The following is excerpted from IRG's weekly stock report:
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• China Finance Online Co. Limited, a Chinese online financial information and corporate data provider, will deploy Aladdin eToken PRO USB smartcard devices. The devices provided by Aladdin (ALDN) are enabling secure customer access to China Finance Online's StockStar investment analysis tools and services. Aladdin eToken USB smartcard devices will provide an initial 20,000 VIP users with strong, two-factor authentication for secure online access to StockStar accounts and could potentially reach over 500,000 StockStar users. China Finance Online's customers will gain enhanced security against fraud and identity theft while receiving proprietary financial information through a secure network connection.
• The number of Internet users in China has increased 91 million, representing an increase of 56.2 percent from the same period in 2007. In the meanwhile, broadband Internet access service subscribers have been growing rapidly, hitting 214 million. 86.7 percent of Internet access service users are broadband subscribers. 28.9 percent of Chinese Internet users once had used their mobile
phones to get access to the Internet in the first half of 2008. Mobile phone Internet users have reached 70.1 million. By the end of August, the number of broadband users of China Telecom (CHA) stood at 41.5 million. Meanwhile, the growth rate of broadband business of China Netcom (CN) was slowing down. Its broadband users hit 24.25 million by the end of this August.
Media, Entertainment and Gaming
• Cyber game vendor Netease (NTES) held a press conference in Shangri-La, Yunnan province, and announced the start of trial run of Tianxia II. Tianxia II is the first 3D large scale cyber game developed by Netease with five-year efforts. And it is the first cyber game of the company charging fees for game property. As one of the flagship products of Netease, Tianxia II has drawn great expectations from game players. The game has been regarded by young Chinese as the hope of the domestic cyber game industry. Industry analysts believe that with more than half a year optimization, Tianxia II has improved a lot in playability and operability. After undergoing the fast growth period during the past a couple of years, China's cyber game vendors are struggling with the growing pains this year.
• NetDragon Websoft Inc. (NDWTF.PK) Board Chairman Liu Dejian purchased over one million shares of the Hong Kong-listed company, lifting its holdings to 52.4 percent from the previous 52.3 percent. The online game operator also filed a stock buyback report to the Stock Exchange of Hong Kong, saying that it purchased back 1.0525 million shares at a price range between HK$4.68 (US$0.60) and HK$5.08 (US$0.65) apiece, or HK$5.2 million (US$0.7 million) in total. NetDragon has been repurchasing its shares since September 2008. Since September 3, it accumulatively bought back 8.5425 million shares for HK$39.7 million (US$5.1 million). The move was believed to accord with
shareholders' interests, CEO Liu noted earlier, adding that the current share price could not reflect the company's potential value.
• Huawei Technologies has been appointed by Axis, Indonesia's newest GSM and 3G operator, as a key partner in establishing a national mobile network. Huawei will design, build, deploy and manage the Indonesian firm's 2G and 3G networks across Java, Bali, Lombok, Kalimantan and Sulawesi until 2010.
• The State-owned Assets Supervision and Administration Commission (SASAC) is expected to transfer about 50 billion yuan (US$7.3 billion) from China Mobile Group to China Unicom Group to boost Unicom's working capital. Unicom would then transfer part of the sum to China Telecom as an interconnection settlement to ease Telecom's financial pressure as it purchases Unicom's CDMA wireless network. SASAC is the main shareholder of China Mobile Group, China Unicom Group and China Telecom Group. Under the state-sponsored restructuring of the country's telecom industry, fixed-line operator China Telecom will pay 110 billion yuan (US$16.1 billion) to buy Unicom's CDMA wireless network, becoming a full-service operator. Unicom, which retains its GSM wireless network, is merging with the other big fixed-line operator, China Netcom.
• The parent of China Unicom (CHU) has bought back 50 million shares in its listed subsidiary as major state-run firms heed Beijing's call to buy back shares in their listed units to prop up a volatile stock market. The parent, which had owned 60.74 percent of the listed company, increased that to 60.97 percent by buying back the shares through the Shanghai Stock Exchange trading system. The parent would continue to increase its stake in the listed company over the next 12 months, but the total stake would not exceed 2 percent of China Unicom's entire corporation's share capital. Local-currency A shares in Shanghai-listed China Unicom, which indirectly owns a similarly named Hong Kong subsidiary, closed up 7.72 percent at 5.3 yuan (US$0.77), helping the overall market reverse its early losses to finish the day up 0.7 percent. Major shareholders of more than 20 listed firms, including the parent of top Asian oil producer PetroChina, have bought back or have announced plans to buy back shares.
• China Mobile Ltd. (CHL) intends to build the TD-SCDMA and Long Term Evolution experimental networks in a certain number of cities in China in 2010. It was disclosed by Zhou Jianming, general manager of the technology division of the company. The company will push the evolution of TDSCDMA towards TD-LTE, building a strong TD-LTE industry in China, and it is now busy in testing with Chinese telecoms carriers. It will further the interoperability between 2G and 3G.
• China Netcom Group Co., Ltd. will issue its first batch of short-term finance bills for this year involving a total face value of 10 billion yuan (US$1.5 billion) on China's inter-bank bond market on October 6. The bills have a term of 365 days from October 8, 2008 to October 8, 2009. Chinese rating agency CCXI gave an AAA rating for the issuer and A-1 rating for the issue. Following the first batch, China Netcom will later float an additional 10 billion yuan (US$1.5 billion) of such bills.
