Chindex International

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.

China Business Briefs 16/4/14

There won’t be a posting of the business briefs tomorrow, as I am flying to Beijing (in about three hours) for a two week visit. I will try to keep on posting once there, but visits and reunions may take precedence.

I am looking forward to seeing Iain Shaw and co, former staff of the Beijinger (and former colleagues of mine) who are starting up The Cleaver Quarterly, a magazine on Chinese food around the world. Check out their kickstarter thing here if you’re interested.

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail Healthcare

Economy

China’s first quarter GDP grows 7.4% – Business – Chinadaily.com.cn China’s economy grew 7.4 percent year on year in the first quarter of 2014, the National Bureau of Statistics (NBS) revealed on Wednesday.

The NBS said that preliminary data showed the nation’s gross domestic product (GDP) reached 12.8213 trillion yuan ($2.08 trillion) in the first quarter.

The figures suggest growth in the world’s second-largest economy in the beginning of year 2014 was stable and that the economy was generally in good health, as Chinese authorities promoted reforms, innovation, restructuring and improvement of people’s well-being, according to the NBS.

Chinese incomes continue surging in Q1 – BUSINESS – Globaltimes.cn The average per capita disposable income rose 11.1 percent year on year to 5,562 yuan (908.82 US dollars) in the first quarter. Deducting inflation, the actual growth was 8.6 percent, according to the NBS.

The income gap between urban and rural residents narrowed with the actual income growth in rural China 2.9 percentage points higher than that in its urban areas in the first quarter, according to the NBS.

China’s Economic Growth Slows to Six-Quarter Low After Credit Reined In – Businessweek China’s expansion moderated to the weakest pace in six quarters and property construction plunged, testing leaders’ commitment to keep reining in credit as risks mount of a deeper slowdown.

Gross domestic product rose 7.4 percent in the January-to-March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 percent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

China’s expansion slows as property construction falls | Money | The Malay Mail Online Gross domestic product rose 7.4 per cent in the January-to- March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 per cent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

The weakest first-quarter property-investment growth since 2009 signals credit is tight and demand is faltering, adding to economic and default dangers as Premier Li Keqiang grapples with risks from shadow banking and local-government debt. A deeper slowdown would put pressure on leaders to expand stimulus or limit the pace of changes intended to give market forces a bigger role in the world’s second-largest economy.

Chinese Police Confront Trust Investors Demanding Repayment – Bloomberg Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch.

People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer.

Electricity, Steel Hint at Economic Uptick in China – China Real Time Report – WSJ Official data shows China’s economy in the first quarter grew at its slowest pace in 18 months, but two proxies point to some resilience.

Electricity output—an indicator favored by Premier Li Keqiang over gross domestic product—and crude steel production grew faster in March than in the preceding two months. In addition, steel output in March hit a record high, the National Bureau of Statistics said.

China’s slowing growth potential minefield for leaders – The Globe and Mail Slowing growth presents a potential minefield for Chinese leadership, whose chief concern is maintaining a rising standard of living for its own people. To that end, officials have sought to discount the value of GDP as a measure of well-being, instead deliberately underscoring other statistics. “Maybe a more important thing to look at is employment and income,” said Mr. Sheng. And those numbers still look good. The first quarter saw 3.74-million urban jobs created, slightly more than the year before. Rural income is up 10.1 per cent, while urban salaries swelled 7.2 per cent. At the same time, consumer price index growth of 2.3 per cent has allowed many of those gains to flow in to consumer pockets, rather than back into groceries.

Slowdown curbs Q1 lending activity – Headlines, features, photo and videos from ecns.cn Money supply growth decelerated further in March amid a reform-induced economic slowdown, according to figures released on Tuesday by the People’s Bank of China.

The central bank said that the expansion of M2, a broad measure of money supply, slowed to 12.1 percent year-on-year from 13.3 percent in February. The market consensus was for an increase of 13 percent.

Slower deposit growth, which limits banks’ ability to lend, was a factor. Yuan deposit growth fell to 11.4 percent year-on-year in March from 12.5 percent in February.

