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Archive for the ‘China’ Category

Noble Gp: “Cheong all the way” Maybank

In China, Commodities on 11/01/2013 at 5:39 am

But if China doesn’t perform, you’re in trouble.

S’pore Biz Review

It was annced yesterday that China’s commodities imports accelerated in 2012 in volume terms in spite of slowing growth in the overall economy, with crude oil, iron ore and copper reporting record high imports for 2012.

This guy is awesome!

In China, Internet on 18/09/2012 at 7:18 am

That is what Mr Moncayo did when, at the tender age of 23, he devised a grand plan to forge a whole new trading relationship between Latin America and China

Despite knowing very little about manufacturing and unable to speak a Chinese language, he decided to build a career negotiating and supervising deals between firms in his native Latin America and Chinese suppliers. It was an obvious gap in the market.

“We were the first ones to really connect these two regions,” he says.

Just eight years later, Mr Moncayo is the chief executive of Asiam Business Group, handling orders from Asia worth $35m (£22m) per year, mainly on behalf of Latin American fashion houses.

http://www.bbc.co.uk/news/business-19507524

Long term investor while trading a stock

In China, Financial competency, Temasek on 04/09/2012 at 7:00 am

Jim Cramer’s “trading round a position”. Got to try it. Locks in profits.

http://www.cnbc.com/id/48614527?__source=ft&par=ft

Maybe Temasek is trading round its position in the Chinese banks it holds, given that China will not be pleased if it sells out of them. https://atans1.wordpress.com/2012/05/03/temasek-rebalancing-its-chinese-bank-portfolio/

Even Chinese manufacturers are moving to Vietnam & Bangladesh

In China, Vietnam on 16/08/2012 at 5:24 am

Earlier this week FT reported that an online Chinese retailer was trying out manufacturing in Vietnam. At about the same time, CNN reported that  Chris Devonshire-Ellis, founding partner of Dezan Shira & Associates in Beijing, which advises firms on foreign direct investment (FDI), as saying,”Companies are starting to think twice before building in China.”

He said the cost of running a factory in Dongguan, China with 300 workers would be about US$2.3 m. The same factory in Ho Chi Minh City, Vietnam would be US$650,000, and a similar factory in Chennai, India would cost about US$346,000.

“About 50 per cent of our work in Vietnam is setting up factories for companies which have relocated from South China because they want to add more (manufacturing) capacity (in the region), but they don’t want to have Chinese costs. Vietnam and Bangladesh are becoming subsidiary manufacturing nations to make goods for sale in China.”

Earlier this month, the Economist wrote, “Another manufacturing firm [making flags]moved its operations to Vietnam in 2004. “We have to migrate, like herdsmen chasing water and pastures””. Love the way moving to a cheaper place is described.

What the MSM doesn’t tell you abt Shenzhen

In China on 07/07/2012 at 6:10 am

The number of listed companies has almost trebled from about 500 before the SME board started eight years ago, and the market value of listed companies soared to US$1.2 trillion at end-May … double the size of Singapore’s exchange.

http://in.reuters.com/article/2012/07/01/china-shenzhen-ipos-idINL3E8HF38F20120701

And no FTs in mgt!

FYI, NYSE is at US$12.5 trillion.

Europe: Temasek has competition

In China, Temasek on 03/07/2012 at 7:42 am

(Updated on 5 July 2012 : forgot to mention ex-UBSer appt)

Sometime back, the new CIO said that Temasek is looking for investment opportunities in Europe.  He said turmoil in Europe may result in a market slump rivaling the 2008 global financial crisis creating opportunities for Temasek to make deals. Earlier this year, Temasek hired former UBS Chief Financial Officer John Cryan to oversee its strategy for Europe, whereit has limited exposure. The hiring of Cryan had raised speculation that Temasek is eyeing distressed assets in the euro zone, shumething that the CIO has confirmed.

It had better hurry.

The total value of mergers and acquisitions in Europe by foreign companies has reached US$101 billion, well ahead of the combined US$73 billion spent in the United States by international acquirers, according to the data provider Dealogic http://dealbook.nytimes.com/2012/06/20/amid-debt-crisis-overseas-buyers-seek-european-companies/?nl=business&emc=edit_dlbkam_20120621.

The Chinese even have a fund to co-invest with Chinese cos wanting to buy European coms for their technology or brands. Not juz but investment returns or financial egineering, unlike Temasek. Maybe our leaders should “sit down and shut up” when it comes to advising China to follow them? And observe what the Chinese are doing?

Hopefully, Temasek will remember that it bot Barclays and Merrill Lynch, and GIC bot UBS and Citi a bit too early in the 2008 cycle, to be precise in 2007. Temasek sold its dogs in 2009, juz went markets were recovering, losing billions. Given the losses, Temasek will hopefully be more cautious, even if it means losing some great bargains. Catching a falling knife will not amuse S’poreans, the “owners of Temasek” (Ho Ching once called us).

As to why it needs to do deals: investment returns are likely to have without some good deal http://www.businessweek.com/news/2012-06-21/temasek-expects-smaller-returns-amid-difficult-years-curl-says.

