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China Business Briefs 23/4/14

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Healthcare

Economy

Reform of China’s state-owned sector gains momentum | South China Morning Post **Cross river by feeling the stones, etc** Far from the spotlight, in secretive high-level meetings and company boardrooms, Beijing is drawing up one of the country’s thorniest reforms: an overhaul of China’s hugely inefficient state-owned enterprises (SOEs).

It shapes up as an eclectic mix of pilot projects and initiatives rather than a single blueprint, which makes it hard to judge their progress.

Yet, taken together, they probably mark the beginning of the biggest revamp of China’s state sector since the late 1990s, when Beijing set out to shore up industry before joining the World Trade Organisation.

South China’s Balancing Act Between Raising Wages & Keeping Investors | China Briefing News In South China for example, minimum wages were last increased in Dongguan, Foshan, Zhuhai and Zhongshan on a mandatory basis on May 1st of last year. This year, no announcement has been made, although rumors are the increase is being deferred a few months to August.

There are signals that local governments are now having to strike a balancing act between making companies happy (with no further labor cost raises) and workers demanding higher salaries – which will attract more workers and increase local consumption. In terms of social insurance, although this is compulsory, some local companies have been late in paying their obligations in full.

Chinese Bad-Loan Ratio Rises ‘Significantly,’ Huarong Says (1) – Businessweek China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt.

The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.

Chinese Shoemakers Are on Strike for Benefits — But Who Will Foot the Bill? – China Real Time Report – WSJ The workers said the Hong Kong-listed company has been making social insurance contributions based on basic wages rather than total actual pay as required by law.

According  to an estimate by a not-for-profit labor support organization, Yue Yuen’s back payments could total more than 100 million-200 million yuan ($16 million-$32 million) depending on how many of the workers are owed for long years of service.

Slower growth poses challenges: AmCham[1]- Chinadaily.com.cn “With slower growth, we see more challenges,” AmCham China Chairman Gregory Gilligan told reporters in Beijing. “That is the reason some American companies are scaling back their investment plans.”

Finance

China Warns of Rising Risks From ‘P2P’ Lending – WSJ.com **Again** “Currently, P2P lending has been growing rapidly. The number of new P2P lending websites and the total of loans they have issued have been rising rapidly,” said Liu Zhangjun, director general of the Office of the Interagency Anti-illegal Fundraising Taskforce, a group that includes bank regulators, police and court officials.

Closer Look: Regulator Takes Hard Look at Jack Ma-Hundsun Deal – **Is Ma starting to overreach?** The securities regulator has been consulting large securities firms and fund companies regarding the proposed acquisition of a leading financial software provider by Jack Ma, the founder and chairman of e-commerce giant Alibaba Group, sources with knowledge of the matter said.

Banks to issue preferred shares this year – Headlines, features, photo and videos from ecns.cn The first batch of Chinese commercial banks may issue preferred shares this year, and investors will ask for a higher dividend rate while putting up with more uncertainties, experts said.

Preferred shares pay fixed dividends and enjoy priority over common stock in the event of bankruptcy. They typically do not trade on the open market, carry no voting rights and do not dilute net profits attributable to shareholders.

“The pace of Agricultural Bank of China and Bank of China is faster, and they probably will issue preferred shares this year,” said an insider at one of the four major State-owned commercial banks.

China may let banks default when deposit insurance begins – SFGate Authorities may tolerate failures of smaller banks once depositor safeguards are in place, Kwong Li, Chief Executive Officer of China Lianhe Credit Rating Co. said. Among lender bonds rated at or below AA, the extra yield investors demand to hold the 2022 securities of China Bohai Bank Co. in the northern city of Tianjin surged to an 11-month high of 245 basis points on Thursday. The premium on the notes due 2019 of Harbin Bank Co., a lender near China’s border with Russia, has jumped 51 basis points in the past year to 225.

DZHNews.com- Breaking China Biz News, Financial Updates, Corporate News Wang Yongli, vice president of Bank of China Ltd. (BOC, 601988.SH) quitted his job last week, following reports that he was under investigation by the Communist Party of China’s (CPC) discipline department.

Wang’s resignation came after he had reportedly been investigated by the CPC’s Central Commission for Discipline Inspection (CCDI).

