TheChek News Flow

Xinjiang Goldwind in talks to acquire onshore wind farms in France, Norway, Sweden, South America

29 DEC 2017

Xinjiang Goldwind Science and Technology (Jin Feng Ke Ji)[ HKG: 2208; SHE: 002202], a Chinese wind turbine manufacturer, is in talks to acquire onshore wind farms in France, Norway and Sweden, a source close to the situation said.

Such talks are in line with the company’s efforts to expand its wind farm operation business into European regions, the source explained. So far the company’s overseas wind farms via M&A are located in the US, Australia and Argentina, he noted.

The Beijing-headquartered company is also in M&A talks on the onshore wind farms in South America, the source said. Xinjiang Goldwind was mulling wind projects buys in Brazil, Reuters reported on 17 October 2017.

It welcomes advisory approaches with overseas targets, the source said.

Preference in overseas M&A targets will be only given to onshore wind farms with above 30MW in capacity each, the source said. The potential targets should be located in countries with low sovereign credit risk, he said.

Each deal size should be no more than USD 100m, the source said.

Goldwind’s war chest for overseas acquisitions will partially come from bank loans and its cash flow, the source said.

Its cash and cash equivalents were recorded at CNY 3.7bn (USD 568.1m) by this September-end.

Xinjiang Goldwind secured bank loans of nearly AUD 700m (USD 545.9m) for its investment in Australia's Stockyard Hill Wind Farm, according to the company’s announcement on 19 December 2017. The lenders include National Australia Bank [ASX: NAB], Westpac, Commonwealth Bank of Australia [ASX: CBA], ICBC [SHA: 601398], SMBC, MUFG [TYO: 8306], Mizuho Bank, Société Générale [EPA: GLE], and ABN AMRO [AMS: ABN]. It acquired 536.4MW Stockyard Hill from Origin Energy [ASX: ORG] for AUD 110m in August 2017.

Xinjiang Goldwind’s largest shareholder is Hong Kong Securities Clearing Company with a 18.23% stake.

The CNY 76.41bn market cap company reported its revenue of CNY 17bn and net profit of CNY 2.3bn in the January-September period of this year, up 0.25% and 7.26 from the same period of previous year, according to its financial report for 3Q17.

Established in March 2001, Xinjiang Goldwind primarily produces onshore and offshore wind turbines, as well as provides wind turbine maintenance services and operates wind farms. It possessed wind farms with total capacity of above 40GW by this June-end, according to its financial report 1H17.

The company declined to comment on this situation.

Glencore withholds US assets from HNA sale

Deal with Chinese conglomerate faces regulatory obstacle

Glencore, the mining and commodities trader, has withheld its US assets from the sale of a 51 per cent stake in its oil products storage business to HNA because they must be approved by US authorities amid greater scrutiny of the deal-hungry Chinese conglomerate.

The deal, which was announced in March, will no longer include three US-based assets unless Glencore receives “satisfactory” clearance from the Committee on Foreign Investment in the United States (Cfius), the Switzerland-based company said. That will reduce the total amount of the sale to $579m from an original $775m, it said.

It comes as HNA faces greater global scrutiny over its secretive ownership structure following a $40bn dealmaking spree over the past three years. This month New Zealand’s Overseas Investment Office blocked HNA from taking over a unit of ANZ Bank because it could not verify who controlled the company.

Earlier this month, US-based software group Ness Technologies filed a complaint with the Supreme Court of the State of New York against HNA and its Beijing-based IT outsourcing unit Pactera. The complaint states that discrepancies among HNA’s reports of its ownership structure led to Cfius scuppering the acquisition of Ness’s unit.

HNA, which was founded in the early 1990s on China’s tropical Hainan Island as the owner of Hainan Airlines, has bought everything from real estate to airlines and logistics groups around the world as well as large stakes in companies such as Deutsche Bank and Hilton Worldwide.

But analysts including the rating agency Standard & Poors have expressed concern about the group’s high leverage and access to funding. This month a liquidity squeeze caused the company to pledge HK$2.8bn ($362m) of shares in a Chinese bank as collateral.

