The following is excerpted from IRG's weekly stock report:
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• Alcatel-Lucent (ALU) has signed framework agreements for 2009 with China Mobile Ltd. (CHL) and China Telecommunications Corp. (CHA) valued at US$1 billion and US$700 million respectively, and come just a month after AlcaLu's W-CDMA contract with China Unicom Ltd. (CHU). Alcatel-Lucent's framework agreements include radio and core network equipment, IP service routers, backhaul technology, and application platforms, though the vendor couldn't break down the value of its framework deals by technology. This makes it the first non-Chinese vendor to complete the set, as neither Ericsson AB nor Nokia Siemens Networks currently supplies China Telecom with 3G-specific equipment, and Nortel Networks Ltd. is only active with China Telecom. Motorola Inc. (MOT) has engagements with both China Telecom and Unicom. It also makes Alcatel-Lucent potentially the strongest international vendor in the Chinese 3G market. According to analyst firm iSuppli Corp., ZTE Corp. (OTC:ZTCOF) claimed it tops the 3G vendor table in China last month. Huawei Technologies Co. Ltd. is believed to be in second place, with Alcatel-Lucent a distant third. China's three giant carriers are expected to spend more than US$29 billion on building out their 3G networks.
Media, Entertainment and Gaming
• China's top provider of advertising in airports and on planes, AirMedia Group Inc. (AMCN) and Sinopec Corp. (SHI) signed a deal allowing the media group access to 8,000 gas stations around the country. The deal is AirMedia's first venture into outdoor advertising. AirMedia will install its digital TV screens in up to 1,000 Sinopec gas stations this year, and plans to have a nationwide network in 8,000 service stations by 2015, said AirMedia. The company's ads already cover more than four-fifths of Chinese air passengers via 2,500 digital TV screens across more than 40 airports and more than 16,000 screens in nine airlines.
• VisionChina Media Inc. (VISN), one of China's largest out-of-home digital television advertising networks on mass transportation systems, reported total revenues in the first quarter of 2009 growing 100.0% year-over-year to US$27.3 million and net income increasing 23.7% year over year to US$6.7 million. The Company had cash and cash equivalents of US$122.9 million as of March 31, 2009. The number of cities covered by the Company's network increased to 18. Network capacity, which is measured by total broadcasting hours, reached 32,737 hours in the first quarter of 2009, compared to 25,980 hours in the first quarter of 2008 and 31,834 hours in the fourth quarter of 2008. The Company's advertising network had grown to include 81,690 total digital displays on buses, subway trains, subway platforms, and other platforms, compared to 66,264 digital displays at the end of 2008. In the first quarter of 2009, the Company sold a total of 184,045 advertising minutes in its network compared to 162,193 minutes in the first quarter of 2008 and 281,059 minutes in the fourth quarter of 2008.
• Operator of China’s most-used Internet search engine, Baidu Inc. (BIDU), will post a high growth rate “for years to come” as online demand surges in the world’s third-biggest economy, Chief Executive Officer Robin Li said. The Chinese company plans to generate growth through its search-engine operations and won’t shift focus. Baidu doesn’t intend following Google Inc. (GOOG) in offering online music. Baidu said first-quarter profit rose 24 percent to 181.1 million yuan (US$26.5 million) from 146.6 million yuan (US$21.5 million) a year earlier as advertising sales surged after the company spent more on marketing to maintain its lead over Google in China, the world’s biggest Internet market by users. Sales jumped 41 percent to 810.7 million yuan (US$118.8 million). Baidu’s profit beat the 178.8 million yuan (US$26.2 million) average of 11 analysts’ estimates compiled by Bloomberg. Sales were predicted to be 787.9 million yuan (US$115.5 million). The Beijing-based website’s shares have gained 72 percent this year, outperforming Chinese Internet stocks including Tencent Holdings Ltd. (TCEHF.PK) and Sina Corp. (SINA). Baidu’s market share in China rose to 62.2 percent last year from 59.3 percent in 2007, according to research company Analysys International. Google’s share grew at a faster pace, to 27.8 percent from 23.4 percent. According to the company, second-quarter sales will be 1.07 billion yuan (US$156.8 million) to 1.1 billion yuan (US$161.2 million), more than the 983.6 million yuan (US$144.1 million) average of 14 analysts’ estimates.
• ZTE Corporation announced that its terminal products recorded 10 million units shipped globally in Q1 2009, representing an increase of 30% compared with the same period last year. In Q1 2009, 68% of ZTE's terminal shipments were to overseas markets, delivering terminals to over 100 countries and regions. During this time, ZTE's CDMA handsets recorded 2.5 million shipments in the global market, exceeding the total CDMA handsets shipment volume in 2008. In addition, ZTE provided more than 2 million data cards to the global market in Q1 2009. In 2008, the group shipped 10 million data cards to its worldwide customers, registering a remarkable 426% increase over 2007 and setting a world record as the fastest growing company in the data card market.
• Canadian Solar Inc (CSIQ), a Photovoltaic products manufacturer announced that it has signed strategic partnership agreements with Bank of China, Bank of Communications and Industrial and Commercial Bank of China to get hold of as much as US$2.2 billion in aggregate credit facilities. Each bank may offer up to 5 billion yuan (US$732.7 million) to domestic and overseas solar projects wherein Canadian Solar supplies solar modules. Canadian Solar may establish a China holding company to manage these and other transactions. The company also announced that the Suzhou New District government in Jiangsu province has agreed to provide 7.5 million yuan (US$1.1 million) in matching funds to support commercial rooftop and building integrated photovoltaic projects undertaken by Canadian Solar in the district. The district government is providing funds in conjunction with subsidies provided by the ministries of finance and constructions.
• Solargiga Energy Holdings Inc., a manufacturer of mono-crystalline silicon solar ingots and wafers, announced that Jinzhou Yangguang Energy Co. Ltd., a subsidiary of the company, has entered into a formal joint-venture agreement with two independent third parties - Kinmac Holdings Ltd. and another partner - to establish Jinzhou Jinmao Photovoltaic Technology Co. Ltd. The joint-venture company will principally engage in the production and sales of photovoltaic modules, as well as design and install photovoltaic systems. According to the company, this venture marks Solargiga's first step to expand its first downstream business. The Company also announced that it recorded a net loss in first quarter 2009 of 68.6 million yuan (US$10.1 million) and revenue of 176.3 million yuan (US$25.8 million), compared to profit of 95.1 million yuan (US$13.9 million) and revenue of 341.8 million yuan (US$50.1 million) over the same period last year.