Forex controls and VIEs | China Accounting Blog | Paul Gillis Chukong Holdings Limited filed on last Friday with the SEC for a U.S. IPO. Chukong is an online game company so it uses the variable interest entity (VIE) structure despite a specific MIIT prohibition against using VIEs for game companies. The company also faces a lawsuit alleging they ripped off their game Fishing Joy from an arcade game, report that they have not been paying required employee benefits, never bothered to register their stock option plan, and have an auditor facing suspension by the SEC, but based on past history investors ignore such matters.

Beijing mulls bond sales by local gov’ts|Finance|Business|WantChinaTimes.com Money raised by the bond sales could be used to partly finance construction projects that have been included in the provincial-level governments’ general public budget plans, it said.

No other forms of debt raising by local governments and their subordinate organs would be allowed under the draft revision. Furthermore, local governments and their subordinate departments should not provide debt guarantees for any institutions or individuals, under the proposals.

WH Group Said to Mull Cutting $5.3 Billion IPO in Half on Demand – Bloomberg The company may sell new shares equivalent to 10 percent of its enlarged market capital, about half of what it previously planned, the people said yesterday, asking not to be identified as the information is private. Existing investors including Goldman Sachs Group Inc. (GS) may also refrain from selling stock as part of the IPO, the people said.

At $5.3 billion, the WH Group IPO would have been Hong Kong’s biggest since October 2010, when AIA Group (1299) Ltd. raised $20 billion, according to data compiled by Bloomberg. The company struggled to attract investors even after hiring 28 underwriters, the most ever for an IPO in the city.

Wanda Cinema Line Plans CNY2 Billion IPO in Shenzhen — Update – WSJ.com China’s biggest cinema operator in terms of box office revenue plans to sell up to 60 million yuan-denominated A shares to fund the opening of new cinemas and to supplement working capital, according to a preliminary prospectus posted late Monday by the China Securities Regulatory Commission.

The planned listing comes as China pushes to generate economic growth more through domestic spending and less through state-backed investment. The film industry, part of the so-called “cultural industry” that Beijing wants to build up, has in recent years grown rapidly with box office revenue rising by about 30% a year.

Huarong Q1 profits up by 75% – Business – Chinadaily.com.cn Huarong, one of four asset management companies the government set up in 1999 to absorb toxic assets held by China’s four biggest banks, said total assets and net assets were 432.9 billion yuan and 56.7 billion yuan, respectively, at the end of March.

Profits nose dive for Chinese rare earth miner|Markets|Business|WantChinaTimes.com The company made 1.6 million yuan (US$261,300) in net profits from the start of January to the end of March, diving by 94.1% year on year, according to a financial report released on Monday.

The miner’s business revenue also declined by 98.5% to reach 3.3 million yuan (US$529,100) in the first three months. The financial results came after a 20.5% decline in net profits and a 57.6% drop in business revenue in 2013.

Auto

GM to battle VW in China with $12 billion investment and new plants | Reuters GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG, and domestic players like SAIC Motor Corp vie for more market share.

“We are investing wisely and accelerating our vehicle development and manufacturing to keep pace with market demand. In total we are investing $12 billion between 2014 and 2017,” Matt Tsien, president of GM China, said at the Auto China show in Beijing.

Chinese Nissan Leaf goes on sale in September as Venucia e30 The upcoming Chinese version of the Nissan Leaf, the Venucia e30, was not the highlight of the Dongfeng Nissan stand at this year’s Beijing Motor Show. That honor goes to the R30, a compact car with “segment-competitive fuel economy” and a starting price of under RMB 50,000 ($8,033 US). But that doesn’t mean Dongfeng didn’t make some news about the debut of the world’s most popular electric vehicle in the world’s most populous country.

Infrastructure

China Province to Spend $3.35 Billion on Water Projects – Bloomberg A northeastern Chinese province is planning to invest 20.9 billion yuan ($3.35 billion) this year on water-conservation projects as the world’s most-populous nation tries to ensure residential and industrial supplies.

The works in Heilongjiang province, which borders Russia, will highlight agricultural irrigation and drainage, improved flood protection and preserving water resources, the official Xinhua News Agency reported today, citing a provincial government work meeting.

Sany digs deep to lay foundation in Africa[1]- Chinadaily.com.cn However, Xiao Jiang, general manager of subsidiary Sany Southern Africa (Pty) Ltd, said that while Africa has tantalizing potential as a market, any Chinese company contemplating taking advantage of that potential needs to take a long-term view.

