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

• • •

Internet

  • China's Alibaba.com Ltd., an online business platform operator, said its first-half net profit more than doubled from a year earlier on robust growth in its domestic trading services and an increase in paying members. Business conditions will likely further deteriorate in the second half  for Chinese exporters, which make up the bulk of the company's customer base.

Mobile/Wireless

  • Though Chinese domestic cell phone makers were shipping more handsets in the first half of 2008, their gross profits were on the decline. China Zhenhua (Group) Science & Technology Company recorded a gross profit rate of 7.5 percent during the period, down 1.1 percent from the corresponding period of last year. Hedy Holding Company saw a decrease of 4.0 percent in gross profits to 6.8 percent. The gross profit rate of Shenzhen SED Industry Company, Kanka, TCL, and ZTE was 30 percent, 8 percent, 19 percent, and 26.4 percent, respectively.

Telecommunications

  • China Unicom Ltd. (NYSE:CHU) said its first-half net profit more than doubled from a year earlier, when earnings were hit by an accounting loss related to a convertible bond. The company, China's second-largest mobile operator by subscribers after China Mobile. (NYSE:CHL), said in a statement that its net profit in the six months ended June 30 was 4.4 billion yuan (US$646 million), up from 2.2 billion yuan (US$318 million) a year earlier. The result was slightly higher than the average 4.2 billion yuan (US$610 million) forecast of seven analysts polled earlier by Dow Jones Newswires.
  • ZTE, a leading Chinese telecom equipment and cell phone producer, has gained 40 percent of China Telecom's 27.9 billion yuan (US$4.1 billion) order of CDMA equipment tender. The rest of the order was obtained by Huawei and Alcatel-Lucent (NYSE:ALU), which gained 40 percent and 20 percent respectively. For the short message equipments sector, ZTE won contracts of short message centers in 12 provinces and gateways of short messages business in 10 provinces. Huawei won contracts for short message centers in 11 provinces and gateways of short message business in 15 provinces.
  • China Mobile Communications Corporation, the parent company of China Mobile, recently initiated the internal test of mSpaces.net, a Web2.0 product based on Internet platform and cell phone platform. mSpaces.net embodies the features of integrating traditional Internet and mobile Internet. It supports e-mail registration and mobile phone registration, but is only accessible to cell phones manufactured by Nokia (NYSE:NOK), Motorola (MOT), and those based on Borqs platform. CMCC, Softbank Corp. (SFBTF.PK), and Vodafone (NASDAQ:VOD) have founded a Joint Innovation Lab to promote the development of new mobile technologies, applications and services earlier this year.
  • Huawei Technologies lately set up a research and development center in Chongqing. The center will turn out to be one of the company's most important research and manufacturing bases and will have a research workforce of 1,000 in three years ahead. The new center came into service shortly after Huawei established a data processing and 3G research and development center this June in Nanjing, Jiangsu province.
  • The telecom companies in central Hubei Province acquired 15.3 billion yuan (US$2.2 billion) of total revenues from January through July 2008, rising 14.9 percent from a year earlier. They gained 38.0 billion yuan (US$6 billion) of sales in the period, leaping 24.3 percent. Hubei ranked number thirteen in China in terms of telecom revenues and sales, and the number three in central provinces. In the province, the total telephone users amounted to 34.8 million, hiking 11.0 percent, taking the tenth place around the country, and the second in central provinces.
  • Another batch of big orders for telecoms equipment are expected to be cast by China Mobile Ltd., China's biggest mobile telecom operator, which got regulatory approval to start the second- phase construction of its 3G TD-SCDMA network. The company has staked out 28 Chinese cities as the sites for the round of construction, though it has not named them yet. Changchun, Harbin, and Dalian, the three northeastern Chinese cities, have been listed on the plan of the telecoms operator. In North China, it is said to have chosen Shijiazhuang, Jinan and Zhengzhou.
  • China Telecom Corp. (NYSE:CHA), the country's biggest fixed-line operator by subscribers, reported an 8.2 percent drop in first-half net profit from the corresponding period last year as its users continued to migrate to mobile telecommunications service providers. Chief Executive Wang Xiaochu expects the company's earnings to remain under pressure in the short term as its fixed-line subscriber base continues to shrink and its own foray into mobile  services will require significant investment in the initial stages.
Source: Chinese Tech Stock Weekly Summary (Aug. 26-31)