Related post: https://atans1.wordpress.com/2012/02/26/our-swfs-owned-four-out-the10-biggest-investment-flops-of-the-last-10-yrs/

If China slows down, ASEAN beneficiaries

In China, Commodities, Indonesia, Malaysia, Vietnam on 26/06/2012 at 6:22 am

(Or “What stocks, ETFs to buy”)

A  China slowdown need not be bad for everyone. Mr Frederic Neumann, Regional Economist at HSBC, distinguishes between hard and soft commodities. A Chinese rebalancing could actually be good for soft commodities*, such as wheat and soybeans*, if household spending were to rise.

Brazil’s loss, in other words, could be Argentina’s gain. Other commodities, such as palm oil**, used in processed foods, may also do better.

That could benefit countries such as Malaysia, which has ramped up palm oil*** production in recent years, and Indonesia**** – although the latter also produces hard commodities including coal.

On the other side of the ledger, some big oil importers***** could benefit from the weaker prices that a Chinese slowdown might produce.

http://www.todayonline.com/CommentaryandAnalysis/Commentary/EDC120622-0000021/Should-we-fret-about-Chindown?

*Think Olam, Wilmar, Golden Agri, Bumitama Agri, Kencana Agri and First Resources

**Think Wilmar and the other SGX plantation stocks.

***Think Felda, Sime Darby, United Plantations, IOI, Genting Plt, KL Kepong, TSH, Oriental.

****Think Astra Agro and London Sumatra Indonesia. Any other Indon listed plantations cos to think about? Do remember that the SGX-listed planters are mainly Indonesian planters and many of them are relatively new, giving them an advantage over the older Malaysian plantation players. Malaysian planters have also bought land in Indonesia partly because land in Malaysia is getting too expensive even in East Malaysia.

*****Think ETFs on Singapore, Thailand and Vietnam.

“China has risen”: Mao will be proud

In China on 16/06/2012 at 6:57 am

More people are saying that China is world’s leading economic power

http://www.economist.com/blogs/graphicdetail/2012/06/daily-chart-8

This guy is shorting China & emerging markets

In China, Emerging markets on 14/06/2012 at 7:11 am

And a bull on US retailers.

And he has outperformed his peers!

http://www.bloomberg.com/news/2012-06-06/a-contrarian-fund-manager-bets-against-emerging-markets.html

Why our local banks shld stop wasting resources on China proper

In Banks, China, Investment banking, Temasek on 07/06/2012 at 5:14 am

(Or “Why Temasek’s big bet on Chinese banks makes sense“)

DBS is the 6th largest foreign bank in China proper. It has a strategy of expansion into China. So have UOB and OCBC.

Well, its a tough biz to be in. Non-Chinese banks have only 2% market share. Even HSBC, StanChart and Citi have problems http://www.bloomberg.com/news/2012-06-04/china-wall-hit-by-global-banks-with-2-market-share.html

DBS, OCBC and UOB shld juz not bother abt China.

Test needed to ask questions at co. meetings

In China, Corporate governance, Financial competency, Humour, Property on 04/06/2012 at 5:01 am

(Or “Shume really stupid shareholders” or “Why SGX shld pay Mano Sabnani to conduct courses on asking sensible qns at AGMs and EGMs”)  

Sometime back, the media reported that some daft shareholders (same people as those who complained at DBS AGM that DBS paid 50% premium over Bank Danamon’s share price to get controlling stake? I mean these people never ever heard of a premium needed to secure a controlling block?) abt CapitaLand’s China exposure and share price since 2008 or 2007 at its AGM.

Don’t they read the int’l media?

Example from BBC Online:”China has, thus far, avoided the much-feared hard landing,” said IHS Global’s Ren Xianfeng.

“Expect no major property meltdown or construction bust. Expect no deflationary spiral or banking crunch.”

Analysts said that given the steadiness of the property market, policymakers were likely to continue to ease their policies to boost growth.

Ting Liu of Bank of America-Merrill Lynch forecast that China’s economy was likely to grow at an annual rate on 8.5% in the second quarter, up from 8.1% in the first three months of the year.

And on the share price: don’t they realise that equity markets have had a choppy ride since 2008. And that China-related stocks have been the target of bear raids and that CapitaLand is an obvious target to short given that the stock is liquid and shares can be easily borrowed

In case anyone doesn’t understand the reference to Mano, he asks vv intelligent questions at AGMs and EGMs. Only one I can bitch abt is at K-Reit EGM when he queried the price paid for Ocean Towers from its parent. Shumething like Ocean Towers seldom gets sold at mkt price, except perhaps in distressed sale. Kanna pay premium.

More bad news for Noble, Olam and Wilmar

In China, Commodities, Logistics on 21/05/2012 at 5:48 am

The FT reports that Chinese importers are requesting trading houses to defer shipments of commodities. Sometimes they have broken agreements by refusing to accept deliveries.

Commodities specifically mentioned are iron ore and thermal coal (Noble’s specialities), cotton (Olam speciality) and soyabeans (Wilmar is world’s boiggest crusher). No wonder the price of these stocks keep weakening.