“If all you do is scramble for market share by offering the lowest price and don’t care about related services, it’s only a matter of time before your operations fold,” Xiao said.

Energy

CNOOC Limited Announces Key Operational Statistics of Q1 | The Jakarta Post – PR Newswire In the first quarter, the Company achieved a total net production of 108.1 million barrels of oil equivalent (“BOE”), representing 15.5% increase year over year (YoY).

In the first quarter, the unaudited oil and gas sales revenue of the Company reached approximately RMB59.15 billion, representing an increase of 6.9% YoY, mainly due to the increase of oil and gas production. During the period, the Company’s average realized gas price was US$6.33 per thousand cubic feet, representing an increase of 9.3% YoY while the Company’s average realized oil price was US$104.63 per barrel.

PetroChina hikes 2015 shale gas output target to 2.6 bil cu m: report – Natural Gas | Platts News Article & Story State-owned PetroChina has hiked its shale gas production target significantly and now expects to produce 2.6 billion cubic meters/year next year, a senior executive was reported as saying Monday.

This is an increase from an earlier target of 1.5 billion cu m/year made in August last year.

China Petroleum and Chemical’s Underperform Rating Reaffirmed at Zacks (SNP) – Mideast Time Zacks’ analyst wrote, “We are maintaining our recommendation on Sinopec at Underperform, ahead of first quarter results. During 2013, the company witnessed a sharp drop in crude oil prices, which dragged down the Exploration and Production (E&P) segment’s operating profit by 21.8% year over year. However, increases in the price of international crude oil amid government caps on fuel prices prevented the company from fully passing on the spiraling costs to consumers. We believe that Sinopec’s matured domestic oil fields and associated rising costs will continue to be an overhang on its operations as natural declines become pricier to counterbalance. In view of these factors, we see no positive catalyst in the near term.”

Exclusive – Nigeria favours local firms in $40 billion oil contract awards – Yahoo Singapore Finance A number of other former winners were also absent from the 2014/2015 list, which will take effect from June. China’s Unipec, the trading arm of top Asian refiner Sinopec Corp , as well as Azeri state oil company Socar, were former contract holders and did not feature on the new list.

China Hydroelectric Corporation Announces Results for the Fourth Quarter and Full Year 2013: PR Newswire Business News – MSN Money China Hydroelectric Corporation (NYSE: CHC, CHCWS) (“China Hydroelectric” or “the Company”), an owner, developer, and operator of small hydroelectric power projects in the People’s Republic of China, today announced its unaudited financial results for the fourth quarter and twelve months ended December 31, 2013.

For the fourth quarter of 2013, revenues from continuing operations (net of value-added tax) declined by 18.5% year over year to $10.1 million, due to a 16.6% decline in electricity sold. We recorded a net loss attributable to China Hydroelectric shareholders from continuing operations of $5.1 million for the fourth quarter of 2013, compared to a $9.2 million loss for the same period of 2012. This improvement is partially attributable to a $2.9 million decrease in general and administrative expenses.

Telecoms

China Mobile Profit Declines as Costs Rise With IPhone Release – Bloomberg China Mobile Ltd. (941), the world’s largest phone company by users, posted its third straight drop in quarterly profit as expenses for subsidizing Apple Inc. (AAPL)’s iPhone and building networks increased.

Net income fell 9.4 percent to about 25.24 billion yuan ($4 billion) in the first quarter, the Beijing-based company reported yesterday. Profit was expected to be 27 billion yuan, based on the median of five analysts’ estimates compiled by Bloomberg News.

China Unicom Q1 Earnings Soar on 3G Adoption – April 22, 2014 – Zacks.com China Unicom Hong Kong Limited, China’s second largest mobile operator, announced results for first-quarter 2014 with adjusted net income of RMB 3.302 billion ($539.5 million) that surged 73.8% year over year on strong revenue growth and higher adoption of the 3G plan. Earnings per share soared 75% year over year to RMB 0.14 (2 cents).

Total revenue (excluding deferred fixed-line upfront connection fee) climbed 8.3% year over year to RMB 76.5 billion ($12.5 billion) in the first quarter. Telecommunication service revenues, comprising roughly 81% of total revenue, were RMB 63.80 billion ($10.4 billion), up 11.8% year over year.