The Glencore unit’s sale to HNA Innovation Finance is part of the creation of a new vehicle, HG Storage InternationaI, which will hold the trader’s oil products storage and logistics assets in Europe, Africa, the Middle East and the Americas. The US assets will be transferred into the company and the remaining balance paid in 2018 if Cfius clearance is given, Glencore said.

“HGSI intends to expand its global footprint through acquisitions and organic growth supported by its shareholders,” Glencore said. “A combined board and management team with extensive operational and trading experience is in place to execute HGSI’s growth plans and utilise the strengths of Glencore and HNA groups globally.”

HNA’s statement on the deal’s closing did not mention the US assets or any approval by Cfius.

“This purchase will help improve HNA Innovation Finance’s global position in commodity trading,” HNA spokesperson Qi Guanghui said.

The deal follows years during which the oil glut made storage immensely profitable as traders scrambled for locations to place excess barrels when the market became swamped.

China is the world’s largest importer of oil and Chinese buying has helped oil prices recover this year, with Brent crude oil rising above $67 a barrel for the first time since 2015 this week.

The ephemeral retail locations are becoming increasingly experiential.

By Jennifer Weil on December 29, 2017

PARIS — Beauty pop-up shops continue to proliferate here while becoming ever more experiential.

The French capital is a focal point for a confluence of reasons, including tourist footfall being on the rise again, a successful bid for the 2024 Olympic Games and its swiftly developing innovation economy, industry watchers believe.

Yves Saint Laurent Beauté, for one, is set to host a four-day “hotel” in the heart of Paris during the men’s fashion season in January. It’s a place where people are meant to live the brand and no products are sold, an evolution — or 2.0 version, if you will — of the YSL Beauty Club initiative.

That strategy, which kicked off late last year, involves gathering clients, ambassadors and celebrities “in a place that is like a club in which you can offer a lot of experiences,” said Stephan Bezy, international general manager of Yves Saint Laurent Beauté.

“The idea is to be very fun, very interactive,” he explained, adding it is also about holding a party, with dancing, bands and DJs. “That’s a way to experiment. All this started from a strategic shift that we wanted to do from storytelling, which brands do a lot, to ‘story-living.’”

A rendering of the YSL beauty hotel.

A rendering of the YSL beauty hotel. Courtesy Photo

Labels are generally veering away from re-creating traditional shopping experiences in their ephemeral pop-ups.

“The pop-up as retail was a real struggle,” said Nicholas Russell, founder of Project X, who explained audiences for that typically take time to build. He said, however, “from the experience angle, it’s absolutely huge.”

Experiences are a huge lure not least for Millennials, who reportedly spend some 40 percent of their income on leisure activities.

“What makes a difference between buying on the Internet and buying in brick [and mortar] is experience, sensuality and the engagement you get by having a specific event,” said Leïla Rochet Podvin, founder and chief executive officer of Cosmetics Inspiration & Creation.

She said: “This pop-up excitement is part of a major phenomenon of the ephemeral economy. There is a strong consumer attraction to the ephemeral and scarcity. Look at the success of Snapchat and Instagram stories.

“Consumers love to escape from monotony and have a strong tendency to share these special brand moments of discovery through social media. So for brands, it adds content and engagement,” continued Rochet Podvin.

YSL’s goal is to have clients enjoy the brand from the outside but to live it, as well, from the inside. “YSL Beauté is young and edgy, cool,” said Bezy. “It’s good to show that through movies…through advertising. But we thought we have to move to the next level, where our consumers become part of the story. It really enhances the love factor of the brand.”

Since launching the club program, YSL has opened 23 worldwide, in cities such as London, Los Angeles, Tokyo and Moscow.

The YSL beauty hotel takes the strategy even further. Some highlights of the three-floor space will be a speakeasy bar, where makeup can be done, and a drive-in-like movie venue with vintage cars where consumers will be able to discover a new advertising film for Touche Éclat.

