Chinese Tech Stock Weekly Summary

by: IRG Ltd

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


• (NASDAQ:BIDU) announced that it has entered into an agreement with Mozilla Online to embed all of its search engine functions into the Chinese version of Firefox browser. The formalization of the agreement is expected to make clearer the present cooperation as the Firefox browser is already embedded in Baidu’s search engine. Baidu indicated that Firefox is going to bring to the company a greater capability to provide better service to its Chinese clients.
• Alibaba announced the launching of Online Warranty Loan, an online loan service in China, in cooperation with China Construction Bank (OTCPK:CICHF). The company said six firms have reportedly received a total of 3.1 million yuan (US$419,000) in low-interest loans, which do not require mortgage. Clients must have a membership in Alibaba's Chengxintong or Chinese Suppliers. According to the two companies, the service is now available to firms that have been registered for over 18 months at the Department of Industry and Commerce in the three trial cities of Hangzhou, Shaoxing and Jiaxing.
• Sohu (NASDAQ:SOHU) announced that it is raising its guidance for the fourth quarter of 2007 for total revenue, which is now expected to be between US$55.5 million and US$57.5 million. This marks an increase of US$2 million over previous guidance. Sohu said the guidance for advertising revenue will remain unchanged from previously reported estimates of US$31 million to US$32 million with nonadvertising revenue placed between US$24.5 million and US$25.5 million, an increase of US$2 million over previous guidance. The Chinese Internet portal looks to online game as the main source of its future profits.

Media, Entertainment and Gaming

• Shanda Interactive Entertainment Limited (NASDAQ:SNDA), a leading interactive entertainment media company in China, announced that it has entered into an agreement with South Korean online game developer Eyedentity Games, Inc. for the exclusive license to operate the 3D MMORPG Dragon Nest in mainland China. Eyedentity Games, Inc. is an early stage developer founded by a group of industry veterans.

• CDC Games (NASDAQ:CHINA), a pioneer of the “free-to-play, pay for merchandise” model for online games in China, announced that its CDC Games International [CGI] business unit plans to launch Lunia Online, an MMORPG. The business unit of CDC Corporation said the game is based on the popular manga style comic art form, a form that is seen as widely popular worldwide. The game will be commercially available in the U.S. during the first quarter of 2008. Lunia Online was developed by Korea-based ALLM Co., Ltd. Unlike many other MMORPGs on the market, Lunia Online is played like an action arcade game, as it allows players to move around using arrow keys rather than a mouse.
• Focus Media (NASDAQ:FMCN) announced the launch of its first large-size LED digital outdoor billboard in Shanghai following its securing of a contract with the Shanghai authority. Under the agreement, Focus Media has been given the right to operate a 1,500 square foot-LED digital billboard on a boat navigating along the Bund area in Shanghai. Focus Media considers the digital billboard as boosting its current iStreet Network of over 200 digital LED advertising panels covering Shanghai's major commercial areas.
• Linktone (NASDAQ:LTON), a wireless value-added service firm announced that it has entered into a definitive agreement with Tianjin Satellite Television [TJSTV] through one of its wholly-owned media subsidiaries Lang Yi. Under the agreement, Linktone will serve as the exclusive, long-term partner for all non-4A Category I advertising on TJSTV, a popular satellite TV channel in China which reaches more than 50 million households. TJSTV has more than 170 million urban viewers in 31 provinces throughout China with the firm advertising revenue hitting 100 million yuan (US$13.5 million) in 2007.


• According to its spokesperson, the TCL Group intends to keep the computer business even though it has announced that it will sell 82 percent of its computer company's stakes to an unnamed Hong Kong registered company.
The spokesperson indicated that TCL has introduced strategic investment for the computer business, with the selling of the stake as a move to bring solution to the company’s debt problems. TCL also disclosed that it has entered into an agreement with the buyer that would allow it to be given the priority in acquiring back the stake in the future. TCL has not revealed any information about the buyer of the stake.
• According to industry sources, Suning is acquiring its rival Dazhong in a deal valued at 3 billion yuan (US$405.2 million). The report said that the Chinese electronics retailer has completed the audits related to Dazhong's profit-making capabilities. Under the agreement, Suning will permit Dazhong to run on its own operations and retain its own logo. Dazhong currently owns 63 stores in Beijing, which account for about 50 percent of Beijing’s electronics retail market. The sources said, however, that no formal agreement has been made yet between the two companies.


• ZTE revealed its plans to join the energy sector through a new joint venture company with Zhongxing Weixiantong, ZTE Development, ZTE International and the president of ZTE Hou Weigui. The company said the group will invest a total of 1.2 billion yuan (US$162 million) in the company, which is expected to focus on the development, investment, and production in the energy field. Industry sources said ZTE has spent some 300 million yuan (US$40.5 million) on the joint venture. ZTE said it looks to the venture as boosting its external investment and increase the return of its investment. For the third quarter of 2006, ZTE posted a net profit of 143 million yuan (US$19.3 million).

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

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