Reports » China

China stock market report by ChinaStockAdvice.com (May 22, 2009)

Macro-economic Policy
 
Mr. Li Keqiang: To Focus on Development of Strategic Emerging Industries like New Energy 

Ministry of Finance: Ten Focuses to Support Development of New Energy and Energy Conservation & Emission Reduction ??

Industrial Economic Report: Growing Speed in 2H2009 Expected to Reach above 10% ??

Domestic Market

 
Official Said GEM to Go Public around July-August 2009
 
Temasek holdings Being Said to Increase Holding of China Construction Bank (601939) at USD600mn?

Singaporean GDP saw quarter-on-quarter decline of 14.6% in Q1 2009, being better than expectation.

Hang Seng index closed low by 276.35 points or 1.58% at 17199.49 points.

Financial and real estate shares led the H-share decline.

Chinese-funded auto shares surged higher.

Overseas Market
 
Overview: Standard & Poor's Lowered Credit Rating Prospect of Britain; American Market Plunged ??

Economic Data Being Not Optimistic; New York Gold Price Hitting Summit of Recent Two Months ?

S&P 500 closed low by 15.14 points or 1.68% at 888.33 points.

Leading indicators of Conference Board saw initial ascension of recent 7 months.

Companies & Industries
 
- GAIG Acquired 29% Equity of Hunan Changfeng Motors (600991); Rmb10bn Invested to Form Production Capacity of 0.5mn Vehicles

IT Industry

- Domestic Telephone Users Cracked 1bn in China
- ZTE Completed TD-LTE Third-party Terminal Test

- Indian BSNL Decided Not to Outsource Western Businesses to Huawei  
- Apple Being Said to Launch Third-generation iPhone on July 17, 2009

- Shenzhen Textile (Holdings) (000045): Might Purchase 52% Equity of Shenzhen Shengfang-Lucky Photoelectron Material Co., Ltd
- Qingdao Haier (600690): 0.3mn Shares Increased by Haier Investment Consulting, Its Person Acting in Concert

Consumer Goods Industry

- Zhejiang NHU (002001): Production Suspension and Overhauling May Cause Advance Instead of Retreat

- Along Tibet (600773): The Third Largest Shareholder Reduced Holding 4.02mn Shares or 1.76% of the Total

- Silver Plaza Group (600858): Planned Non-public Shares Issuance

Datang Intl Power Generational (601991): On-going Projects Gradually Established, to Enhance Earning Stability

During the first two weeks of May 2009, generating capacity was 8% less than that of normal circumstances, which was in line with the national status that decline of generating capacity enlarged. We forecast that the company's utilization hours of thermal power generator will increase by 11% in 2H2009 compared with that of the first half year, and annual utilization hours will be around 5000; additionally, lessening effect of rate cut in late 2008 on financial charges is expected to emerge in the second half year, and the company's earning level per unit and overall profit scale will be enhanced compared with that of the first half year.

The company's 2009-2010E EPS is forecasted to be Rmb0.23 and Rmb0.28 respectively, representing dynamic P/E ratio at 33x and 27x based on closing price of Rmb7.67 on May 19, 2009, which is slightly higher than the industrial average; "Neutral" rating is hereby maintained temporarily.

Overall Statistics Fell back Due to Seasonal Elements; Monthly Net Increment of China Mobile and China Telecom Outperformed that of China Unicom

The three major operators released their operating statistics of April 2009, of which, in terms of mobile customer, China Mobile, China Telecom and China Unicom saw monthly net increment of 5.82mn, 1.87mn and 1.14mn respectively; regarding fixed phone, China Telecom and China Unicom lost customer of 1.9mn and 0.17mn respectively; in the field of broad band customer, China Telecom and China Unicom saw monthly net growth of 0.72mn and 0.54mn separately.

Negotiation of Iron Ore Product Price Approaching the End

Mr. Shan Shanghua, General Secretary of China Iron & Steel Association said on May 20, 2009 that China's steel & iron enterprises would not concede in negotiation of iron ore product price. He also denied that China had compromised on the previous 40% price cut.
 
Comment: Negotiation of iron ore product price is approaching the end. However, great disparity between steel and ore enterprises makes the negotiation proceed extremely hard.   
 
Favors on China's side: 1). China's status as buyer and the right of speech have been greatly strengthened amid global financial crisis; 2). Depreciation of Australian dollar and Cruzeiro against the US Dollar provides further downside space for price of iron ore product; and 3). High inventory of iron ore product in the ports is an important bargaining chip for China.