BTW, until I read below, I didn’t realise Noble is a big player in coffee and cocoa (but revenue is “peanuts” compared to iron ore and energy).

http://seekingalpha.com/article/572831-commodity-trading-firms-bunge-and-noble-offer-investors-good-value

MIIF & FCT: Useful updates

In China, Property, Reits on 17/05/2012 at 6:51 am

Never summed up the courage to buy MIIF because although it is a China infrastructure play, yirld is super, and MIIF is net cash, its underlying investments are up to their eyebrows in debt: could affect MIIF’s payouts, NAV and price. But chk out for yrself  http://www.investmentmoats.com/money-management/dividend-investing/amfraser-have-some-seriously-optimistic-cash-flow-projections-for-miif/

For the working stiffs who got cashflow from day jobs. Not for retiree who gambled his cashflow.

 CIMB likes Frasers Commercial Trust I own shume.

Update: DBSV likes FCT too http://sreit.reitdata.com/2012/05/18/fcot-dbsv-3/

Philippines not safe for PRC nationals warns China

In Casinos, China on 12/05/2012 at 6:26 am

China told its citizens on Thurday  they were not safe in the Philippines and its state media warned of war, as a month-long row over rival claims in the South China Sea continued.

Chinese travel agencies announced they had suspended tours to the Philippines, under government orders, and the embassy in Manila advised its nationals already in the country to stay indoors ahead of protests on Friday. Five hundred protested outside the Chinese embassy, in the event.

And the Philippines wants Chinese gamblers to visit Manila, and the Chinese to invest in the country. What a joke!  Want Chinese money but intent on upsetting China. Filipinos are not realists.

Temasek: Rebalancing its Chinese bank portfolio

In Banks, China, Temasek on 03/05/2012 at 6:04 pm

Last month, Temasek bought US$2.3bn worth of shares in Industrial and Commercial Bank of China (ICBC), taking its overall stake in the bank to 1.3%. I commented that it was increasing its bet on the big Chinese banks (it owned big stakes in three of them) when the mood on them was getting bearish.

Well it is now sell US$2.4bn worth of its shares in Bank of China and China Construction Bank.

So overall, it is reducing its stakes in BoC and CCB (locking in some profits: it got into these at very attractive prices as a cornerstone pre-IPO investor) while adding a stake in ICBC to the mix at a slight discount to the market.

Update on 4 May 2012 at 3.10pm: More details http://www.bloomberg.com/news/2012-05-02/temasek-selling-2-4-billion-in-boc-china-construction.html

Temasek’s Chinese banks have an unending appetite for capital

In Banks, China, Temasek on 27/04/2012 at 6:54 pm

Regular readers will know that Temasek’s investments in Bank of China and China Construction Bank are great investments. It came in as a pre-IPO cornerstone investor and unlike the Western banks that had similar status had not sold out. Gd friend of China. It trades out and in of these stocks to make realised profits. But these trading profits are peanuts as the trading positions are peanuts in relation to its holdings in these banks

And that it recently bot Goldman Sach’s remaining stake in ICBC, at a slight discount to its mkt price. 

As this article explains these banks have an unending appetite for capital because they are “squeezed for capital”. So Temasek has to be willing to cough up more of our money if it wants to avoid being diluted when rights issues are called.

S-Chips are not the only Chinese junk exports, ask the US and HK

In China, Hong Kong on 23/04/2012 at 6:44 pm

The 180 Chinese companies that went public around the world since the beginning of 2010 are trading at an average of 21%  below their IPO prices, Bloomberg News reports.

In Singapore, the third-biggest market for such listings after Hong Kong and New York, eight Chinese companies that went public in 2010 have declined an average of 47 percent from their offer prices, the data show. That compares with a drop of 15 percent for the 23 non-Chinese firms that had IPOs in 2010.

And trading volumes are shrinking. In the last 12 months, trading volumes in S-Chips have halved. [Update on 24 April 2012 at 7.20pm]

But HK and the US are doing something. Regulators in Hong Kong are set to propose rules that would make banks liable for faulty IPO documents, Reuters reports. And earlier today, Hong Kong’s securities regulator fined a brokerage firm and revoked its corporate finance licence. Mega Capital (Asia) has been fined HK$42m (US$5.4mfor “inadequate and sub-standard” diligence work and “failure to act independently”. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. BBC Online

In the US, the SEC and FBI have been investigating people allegedly involved in fraud in China-based companies listed on US exchanges. Latest [25 April 2012] SEC investigations and analysis of the complicated structure that overseas listed Chinese cos (including S-Chips) have to adopt to list overseas which makes malpractice easier..

Err waz happening here? We are told by an SGX non-executive director that SGX is “a private club” despite it regulatory role. He said this recently when representing SGX in court as SGX’s lawyer in a case involving a S–Chip. Article 14 analyses the case.

When will this happen to a S-Chip?

In China, Corporate governance on 22/04/2012 at 7:20 pm

It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.

Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.

And recently more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing.

http://dealbook.nytimes.com/2012/04/19/battle-over-a-chinese-company-turns-physical/?src=dlbksb

No wonder S-chips are finding it difficult to get people to be non-executive or independent directors.  And the row between China Sky’s former independent director Yeap Wai Kong and SGX doesn’t help. He took SGX to court in an attempt to quash its public reprimand issued against him in December 2011. The court is hearing the case.