“We wanted to do [the hotel] in Paris — it’s naturally the heart of the brand,” said Bezy, who explained it will anniversary a club event held at the same time last year, too.

More than 1,500 people, including YSL global beauty director Tom Pecheux and ambassador Zoë Kravitz, are expected at the YSL hotel, where there will be many possibilities for people to create social media content.

Also high on the experiential quotient is the Christian Louboutin ephemeral nail bar that’s running at the Mandarin Oriental, through Dec. 30. Marking a first for a hotel, it opened on Dec. 11, offering just services.

The hotel was chosen to host the location since its clientele “is similar to ours — women who appreciate luxury, craftsmanship and attention to detail,” said Catherine Roggero-Lovisi, general manager of Christian Louboutin Beauté.

She added: “Tourists and Parisians alike enjoy the Mandarin Oriental in Paris, and it was important that we reach both clientele. We have limited points of sale in Paris so this was a great new way to introduce our manicure to our target audience. Instead of having them come to us, we’ve come to them.”

Teasing the nail bar is a holiday display in the hotel’s lobby, which showcases the brand’s limited-edition Metalissime collection and nail colors. The service, which is priced at 45 euros for 30 minutes, is carried out in a lobby alcove. That includes a hot hand towel infused with a Christian Louboutin fragrance oil, whose scent is chosen by the client. That’s followed by nail shaping, cuticle care and a color application.

A Christian Louboutin beauty stand.

The Christian Louboutin holiday display. Guillaume Fandel

Nuxe also opted for Paris to stage its first pop-up shop, which stands next door to the brand’s original spa on Rue Montorgueil. In the 500-square-foot venue due to run until Feb. 17, the idea is to “seduce clients, make them want to come in and share a beautiful experience with us,” said Valérie Di Michelangelo, director of Nuxe’s spa activity.

The first part of the shop is divided into three parts: One is a unit displaying the brand’s products, where people can purchase without advice. There’s an area of testers and a place where aestheticians give skin diagnosis and allow people to sample products and mini-treatments, all free of charge.

“The objective is to discover Nuxe’s expertise,” said Di Michelangelo. It’s to learn about a new premium line, 32 Montorgueil, as well, which takes center stage on a table in the pop-up and is sold exclusively starting recently in the brand’s spas.

Nuxe's popup.

Nuxe’s pop-up. Courtesy Photo

In the back is an atelier where people can experience Nuxe’s new identity, dubbed Instinctive Beauty. Here, until Dec. 31, customers can customize their gift boxes and after that, their own tote bags and then T-shirts for the last 15 days of the pop-up’s run. The idea is for people to “follow their instincts in making the creation they choose,” said Di Michelangelo.

Other animations include courses on subjects such as cosmetics.

She noted that many people who don’t enter the Nuxe spa venture into the pop-up and ask a lot of questions concerning products. The executive said an ephemeral experience is an important lever for building traffic in brands’ other retail locations.

Bulgari’s fragrance pop-up, which was staged, between Nov. 7 and Dec. 5 in Charles de Gaulle airport’s travel-retail zone, is an example of a strong retail sales generator unto itself.

There the LVMH Moët Hennessy Louis Vuitton-owned brand launched a new concept, which had yet to be rolled out elsewhere in Europe. It had a look based on Bulgari’s flagship shop in Rome, with the 280-square-foot space spotlighting the brand’s exclusive Le Gemme scent collection, which isn’t sold in other Paris travel-retail doors, along with some of the label’s other lines.

Information was given about where the gems came from and their corresponding scents. “The material, the origin, the fragrance; we wanted to convey one message,” said Caroline Ferlay-Naudin, Europe and Africa marketing director for travel retail, affiliates and distributors at Bulgari. “It is a story of great travelers.”

She said such a pop-up brings a “statement of image, a statement of luxury.”

Bulgari's fragrance popup.

Bulgari’s fragrance pop-up. Courtesy Photo

To help immerse people into the brand’s concept, they could be photographed in front of an image of a famous travel destination. Then the snap would be sent digitally elsewhere.

“We also want to seduce the young consumer,” said Ferlay-Naudin.

