The following is excerpted from IRG's weekly stock report:
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- Mobile phone sales in China down 14.6 percent in Q208. Around 36 million mobile phones were sold in the domestic market in April - June, dropping 14.6 percent from the January - March period. Sales volume of GSM mobile phones fell 13.4 percent quarter on quarter to 34 million sets and that of CDMA cellphones slumped 30.9 percent to 2 million sets. Earthquakes, telecom industry reshuffling, and withered overall demand caused the decline in sales in the second quarter. Overseas mobile phone markers, Nokia (NOK), Samsung, and Motorola (MOT), respectively ranked the top three positions in the Chinese mobile terminal market with shares of 38.6 percent, 17.7 percent, and 9.7 percent.
- KongZhong Corp. (KONG) has appointed Chen Xiaoxin as a new board director. Chen will also work as an independent director and in the board's audit committee. He takes the place of Zhang Hui, who resigned from the board, and will serve Zhang's remaining term ending 2010. Before joining KongZhong, Chen was a managing partner of Zeniphs China Capital since the end of 2007. Prior to that, he worked for Oak Pacific Interactive [OPI] as the CFO.
Telecommunications/ Information Technology
- China Unicom Ltd. (CHU) doesn't expect the sale of its Code Division Multiple Access [CDMA] operations to China Telecom Corp. (CHA) to be affected by the collapse of Lehman Brothers Holdings Inc. (LEHMQ.PK), which is advising on the sale, as the deal is almost done. The company’s minority shareholders approved the merger with fixed-line carrier China Netcom Group Corp. (CN) (Hong Kong) Ltd., as part of the restructuring of China's telecommunications industry. The company hasn't held talks with Telefonica SA (TEF) on the plan by Spain's dominant telecommunications operator to raise its stake in the new company to be formed from the merger of China Unicom and China Netcom.
- China Mobile (CHL) notified its partners lately that the first nine cell phone games offered by them had gone through public trial run, three of which had started operation on September 10, 2008. Six games are scheduled to come into service before September 25, 2008. China Mobile has been building up a new cyber game platform since the first half of 2007. The platform was officially kicked off this June. Insiders in the know say that China Mobile has a strict requirement on these games in online time, registered users, and profitability. These games that have gone through public trial run are provided by top-ranking game developers. As the biggest mobile telecom carrier in this country, China Mobile hopes that its cell phone game sector will be in peace with cyber games. However, there is great possibility for the cyber game platform to merge the cell phone sector in the future.
- The core network in the second round of TD-SCDMA network construction of China Mobile Communications Corporation [CMCC] is expected to be put into use by next June if the construction goes on smoothly. The total investment for construction of the second phase of the TD network will exceed 30 billion yuan (US$4.4 billion). CMCC recently requested its subsidiaries in the ten cities where TD network has been constructed to expand the number of subscribers of TD cellular services to 400,000 by the end of this year. Upon completion of the second phase of the TD network, CMCC will launch 3G services in 38 cities.
- Telefonica SA reported a 9.9 percent stake in China Netcom Group Corp. (Hong Kong) Ltd. Telefonica has beneficial ownership of about 663.2 million China Netcom shares. Telefonica seeks to become the leading private shareholder of the new company resulting from the merger between China Netcom and China Unicom Ltd.
- Huawei Technologies' revenue from optical transmission equipment was the highest among all telecom equipment manufacturers in China in July. Huawei produced optical transmission equipment valued at 2.7 billion yuan (US$391.9 million) in July. Over the course of the month, it attained revenue of 558.1 million yuan (US$81.8 million) from domestic sales of optical transmission equipment, and revenue of 2.0 billion yuan (US$299.1 million) from exports of such equipment. Huawei also recorded the highest revenues from domestic optical transmission equipment sales in April, May and June. Hong'an Group maintained its top position in July in terms of shipments of optical cable in China. The company produced 642,000 kilometers of optical cable and shipped 642,000 km of optical cable to the domestic market.
