Consumer Products and Services

Chinese drone giant DJI charts a risky flight path

22 Mar 2018

The world’s top maker of unmanned aircraft is raising money at a $15 bln valuation, Reuters says. Sales are soaring and DJI has a commanding market lead. Given drones’ data-gathering ability and military potential, though, DJI could easily hit turbulence in major foreign markets.

Failed MBO leaves Nordstrom in a jumble

21 Mar 2018

The board's rejection of the founding family's $8 bln offer for the retailer makes both sides look too stubborn. Nordstrom is a middling performer in a struggling industry. Compromise would have suited shareholders well. Instead, they face an ill-fitting future.

Kingfisher’s refurbishment has a sloppy finish

21 Mar 2018

The DIY merchant’s good 2017 results fail to cover up other problems. Softening demand in Britain chimes with other UK retailers’ experience. But there’s less excuse for poor stock management and underperformance in France. The company’s turnaround plans may be prone to cracks.

Tencent wisely prepares for post-“Kings” era

21 Mar 2018

Hits like "Honour of Kings" powered another blockbuster quarter for the $565 bln web titan. Yet Tencent's incredible run in online games may tail off, as overall market growth in China slows. Pushing into videos and music is vital, despite high upfront costs and distant returns.

Private equity goes back to dangerous superlatives

20 Mar 2018

Strong buyout returns have investors putting more money than ever into funds that acquire companies with loads of debt. But deal multiples are nearing record highs, too. As legacy LBOs like Toys R Us and Claire’s go bust, it’s a reminder of the industry’s tendency to overheat.

Brexit risk looms larger as UK banks get smaller

20 Mar 2018

Shares in the 1.1 bln pound Virgin Money trade below book value despite a 14 pct return on tangible equity. Market behemoth Lloyds, meanwhile, is worth more than its net assets. Investors seem to be betting that a double whammy of funding costs and bad debts hits minnows harder.

Mile-high stake swap could feed Air India bid

20 Mar 2018

Jet Airways may be interested in the soon-to-be privatised national carrier. However, Naresh Goyal’s airline would need serious financial help to make an offer fly. Abu Dhabi’s Etihad may need to make room for a new large strategic investor.

Icahn-Newell pact clarifies Starboard’s value

19 Mar 2018

The maker of Sharpie pens and Crock-Pot cookers is giving the investor’s firm four board seats, including chairman, and handing it control of divestitures. Icahn’s entry confirms Starboard’s line that Newell needs an overhaul, while showing his fellow activist’s strategic limits.

Alibaba presses its advantage in Southeast Asia

19 Mar 2018

The e-commerce giant is pumping $2 bln more into regional subsidiary Lazada, and replacing the group’s founder-CEO with Alibaba veteran Lucy Peng. Armed with her fintech expertise, Lazada can use mobile payments to entrench its regional lead over rivals Amazon, JD and Sea.

China Literature results could use more drama

19 Mar 2018

Tencent's $10 bln e-books arm reported strong debut numbers as a public company, with sales up 60 pct. But user growth is slowing, and hype over turning historical novels and kung fu epics into hit movies has yet to deliver. A lofty valuation requires a bit more excitement.

China’s corporate-exposé programme jumps the shark

16 Mar 2018

A popular consumer-rights show fell flat targeting VW again and small bike-sharing startups. State broadcaster CCTV's yearly investigations once scared CEOs and even knocked their share prices. After helping deliver the message on quality control, "3.15" is no longer must-see TV.

Wesfarmers supermarket spinoff is a good start

16 Mar 2018

The sprawling A$50 bln Australian conglomerate plans to list Coles separately and under a new boss. Pushing out the slow-growth, capital-draining company should make Wesfarmers more appealing to investors. A broader carve-up including Britain's Homebase would also make sense.

Who broke Toys R Us? Toys R Us did

15 Mar 2018

The retailer is liquidating over 700 U.S. stores. The woes were mainly self-inflicted: high costs, declining sales and onerous interest payments wiped out profit. Amazon played a role. Yet basic retail and financial risks sealed Geoffrey the Giraffe’s fate, as it may for others.

Cox: Aramco and Amazon encourage bad behavior

15 Mar 2018

Global financial capitals are prostituting themselves to accommodate the Saudi oil giant's IPO. Amazon's competition for a second HQ is provoking U.S. municipalities to similarly ingratiate themselves. This "Aramazon" effect exemplifies how races to the bottom get started.

Unilever exit is double setback for London

15 Mar 2018

The Dove soap maker has picked Rotterdam as its global base in a corporate streamlining. Scrapping its Dutch trust office will help reassure investors that the move is not a takeover defence. However, the reshuffle may also rob the FTSE 100 index of one of its larger members.

Activist adds governance flub to drab Newell pitch

14 Mar 2018

Starboard’s three top board picks will buy $25 mln of stock in the consumer-brands outfit if it wins a proxy fight. That’s a fraction of their unpopular payoff after Newell bought their firm, Jarden, and highlights Starboard’s lack of vision. Investors should leave it on the shelf.

Inditex still deserves its fashionable premium

14 Mar 2018

Zara’s owner plans to open less new space as purchases shift online, and overall sales growth slowed in its fourth quarter. But web-based sales are strong, and peers are struggling more. It’s trendy to be down on retailers, yet Inditex merits its valuation lead.

Volkswagen investors are stuck in the past

13 Mar 2018

The carmaker’s shares are priced at a 20 pct discount to German rivals Daimler and BMW. That’s despite fast growth, a rising operating margin and scale that gives it an edge in electric vehicles. Cost cuts and a full year without unexpected diesel provisions would help close the gap.

Prada’s valuation is fancy even in luxury land

12 Mar 2018

The Italian brand is trading at roughly the same multiple of expected earnings as super-elite Hermès. Nascent signs of a turnaround after four years of falling sales, especially in its lucrative handbag business, are helpful. But investors are giving credit before it is due.

China’s iQiyi channels Netflix with a twist

12 Mar 2018

The Baidu-backed video-streaming site wants to raise at least $1.5 bln in an IPO. It's growing quickly and spending cash on new programmes for 50 mln paying customers. But iQiyi also broadcasts live events and sells ads. That makes it a tantalizing hybrid that's hard to value.