Bulgari’s fragrance pop-ups lure shoppers. With just fragrance, the company tends to rank third or fourth among beauty brands, versus on average between 10th or 20th in traditional travel-retail shops.

Along with broader retail trends, pop-up strategies keep evolving. Russell noted a rise of stores mixing product offerings to lasso a psychographic rather than a demographic. He gave as an example a gelato bar that had opened in an upscale flower boutique in London.

“It’s [about], I can actually extend my offering going — however you want to consider it — either up- or downstream, for more share of wallet,” he said.

At Soho House in London, there’s a Barber & Parlour salon. “It’s just pairing all the sorts of things you want to do on a Saturday or Sunday,” he said, adding such a mix takes a cue from the pop-up culture. “A store doesn’t have to be a store. A store doesn’t have to be permanent. A store doesn’t have to sell stuff. So you end up with what I see as a kind of wholesale service innovation.”

In retail overall, Russell expects more convergence ahead. “You’re getting companies that are focused on service, rather than product,” he said. “You’re getting a lot of silo-busting that I think will be really interesting.”

“It’s all about a lifestyle,” said Rochet Podvin.

Further, as shopping centers continue to consolidate, Russell foresees more free space emerging with lower rents.

“I do think you will probably see the pop-up concepts start extending a lot more,” he said. “We found that every time you lower the price or you create a new offer, you immediately find people who want to create Internet-style innovation in the real world.”

Gapping down

Earnings:

ADTN -12% (guides Q4 well below consensus)

LINU -8% (reported 1H17 results)

News:

BCEI -0.50% (Sandridge terminates acquisition)

Broker calls:

SYNT -3% (downgraded to Underperform at Wells Fargo)

Misc:

LIVE -7% (paring yesterday's gains)

Crypto stocks:

LTEA -6.01% SIEB -1.79% OSTK -0.76%

New Apple patent application hints at long-range wireless charging

As is usual with Apple patent applications, the wording is as general as possible – encompassing both wired and wireless charging – but the problem it aims to solve does appear to be one that arises primarily with long-range wireless charging …

RF-based charging has two problems. First, the amount of power available to devices drops off dramatically as the distance from the charger increases. Second, safety requirements limit the amount of power that can be transmitted in the first place.

The net result is that the amount of usable power available to devices will often be very limited, so what Apple’s patent proposes is a method of prioritizing which devices get charged in what order.

An online user account may be maintained on computing equipment in the system. The computing equipment may communicate with the electronic devices or power adapter over a communications network. The power adapter or other components in the system may gather information from the online account, from the electronic devices, and/or from the power adapter to use in identifying an optimum power transfer strategy for the power adapter to use in transferring power to each of the electronic devices. The optimum power transfer strategy may involve transmitting different amounts of power to different electronic devices.

The information that is used in identifying appropriate amounts of power to transmit to each of the electronic devices may include information such as user device charging priority settings, battery charge state information, device type information, usage history information, calendar information, and other information.

In other words, you’d be able to tell the system to charge your iPhone before your iPad, for example. But the text suggests that more sophisticated tailoring may be possible, such as giving a device enough charge to last a typical day based on your usage patterns, then switch to charging the next device.

As always with Apple patents, there’s no way to know which ones will make it into production. We’ll be taking a closer look at the whole area of RF-based charging in a future piece.

With many Soviet-era oil fields in decline, Russia will need new sources by the mid-2020s if it wants to maintain production

KRASNOLENINSKOYE OIL FIELD, Russia—This western Siberian oil field is called “Red Lenin,” but its reserves have a distinctly American ring: shale.

The future of the Russian oil industry could lie in the vast Bazhenov shale formation, the largest in the world. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to pump.

Only Americans have really gotten shale right so far, but the Kremlin is taking the first steps to unlock Russia’s potential.

Companies like PAO Gazprom Neft GZPFY -1.78% are leading Moscow’s drive to replicate the U.S. shale boom, experimenting with a uniquely Russian, state-controlled approach to fracking that contrasts with the free-for-all among independent producers in Texas and North Dakota.

