Category Archives: Company

HNA’s Shadow Banking

Summary Starting with a registered capital of Rmb10mn, HNA Group has grown its total assets to more than Rmb1trn. In just the past three years, the Group completed acquisitions valued at more than US$40bn. The most frequently asked question now is: where did HNA obtain its capital? Recent articles (see Financial Times, June 2, 2017) […]

Zheshang Bank (HK 2016) – The Risks of Small Banks in China

Zheshang Bank How Chinese Banks Accelerate Risks We have long maintained that the smaller Chinese banks have the highest risk profiles. This is due to their aggressive expansion of their balance sheets using risky sources of capital, along with their reliance on a much smaller market with less opportunity to spread the risk geographically. Zheshang […]

China Oceanwide: Synergies with Genworth Financial

China Oceanwide Holdings Group Co., Ltd. (715 HK) announced in October it plans to acquire 100% of the outstanding shares of Genworth Financial Inc. (GNW NYSE). The purchase will be made through its affiliated company, Asia- Pacific Universe Investment, for US$5.43 per share in cash, 4.2% more than the closing price of the date of […]

The Politics of the Syngenta Deal

Will Chem China Get its Money? We’ve been doing some work recently on the proposed Chem China acquisition of Syngenta. The documents submitted so far are woefully inadequate, forcing investors to rely on press reports from Caixin Magazine in Beijing. That has left many investors scratching their heads figuring out if the financing is solid. […]

McDonalds Versus Yum Brands. Who Will Win in China?

We attended investor meetings and store visits for both companies in September 2013 in Shanghai

Yum Brands has outpaced McDonalds in China on almost all metrics, looking at 2008-12 CAGR sales, ops profit, store expansion, margins. This is through first mover advantage and a flexible local team. The food scare for chicken supply and avian flu hurt 2013 results with 1H 2013 sales falling 6.3% YoY. Yum says it “will take some time” for margins (now 18%) to return to 20% and appears to be using this period to experiment with format and menu diversity. McDonalds is focused on a) rolling out its brand name to smaller cities and b) cutting costs. Given the diversity of its current menu and formats, KFC has the higher risk/reward profile.