• The total income of China's telecom sector registered in the first seven months this year amounted to 467.8 billion yuan (US$68.3 billion), representing a year-on-year rise of 9.1 percent. During the January-July period, the number of newly added phone users amounted to 50.5 million, bringing the total number of users to 963 million at the end of July. Of the total, mobile phone users increased 61.1 million from a year earlier to about 608 million, while thefixed-line users decreased 10.6 million year-on-year to 355 million as of the end of July. In the corresponding period, the newly added broadband subscribers stood at 11.4 million, bringing its total subscribers to 77.8 million. In August, China Mobile and China Unicom added 7.2 million and 510,000 users respectively.
• Canon (CAJ) said China is one of the most important strategic markets. The company has worked out new strategy in China. It hopes to have its sales increase 10 times in the coming ten years in this country. Under its new strategy, it will shift its exposure from digital camera to projectors. Last year it won 21.5 percent of the global digital camera market. In years ahead, it is set to be the number one in the projector sector. Canon is about to increase the number of its quick service centers in China to 25 in the coming three years. So far it has more than 100 flagship special stores in the country.
• HP China has established a Chinese center for microenterprise development in cooperation with Youth Business China (YBC), providing support and training to microenterprises andenterprise starters to use technology to build and grow their business.. HP has established 21 microenterprise development centers and accessory training rooms so far, serving surplus rural workers, social youths, college students and migrant workers, with investment exceeding 10 million yuan (US$1.5 million). The HP Microenterprise Development Program, which was introduced to China in 2007, is a nonprofit community investment program.
• NetDimensions announced it has acquired a 25 percent interest in Peak Pacific Limited, an Asia's strategic eLearning Product, Solution and Services Company, for a cash consideration ofUS$250,000. Peak Pacific Limited, based in Hong Kong, is a newly incorporated business which has been formed through the spin-out of Cathay Pacific Airways' corporate eLearning business unit. Peak
Pacific will be led by CEO Kishor Mistry, former Corporate eLearning Manager at Cathay Pacific. Peak Pacific will primarily focus on aerospace, maritime, transportation and logistics business and will provide a one-stop eLearning company for customers to outsource their entire eLearning requirements,
giving better economy of scale in terms of cost, quality, resources and flexibility depending on demand and business conditions.
• Hurray! Holding Co., Ltd. (HRAY) announced the signing of definitive agreements to make a strategic investment in Taiwan's Seed Music Group Limited (Seed Music). Seed Music is a music production company which focuses on artist development, music production and offline distribution of music in the Asia Pacific, especially in China, Taiwan and Hong Kong. Hurray! will invest US$3.0 million in cash for 61.1 percent of Seed Music. The final consideration payable by Hurray! and the respective ownership interests of the shareholders of Seed Music are subject to adjustment based on the financial performance of Seed Music following the closing of the transaction. Hurray! currently expects the transaction to close before October 30, 2008, subject to customary closing conditions.
• Chinese solar wafer maker LDK Solar Co. Ltd. (LDK) raised US$192.4 million from a secondary offering of 4.8 million American Depositary Shares. 60 percent of the proceeds would fund construction of its polysilicon manufacturing plant, 30 percent would fund an expansion of its wafer production facilities, and the remaining 10 percent would go toward other corporate purposes. The
ADS's sold at US$41.75 each. LDK's ADS's closed at US$36.42.
• Yingli Green Energy (YGE) announced that it has entered into a sales contract with SunDurance Energy, LLC which develops, designs and builds large-scale solar energy facilities for private and public entities in the U.S.. Pursuant to this agreement, Yingli agreed to supply an aggregate of 1.4 MW of PV modules to SunDurance from December 2008 to January 2009, which will be used for a
solar power plant under construction on the Livingston Campus of Rutgers University. The US$10.0 million solar farm project will be financed by Rutgers University and the Clean Energy Program of the New Jersey Board of Public Utilities. This project will be the largest campus solar energy facility in the
United States, and is expected to generate approximately 10 percent of the electrical demand for the Livingston Campus while reducing the university’s carbon dioxide emissions by more than 1,200 tons per year.
• Jifan Gao, CEO of Trina Solar Ltd. (TSL), expects his company's stock price to rise and fall erratically and acknowledges future financing might be difficult to attract. However, Trina Solar still plans to spend US$250 million in 2009 revamping its business. The company had about US$190 million in the bank at the end of July. Once this year's earnings are added, the company's cash reserves will soar to between US$350 million and US$400 million. These plans include refocusing the company on its downstream products. Trina Solar's annual production capacity of silicon ingots and solar modules stands equivalent to nearly 350 megawatts (MW) at present, the company's target for 2008. Gao is confident that the company can double its output to 700 MW by the end of next year. As the company intensifies its focus on downstream products, it will also take a new approach to the upstream sector.
• Semiconductor Manufacturing International Corp. (SMIC), announced operating losses of US$242.6 million for the first half of this year. The huge losses were due to SMIC's increased expenses in transitioning from DRAM production to more lucrative logic chip production. SMIC announced the decision to dump its DRAM business due to the continuous decline of DRAM prices since 2001. SMIC's sales revenues and profits have therefore been impacted by dealing with its DRAM inventories and setting up new facilities for logic chip production. In the first half of this year, the company announced a 7.6 percent annual decrease in total sales revenues to US$705.3 million, but a 25.3 percent year-on-year increase in total expenses to US$947.9 million. SMIC runs five chip
production plants in China, including Shanghai, Tianjin, Beijing, Chengdu, and Wuhan. It also plans to launch a new plant in Shenzhen. The newest plant, in Wuhan, was launched with full funding from the Wuhan municipal government of 10.0 billion yuan (US$1.5 billion).