ANZ Bank attractive to Chinese strategic buyer?

In Banks, China on 20/04/2012 at 7:24 pm

An Australian who recently retired as head of Standard Chartered’s business in China believes there’s a strong chance of a major Chinese lender picking up a cornerstone stake in one of Oz’s big four banks within a few years. The Age carried an interview with Mike Pratt, , who says it’s “highly possible” that a major Chinese player will take a stake of up to 15%  in a major Australian bank this decade”.

ANZ Bank would make the most sense, given its super-regional bank strategy. Commonwealth Bank is increasing its presence in Asia but is nowhere as regional as ANZ Bank.

Westpac (a portmanteau of “Western-Pacific”) despite its name, and National Australia Bank both focus on Oz after misadventures abroad.

Analysing Temasek’s investment in another Chinese bank

In Banks, China, Financial competency, Temasek on 16/04/2012 at 7:06 pm

Temasek has agreed to buy Goldman Sachs’s shares in the Industrial and Commercial Bank of China (ICBC), the world’s largest bank. It will buy US$2.3bn worth of ICBC shares, taking its stake to 1.3% in the bank.

In an interview with Reuters at the end of March, Ho Ching’s presumed successor-in-training, Temasek’s head of portfolio management,acknowledged the heavy allocation to financials, but noted that it holds four very good banks: Bank of China, China Construction Bank, DBS Group and Standard Chartered. Well it has added ICBC to this list, and at a price close to the market price, unlike the stakes in the other two Chinese banks where it got a “special” price as a pre-IPO cornerstone investor.

But is it a wise move?

True, since the lows last October of the Chinese and HK stock markets, the shares of the four leading Chinese banks (including Bank of China, China Construction Bank and ICBC) have gone up by more than half, easily outperforming the broader market.

But since March, prices have been off (but masked by general market falls) because of concerns abt China’s growth, bad loans and comments by the  Chinese PM, Wen Jiabao, who hinted  of breaking the monopoly state-owned lenders have enjoyed in China’s banking sector. (The sector is dominated by four big state-owned banks and Temasek now has significant stakes in three of them.)

Mr Wen said that their monopoly was hurting businesses in the country, as they had few options to raise capital.

“Frankly, our banks make profits far too easily. Why? Because a small number of major banks occupy a monopoly position, meaning one can only go to them for loans and capital,” he was quoted as saying by China National Radio. “That’s why right now, as we’re dealing with the issue of getting private capital into the finance sector, essentially, that means we have to break up their monopoly.”

The lack of easy availability of capital has often been cited as threat to growth of small and medium-sized businesses in China. There have been fears that some of these businesses, seen as key to China’s growth, may turn to unofficial sectors for capital, increasing their borrowing costs substantially

But Temasek could be betting on, “Wen has one year left [in his term].” This was said by an unnamed Chinese state banker quoted by Reuters. “This is a task for the next generation of leaders. It cannot be accomplished within one year.”

But the banker could be wrong, Wen could be telling us what has been agreed upon between his generation and the next generation of leaders.

Remember, It took a beating on its finance industry holdings after the 2008 crisis, losing about $5 billion in stakes held in Barclays and Merrill Lynch, now part of Bank of America. It has since trimmed its financial holdings by 4 percentage points to 36 percent of the portfolio. Last month, it sold a 1.4 percent stake in India’s No.2 lender ICICI Bank. From said Reuters reported.

And of the remaining two “very good banks” where Temasek has significant stakes, DBS has juz decided to buy Temasek’s stake in Bank Danamon. Management will now be preoccupied with getting the deal approved by the Indonesian authorities, then integrating the bank into DBS. Before this deal, management had finally got to grips with DBS’s operational problems. The danger is that the focus on the Danamon deal may lead to backsliding in the area of operatons.

The genuine jewel is StanChart, but by global standards, it is “peanuts”.

Another day, another sucker

In China, Corporate governance on 21/03/2012 at 8:53 am

First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?

http://www.reuters.com/article/2012/03/14/ipo-london-china-idUSL5E8E8A2220120314?feedType=RSS&feedName=financialsSector

A Gamble Too Far? Pinoys gamble on China

In Casinos, China on 15/03/2012 at 9:45 am

The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.

Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.

Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.

And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.http://www.bbc.co.uk/news/business-16753960

But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?

—–

*They could make travelling to the Philippines inconvenient.

Wilmar: Beneficiary of China slow-down?

In China, Economy on 13/03/2012 at 6:47 am

One reason why Wilmar had such a bad set of results was because it’s Jing Long YU (China’s biigest cooking oil brand) could not raise prices because of administrative measures imposed by the government to control inflation. Pre-tax margins in this segment more than halved.

Now that Chinese inflation has fallen to a 20-month low in February, Wilmar should be able to raise prices for this brand?

