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Euro 2024 sponsors – Chinese companies are breaking the bank. Vol. I [Guide]
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Euro 2024 sponsors – Chinese companies are breaking the bank. Vol. I [Guide]

created Forex ClubJune 19 2024

Euro is the celebration of European football. Millions of people watch the competitions of the best teams on the Old Continent. This means that these people will be focused and watching the match for at least 90 minutes. For many companies, it is an excellent opportunity to remind consumers about themselves. Although the matches are mainly of interest to Europeans, if we look at the sponsors, we will find 5 companies from Europe (Adidas, Atos, Lidl, Engelbert Strauss and Betano). Greater activity of Chinese companies is also visible (Aliexpres, Alipay, BYD, Living and Hisense). In turn, there are only two title sponsors from the USA (Coca-Cola and Booking). The sponsor is also Qatar, which advertises itself under the logo Visit Quatar. Advertisers are not surprised. In 2020, Euro 2020 attracted over 5 billion viewers, i.e. over 60% of the world's population.

Not all sponsors are joint-stock companies

Not all sponsors are listed companies. Companies not listed on stock exchange floors include: Lidl (belongs to Schwarz Gruppe, which also owns the Kaufland brand). Another German company that is not listed is Engelbert Strauss. This is quite an unusual sponsor for such an event, because the company produces work clothes and footwear. In this case, the company's recipients will only be part of the Euro viewers. Another non-public company is a Portuguese bookmaker Betano. In this case, such an advertiser should not be surprising. For bookmakers, the period of popular sports events is a real harvest season. Betano is also a sponsor of the Copa America (the South American equivalent of the Euro).

Interestingly, we also find sponsors: Living, one of the largest smartphone manufacturers on the Chinese market. The company has come a long way from a supplier of cheap phones to a mid-range manufacturer. The mentioned devices can also be purchased in Poland - the prices of the models range from several hundred to even several thousand zlotys. Another Chinese company that is not listed (but was supposed to debut a few years ago) is the owner Alipay, or Ant Financial. Alipay is one of the most popular payment apps in China. Ant Financial was much talked about in 2021 when, just before its debut, Chinese regulators blocked the IPO.

You can buy these Chinese sponsors on the stock exchange

But let's get to the point. In this article, we will focus on Chinese companies that have spent a lot of money on becoming sponsors of EURO 2024 and are also listed on the stock exchange. These include an e-commerce platform whose ADRs can be purchased in the United States, and Chinese manufacturing companies that plan to conquer their markets thanks to innovation, large capital resources and operational efficiency. It is worth taking a look at the companies mentioned above, because they show that P/E multiples alone do not mean anything. The most important thing is the ability of companies to grow and meaningfully reinvest their profits.

Aliexpress – a former leader that has to fend off attacks from competitors

When watching Euro 2024 matches, you can often see the Aliexpress logo on advertising banners, an e-commerce store where you can buy many things at affordable prices. The mentioned platform belongs to a Chinese company Alibaba, which is one of the leading players on the Chinese e-commerce market (using platforms such as Taobao or Tmall). In addition, the company develops logistics services (cainiao) and cloud services (Alibaba Cloud). Moreover, the company invests heavily in additional services, e.g. delivery of local products or investments in entertainment. Many years ago, she decided that she would like to expand into foreign markets. The platform operates in Southeast Asia Lazada, while in Europe it is present under the brand AliExpress. This sales platform is dominated by products from China, which, thanks to synergies with Cainiao, can reach the end recipient even within 5-10 days.

Of course, Alibaba was not the only one who came up with the idea to make Chinese products available on dedicated platforms for European consumers. One of the bigger competitors is Temu, which belongs to Pinduoduo. The Chinese competitor has successfully gained significant market shares in the Middle Kingdom and intends to repeat this in Europe. It is worth mentioning that the Temu platform is also expanding in the United States, where it advertised during the Super Bowl. The campaign was a success. The number of weekly active users increased by 70%, while the number of application downloads increased by 90%. No wonder Aliexpress also decided to try advertising at sporting events. He is the face of the advertising campaign David Beckham, who was one of the stars of the England national team 20 years ago. AliExpress plans to offer special discounts after every goal scored at the Euros. To take advantage of the promotion, AliExpress users must log in to their account via their smartphone and shake it. Apart from this, there is also strong competition Shein (in some product categories), Amazon or local players (in Poland it is Allegro). Recently too TikTok started e-commerce operations on selected European markets (France, Germany, Italy, Spain).