Property

Xi’s Squeeze Leaves China’s Heartland Missing Boom – Bloomberg “Cities in China are facing some serious real estate bubbles, and the bubbles in third-, fourth-tier cities have the risks of total collapse,” said Tao Ran, director of the China Center for Public Economics and Governance at Renmin University in Beijing, in a phone interview on March 31. “The central government and banks tightened credit in the property market because they realized the risks.”

Liu said three years ago he could get loans from China Construction Bank Corp. (939) and Agricultural Bank of China Ltd. for half the value of the land at about 6 percent to 7 percent interest. Now he’s forced to rely on “friends with connections” and pay rates of about 20 percent.

Closer Look: Why Gov’t Is Eager to Renovate Shantytowns – Premier Li Keqiang said in a recent work report that the government plans to start building 7 million low-income housing units this year, 340,000 more than the number built last year. But the number to be completed is 4.8 million, 640,000 units less than in 2013.

A rough estimate based on the data from Li’s report shows investment in affordable housing for this year will be around 1.2 trillion yuan, similar to last year’s level. In 2013, 1.12 trillion yuan was spent to build affordable housing, equivalent to 13 percent of the year’s total real estate investment, and 2 percent of GDP.

Travel

Shandong Airlines orders 50 Boeing aircraft for US$4.6 billion | South China Morning Post The company signed a deal to purchase 16 Boeing 737-800s and 34 Boeing 737 MAX planes, a statement said, in a drive to grow its fleet for business expansion in the future.

China’s commercial airline industry is dominated by the “Big Three” – flag carrier Air China, China Eastern Airlines and China Southern Airlines – but a move towards greater competition has seen the growth of smaller players in the market.

Tech

China Money Network − Baidu Likely To Report Better-Than-Expected Earnings Baidu, Inc. will report first quarter results on April 24th after the market close. We believe its results are highly likely to come in better than consensus expectations, mainly driven by its mobile business and other non-traditional search businesses such as online video.

In the mobile area, the number of downloads for both Baidu app stores and Baidu’s apps showed significant growth based on our proprietary data.

Ban on Video Game Consoles Tentatively Lifted in the Shanghai FTZ | China Briefing News **Nuts, when you think about it** On Monday this week, details were announced regarding the lifting of China’s 14-year ban on video game consoles, set to begin as a pilot program in the Shanghai Free Trade Zone (FTZ). The lifting of the ban is poised to fundamentally alter China’s lucrative video gaming market, which is currently dominated by PC and mobile games, as the giants of console gaming compete over the world’s 3rd largest video game market in terms of revenue (valued at 123 billion yuan).

Qingguo Jizhang, WeChat-based Daily Expenses Tracking App | TechNode Qingguo Jizhang is one of those expense tracking apps that hopes to make your life easier through their outstanding value proposition – using audio recording function to track your expenses.

By tapping on the WeChat platform and its audio message capability, Qingguo Jizhang wants to make expense tracking easily accessible, hassle-free and most importantly, cultivate a habit of managing your finances on a daily basis.

Alibaba’s chat app has turned its focus away from messaging **”Me too! Me too!”** How is the new Laiwang different from the old app? For starters, let’s take a look at the design. A screenshot of the original Laiwang ought to show up as a picture under the Chinese-English dictionary entry for the word “uninspired.” Its app icon featured a speech bubble enclosed in a kelly green backdrop. Look familiar? Laiwang’s user interface, meanwhile, closely mimicked that of the original WeChat interface, before Tencent placed public accounts on separate pages from ordinary contacts pages.

Now, the updated Laiwang is drenched in sour-candy yellow as it sports a new lemon theme. It even has a new mascot of sorts – anthropomorphic lemons.

Days after promising to go legit, police in China raid offices of notorious video piracy app Police in the southern Chinese city of Shenzhen performed a raid this morning on the offices of one of China’s most notorious video piracy apps. The raid on Kuaibo, makers of the QVOD app for streaming films and TV shows, comes less than a week after the company promised to remove pirated content – which can be streamed or downloaded – from QVOD.

Late last year, QVOD (pictured below) and a mobile app made by search engine Baidu were the targets of a $50 million legal challenge by legitimate video streaming sites in China.

China Money Network − China Everbright Supports Management Buyout Of iSoftStone Beijing-based Chinese IT services provider iSoftStone Holdings Limited says it has entered into a definitive agreement, in which its chairman and CEO Liu Tianwen, together with China Everbright Investment Management Limited, will take the company private, according to a company announcement.