Due diligence: a cautionary tale

In China on 29/02/2012 at 6:42 am

The fraud at Puda Coal, a Chinese company traded in the United States, was spelled out in documents that were publicly available months before the company raised $100 million from investors, but it appears no one bothered to look, writes Floyd Norris of The New York Times.

http://www.nytimes.com/2012/02/24/business/sec-charges-reveal-fraud-in-chinese-company.html?_r=2&ref=business&nl=business&emc=dlbka35

More chillingly is that the the Chinese authorities are making it more difficult to inspect publicly-filed documents, often informing the filers who are asking for filings.

So play, play in China at yr own risk. Like having unprotected sex.

China Sky shows how impotent SGX is when it comes to China stocks. Can only reprimand directors. I tot it damned funny that the CEO (and a major shareholder) could juz resign like that,

Don’t underestimate the US

In China on 22/02/2012 at 6:04 am

This is another of an occassional series on why Chinese chauvinists and Cina Tua Kee lovers should be careful about crowing of the coming hegemony of China, and the fall of the US.

A US company is a major beneficiary of the Chinese love of eating fried chicken.

The US-based company that owns the KFC fast food chain has again reported solid growth figures fuelled by demand in China despite increasing food and labour costs in China. Revenue from Yum’s restaurants in China fell 2.4% to 19.7% in the last quarter from the year before, due to wage inflation of 20% and an 8% rise in commodity prices. The company says the Chinese market is crucial to its success.

“We opened a record 656 new restaurants and delivered extraordinary same-store sales growth of 19%,” said David C. Novak, chairman and CEO of Yum! Brands.

“Clearly our KFC and Pizza Hut brands in China continued to strengthen their category-leading positions.”

Yum! Brands has reported better-than-expected profits for the fourth quarter of 2011, jumping 30% from the same period last year. Net income for the three months ending in December was US$356m.

FBI in US, SIAS, SGX here

In China, Corporate governance on 02/02/2012 at 8:49 am

FBI investigating adviser on Chinese reverse mergers following a spate of problems with these listcos. No such luck here for investors here in S-Chips, despite the well documented problems. Investors only got SIAS and SGX.

http://dealbook.nytimes.com/2012/01/27/f-b-i-searches-offices-of-n-y-adviser-on-chinese-reverse-mergers/?nl=business&emc=dlbkpma1

I mean even HK securities authority seems to be more active in taking action against Chinese listcos (see bit towards end of article).

http://www.bloomberg.com/news/2012-01-30/hong-kong-s-tiger-court-fight-tests-regulator-s-offshore-reach.html

Metro: Share price of 0.695 includes 0.36 of net cash

In China, Property on 30/01/2012 at 5:40 am

DMG & Partners Securities on 27 December 2011, issued a “Buy” call on Metro Holdings. As the price remains unchanged at 0.695 (despite a strong market); and given that less the net cash, the stock is only trading at 0.335;  and a yield of almost 3% (historical), it’s something worth exploring despite it being a China play, and a property one at that.

(Background: Metro was founded in 1957 as a department store operator and became a household name. It diversified into property development in the 1990s and was one of the early investors in China’s real estate market, thereby missing the bullet of being a retailer here.)

It has since built up a portfolio of prime commercial properties in Tier-1 cities in Shanghai, Beijing and Guangzhou, as well as several property projects and joint ventures in Tier-2 and Tier-3 cities. Key properties that the group owns include Metro City and EC Mall in Beijing, Metro City and Metro Tower in Shanghai and GIE Tower in Guangzhou.

Leveraging on the group’s retail experience, Metro has chalked up an impressive track record as a mall operator and investor in China. To date, all its property ventures have been profitable, with past divestments making gains of 5-25 per cent premium over book value.

Over the past five years, shareholders’ equity compounded at a CAGR of 9 per cent. This was achieved without the use of excessive leverage given management’s conservative style. Its strong balance sheet (net cash of 36 cents) allows it to deploy capital opportunistically. The ability to recycle capital and profits into new projects has been a hallmark of Metro’s management.

The company is in the midst of selling its 50 per cent stake in Metro City Beijing for 1.25 billion yuan (S$247.5 million), a 50 per cent premium over its latest valuation. Should the deal go through, Metro will be able to book a pretax profit of $87.4 million. We estimate this will lift book NAV by nine cents/share.

On our estimates, the stock has an RNAV of $1.02 billion, or $1.23/share, after netting out liabilities. At current price, the stock is trading at a steep discount of 45 per cent to RNAV. Our target price for the stock is $0.86, based on a 30 per cent discount to RNAV.

Shan Gao Huang-di Yuan (“The mountains are high and the emperor is far away”)

In China, Corporate governance on 16/01/2012 at 6:01 am

It was SGX managers that were keen on China listings in the late 1990s and early noughties. They got their mult—million bonuses, but minority shareholders in many S-Chips got the worms. Now SGX has all kind of rules to try to ensure good corporate governance. But as this shows, the mgt of a Chinese co listed on NASDAQ, doesn’t care a damned abt US laws, confirming the experience of investors here on the attitude of the management of S-Chips to S’pore laws and SGX’s rules.