Higher-value exporters survive turmoil in market[1]- Chinadaily.com.cn Higher-value Chinese exporters are more immune than low-cost manufacturers in the face of market turmoil from such things as weak demand, exchange-rate fluctuations and rising costs, said exhibitors at the Canton Fair that opened on Tuesday.

China not Currency Manipulator: US Treasury-Caijing “China’s currency yuan, or renminbi (RMB) appreciated on a trade-weighted basis in 2013 but not as fast or by as much as is needed,” the US Treasury said  in the latest semi-annual Report to Congress on International Economic and  Exchange Rate Policies.

According to the report, the yuan appreciated by 2.9 percent against the US  dollar in 2013, and China’s current account surplus declined to 2.1 percent of  gross domestic product (GDP) in 2013, down from 2.3 percent of GDP in 2012 and  from a peak of over 10 percent in 2007.

Yangtze River Delta becomes epicentre for China credit risk | South China Morning Post Suzhou, an ancient city in Jiangsu province 100 kilometres west of Shanghai, lives in legend as one of China’s most beautiful, famous for its elegant gardens and charming canals.

More recently, it became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove the mainland’s economic boom.

Now it is ground zero for a painful corporate deleveraging that has tacit government approval. A third of all loan delinquencies come from the region, and credit is getting harder to come by.

Finance

Citic Pacific to Pay $36B for Parent’s China Assets – Bloomberg The steelmaker and property developer will pay 49.9 billion yuan in cash and issue almost 16.6 billion shares at HK$13.48 each, according to a Hong Kong exchange filing today. Citic Group Corp. will hold 75 percent of Citic Pacific following the transaction and a share sale by the Hong Kong company, it said.

The transaction comes as Chinese President Xi Jinping advocates the most sweeping changes since Deng Xiaoping’s liberalization in 1978, including loosening yuan trading and allowing more private investments in state businesses. The deal gives Citic Pacific a stake in China’s largest brokerage, as well as banking, energy and infrastructure assets.

China Money Network − S&P Downgrades Fosun International’s Credit Rating Shanghai-headquartered Chinese privately owned conglomerate Fosun International Ltd. has been downgraded by Standard & Poor’s Ratings Services because of the company’s increasing leverage level as a result of its acquisitions, according to a notice issued by S&P.

Fosun’s long-term corporate credit rating is downgraded to BB from BB+ with stable outlook.

BRIEF-Ping An Insurance’s Jan-Mar premium income totalled 108 bln yuan | Reuters Ping An Insurance Group Co of China Ltd

* Says January-March premium income totalled 108 billion yuan ($17.37 billion)

Source text in Chinese: link.reuters.com/tan58v

BRIEF-China Life Insurance’s Jan-Mar premium income totalled about 132.2 bln yuan | Reuters China Life Insurance Co Ltd

* Says January-March premium income totalled about 132.2 billion yuan ($21.25 billion)

Source text in Chinese: link.reuters.com/tet58v

Auto

Volvo likely to become China’s next official car brand: report|Companies|Business|WantChinaTimes.com **I wonder what % of Audi’s revenues come from China** China’s president Xi Jinping, who visited the Chinese-owned Volvo car plant in Ghent, Belgium on April 1 during his European trip, seems to have become the best spokesman for the automobile brand after a photo of him and the Volvo XC60 model was published. Volvo could likely become the new choice for official cars in China, according to the Guangzhou-based Time Weekly.

Infrastructure

SOE accounting puzzle blurs frugality drive – Headlines, features, photo and videos from ecns.cn **Article repeated from Xinhua – evidently CRCC’s arse is being kicked** Many Chinese state-owned enterprises(SOEs) that were under fire last year for exorbitant “reception” fees hid the item in their latest financial results, renewing public concerns over their sincerity to cut extravagance.

China Railway Construction Corporation Ltd. (CRCC), one of the country’s largest construction companies, spent 837.5 million yuan (135.1 million U.S. dollars) on receptions in 2012. The company was punished following public outrage over the alleged abuse of state assets.

In its 2013 financial report released in late March, CRCC canceled the item called “receptions” in its accounting statement. Meanwhile, the item named “management fees,” which included the sub-item “receptions” in the 2012 report, surged by nearly 2.2 billion yuan last year.