Agriculture

Millions of China’s Farmers Now Buy Climate-Change Insurance – Scientific American Li is one of hundreds of millions of Chinese farmers who are now using insurance as a tool to hedge against the risks of climate change. China is the world’s second-largest agricultural insurance market after the United States by premium income, and it is scrambling to spread the use of climate-related insurance into other sectors.

Chinese policymakers in recent years have already persuaded hundreds of millions of farmers there to buy agricultural insurance, forming a capability of covering losses worth 1.4 trillion yuan ($225 billion) in 2013. Climate risks are known as the biggest danger for losses in agriculture.

Healthcare

Fosun-TPG Group Agrees to Buy Chindex With Sweetened Bid – Bloomberg **Wonder how this will affect expat media – United Family Hospitals are one of their biggest advertisers** Shanghai Fosun Pharmaceutical Group Co. (2196) and its partners agreed to acquire hospital operator Chindex International Inc. (CHDX) for about $433 million, after raising their offer to counter another bidder.

The group comprising Fosun Pharma, TPG Capital and Roberta Lipson, Chindex’s chief executive officer, boosted its offer for the hospital operator to $24 a share from $19.50, the Chinese drugmaker said yesterday. Chindex, based in Bethesda, Maryland, signed an amended agreement with the group after another bidder, who earlier offered $23 a share, declined to bid further, Chindex said in a separate statement

Posted from Diigo.

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China Business Briefs 13/1/14

ECONOMY

Yuan Reaches 1993-High on Record Fixing as Taper Concern Eases – Bloomberg The currency advanced by the most in a month as the People’s Bank of China strengthened the daily fixing by 0.1 percent today to 6.0950 per dollar, the highest since a peg to the greenback was scrapped in July 2005. U.S. employers added 74,000 workers in December, the least since January 2011, the Labor Department said on Jan. 10. China had a trade surplus of $25.6 billion in December, according to official figures released Jan. 10.

China Moving Closer to Bank Failure: Xinhua-Caijing China is moving closer to allowing its banks actually fail, the official Xinhua reported, citing Yan Qingmin, deputy chairman of China Banking Regulatory Commission.

The market will have the final say in future, Yan told the forum, which means banks would have to stay out of the market if they end up insolvent. Such a remark from the regulator has signaled the state’s exit from its support to deposits in commercial banks and the government will for the first time allow its banks to go bankrupt, Xinhua said.

China’s 2013 exports rise 7.9%, imports up 7.3% – Business – Chinadaily.com.cn China’s exports rose 7.9 percent year on year to $2.21 trillion in 2013, while imports increased 7.3 percent to $1.95 trillion, customs data revealed on Friday.

The foreign trade surplus widened to $259.75 billion in 2013, an increase of 12.8 percent from a year earlier, said Zheng Yuesheng, spokesman for the General Administration of Customs.

Nation’s salary growth strong: Report – Business – Chinadaily.com.cn According to the 2014 Hays Asia Salary Guide, which was released on Thursday and polled about 2,600 employers across the region, 67 percent of the surveyed Chinese employers said they will increase employees’ salaries above 6 percent, compared with 66 percent last year.

US scrutinises Chinese investments most over national security: law firm | South China Morning Post The Committee of Foreign Investment in the United States (CFIUS) reviewed 23 transactions proposed by Chinese companies in 2012, followed by 17 for Britain, traditionally top of the list for scrutiny, and 13 for Canada, US law firm Kaye Scholer said in a report.

Investors still not sold on rail sector – BUSINESS – Globaltimes.cn Some see these losses as a sign that China’s rail assets are undervalued, despite a recent industry overhaul. In actuality though, investors have good reason to be bearish on the rail sector.

Chinese Developers Set to Increase Investment In Foreign Real Estate – Forbes Chinese developers have been purchasing big real estate projects in the world’s most important cities in the past year. They will continue the shopping spree this year, with other Chinese groups to follow the trend soon, according to real estate analysts.

New property bureau to be set up – BUSINESS – Globaltimes.cn China will establish a new bureau specifically designed for property registration this year in a push to facilitate property management reform, the Ministry of Land and Resources (MLR), the country’s top land regulator, said over the weekend, according to the Xinhua News Agency.