If ChinaCast again loses in the Delaware courts, the question is, what will it do afterward? The Chinese company could simply refuse to honor the court’s order. It has no assets in the United States, so it could easily ignore any monetary fine. However, it is listed in the United States and is subject to S.E.C. supervision; such an act is likely to crater its stock price. The likelihood of such a response is low, but it appears that ChinaCast’s current management is going to fight this coup to the bitter end. Expect more maneuvering by all parties involved.

There is a wider lesson here. It is hard to know the real facts in this case given the murky nature and distance of the events, but whatever the truth is, investing in companies based in a foreign country is risky not only because the rule of law is weaker, but also because of cultural differences.

Foreign companies are not as familiar with United States practices and laws governing domestic corporations. They are sometimes more willing to push the envelope, either out of cultural inexperience or simple ignorance. ChinaCast itself appears to have been a bit behind the ball in getting good advice.

 Sigh. Taz the scandal, not PM and ministers earning millions. But SGX listing cos that are difficult for S’pore-based investors to monitor, and police.

China’s collapse ‘will bring economic crisis to climax in 2012′

In China, Temasek on 15/01/2012 at 5:56 am

But it’s sunshine from 2013 onwards, if you still got the money.

A looming hard landing in China will bring the financial and economic crisis of the past five years to a climax in 2012, one of the City of London’s leading analysts has warned.

Albert Edwards, head of strategy at Société Générale and one of the UK’s leading “bears”, said the next 12 months would be the “final year of pain and disappointment”.

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

SDP, KennethJ and the usual grumblers will have a field day if this guy is right (he has a good track record, this last few yrs) what with Temasek’s and its TLCs’ (Think DBS, CapitaLand, KepLand), and other GLCs’ (Ascendas for example)  big bets on China.

Predicting a sharp slowdown in activity in the world’s fastest-growing emerging economy, Edwards said: “There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands.”

http://www.guardian.co.uk/business/2012/jan/11/china-economic-collapse-global-crisis

DBS bullish on China infrastructure play MIIF

In China, Infrastructure on 29/11/2011 at 6:19 am

In a note dated 25 November 2011, DBS is bullish on MIIF. Interesting as there is current net cash of about S$115 m and  prospective yield of about 10.5% assuming mgt is correct. My previous post in January this year https://atans1.wordpress.com/2011/01/11/miif-unnoticed-china-play/ reflects my concerns about this stock. But it could be I’m wrong, and DBS is correct. Anyway, nearly a year has passed.

International Infrastructure Fund (MIIF) is now leaner, fitter and wholly Asia-focused … MIIF has divested its non-Asian assets, and repaid corporate level loans with the sale proceeds … a cleaner balance sheet with current net cash of about $115 million.

The sale of stakes in other funds also eliminated the black-box problem (assets with limited financial visibility) and the fund now focuses purely on key Asian infrastructure assets.

MIIF’s three key investments

Taiwan Broadband Communications (TBC), the third largest cable TV network in Taiwan;

— Hua Nan Expressway (HNE), a 31 km urban toll road in Guangzhou, China; and

— Changshu Xinghua Port (CXP), a multipurpose port in the Yangtze River Delta region of China.

We visited these …  impressed by the management and operations … fairly confident of steady organic dividend growth from CXP and TBC, though traffic growth at HNE could face some near-term roadblocks. MIIF [has] used its surplus cash (from the sale of prior investments) to increase its stake in TBC from 20 per cent to 47.5 per cent …  higher dividend receipts from TBC.

MIIF paid out a three-cent dividend for FY2010. After restructuring its portfolio, MIIF is now guiding for a dividend per share of 5.5 cents for FY2011, based on expected cash flow generation plus existing cash reserves (2.75 cents already declared for H1 2011). We expect this is achievable and given the healthy implied yield of close to 10.5 per cent at current prices, we are reinstating coverage with a ‘buy’ call and TP of S$0.64, based on a discounted cash flow valuation of underlying assets. The share buyback programme … provides further support …

Temasek: Where things can go wrong.

In China, Temasek on 19/10/2011 at 6:44 am

Credit Suisse analyst Sanjay Jain said in a report last week that he thinks that up to 12%  of all of China’s outstanding loans may go bad and non-performing loans may likely account for all of the banks’ equity. Current NPL ratios hover at around 1% or the top Chinese banks.

Ops a daisy. As Temasek has major (and so far very profitable) stakes in two of China’s top four bank, Bank of China (4%) and Construction Bank of China (7%), predictions such as this (and Credit Suisse is not alone, just the latest and most pessimistic) should worry S’poreans.

As Temasek got the initial substantial stakes at bargain prices (courtesy of the Chinese government), selling part or all these stakes requires Chinese approval. At a time when the Chinese government is supporting the shares of the major four banks, such approval is unlikely.

Not another debacle like Shin, ABC Learning, Merrill Lynch or Barclays in the making?

Temasek the hedge fund?

In Banks, China, Temasek on 01/09/2011 at 8:29 am

A consortium that includes Temasek and its wholly owned hedge fund Seatown Holdings has acquired a 5% stake in China Construction Bank it was reported on 30 August 2011

It had unloaded a portion of its own stake in the Chinese lender about a month ago, when, by my calculations, the price of CCB shares was  abt 10% higher. And given that it bought the latest batch of shares at a discount, Temask could have made 20% on the sale and repurchase.