World’s longest plateau rail tunnel completed – People’s Daily Online The Xinguanjiao Tunnel, the world’s longest plateau rail tunnel on the Qinghai-Tibet Railway, was completed on Tuesday, local authorities said.

Spanning 32.645 km, the tunnel was finished on Tuesday afternoon, making it the longest rail tunnel in China, according to Zhi Changying, an official with the China Railway Tunnel Co. Ltd. (CRTC), a partner in the project.

Sierra Leone Sports: Bo stadium handed over to Salone « Awoko Newspaper Renowned Chinese company, Xinjiang Beixin construction and Engineering Group Company Limited on Friday April 11th handed over the four thousand seater stadium to government through the Ministry of Sports.

Before the handing over ceremony, one of the Engineers Tai Xie who also doubles as interpreter told Newday that they started the construction of the Stadium on the 25th of December 2008 and they finished the project on 25th December 2013 spanning over a five year period.

Energy

China Natural Gas Output Rises in March to Highest in Two Years – BloombergNatural gas output in the world’s largest energy consumer rose 7.6 percent to 11 billion cubic meters last month, data from the National Bureau of Statistics in Beijing show today. That’s the highest since March 2012. NBS didn’t release output figures for January 2013 because the data was distorted by the Lunar New Year holiday.

The Chinese government sees expanding gas supply as a way to curb air pollution that has frequently exceeded limits recommended by the World Health Organization. The National Energy Administration said in its work plan in January that gas output is forecast to rise 12 percent from a year earlier to 131 billion cubic meters this year.

China State Grid Considers Dollar Issue Amid State-Giant Sales – Bloomberg State Grid Corp. of China, the nation’s largest power distributor, is considering a dollar-denominated bond offering following sales from other government-backed giants.

The company will meet investors in the U.S. and Asia from April 21, according to a person familiar with the matter, who asked not to be identified because the details are private. China Petrochemical Corp., known as Sinopec Group and parent of Asia’s largest oil refiner, raised $5 billion selling securities April 2 in Asia’s biggest dollar bond offering in a decade.

China builds up nuclear power grid – Business – Chinadaily.com.cn “China will install another 800 gigawatts of capacity for nuclear power, about 70 percent of which will use our technology for steam turbines and other key components,” Chen Chaoming, vice-president of Nuclear China-Alstom Thermal, told reporters in Beijing during the 13th edition of Nuclear Industry China, organized by the Chinese Nuclear Society.

“Despite the post-Fukushima delays,” he said, referring to the Japanese disaster of three years ago, “China’s nuclear market has a huge potential for growth. Basically, it is because China’s nuclear industry is still at a nascent stage. Power generated by nuclear plants accounts for less than 2 percent,” he said.

PetroChina Company Ltd.: Notice of Annual General Meeting for the year 2013 NOTICE IS HEREBY GIVEN that an annual general meeting of PetroChina Company Limited (the “Company”) for the year 2013 (the “Annual General Meeting”) will be held at 9 a.m. on 22 May 2014 at Beijing Oriental Bay International Hotel, 26 Anwai Xibinhe Road, Dongcheng District, Beijing.

PLN teams up with Chinese firms on marine project | The Jakarta Post State owned electricity company PT PLN has teamed up with three Chinese companies — Technology Intern Shijiazhuang Enric Gas Equipment Co. Ltd, Ocean Engineering Design & Research Institute of CIMC and PT Enviromate Technology International Cui Li — to develop marine transportation of compressed natural gas (CNG) in Indonesia.

The marine CNG transportation project, which will transport CNG from Gresik, East Java to Lombok, West Nusa Tenggara, via a CNG vessel, is the first project of its kind in the world.

Telecoms

Huawei world’s top communications equipment supplier in 2013|Companies|Business|WantChinaTimes.com Drawing from China’s huge mobile communications market, Huawei became the world’s largest communications equipment supplier in 2013, overtaking Ericsson, according to the Chinese-language CBN Weekly.

The company raked in net profits of US$3.47 billion on sales of US$39.5 billion in 2013, compared with US$1.9 billion and US$35.3 billion for Ericsson. Cisco was third.