“The Bazhenov is a huge prize,” says Alexei Vashkevich, Gazprom Neft’s exploration director.

The Kremlin is offering tax breaks for shale production and encouraging collaboration among companies and other players such as research institutes, hoping that fracking can help stave off a reckoning for its oil industry.

Mr. Vashkevich, who worked on the Bakken Shale formation in North Dakota for Hess Corp., said Russian shale will develop in a fundamentally different way from U.S. counterparts.

Russia’s giant oil companies aren’t renowned for the kind of risk-taking, innovation and speed at the heart of shale producers’ success in the U.S.

“Here, 90% are big players with a culture of secrecy. Historically, we are slower,” Mr. Vashkevich said. Other challenges include an underdeveloped services sector and extreme weather.

No significant shale production is expected before the mid-2020s. With the Bazhenov’s complex and varied geology and other risks companies face here, executives and analysts are wary of making output forecasts.

“I don’t think anyone is going to be jumping up and down in 2020 and saying [shale] is the savior of the Russian oil industry,” said James Henderson, director of the natural-gas program at the Oxford Institute of Energy Studies, an independent research organization.

But the size of the Bazhenov—which holds almost as much oil as all the known U.S. shale plays, according to the U.S. Energy Information Administration—offers a chance for Russia to maintain its prized position as the world’s top producer of crude in coming decades.

Developing shale is important to the ambitions of Russian President Vladimir Putin, whose government depends on oil and gas for around one-third of federal budget revenues. In Mr. Putin’s 17 years as Russia’s leader, crude has fueled spending that has underpinned his popularity at home and efforts to spread influence abroad.

Russia’s main Soviet-era fields are declining, and the country will need new sources by the middle of the next decade if it wants to maintain its production, oil executives and industry analysts say.

U.S. and European sanctions over Ukraine have hurt Russian companies’ ability to get the technology needed for hydraulic fracturing and horizontal drilling, the techniques used to blast oil out of shale formations. But sanctions aside, few countries besides the U.S. and Canada have had real success with fracking, an often high-cost technique that rewards entrepreneurial risk taking and benefits from a looser regulatory regime. Efforts have sputtered in China, Poland and Romania, while fracking isn’t allowed in Germany and France over public concerns over the technique’s impact on the environment, particularly drinking water.

Until recently, Russian oil officials had focused on new conventional projects and old Soviet fields, where they boosted production by making scores of small gains. The result was that Russia surpassed Saudi Arabia as the world’s biggest producer of crude oil, pumping a post-Soviet record of over 11 million barrels a day in 2016. Improving output at conventional oil fields will remain an important piece of staving off decline in Russian production.

Gazprom Neft, Russia’s fourth-largest oil producer, is seen as a leader in Moscow’s drive to replicate the U.S. shale boom.

Gazprom Neft has revamped its approach to shale. Previously focused on a partnership with Royal Dutch Shell PLC, it is now moving ahead with new technologies to squeeze out oil from the Bazhenov and, hopefully, begin real production at the start of the next decade.

The company is working with technical universities and service providers on a methodical strategy. Mr. Vashkevich says it has drilled 18 wells of some 120 that he says it will need to find the sweet spot for the production rate and technology costs.

At a well pad on the Red Lenin field, reached by roads that turn to sludge in fall rains and freeze over in winter, a couple of engineers check progress at a site surrounded by seemingly endless forests. Much of the work is done at a gleaming drilling hub in the center of St. Petersburg, where the company’s top minds monitor drilling.

Russian oil companies have an advantage that U.S. firms didn’t have: The Bazhenov formation lies underneath existing oil fields, meaning much of the infrastructure to develop it is already in place.

Early results are promising, executives say: Gazprom Neft says it has achieved about half the daily production at wells that it needs for commercial production.

Still, even the company doesn’t expect a production boom. It forecasts that shale oil from the Bazhenov could make up 2.5% of its total oil-and- gas production in 2025.

“It will take a little longer, but we’ll get there nonetheless,” Mr. Vashkevich said.