Gd trade.

Description of trades

http://www.nytimes.com/reuters/2011/08/30/business/business-us-bankofamerica-ccb.html?nl=business&emc=dlbka32

China: Not immune to Western slowdown?

In China, Economy on 24/08/2011 at 8:31 am

China, the world’s biggest exporter and second biggest economy, is still booming. Its GDP is expanding at about 9% a year and since the 2008 financial crisis, China has helped keep the global economyfrom falling in a recession. But, as the BBC’s  Damian Grammaticas reports, China may not be immune if there is a new slowdown in the US and Europe.

http://www.bbc.co.uk/news/world-asia-pacific-14578083

S’poreans have two reasons to be interest in the issue. We depend on global growth and Temasek itself, TLCs, other GLCs (like Ascendas) and GIC have big bets on China.

When China plays fail in US

In China, Corporate governance on 30/07/2011 at 7:02 am

The shareholders of dud China plays are increasingly filing class-action lawsuits against the companies, auditors and even the investment banks. The auditors and banks have deep pockets. http://dealbook.nytimes.com/2011/07/26/chinese-reverse-merger-companies-draw-lawsuits/

Too bad for investors in S-Chips that class-action law suits are difficult to undertake here. So the banks are auditors are safe from law suits.

A problem S’pore & China share

In China, Economy on 12/07/2011 at 7:08 am

In an image entitled Live At The High Place, the photographer and performance artist Li Wei stands at the base of an inverted human pyramid in front of the Sanlitun Village shopping centre in Beijing. On his shoulders are balanced four people; on theirs, six more. The human sculpture portrays the impact of China’s one-child policy – as a generation of only children, now adults, contemplate looking after increasing numbers of older relatives. BBC report

In S’pore it was a two-child policy and “babies are for graduate mums only” (OK I exaggerate on the latter, but you know what I mean) but the effect is still the same.

To solve this goof-up, the government then introduced the FT policy, except that FTs turned out in many cases to be Foreign Trash (they are veerry cheap) rather than the Foreign Talents. Now we are waiting to see how this FT balls-up will be solved. What with Tharman supervising the manpower ministry, I am reasonably optimistic something will be done that will satisfy the people. Especially since at least 40% of the  voters are angry with the FT policy in its present form.

China play: when due diligence is not enough

In China, Corporate governance on 27/06/2011 at 9:54 am

The hedgie who made a fortune shorting subprime mortgages, and who made money buying BoA when one Temasek was selling, recently lost US$100m over a China play despite doing serious due diligence. http://dealbook.nytimes.com/2011/06/24/paulson-speaks-out-on-sino-forest/?nl=business&emc=dlbkpma21

If such an investor with all his resources and acumen, can still get snookered, what makes the ordinary retail investor here think he can do better?

Ignore S-Chips? They can ruin yr finances.

Experts differ on prospects for China; but we got big bets on China

In China, Temasek on 20/06/2011 at 9:36 am

Some see serious trouble ahead, some see the troubles as to be expected in a rapidly expanding economy, and are notb that serious. http://www.bbc.co.uk/news/business-13802453

And do remember Temasek has big bets on China.

https://atans1.wordpress.com/2010/02/08/tlcs-in-china-groupthink-or-mastermind-at-work/

https://atans1.wordpress.com/2010/09/03/sporeans-temasek-may-have-a-problem/

So does GIC.

S-Chips: Sumething SIAS could do

In China, Corporate governance on 11/06/2011 at 4:45 pm

SIAS is, as usual, calling for more measures to safeguard investors’ interesting following yet another S-Chip fiasco.

SIAS has a research department. Why can’t it do what Muddy Waters Research is doing? This US firm has issued damning reports on five Chinese cos listed in the US. He approaches each case like an investigation, sifting through corporate registration documents and even hiring private investigators to pose as potential business partners.

Perennial Retail Trust: the case against

In China, Property, Reits on 03/06/2011 at 10:36 am

In today’s ST, Perennial China Retail Trust took out a full-page ad in colour in ST to extol the IPO’s merits.

Two pages away, ST carried a story headlined ” CapitaLand’s share dip linked to China”. In juz slightly smaller type face, the headline went on, “Poor showing due to concerns over firm’s greater exposure, vulnerability to policy changes”.

If I were Perennial, I’d ask ST for a refund. This headline sums up the thesis why this is an IPO to avoid.

DBS bullish on Hutch Port at US$0.95

In China, Infrastructure on 02/06/2011 at 6:29 am

Find it difficult to poke holes in DBS’ analysis. But note DBS was one of the IPO mgr and that HPH is trading below its IPO price of US$1.01. DBS says:

Firm prospects over the short and medium term. We like HPH Trust for its stable and growing earnings profile, which we believe will be driven by continued rising trade volumes into and out of the Pearl River Delta region, translating into an annual growth of 10 per cent in distributions to unit-holders for the next few years.

HPH Trust is due to report its interim results by mid-August, and we are expecting a distribution per unit (DPU) of about 1.8 US cents to be declared.