Property

China First-Quarter Home Sales Post Decline on Tight Credit – Bloomberg The value of homes sold fell 7.7 percent to 1.1 trillion yuan ($177 billion) in the three months to March from the same period a year ago, the National Bureau of Statistics said today. The last time home value sales dropped in the first quarter was in 2012. New property construction declined to 291 million square meters (3.1 billion square feet) in the quarter.

Is glut developing in retail building sector?[1]- Chinadaily.com.cn Despite a rapid growth in retail sales, less-experienced developers could soon be learning a hard lesson from a market with a supply glut, says a retail property trend report released by Cushman & Wakefield, the world’s largest privately held real estate services company.

The report forecast that the new supply of commercial properties in 30 cities that it monitors will total 75 million square meters, and a peak of new supply with more than 20 million sq m will flood the market this year.

Hoping for Price Rises? Here’s the Harsh Reality, CCTV Tells Home Buyers – China Real Time Report – WSJ China’s latest message about the property market is simple and aimed at the man on the street: The home you’ve bought isn’t a one-way bet. Deal with it.

That message has been pumped out through China’s state broadcaster as part of Beijing’s efforts to curb people’s enthusiasm for homes as an investment tool. Such appetite for property has driven economic growth, but also led to imbalances in the country’s economy and social tension.

Hebei Hopes to Turn Cities into Satellites by Pushing Them into Beijing’s Orbit – The housing market in Baoding heated up after media reports that provincial officials in Hebei want to develop some cities into satellites of Beijing, and Baoding might host some central government offices.

A Hebei official has said the idea is still just that, and that the central government has not approved anything.

However, the plan shows the province is enthusiastic about developing its economy, and has identified problems in the capital – overcrowding, heavy traffic and terrible air pollution – as problems it could use to its advantage.

Travel

WeChat Adds Air Ticket Booking Service | TechNode WeChat’s m-commerce offerings has added flight booking service that is provided by LV.com (formerly 17u.cn), a Chinese online travel service Tencent has a stake in. Payments, of course, are supported by WeChat Payment.

Firms decline to comment on merger rumors – BUSINESS – Globaltimes.cn Ctrip.com International and Qunar.com Inc, two Chinese NASDAQ-listed online travel service providers, both declined to comment Tuesday on market rumors that they will merge in a deal that would create an online travel service giant with a market capitalization of over $10 billion.

The rumors, as reported by China Business Journal over the weekend, claimed that search engine giant Baidu Inc, the majority shareholder in Qunar, will swap its shares in Qunar for Ctrip shares, resulting in Baidu taking a controlling stake in Ctrip.

Sikorsky Helicopter Receives Chinese Nod – Analyst Blog – NASDAQ.com **UK political buffs may remember Sikorsky from the Westland affair** Sikorsky Aircraft Corp., a unit of  United Technologies Corp. (UTX), declared that its S-76D aircraft has received China’s  certification, jumpstarting its delivery to Chinese customers.

The Civil Aviation Administration of China (CAAC) issued a validation type certificate for the helicopters, which will  support expansion of Sikorsky’s operations in a potentially  profitable market and strengthen its foothold in the Chinese market.

Tech

Alibaba Plans Hong Kong-Style Fee as Carrot for IPO Banks – Businessweek Alibaba Group Holding Ltd. is planning to award about one-third of the fees for its initial public offering in the form of incentive bonuses to coax better performance from underwriters, people with knowledge of the matter said.

China’s largest e-commerce company plans to pay at least 1.1 percent of the total IPO proceeds in fees, two people said, asking not to be identified discussing private information. Estimates of Alibaba’s valuation suggest the company could raise as much as $18 billion in the sale, making the potential fee pool almost $200 million. While the e-commerce giant is preparing for an IPO in New York, performance incentives are common in Hong Kong and have been used by companies including Agricultural Bank of China Ltd.

China’s Alibaba sees profit double ahead of long-awaited IPO As the tech world awaits Alibaba’s US IPO, here are some new financial figures to chew on. The Chinese ecommerce juggernaut pulled in US$3.06 billion in revenue in Q4 2014, which is up 66 percent on the same period a year before. Alibaba’s Q4 net income hit $1.36 billion in net income in Q4, which has more than doubled (up 110 percent) from the previous year.