If we look at Alibaba's chart, it is clear that it has not been the best investment in recent years. Back in 2021, the company was listed at $300 per ADR and had a multiplier Price to Profit at the level of 30. The reason was that the e-commerce industry was one of the beneficiaries of the coronavirus pandemic. However, in the following quarters, the company's performance was deteriorating, revenue growth dropped significantly, and political risk added to this (rumors had it that Jack Ma, the founder of Alibaba, was not very liked by party members close to Xi Jiping). The company seems to be reasonably valued. However, it is worth considering whether the low valuation is not a discount for future slower growth and political risk.

baba

Chart of Alibaba shares and P/E ratio. Source: Scrab.com

BYD – expansion plans in Europe

At first ignored, then ridiculed, now feared by European producers. This is how it can be described in a nutshell Chinese electric cars. Currently, China has become the undisputed leader in the production of this type of cars. Huge production capacities combined with high efficiency have resulted in European EV car manufacturers having a much less competitive offer. The European Union has decided to impose large tariffs on Chinese electric cars, which are expected to reach over 30%. On the one hand, it is intended to protect domestic producers (mainly from Germany, France and Italy) and to encourage Chinese companies to assemble cars in the EU. One of the most important electric manufacturers from China is BYD. His cars perform well in crash tests and many people in the industry are delighted with their appearance and functionality. There is no accounting for taste, but we can certainly expect that in the coming years more and more Europeans will choose Chinese cars because of the good price-quality ratio. Then there will be another "Asian flood" on the car market. It was started by the Japanese (including Toyota, Suzuki), then the Koreans (including KIA). It is possible that now it will be time for the Chinese.

However, for this to be successful, new brands must become established in consumers' minds. Currently, for the "average" Kowalski or Schmidt, the name BYD means nothing. Therefore, it is not surprising that the Chinese car manufacturer decided to launch an advertising campaign for Euro 2024. Hundreds of millions of people will watch the competitions of the best European teams. Considering that the championship is mainly watched by men (and many people love motoring), the decision to sponsor Euro 2024 cannot be a shock.

BYD has been dynamically increasing the scale of its operations in recent years. This was visible in the company's valuation. Multiples of over 60 times net earnings were not a unique sight. Valuations may have suggested that it was a technology company rather than a regular carmaker. However, the market priced in future dynamic revenue growth. When the scenario came true, the share price stopped rising. This is due to the fact that the automotive industry has low profitability and high capital expenditure. This is not a very attractive industry, which is why the multipliers are usually low (except for luxury car manufacturers). The market currently values ​​the company at 17 times future earnings. This means that he still believes that a double-digit growth rate is possible. Will it be so? We'll see in a few quarters.

byd

Chart of BYD shares and quarterly profit and P/E ratios. Source: Scrab.com

Hisense – one of the leaders in the consumer electronics and household appliances market with an appetite for more

The history of Hisense is interesting because it dates back to the dark times in the People's Republic of China, during the Cultural Revolution. In 1969, a factory producing radios was established, which after a few years began to supply televisions. However, the company was officially established in 1994 and debuted on the Shanghai Stock Exchange three years later. The beginnings were difficult because in the 3s there was huge competition on the Chinese home appliances and electronics market. New companies appeared like mushrooms after the rain and wanted to encourage consumers to make purchases through price wars. This meant that the margins achieved on this market were very low. It is not surprising that such competition disappeared as quickly as it appeared. Hisense focused on a marathon, not a sprint. The products stood out for their quality (compared to Chinese competition) and affordable price (compared to products from the USA or Europe). No wonder it became more and more popular over the years. Years of fighting with domestic competition resulted in the company's operational efficiency being at a satisfactory level. Moreover, R&D departments were developed to improve the quality of products. The company also decided to develop through acquisitions. She bought it in Europe Gorenje, while in Mexico it bought back the operations Sharp, while a few years ago Hisense has acquired a majority stake in Toshiba Visual Solution (mainly for patents). Recent years have seen foreign expansion, which has allowed us to increase revenues and profits. Hisense strongly focuses on marketing and has been a sponsor at large sporting events for many years. It is currently advertising for EURO 2024 and its faces are Iker Casillas and Manuel Neuer.

