point

27 Aug 2018

A bid to trademark initialisms like LOL suggests the $208 bln consumer giant has lost the plot. Slightly passé social-media argot is unlikely to sell more Cascade detergent to millennials. Brands that fit their preferences – and cost less – are the way to get growth going again.

China Biologic suffers contaminated infusion

27 Aug 2018

The plasma-products maker rejected two buyout offers, including one worth $3.9 bln led by its former boss, in favour of a dilutive share sale at a discount to both. Investors are stuck with fuzzy maths and poor governance that show why China Biologic would be better off private.

Babytree’s Hong Kong IPO robs the cradle

24 Aug 2018

The Alibaba-backed Chinese parenting site wants to raise up to $1 bln. Targeting tiger mothers might seem timely, given Beijing’s fertility push. Yet the chat-and-shopping combination is unprofitable after 11 years, and its desired value exceeds the wildest demographic optimism.

Alibaba channels old-school conglomerates

23 Aug 2018

Quarterly sales at the Chinese e-commerce firm soared 61 pct to $12 bln, but earnings were flat compared to a year ago. That's due to investments in cloud computing, supermarkets, video streaming and other bets. Alibaba's unwieldy mix of businesses may merit a valuation discount.

Australia’s Huawei ban undercuts “Made in China”

23 Aug 2018

Security and political concerns prompted Canberra to block the telecom titan from backing the country’s 5G network. It’s a setback for Huawei, but also for Beijing. The world-beating national champions it wants to cultivate are increasingly seen as dangerous arms of the state.

China’s Xiaomi passes first public market test

22 Aug 2018

After a bumpy IPO, the newly listed handset maker delivered better-than-expected maiden results, with quarterly sales up 68 pct to $6.6 bln. Smartphones and gadgets did well at home and abroad. If that growth continues, investors may cut Xiaomi some slack on internet services.

Chinese beauty app reveals ugly tech reality

22 Aug 2018

Meitu’s dismal results included a fall in revenue and monthly active users. A planned social media makeover for the $2.5 bln photo-editing and smartphone maker also failed to prevent a 17 pct decline in the shares. Stiffer competition and Beijing crackdowns are taking their toll.