Alibaba’s Q4 numbers were boosted by the popularity of China’s equivalent of Cyber Monday, which happens every November 11. On that day, Alibaba’s Tmall and Taobao marketplaces saw $5.7 billion spent by shoppers in just 24 hours.

Baidu enters China’s mobile payments war with Baidu Wallet Baidu (NASDAQ:BIDU), the Chinese tech giant best known for its search engine, announced yesterday it will roll out a new mobile wallet app called Baidu Wallet (baidu qianbao), reports Jinghua.cn (via Techweb).

Like its main rivals from Alibaba (Alipay) and Tencent (Tenpay and WeChat Payments), Baidu Wallet serves as a Swiss army knife for the average Chinese consumer’s finance needs. By binding bank cards to the app, users can transfer money to friends’ accounts, top up their SIM cards, pay for virtual goods in video games, purchase movie tickets, and buy goods from any vendor that accepts Baifubao, Baidu’s third-party payment solution.

Agriculture

Noble Group to sell stake in agriculture unit for US$1.5b – Channel NewsAsia China’s largest grain trader COFCO Corp will buy a 51 per cent stake in Singapore-listed Noble Group Ltd’s agriculture business unit for US$1.5 billion, Noble said on Wednesday.

The two companies plan to form a partnership that will link COFCO’s grain processing and distribution business with Noble Agri’s agricultural unit.

Noble Group Limited – Did it sell the agriculture business at right price – which of the brokers is right? – Yahoo Singapore Finance After failing to spin off its agriculture business in 2011 it has now again plans for an IPO after divesting majority stake to COFCO. The question still remains whether this segment deserves better valuations.

Retail

An Overview of China’s Retail Industry | China Briefing News Underpinned by the steady rise of household income, China’s retail market has become one of the most lucrative and rapidly growing in the world. China is currently the world’s second largest retail market, and Asia’s largest. It is expected to surpass the U.S. to become the world’s largest retail market by 2016. After years of accelerated growth and annual expansion rates of 10 percent or more, China’s growth in 2013 slowed down to 7.7 percent – level with the figure for 2012. This slowdown in growth is consistent with China’s effort to carry out a major overhaul aimed at weaning its economy off its decades-long reliance on heavy industry, export-oriented manufacturing, state-driven investment, as well as investment in infrastructure. Meanwhile, to rebalance the nation’s economy, policymakers are attempting to shift towards a more consumption- and service-driven model, hoping to foster and sustain more productive growth over the next decade and beyond.

Reaching for the red | China Economic Review This is a characteristic trait seen in previous emerging markets like Japan that eventually opened up their palates to other varieties, notes Guilllame Delglise, CEO of Vinexpo, a global wines and spirits exhibition, but it will take time for the same to happen in China.

In an interview during a recent visit to Shanghai, Delglise, who was previously Asia Pacific director for Laurent-Perrier, also told China Economic Review that officials in Beijing are not inclined to serve champagne to their guests, and explained why that might be good for marketers of bubbly as they chase affluent urban youngsters at fancy nightclubs.

Healthcare

China Money Network − TPG, Fosun’s Privatization Target Chindex Receives Higher Takeover Proposal NASDAQ-listed Chindex International, Inc., the operator of high-end United Family hospitals in China, says the company has received a superior take-private proposal from an unspecified financial bidder, according to a company release.

The new bidder is willing to pay $23 per share for all outstanding American Depository Shares (ADS), valuing the company at around $414 million.

Posted from Diigo.

Financial Results 12/11/13 – Chindex International, China Yuchai International

Chindex International, Inc. Reports Financial Results for Third Quarter and First Nine Months of 2013

**Chindex owns United Family Hospitals, which runs Beijing United hospital. I once wrote a profile of CEO Roberta Lipson.**

Third Quarter 2013 Financial Highlights
  • Revenue from healthcare services increased 16% to $43.1 million from $37.3  million in the prior year period.
  • Adjusted EBITDA was $5.0 million, compared to $6.0 million in the prior  year period.
  • Development, pre-opening and start-up expense was $4.9 million, compared  to $2.7 million in the prior year period.
  • Loss from operations was $2.8 million, compared to income from operations  of $1.5 million in the prior year period.
  • Net loss was $3.8 million, or $(0.23) per diluted share, compared to net loss of $664,000, or $(0.04) per diluted share, in the prior year period.
  • Full year guidance adjustment primarily due to government regulatory delays.