If we look at the share price, we see dynamic growth in recent years. This is due to both the rate of revenue growth (doubling in 2020 - 2023) and multiplier expansion. The company is currently valued at 11 times future earnings (for 2024). Just a few years ago, Forward PE was at 5 times. Investors appreciated the recent increase in revenues and profits. However, it is worth remembering that the household appliances and consumer electronics market is very competitive and grows by a few percent per year. For this reason, in order to maintain a double-digit revenue growth rate, the company would have to increase its market share (e.g. through price wars) or decide to take over smaller competitors. It is worth watching the company because it may turn out that in the coming years the market will again value it at a significant discount to its intrinsic value.

Hisense sponsors euro 2024

Chart of Hisense shares and quarterly profit and P/E ratios. Source: Scrab.com

Forex brokers offering ETFs and stocks

Euro 2024 sponsors are recognizable brands around the world. Some of them are listed on stock exchanges in different countries, so the most convenient option is to choose the offer of a broker that gives access to many trading floors within one account. An increasing number of forex brokers have quite a rich offer of stocks, ETFs and CFDs for these instruments.

For example on XTB Today, we can find over 3500 equity instruments and 400 ETFs, a Saxo Bank over 19 companies and 000 ETF funds.

Broker xtb 2 saxo bank logo small etoro
Country Poland Denmark Cyprus
Number of exchanges on offer 16 exchanges 37 exchanges 21 exchanges
Number of shares in the offer approx. 3500 - shares
circa 2000 - CFDs on shares
19 - shares
8 - CFDs on shares
3 - shares
The amount of ETF on offer approx. 400 - ETF
approx. 170 - CFD on ETF
3000 - ETF
675 - CFD on ETF
323 - ETF
Commission 0% commission up to EUR 100 turnover / month according to the price list 0% commission*
Min. Deposit PLN 0
(recommended min. PLN 2000 or USD 500, EUR)
PLN 0 / EUR 0 / USD 0 100 USD
Tool xStation SaxoTrader Pro
Saxo Trader Go
EToro platform
 

*Zero commission means no brokerage/transaction fee was charged during the activity. However, they may still incur general fees, such as currency conversion fees for deposits and effects in non-USD currencies, fees for fees, and (if applicable) inactivity fees. Market spread also applies, although this is not a "fee" charged by eToro.

76% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you can afford the high risk of losing your money.

Will the Chinese eat competition from Europe and the USA?

On the one hand, Chinese companies, thanks to the competitive market environment, had to develop mechanisms to improve operational efficiency. Moreover, the huge revenues generated on the domestic market by manufacturing companies were used for R&D research, purchasing patents or competitors. Thanks to this, manufacturing companies have huge advantages compared to smaller competitors (just compare Hisense with Amica). However, this does not mean that the fight is already lost. Allegro shows that it can confidently compete with rich players from Asia (e.g. Temu, Aliexpress). Many companies from Europe and the USA still have large advantages over their Chinese competition.

This article was intended to briefly describe the activities of Chinese EURO 2024 sponsors who are listed on stock exchanges. In the next text, we will mention European sponsors in more detail. Many of them have interesting business models and a very strong market position.

This article is for information only. It is not a recommendation and is not intended to encourage anyone to undertake any investment activities. Remember that every investment is risky. Do not invest money you cannot afford to lose.
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Forex Club
Forex Club is one of the largest and oldest Polish investment portals - forex and trading tools. It is an original project launched in 2008 and a recognizable brand focused on the currency market.