- AsiaInfo (ASIA), China’s leading provider of telecom software solutions and IT security products and services, announced that its Board of Directors has authorized a stock repurchase program under which AsiaInfo may repurchase up to 5,000,000 shares, approximately 11% of its outstanding common stock.
- Chinese telecom firms Huawei and ZTE have won contracts worth US$75.0 million to expand the mobile phone network in Libya.
- China TransInfo Technology Corp. (CTFO), a provider of public transportation information systems technology and comprehensive solutions in China, has entered into an equity transfer agreement to acquire 85 percent ownership of Dalian Dajian Zhitong Information Service Co., Ltd. for 2.0 million yuan (US$292,568) in cash. Dajian Zhitong is a taxi media operator in the city of Dalian, Liaoning province. Dajian Zhitong holds exclusive rights to sell advertisement space on taxi rooftops and administer real time GPS data activities including a GPS-based taxi call center, a GPSbased real time taxi alarm system, and a GPS-based taxi driver navigation system for about 10,000 taxis in Dalian for a period of 10 years, starting from August 2008.
Media, Entertainment and Gaming
- Pay88, Inc., a reseller of online multiplayer game cards and Internet game time in China, has signed an exclusive agreement with Shanghai Hongli Digital Technology, Ltd., an interactive amusement game company, to distribute two new online game cards that are part of the company's popular Goldcool One Card series. The two new online game cards to be distributed by Pay88 are Devildom and Twelve Animals' Legend. The new Devildom game is the first video talking internet game developed by Shanghai Technology and is expected to become a huge success among the millions of players of internet games in China. The Goldcool games will add to the growing list of highly popular online multiplayer games distributed by Pay88 to the booming Chongqing market and 20 other cities in China.
- Orbit E-Commerce Inc., an IPTV development company focusing on the Chinese IPTV market, has agreed in principle to acquire all outstanding stock of NexTube Broadcasting Inc. [NBI], a private Toronto company, through a US$5.0 million private placement. The proceeds of the US$5 million financing will be used to initiate the roll out of a High Speed Internet Video Services network to Universities in China through NexTube China Joint Venture.
- Ningbo Kangqiang Electronics Co., Ltd. planned to apply to the National Association of Financial Market Institutional Investors for quotas to sell not more than 200 million yuan (US$29.3 million) short-term financing bills. The bills would have terms not longer than 365 days, and their interest rates would keep in line with the market interest rates and would not surpass the bank lending rate in the corresponding period. The company expects the bill sales to help it expand major businesses, replenish working capital, improve liability structure and lower fundraising cost. Besides, Kangqiang Electronics planned to buy a plant in Ningbo City for 109.2 million yuan (US$16.0 million),in a bid to shift its production away from the current plant, as asked by the Ningbo government.
- TPV Technology Ltd. plans to build a large-sized LCD module & LCD TV plant in Nanhai District, Foshan, Guangdong Province. The to-be-built factory will produce 10 million LCD modules and 7 million LCD TVs a year, seeking annual production value of over 30 billion yuan (US$4.4 billion), disclosed a person in the know. Chi Mei Optoelectronics [CMO] would executively supply LCD panels and LCD modules to TPV within three years when it acquired a 7.66 percent stake in the latter in December 2007. TPV had set up monitor facilities in Beijing, Ningbo, and Wuhan, TV plant in Suzhou, as well as TV & monitor factory in Fujian. Foraying into flat-panel TV sector in recent years, TPV hopes to find a site for its LCD TV module project and expand the production capacity of large-sized LCD TVs. As a favorable option, the Nanhai District has related facilities set up by CMO and is convenient to TPV's export.
- The General Electric Company (GE) will set up five new regional headquarters in China's Shenyang, Wuhan, Chengdu, Xi'an, and Guangzhou. The company already has two regional headquarters in the Chinese market situated in Beijing and Shanghai. GE plans to enhance its cooperation with Chinese small and medium enterprises through acquisitions, mergers, and technology stake. After becoming the only supplier of China's proprietary regional aircraft engines, the household appliance giant is eyeing the trunk line aircraft engine and components market.