On top of the establishment of the new bureau, relevant regulations that will lay the ground for a unified regi­stration system will be released this year, Xu Deming, vice minister of land and resources, said Saturday at a two-day annual work conference.

China Believes that it Can Duplicate Our Success Given our recent success in producing oil and natural gas, it shouldn’t shock anyone that other countries believe they can follow suit. China now has hopes of doubling its oil production by 2030. Because it will be relying heavily on unconventional production methods, the help of current experts in these areas will be needed. Equipment & service providers Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB) have already begun successfully setting up shop in China. They will be helping producers like CNOOC (NYSE: CEO) and Royal Dutch Shell (NYSE: RDS-A  ) tap these vast resources. For more, tune in to the clip below.

Why China Wants to Kill Off Bitcoin The press releases may seem mundane, but the reality is, China has a big incentive to keep Bitcoin out of the hands of its citizens. China maintains very tight capital controls, limiting the amount of cash citizens can move outside the country.

Bitcoin effectively circumvents any and all capital controls. Prior to a widespread ban, Chinese citizens could buy Bitcoin to sell for another currency, or even buy homes in foreign lands. Yes, homes. Several homes have been listed with prices in Bitcoin.

COLUMN-Record China crude oil imports flatter to deceive: Clyde Russell | Reuters Taken together, net crude and fuel imports last year were 5.83 million bpd, up about 160,000 bpd, or 2.8 percent, from 2012’s 5.67 million bpd.

This figure is a truer reflection of the overall state of Chinese import demand.

Closer Look: Same Game, Different Names – The end of a listing freeze on mainland stock exchanges has reinvigorated investor appetites for new shares. This comes along with the intention of many company founders to cash out of newly-listed companies. When such demands intersect, sparks are bound to fly.

RMB appreciation unappreciated as inflation dampens affordability|WantChinaTimes.com The 35.7% appreciation in the value of the yuan during this eight-year period has been a positive development for Chinese exchange students studying overseas, but locals who have remained in the country are complaining that their money is becoming less valuable given that the consumer price index, the main measure of inflation, has averaged around 3.1% per year.

Milk, Games and Movies: China Stocks to Watch in 2014 – China Real Time Report – WSJ One area to watch: dairy products. The government’s relaxation of its one-child policy and antitrust measures targeting international competitors are both good news for the domestic milk industry, Bank of Communications Schroder Fund Management Co. said in a recent research report. Retail prices of China’s dairy products rose 5.7% in 2013 on-year, up from an increase of 3.2% in 2012, data from the National Bureau of Statistics showed—faster than inflation, which clocked in for the year at 2.6%.

China can avoid Japan-style property bubble: official | Reuters China’s policy fine-tuning and ongoing urbanization can help it to avoid a Japan-style property bubble, a senior housing official said, amid fears a housing market crash could lead to a hard landing for the world’s second-largest economy.

Beijing has allowed local governments to take differentiated property tightening measures, rather than a one-size-fits-all bid to cool the market, Vice Housing Minister Qiu Baoxing said in remarks published in the Southern Metropolis Daily.

Luxury cars drive UK exports to China – Telegraph British exports to China are rising at a blistering pace and are poised to overtake those of France for the first time in the modern era, driven by sales of Range Rovers and other luxury cars to the country’s new rich.

Fresh data released by China’s authorities show that imports from Britain rose 14pc to $19.1bn (£11.6bn) last year, with more than 40pc of total sales coming from vehicles and transport goods.

Closer Look: Why Overpriced IPOs are not a Reason for Intervention – All of them have one thing in common: the price-to-earnings (PE) ratio of their proposed offering price was much higher than the average PE ratio of comparable companies in the secondary market.

Five companies scheduled to start their online road shows for an initial public offering on January 13 postponed their issuance on the previous day, putting the number of companies to halt their stock issuance last minute at six.

China ‘equity return’ is a misnomer – Craig Stephen’s This Week in China – MarketWatch The lack of correlation between China’s growth and stock-market performance has frustrated money managers for years and spawned a variety of theories to try to explain this misnomer. Some look more useful than others, but they are worth reviewing as new explanations arrive.

Little consensus on renminbi appreciation this year | China Economic Review The bank’s Deputy Governor Yi Gang went a bit further last week, saying that China’s currency was close to equilibrium and would not require more intervention.

