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

• • •

Telecommunications

  • Fixed-line operators China Telecom Corp (NYSE:CHA) and China Netcom Group Corp (CN-OLD) are raising their Hong Kong exposure this year to enhance regional connectivity as two new submarine cables are due to connect with the city in the near future, promising to boost cross-border data traffic. The submarine cables, Intra Asia, and Asia American Gateway, which more than 20 telecommunications carriers have invested in, will land in Hong Kong in the near future. The cables can provide more than 1,125 gigabytes per second of bandwidth and can also be linked with the mainland. Hong Kong has installed bandwidth of about 2,178 gigabytes per second, of which 1,439 gigabytes per second has been activated.
  • Huawei Technologies says that it hopes its sales in Europe can exceed US$ 2 billion this year. Last year the company made total sales revenues of US$ 2 billion in the continent, in contrast to US$ 770 million in 2006. The company believes that Europe has significant strategic meaning to Huawei  and it will invest more in this area. Though Huawei made much headway in Europe, it recorded merely US$ 100 million in the U.S. in 2007. Huawei won big orders from Vodafone (NASDAQ:VOD) last year in Greece, Rumania, and Spain, and orders from France Telecom (FTE) in Belgium and France.
  • Chinese Unicom's (NYSE:CHU) shares fall as it reveals a higher-than-expected investment figure. China Unicom expects to invest 100 billion yuan (US$14.58 billion) in third-generation wireless services over the next two years a higher than expected figure that pushed its shares down sharply. Investors responded to the news which appeared on page 38 of a lengthy company statement covering a number of topics by punishing China Unicom shares in Hong Kong.
  • China Mobile (NYSE:CHL) is still talking with Apple Inc. (NASDAQ:AAPL) about introducing the iPhone in China. Both sides are interested in bringing the iPhone to China, but haven't reached any agreement, he said, adding there is no timetable for introducing the iPhone in the country. Last month, China Mobile had resumed talks with Apple about launching the iPhone in China, which has the most mobile-phone users in the world, after earlier talks ended in January.
  • AsiaInfo Holdings (NASDAQ:ASIA) has signed a contract with China Mobile to provide a system monitoring and management platform and related services to China Mobile's headquarters during the 2008 Beijing Olympic Games. Its system monitoring and management platform and services will work to ensure continuous operations and the security of China Mobile's business operation support system, business intelligence system and other business support systems during the Olympic Games. The platform will also provide real-time analysis and monitoring of China Mobile's Olympics-related business, allowing the company to manage its partners more effectively during the Olympic Games.

Internet

  • Ctrip.com (NASDAQ:CTRP), China's top online travel agent, posted a 35 percent rise in second-quarter net profit but said revenue growth would slow this quarter because of a drop in domestic travel during the Olympics. A drop in air traffic caused by May's earthquake in Sichuan would continue into the third quarter due to a slowdown in business and individual travel during the August 8-24 Olympics. The company said it expected its revenue to grow in the range of 15-20 percent in the third quarter and slightly lowered its whole-year revenue growth rate guidance to 30-35 percent from 35 percent.

Mobile/Wireless

  • Wireless coverage equipment maker China GrenTech (NASDAQ:GRRF) posted a quarterly loss, hurt by a steep fall in revenue from base station radio frequency products, sending its shares down as much as 22 percent. The company said the mainland government's plan to restructure the country's telecommunications operators had led to a temporary drop in demand. The company expects third quarter revenue from its radio frequency [RF] business, which accounts for about 16 percent of its revenue, to be lower than a year ago. China GrenTech, however, expects to see a rise in demand for its RF products following the restructuring and the development of 3G network in China.

Media, Entertainment and Gaming

  • Giant Interactive Group (NYSE:GA) announced that its board of directors has approved a share repurchase program. Under the terms of the approved program, Giant may repurchase up to US$150.0 million worth of its issued and outstanding American Depositary Shares from time to time in open-market transactions on the NYSE Euronext. The repurchases will be made from time to time  on the open market at prevailing market prices, in negotiated transactions off the market, in block trades or pursuant to a 10b5-1 plan.
  • AirMedia Group (NASDAQ:AMCN), which operates the largest digital media network at mainland airports and aboard aircraft, plans to set up more joint ventures and secure long-term contracts to address investor worries about sustaining its triple-digit growth. The first joint venture of this kind was in  March with China Eastern Airlines (NYSE:CEA), one of the mainland's leading carriers. AirMedia took a 49 percent minority stake. The firm is negotiating with other airports and airlines but declined to identify them.

Hardware

  • China's laptop sales surged 47.5 percent from a year earlier to 1.897 million units in the second quarters of 2008. The top five computer makers led by Lenovo Group Limited (OTCPK:LNVGY) took 71.4 percent of the Chinese market. Dual core processors have become the mainstream configuration for laptops. The hardware tended to have big screens, large capacity, and high definition. VISTA was still unable to beat Windows XP in the operating system market. Laptops are likely to take the place of desktops in the mounting home computer market, where Dell Inc. (NASDAQ:DELL) was enlarging its share after broadening retail channels, and Samsung was consolidating its foothold after product and price adjustment.
  • Amoi Electronics Co. reported net losses of 404 million yuan (US$59.3 million) for January-June 2008, more than 351 million yuan (US$51.1 million) a year ago. Sales revenues plunged 24.2 percent year on year while gross profit decreased by 51.39 percent. Sales expenditures, management expenditures and financial expenditures totaled 479.7 million yuan (US$70 million), roughly at par with a year earlier. Mobile phone business contributed 70 percent to the company's revenue from major businesses, up 10 percentage points yearly. TV business contributed 8 percent, down 18 percentage points, and IT business contributed 8 percent, up 6 percentage points. Gross margin of major businesses stood at 3.65 percent.
  • H3C expects sales growth of 15 percent on the mainland this year and improved brand awareness globally due to the Olympic Games. The company, which generates about 70 percent of revenue from domestic sales, saw total sales rise 6.3 percent to US$757 million last year, compared with US$712 million in 2006. The company was previously selected to be the supplier of several Olympics-related projects, including a "Good Luck Beijing" pre-event in Hong Kong, the Beijing public transportation surveillance system upgrade, the new terminal building's network at Beijing International Airport, and technical support for Sohu.com (NASDAQ:SOHU), the official mainland website for the Olympics.

Alternative Energy/Software

  • Jiangsu Zhongneng Polysilicon Technology Development Co. under GCL Silicon Technology Holdings Inc. has inked an agreement for the production of silicon ingots and silicon wafer. The project, with a total investment of US$ 1.1 billion, is expected to be able to produce 2,700-megawatt silicon ingots and silicon wafer, and generate 30 billion yuan (US$4365 million) of sales revenues a year after being put into production in 2010. Chinese photovoltaic [PV] companies are unanimously extending reaches to upstream silicon wafer field, completing their industrial chains.
  • CDC (NASDAQ:CHINA) posted better-than-expected quarterly results, helped by strong performance at its software division, CDC Software, sending its shares up 6 percent. Revenue for the quarter rose 10 percent to US$111 million. Software revenue increased to US$65.8 million from US$59.4 million a year earlier. During the quarter, the company said it eliminated US$15 million in annual overhead costs by reducing facilities and administration expenses and eliminating certain positions.
Source: Chinese Tech Stock Weekly Summary (8/11-8/17)