China Yuchai International Announces Record Third Quarter Net Revenue

Financial Highlights for the Third Quarter of 2013
  • Net revenue increased 21.6% to RMB 3.7 billion (US$ 608.7 million)  compared with RMB 3.1 billion in the third quarter of 2012;
  • Gross profit rose 25.7% to RMB 781.5 million (US$ 127.1 million), with a  gross margin of 20.9% compared with RMB 621.5 million and a gross margin  of 20.2% in the third quarter of 2012;
  • Operating profit increased 17.4% to RMB 252.8 million (US$ 41.1 million)  compared with RMB 215.2 million in the same quarter a year ago;
  • Earnings per share were RMB 2.86 (US$ 0.46) compared with RMB 2.98 in the  third quarter of 2012;
  • Total number of diesel engines sold rose 21.5% to 118,282 units compared  with 97,328 units in the third quarter of 2012.

China Business Briefs 12/11/13

By 9:19 pm, the value of transactions on Tmall and Taobao surpassed 30 billion yuan, up nearly 60 percent on sales for the event last year, as Ma had predicted.

The projected increase is driven in part by China’s growing number of mobile Internet users, which research firm Analysys International has forecast will exceed 700 million this year.

China Credit Trails Estimates as Officials Check Debt Risks – Bloomberg

China’s top four banks posted their biggest increase in soured loans since at least 2010 as a five-year credit spree left companies with excess manufacturing capacity and slower profit growth amid a cooling economy.

Bad debts at Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. rose 3.5 percent in the third quarter to a combined 329.4 billion yuan, data compiled from earnings reports showed.

Watch: China’s Urbanization Push Heads Underground – China Real Time Report – WSJ

China is stepping up what is already one of the most ambitious urban rail projects in history despite concerns that the country’s obsession with infrastructure could be dragging it into a pit of unmanageable debt. The aim of the expansion isn’t stimulus but urbanization.

China to allow more private investment in state firms – Yahoo Finance UK

According to the China Daily, private partners will be allowed to take 10 to 15 percent stakes in the country’s state-owned enterprises (SOEs).

The move would give such companies or investors a bigger say in decision-making, it quoted officials of the state-owned Assets Supervision and Administration Commission (SASAC) as saying.

The agency is a powerful body that oversees large SOEs collectively worth trillions of dollars, many of which enjoy monopolies in key sectors such as rail and energy.

China’s Recovery Gives Boost to Xi Amid Reform Summit: Economy – Bloomberg

China’s economy entered the final quarter of 2013 with an acceleration in manufacturing and exports, momentum that offered confidence to Communist leaders gathering to determine policy shifts for the coming decade.

Industrial output rose a more-than-estimated 10.3 percent from a year earlier in October and manufacturing investment strengthened, according to data released Nov. 9 by the National Bureau of Statistics. Customs data the previous day showed overseas sales rebounded by more than forecast.

Companies

When a Chinese engineering firm sets off to build a road or a dam in a distant country, a Chinese bank is usually not far behind them. Bank branches bearing Chinese characters can be found on the streets of Lima and Warsaw, as well as Paris and New York.

A deal at the end of October in which China Construction Bank (CCB) acquired a lender in Brazil underscores the size of the banks’ ambitions. The second-largest Chinese bank by assets agreed to pay 1.62 billion reais (US$716 million) for 72% of Banco Industrial e Comercial.

Let’s take four of the STI’s components, Jardine Matheson Holdings (SGX: J36), Jardine Strategic Holdings, Jardine Cycle & Carriage and Hongkong Land Holdings, as an example.

An investor who had invested in these four companies might think he’s diversified, but he’s not: all four companies have inextricable links with each other.