If that’s true, and China intends to stop buying US treasuries on a regular basis, the value of the yuan should appreciate considerably this year and in the years to come as China’s trade surplus is set to rise too. The IMF says the country’s current accounts surplus will double between 2013 and 2017.

COMPANIES

Death blast hits Sinopec for $963m – The Standard China Petroleum & Chemical Corporation (0386) announced yesterday it had suffered a direct loss of 751.72 million yuan (HK$963.69 million) from a deadly accident in Qingdao last November for which chairman Fu Chengyu has received disciplinary penalties.

Fu was given a demerit on administration, while vice chairman Wang Tianpu, president Li Chunguang, chief safety officer Wang Yongjian and supervisor and director of general production Yu Renming were given “serous demerit on administration,” the firm said.

Chinese app store Wandoujia seals $120 million in funding Wandoujia, one of China’s top Android app stores, has secured a massive $120 million in funding, the Beijing-based startup revealed today.

The investment is led by SoftBank (TYO:9984), the Japanese mobile telco, with some funds also coming from DCM and Kaifu Lee’s Innovation Works Development Fund (IWDF). It’s the second major cash boost for Wandoujia, coming long after its $8 million in series A funding in 2011, which was led by DCM and Innovation Works.

Billionaire Li’s PCCW, Pacific Century Premium Suspend Trading – Bloomberg PCCW Ltd. (8), controlled by billionaire Richard Li, and its property unit Pacific Century Premium Developments Ltd. (432) halted their shares from trading in Hong Kong.

Pacific Century Premium plans to release a statement relating to “inside information and unusual price and trading volume movements,” the company said in a filing today. Shares of the Hong Kong-based property developer surged 15 percent to HK$3.07 before the trading halt.

WeChat brings in over 100,000 taxi rides in 9 days It’s been about a week and a half since WeChat, the messaging app that’s dominating smartphones in China, added taxi booking and payments to its range of services. The maker of WeChat, Chinese web giant Tencent, added support for the Didi Dache service after investing nearly $100 million into it. Today the fine folks at 36kr say that the total number of completed transactions – meaning taxis hailed and paid for inside of WeChat – have surpassed 100,000.

KFC Crisis in China Tests Ingenuity of Brand Builder – WSJ.com More than a year into the crisis, Yum is still struggling. Now Mr. Su and Chief Executive David Novak say the Louisville, Ky., company can turn things around in 2014, vowing that new menu items and digital-media initiatives will revive the brand in China. “I fully expect a strong comeback year,” Mr. Su said in a rare interview last month.

Some investors are getting restless. Yum’s shares—which had been propelled for years by its China growth—are up only 12% since late November 2012, when Chinese state media started reporting on food-safety concerns surrounding KFC suppliers. The Dow Jones Industrial Average rose 26% in that period.

President Death Leaves Heir Overdue Rail Payments: China Credit – Bloomberg Shares in China’s second-biggest builder of railways have fallen 4.9 percent in Hong Kong since the company said Jan. 5 that President Bai Zhongren had died in an accident and that Chairman Li Changjin will take over his job before a successor is chosen. The yield on 2023 dollar-denominated debt of a company unit reached an eight-week high of 5.03 percent on Jan. 9, up from 3.88 percent when they were sold last January.

The Beijing-based company had 531.6 billion yuan ($87.9 billion) of liabilities on Sept. 30, data compiled by Bloomberg show. Its long-term debt to equity ratio of 129 percent would put it in the worst 3 percent on the Hang Seng Index, while its ability to cover interest payments with earnings would be in the worst 1 percent.

Li & Fung to Launch Factory-Safety Business – WSJ.com Li & Fung Ltd. , the buying agent for retailers including Wal-Mart Stores Inc. and Target Corp., said it is setting up the unit to provide factories with consulting services on safety, compliance and efficiency, as well as access to financing and insurance.

Dogfight on the cards | South China Morning Post A dogfight is looming in the horizon as more budget carriers come on stream, bringing them head-to-head with the likes of Cathay Pacific Airways, China Southern Airlines and Air China.

There are about 60 budget airlines operating nearly 1,000 aircraft in the Asia-Pacific but only four in Greater China – encompassing the mainland, Hong Kong, Macau and Taiwan – deploying fewer than 80 aircraft.

