Information from Barron’s Emerging Markets Daily section
The Zürich-based multinational financial services company Credit Suisse lists three reasons why corporations will pursue acquisitions this year:
1. Cash financed Mergers & Acquisitions/ buy-backs are earnings enhancing
2. Corporate balance sheets are under-leveraged
3. It is cheaper to buy than to build
Dick Wei, a technology analyst at JPMorgan Chase in Hong Kong, suggests that Sungy Mobile (GOMO), Youku-Tudou (YOKU) and Qihoo 360 (QIHU) are likely acquisition targets “because of their presence in mobile and the difficulty of organically building a large user base there.”
As competition within the Internet space continues to increase, we expect Internet leaders to drive growth and build market dominance via acquisitions. As mobile Internet is still in a particularly high-growth phase, we believe companies with high mobile traffic could be potential target companies.. Sungy generates majority of revenue from mobile, while Qihoo has one of the top mobile apps stores in China. Youku, with around 50% of traffic from mobile, could become a mobile traffic source for Internet leaders.
Emerging Markets Blogger + Columnist at Barron’s, Shuli Ren, mentions Tencent Holdings (0700.HK) and Baidu (BIDU) as potential acquirers. In a previous report, Ms Ren observed that last week China’s Amazon.com — JD.com — filed for an IPO, hoping to raise up to USD1.5 billion. However, Forbes argues that JD.com is not the next Amazon Of China but the next Dangdang (当当网), a Beijing-headquartered e-commerce company, or BestBuy.com of China.