With shares now up over 20x from their May 2012 IPO price of $6.50, Vipshop (VIPS +7.3%) is selling $550M worth of convertible senior notes due 2019. The notes carry an interest rate of 1.5%, and a conversion price of $201.24 (32% above current levels).
The flash sales site is also selling 1.14M shares (~2% of outstanding shares) on behalf of existing holders at a price of $143.74 (6% below current levels).
Underwriters have overallotment options to buy an additional $82.5M in convertible debt, and 171K additional shares from holders.
Vipshop ended 2013 with $334.7M in cash, $385.8M in held-to-maturity securities, and no debt.
Vipshop (VIPS -4.1%) has been cut to Neutral by Goldman. Shares blasted off last week in response to the company's Q4 beat and strong guidance.
Unisys (UIS -6.5%) has been cut to Market Perform by Raymond James.
Aixtron (AIXG -1.6%) has been cut to Neutral by BNP Paribas.
As part of a chip sector coverage launch, AppliedMicro (AMCC +1%), TowerJazz (TSEM +1.5%), Neonode (NEON +1.6%), RF Micro (RFMD +1.8%), and TriQuint (TQNT +1.6%) have been started at Buy by Ascendiant Capital.
Tencent is paying $214.7M in cash. The company is also transferring its QQ Wanggou and Paipai e-commerce platforms, and a minority stake in its Yixun marketplace.
The assets, along with the massive scale of Tencent's QQ, Qzone, and WeChat messaging/gaming/social networking platforms, should give a boost to JD.com's traffic and marketing reach.
JD.com, which (unlike Alibaba) depends heavily on direct e-commerce sales, filed for a $1.5B IPO in January. Alibaba took aim at Tencent last year by acquiring an 18% stake in Sina's Weibo microblogging platform (an indirect rival to WeChat).
The Tencent/JD.com deal could also spell tougher competition for Vipshop (VIPS -4.4%) and Dangdang (DANG -4.9%), both of whom are joining other Chinese Internet stocks in seeing profit-taking.
Vipshop (VIPS) expects Q1 revenue of $640M-$650M, far above a $554.5M consensus.
Active customers grew by 1.7M Q/Q and 3.1M Y/Y in seasonally strong Q4 to 5.7M. Total orders surged 51% Q/Q and 102% Y/Y to 17.7M. With revenue up 117% Y/Y, Vipshop's order data suggests average order size rose.
Q4 gross margin was 24.5%, +20 bps Q/Q and +160 bps Y/Y. Fulfillment spend fell to 11.2% of revenue from 12.5% a year ago; marketing spend rose to 4.4% from 4.2%; tech/content spend rose to 2.2% from 2.1%; and G&A rose to 2.7% from 2.6%.
Shares are now up nearly 6x over the last 12 months.
In Sohu's case, the rumor mill might also be helping out. A source tells Marbridge Consulting Sohu CEO Charles Zhang and Tencent (TCEHY +1.2%) CEO Pony Ma have talked about merging their companies' online video units. Both Sohu and Tencent trail market leaders Youku and Baidu in China's burgeoning online video market.
Dangdang (DANG +8.6%) is adding to yesterday's big post-earnings gains after Oppenheimer hiked its PT to $15. The firm likes Dangdang's improved efficiency and partnerships with e-commerce rivals (inc. Alibaba's Tmall), and the fact mobile accounted for 13% of Q4 orders.
Vipshop says the deal will guarantee "a consistent supply of Ovation branded cosmetic products," which are "in high demand" among its 75%-female customer base. The company also asserts Ovation's branding/marketing expertise will be of value.
Chinese Internet stocks, crushed over the last few trading days amid SEC-related concerns and a general rout in tech momentum plays, are rebounding sharply today in tandem with other high-beta tech stocks.
Possibly helping: The SEC has settled a dispute with Deloitte over its request for documents related to Longtop Financial, a Deloitte-audited Chinese firm suspected of accounting fraud. The settlement, which comes after the SEC received a "substantial volume" of requested docs, is fueling hopes the SEC's auditing ban on the Chinese arms of the big-4 accounting firms (including Deloitte) will be revoked, and a final resolution between U.S. and Chinese regulators achieved.
Also: Morgan Stanley is calling the selloff a buying opportunity, and has picked five names it's a fan of - Baidu (BIDU +2.8%), YY (YY +14.5%), New Oriental (EDU +2.8%), Dangdang (DANG +6.8%), and Ctrip (CTRP +5.2%)..
MS expects Baidu's margins (recently pressured by huge investments) to stabilize later this year with the help of accelerating sales growth; it's pleased with Ctrip's willingness to sacrifice near-term margins for share gains; it think Dangdang's e-commerce strategy is yielding margin improvement and better fulfillment efficiency; and it's a fan of YY's "sticky" user base and monetization potential (less than 2% of users are currently monetized).
Major gainers include Sungy Mobile (GOMO +11.3%), 500.com (WBAI +18.3%), ChinaCache (CCIH +9.8%), Vipshop (VIPS +10%), Bitauto (BITA +9.5%), and Qunar Baidu-controlled (QUNR +8.8%).
H-P (HPQ +3.7%) and Teradata (TDC +1.8%) have been started at Overweight by Atlantic Securities.
BlackBerry (BBRY -6.2%) has been cut to Underperform by Oppenheimer following a major rally over the last four weeks. RBC upgraded shares last Friday.
F5 (FFIV +3.7%) has been upgraded to Outperform by William Blair.
Qihoo (QIHU +4.3%) has been upgraded to Buy by Stifel, and started at Buy by UBS. Shares fell last Thursday following a report questioning the size of the company's search share gains, and rose the day before thanks to an Alibaba investment rumor.