OCBC Said in Talks for All-Debt Financing for Wing Hang Deal – Bloomberg Oversea-Chinese Banking Corp. (OCBC) is in talks with lenders including Bank of America Corp. and HSBC Holdings Plc about an all-debt financing for its acquisition of Hong Kong’s Wing Hang Bank Ltd. (302), according to two people with knowledge of the matter.

Singapore-based OCBC plans to sell stock later to help repay the short-term loan, said the people, who asked not to be identified because the discussions are private. Talks between the companies are centering around a valuation of almost 1.9 times Wing Hang’s book value, though no terms have been finalized, one person said.

Service firms pay 67% of tax revenue – Xinhua | English.news.cn The service industry paid nearly two-thirds of Shanghai’s tax revenue last year and financial firms took the lead as they made up 40 percent of the 100 top service taxpayers, underlining the city’s goal to be a global financial center.

The Bank of Communications Ltd was the top service taxpayer with 16.2 billion yuan, followed by Shanghai Pudong Development Bank with 10.4 billion yuan, and Shanghai GM Sales Co Ltd with 8.4 billion yuan.

Onecard, China’s version of Coin, is your digital credit card As well as storing your credit cards and being swipe-able in China’s point-of-sale devices in stores, OneCard will go a couple of steps further than Coin in also storing prepaid cards and membership/loyalty cards. Even better, it promises to support the tap-to-pay function on Beijing’s and Shanghai’s public transport systems. It also incorporates NFC, but that’s of limited usage pretty much anywhere.

Moody’s assigns A1 to BOC Hong Kong Branch’s MTN program drawdown Moody’s Investors Service has assigned an A1 rating to the benchmark-size  senior unsecured notes to be issued by Bank of China Limited (BOC) Hong  Kong Branch.

ASIA CREDIT CLOSE: New issues feel impact of competition | Reuters Bank of China, meanwhile, also announced a two-tranche offering, which took the shine away from BoCom’s 3-year bonds printed last week, which were, therefore, last quoted at 186bp/184bp over the 2-year US Treasury, or 3bp wider.

Sinohydro Group Ltd : 32 Years After, No Power At Mambilla Hydro-Power Project | 4-Traders According to the report, the project was contracted at the sum of $3.2 billion (equivalent N508 billion) to the China Gezhouba Group Company Limited (CGGC) and another Chinese consortium, Sinohydro, with the proposed structure of the contract stipulating that Sinohydro cover 70 per cent of the project while CGGC would execute the remaining 30 percent.

Hong Kong Electric Eyes up to $3.6 Billion From IPO | 4-Traders HK Electric Investments, which owns power plants and electricity-distribution networks in the city, is selling 4.43 billion units in an indicative price range of HK$5.45-HK$6.30 each, it said in a statement late on Sunday. At the US$3.6 billion size, it will be the region’s top deal since Suntory Beverage & Food Ltd raised US$4 billion from an IPO in Japan in June, according to Dealogic.

£24bn rival to Panama Canal to break ground this year – Telegraph Its construction is essential to deal with a surge in global trade and the rise of colossal supertankers, many of which are too large for the ageing   Panama Canal, more than 500 miles to the south.

The project’s funding is being led by the Chinese telecoms billionaire Wang Jing, whose HKND Group won a licence for the development last year.

Chinese Startup Hopes to Capture Apple’s Magic – China Real Time Report – WSJ The Chinese company, which is planning to expand abroad, paid Apple co-founder Steve Wozniak to appear on Sunday in front of reporters at its headquarters in Beijing. Mr. Wozniak showed up at the event–labeled as the “Lei Jun & Woz Tech Talk”–with Xiaomi’s founder and chairman, Lei Jun, and told reporters that Xiaomi’s products were “excellent” and “good enough to crack the American market.”

What U.S. Coffee Chain Could China’s Goubuli Be Looking to Buy? – China Real Time Report – WSJ Zhang Yansen, chairman of closely held Chinese bun maker Goubuli, has been in the Chinese press this week saying he is in the final stages of negotiations to acquire a well-known American coffee chain, without disclosing the name. He gave some hints though: It has hundreds of shops in 40 countries spanning the U.S., Europe and Asia.

China Life Insurance Co. Ltd. (LFC): New Analyst Report from Zacks Equity Research – Zacks Equity Research Report – NASDAQ.com We maintain our Neutral recommendation on China Life as strong market position, growth in premiums and investment income is expected to outweigh the headwinds like higher expenses and declining cash flow.

Posted from Diigo.