Chinese Tech Stock Weekly Summary (Dec. 15 - 21, 2008)

by: IRG Ltd

The following is excerpted from IRG's weekly stock report:

• • •


  • Alibaba's (OTC:ALBCF) consumer-focused e-commerce platform Taobao has recorded 85 million registered users to date and daily transaction volume of 300 million yuan (US$43.8 million). Alibaba's online advertising exchange platform Alimama includes 400,000 sites and has recorded 3 billion page views. Taobao had more than 83 million registered users by the end of September.
  • Baidu (NASDAQ:BIDU) CEO Robin Li is still looking for the best person to lead Baidu as chief executive. Li only became CEO in 2005 due to the company's Nasdaq listing, and has always been on the lookout for a replacement. Baidu page views have remained high and have not fallen since reports of a paid search scandal shook the industry last month. Baidu has lowered fourth quarter revenue guidance to US$131 million to US$133 million from the previously stated range of US$151 million to US$155 million on factors including the removal of questionable paid search listings. CCTV reported that Baidu had included unlicensed medical providers in its search results and sponsored links section.
  • Net263 was approved by government regulators this month to take at least a 50 percent stake in U.S. voice over Internet protocol (VoIP) service provider iTalk Global Communications. Net263 is expected to spend more than US$10 million in cash buying newly issued iTalk shares with US$7.5 million spent on an initial 33 percent. Net263 signed a related cooperation agreement with iTalk on September 27, 2008 after beginning negotiations with the company in August 2007. Net263 offers services for long-distance and conference calling and corporate and personal email.
  • Ninetowns's business-to-business (B2B) e-commerce site announced the release of B2B site caters to domestic sellers and international buyers with more than 150,000 customers. Ninetowns reported a net loss of US$4.2 million on revenues of US$7.4 million for the first half of 2008. Enterprise software sales accounted for 78 percent of total revenues, while brought in US$0.2 million.


  • ZTE (OTCPK:ZTCOF) has been awarded a 55 percent share of a value-added services (VAS) tender by China Unicom (NYSE:CHU). Under the terms of the agreement, the Chinese equipment vendor will supply the operator with nodes for its ringback tone platform, MMS management platform and WAP services management gateway. Together these elements make up the bulk of the VAS revenues generated on Unicom's GSM network. China has more than 1.3 billion population, which provides it with an enormous opportunity. The deal will enable Unicom to extend its VAS offerings nationwide. Since announcing the reorganization of its telecom industry in May, Chinese operators have awarded a raft of new contracts to a number of equipment makers as they gear up for tougher competition. China Telecom (NYSE:CHA) at the beginning of December awarded a US$230 million CDMA upgrade deal to Alcatel-Lucent (ALU).
  • Chinese telecom operators will spend about US$41 billion on next generation (3G) mobile networks over the next 2 years. China will support the development of core microchips, terminals and testing equipment as it expands network coverage, Minister of Industry and Information Technology Li Yizhong said that at least US$29.2 billion would be spent on 3G next year alone, while long-awaited licenses would be awarded by early next year. Beijing is developing its own TD-SCDMA 3G standard to promote domestic industries and technology and to avoid the hefty royalties demanded by foreign companies that own the rights to the technologies that are commonly used around the world, WCDMA and CDMA 2000. China Mobile (NYSE:CHL) will get a licence for TD-SCDMA.

Media, Entertainment and Gaming

  • CDC Corporation's (NASDAQ:CHINA) online game subsidiary CDC Games announced that its licensed 3D MMORPG "Yulgang" recorded 400,000 peak concurrent users by December. The game recorded 200,000 peak concurrent users on September 1, 2005. CDC Games had recorded more than 400,000 gamers but did not specify if the users were concurrent after Yulgang expansion "The Magic Labyrinth of Ice" was released on October.
  • Kingsoft entered an agreement to buy 30.03 percent stake in Sky Profit, owner of "iSpeak Voice Chat" software and game user community for US$8 million. Kingsoft and Sky Profit will offer shared user registration and logins, while Sky Profit will embed Kingsoft game channel buttons into its client software and Kingsoft will promote the installation Sky Profit client software six months after the first closing of the deal. Second closing payment is contingent upon Sky Profit recording 450,000 daily average peak concurrent users of its client software and achieving positive operating net cash flow for the 5 months ending May 31, 2009, among other things.

Alternative Energy

  • Sanya expects its thin-film solar cell industry to reach annual production capacity of 50MW and annual output value of 1.5 billion yuan (US$219 million) by the end of 2010. Between 2011 and 2012, the city is targeting annual production capacity in the thin-film solar cell industry of 100MW and annual output value of 5 billion yuan (US$731 million); the target jumps to 300MW and 12 billion yuan (US$1.8 billion) between 2013 and 2015.

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