JMH owns more than 80% of JSH, which in turn owns half of Hongkong Land and almost three-quarters of Jardine C&C.

And to top it off, JSH also owns slightly more than half of JMH. This creates a complex web of ownership-links between these few companies and unites them in the realm of risk-exposures. An untoward development in properties that Hongkong Land Holdings owns, for instance, might turn out to be a kick in the gut for JMH and JSH as well.

(Reuters) – Singapore state investor Temasek Holdings TEM.UL and China-focused private equity firm Hopu were among five investors buying a $213 million stake in Yashili International Holdings Ltd (1230.HK), after parent China Mengniu Dairy Co Ltd (2319.HK) sold down shares to meet Hong Kong listing requirements.

Temasek, through one of its Mauritius subsidiaries, Hopu and three individual investors agreed to buy 471.13 million shares of Yashili from Mengniu for HK$3.50 each, putting the total deal at HK$1.65 billion ($213 million), the dairy companies said in a securities filing on Monday.

Industrial & Commercial Bank of China Ltd. was added to a list of too-big-to-fail banks that must set aside additional capital to guard against losses as part a global regulator’s plans to protect the economy.

ICBC was the only firm joining the Financial Stability Board’s annual list of too-big-to-fail banks, which it produces in preparation for capital rules scheduled to be phased in starting in 2016. Other changes include lower surcharges for Deutsche Bank AG (DBK), and Citigroup Inc. (C), which both drop out of the top category and Bank of New York Mellon Corp.

LONDON (ShareCast) – BG Group has sold its stake in the Queensland Curtis LNG (QCLNG) project in Australia for 1.93bn dollars to China National Offshore Oil Corporation.CNOOC has also reimbursed BG for project expenditure in line with its increased interests incurred from January 1st 2012 to September 30th 2013.

Carlsberg A/S’s pursuit of faster growth in Asia may make takeover targets out of Tsingtao Brewery Co. and Beijing Yanjing Brewery Co.

The Danish brewer’s controlling shareholder signaled last month that it will give Carlsberg more leeway to pursue deals. The $15 billion company is eyeing about a half-dozen potential candidates, especially in Asia, including Tsingtao and Yanjing, for a possible purchase, said a person with knowledge of the matter, who declined to be identified as the discussions are private. The Chinese companies each produce some of the most popular beer brands in China, the world’s biggest beer market.

Financial Results

Chindex International, Inc. Reports Financial Results for Third Quarter and First Nine Months of 2013

**Chindex owns United Family Hospitals, which runs Beijing United hospital. I once wrote a profile of CEO Roberta Lipson.**

Third Quarter 2013 Financial Highlights
  • Revenue from healthcare services increased 16% to $43.1 million from $37.3  million in the prior year period.
  • Adjusted EBITDA was $5.0 million, compared to $6.0 million in the prior  year period.
  • Development, pre-opening and start-up expense was $4.9 million, compared  to $2.7 million in the prior year period.
  • Loss from operations was $2.8 million, compared to income from operations  of $1.5 million in the prior year period.
  • Net loss was $3.8 million, or $(0.23) per diluted share, compared to net loss of $664,000, or $(0.04) per diluted share, in the prior year period.
  • Full year guidance adjustment primarily due to government regulatory delays.

China Yuchai International Announces Record Third Quarter Net Revenue

Financial Highlights for the Third Quarter of 2013
  • Net revenue increased 21.6% to RMB 3.7 billion (US$ 608.7 million)  compared with RMB 3.1 billion in the third quarter of 2012;
  • Gross profit rose 25.7% to RMB 781.5 million (US$ 127.1 million), with a  gross margin of 20.9% compared with RMB 621.5 million and a gross margin  of 20.2% in the third quarter of 2012;
  • Operating profit increased 17.4% to RMB 252.8 million (US$ 41.1 million)  compared with RMB 215.2 million in the same quarter a year ago;
  • Earnings per share were RMB 2.86 (US$ 0.46) compared with RMB 2.98 in the  third quarter of 2012;
  • Total number of diesel engines sold rose 21.5% to 118,282 units compared  with 97,328 units in the third quarter of 2012.

Posted from Diigo.