Chinese Tech Stock Weekly Summary

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

Internet

• Alibaba announced the appointment of Maggie Wu as the CFO for its B2B business, a move that is seen as a preparation for its possible Hong Kong listing. Before joining Alibaba, Wu was a partner of KPMG. Her experiences include being a participant in the IPO audits of China Telecom and China Merchants Bank. She also rendered auditing and consulting service to firms that include Motorola, Siemens and Sinopec. Earlier in May, media sources talked about Alibaba’s plan to list its B2B service in Hong Kong in the third quarter of this year. Sources said the aim of the listing is to raise about US$1 billion.

• Industry sources indicated that Tom Eachnet’s new auction platform is going to have its formal launch in August this year. The platform is presently going through data migration. The new platform is described as having a more stable and faster trading platform. The interface is said to be better streamlined. The reports also mentioned that the new platform will charge a fee but with the charging standard lower than the previous one.

• The Culture Market Development Center of China's Ministry of Culture and the Jilin Provincial Netcafe Association announced setting up of a strategic alliance with eight technology suppliers in a bid to help the country’s Internet café industry and push it to a higher level. The suppliers are: Ruijie Networks, AMD, Vimicro, HP, Founder, Tsinghua Tongfang, TCL and Shanda. Ruijie Networks has the reputation of being a pioneer in China's domestic netcafe industry having launched the first types of dedicated netcafe routers in China. Media, Entertainment and Gaming

• Perfect World announced that it has initiated the roadshow for an IPO aimed at generating between US$141.6 million and US$165.2 million. With the offering, the Chinese online game company joins Shanda Interactive Entertainment (SNDA), Netease.com (NTES) and The9 Limited (NINE) on the NASDAQ. According to IDC, the online game revenues in China will increase from US$816 million in 2006 to US$3 billion by 2011. Perfect World has been described as a new player in the industry with a short track record. It has yet to report its first full-year profit. Industry observers note that what makes Perfect World unique compared to the listed players is that it develops all its games itself, using a proprietary 3D game engine and a module-based game platform. The company’s first three games had approximately 237,000 average concurrent users in China in the first quarter 2007. As part of its expansion, the company is planning to launch two additional 3D MMORPGs in 2007 and also one casual game by early 2008. Perfect World’s Legend of Martial Arts online game has officially signed contracts with four overseas agents in Malaysia, Singapore, Thailand, Japan and in Taiwan, Hong Kong, and Macau making it the company's second online game to go international after the Perfect World International Version. The company is offering 11.8 million American Depositary Shares [ADS] or 21.1 percent of the company, at a price of US$12 to US$14 apiece. Of the total, 9 million ADSs are backed by primary shares, while the remaining 2.8 million would be sold by China-based venture capital firm Prosperous World that was an early investor into the company. Perfect World posted a loss of US$3.6 million in 2006. It reported a profit of US$5.2 million in the first quarter this year.

• International Data Group [IDG] Ventures Vietnam, a venture capital pioneer in the country, announced its plans to invest in two more joint stock companies: Vega Software Joint Stock Company and Goldsun Focus Media. The U.S. fund did not reveal the total amount of its planned investments. The Hanoi-based Vega Software, which has a chartered capital of US$1.1 million, offers web design, software solutions, media entertainment, and advertisement services. Goldsun Focus Media, a leading advertising agency that has a registered capital of US$447,000, a tie-up with China’s Focus Media to provide out-of-home advertising services under a franchise deal. The project cost is estimated at US$6.2 million and is already considered among the most ambitious ever conceived in the country’s advertising industry. IDG has invested US$25 million in 14 companies since it came to Vietnam in 2004.

• The9, an online game operator, announced that it has received an exclusive license to operate MMORPG Field of Honor in mainland China. The license, secured from Beijing Gameworld Technology Company, will allow The9 three years from the commercial launch date of the game in mainland China to operate the game.

Mobile/Wireless

• IGRS, the Intelligent Grouping and Resource Sharing working group, and Metalink Ltd. (MTLK), a provider of high-performance wireless and wireline broadband communication silicon solutions, announced that they are working together to provide an advanced High Definition [HD] TV Decoder Platform for wireless home networks. The platform will be used by all TV manufacturers who are members of IGRS, which together account for more than 84 percent of all televisions sold in China. IGRS was established in 2003 by five of China's leading computer and Consumer Electronics companies: Lenovo (LNVGY.PK), TCL, Konka, Hisense, and Great Wall, with Lenovo acting as the chair company. In addition to the founding companies, key IGRS members include China Telecom (CHA), Huawei, Changhong, ZTE, Skyworth and others. Metalink’s WLAN and DSL technologies are designed to enable true broadband connectivity in every home. Headquartered in Israel, the company has design centers in the U.S. and Taiwan, and sales offices in the U.S., South Korea, Japan, China and Taiwan.

• Industry sources reported Huawei’s signing of a CDMA2000 contract with Leap Wireless (LEAP), a U.S. mobile service provider. Under the agreement, Huawei will set up a CDMA 3G network for Leap Wireless's wholly owned subsidiaries Cricket Communications and Denali Spectrum in selected cities in the U.S. The deal marks the second time the two companies have worked together. Earlier this year, Huawei also secured a contract with Leap Wireless in which the Chinese telecom equipment manufacturer deployed CDMA 3G networks in the northwestern regions of the U.S. The financial details of the agreement were not revealed.

Hardware

• Intel (INTC) announced its move to set up an Innovation Commercial Use Computer Technology Platform Accelerator in cooperation with Lenovo. The company described its effort as a way to strengthen its cooperation with China’s local PC manufacturers in a bid to consolidate its position in the Chinese market. The new accelerator is located in Lenovo's Innovation Center in Beijing and is used to display Intel's latest processor technology. Lenovo also said it may duplicate this cooperation pattern with Intel and its other businesses in other locations.

Semiconductors

• Rumors are circulating stating that China Electronics Corporation [CEC] has plans to become a shareholder of Shenzhen Zhongxin Semiconductor Company [SZXSC] through its subsidiary HuaHong Group. Media sources said China Electronics Corporation is aiming to build a large semiconductor enterprise in China. A SZXSC source was quoted as saying that they would needto first study the feasibility of a potential merger. Other observers believe that the companies would be exchanging shares.

Information Technology

• Hisense, a leading provider of consumer electronics, household appliances and information technology, and Metalink Ltd., a provider of high-performance wireless and wireline broadband communication silicon solutions, announced their collaboration to offer innovative and cost-effective solutions for delivering high-definition [HD] multimedia over wireless home networks. Hisense Co., Ltd. specializes in consumer electronics, household appliances and information technology. The company's main products are televisions, air conditioners, refrigerators, computers, CDMA mobile phones, software and network devices. Hisense ranks among China's Top Ten electronic manufacturers and plays a leading role in the global electronics industry, relying chiefly on an efficient technology innovation system. Hisense exports its products to over 50 countries and regions. In addition, it has established subsidiaries in the U.S., Japan, Brazil, Indonesia and Hong Kong, with a production base in South Africa, and a trading office in Italy. Metalink Ltd. is a leading provider of high performance wireless and wireline broadband communication silicon solutions.

Disclaimer: IRG is not responsible for the accuracy of the news compiled within this article, which is based on publicly available information.