Maintain ‘buy’ and US$1.15 TP. Given that HPH Trust seems to be well on its way to meeting our projections in FY2011 and FY2012, current FY2011 and FY2012 yields look very attractive at 6.6 per cent and 7.2 per cent, respectively; expect DPU compound annual growth rate of 10 per cent up to 2013.

Our target price implies a total return potential in excess of 30 per cent at current prices. Among Singapore-listed Reits, business trusts and high yield plays, HPH Trust offers one of the highest combinations of yield and DPU growth.
BUY

Yet another reason to avoid S-Chips

In China on 16/05/2011 at 10:07 am

This story tells how Yahoo may have been taken for a ride in China: Yahoo is upset with its Chinese partner Alibaba over the latter’s transfer of a major internet asset to its chief executive.

If a major MNC, with its legions of lawyers, accountants and executives, can end up in this type of situation, wouldn’t it be better for retail investors to avoid S-Chips as a matter of principle?

Stop worrying, start buying

In China, Investments on 15/05/2011 at 9:45 am

Jim O’Neill, chairman of Goldman Sachs Asset Management, said investors should shed their pessimism and stop hoarding cash amid prospects for a global stock rally that could start in China.

Bloomberg story. Note Goldman is setting up a yuan-denominated fund to invest in China.

Another US China bull

In China on 01/05/2011 at 6:30 am

A private equity boss prefers China to US.

Remember Warren Buffett is bullish on China but remains committed to investing in the US.

Gd reasons to continue avoiding S-Chips

In China, Corporate governance, Uncategorized on 18/04/2011 at 12:07 pm

SGX has mandated that S-Chips introduce new measures that could give them more control over their mainland-based legal representative or top executives.

But “constructive”, “nation-building” Today reports that there practical problems.

“If you don’t have the cooperation of the legal rep, then you might not be able to go through the whole procedure and then to effect the removal of the legal rep because you can foresee that the legal rep will not give full cooperation in helping you to remove himself,” said Mr Lin Song, co-head of international China practice group at law firm KhattarWong.

The lawyer was referring to the paperwork involved in effecting the removal of the Chinese-backed legal representative. Company transactions become binding only when they bear the firm’s corporate seal and the power to affix this seal is vested only in the legal representative.

“The issue is more on the execution level even though you might have in the articles of association all these provisions when you really need to remove the legal rep … you may face difficulty,” Mr Lin said.

“For example, the listed company might be required to present the local authority a stamp registration form and other documents which might require the legal rep to sign,” he added.

Mr Robson Lee, partner at Shook Lin & Bok LLP, echoed the same sentiment that the SGX ruling might not be enough to clip the wings of Chinese-backed executives.

Mr Lee, who also sits as a director for S-chip firm Youcan Food International, said there are practical enforcement difficulties to ensure compliance by the executive management that are based in China.

“It would be better to put in place the necessary legal provisions in the articles of association to give the board of the listed company the legal right to intervene when things go wrong,” he said.

Article

Will MAS ever say this?

In China on 31/03/2011 at 6:39 am

Martin Wheatley, the outgoing head of Hong Kong’s securities market regulator, said today that sponsors’ due diligence of initial public offerings has been “inadequate” at times.

“In many cases, sponsors are spread too thinly in terms of the number of deals they’re bringing to the market at any one time”.

Hong Kong’s regulator may make sponsors of IPOs in the city liable for statements in their clients’ prospectuses to prevent fraud of locally listed Chinese companies.

Bloomberg story

Never ever heard any MAS official say there was anything wrong with sponsors’ due diligence despite some new listcos coming out with profit warnings shortly after being listed.

I’ve been told that MAS does not inspect sponsors to ensure that they are following “best practices”.  It is left to SGX. A few years ago, a then prominent IPO sponsor was “suspended” from bringing new listings to market.

The HK proposal to make sponsors of IPOs in the city liable for statements in their clients’ prospectuses is a gd one, and should be adopted to prevent fraud in listing S-Chips.

How can independent director of troubled S-Chip resign?

In China, Corporate governance on 28/03/2011 at 1:35 pm

Hongwei’s independent director Ji Yicheng has resigned saying,”personal reasons, heavy workload”.  If the director of a troubled listco can quit when the listco gets into trouble,  then what is corporate governance all abt? Such an action is making a mockery of the responsibilities of being an independent director

The SGX must do something to prevent an independent director of a troubled S-Chip, indeed any troubled listco, from resigning. Such a resignation must have the approval of SGX.

The directores at the time the company got into into trouble must sort out the mess.  They cannot be allowed to “move on”.

.

CapitaLand: The peril of being a China play?

In China, Property on 25/03/2011 at 7:17 am

CapitaLand is trading below its FY2010 NAV per share of S$3.32. This has not been seen since September 2009 to May 2010. CapitaLand is currently in a position of balance sheet strength (FY2010: S$7.2 billion cash, 0.18 net gearing), and has balanced exposure to diversified property segments across different geographical regions. DBS Sec

Moreover, the market has assigned no value to any accretion from an expected S$6 billion in capital deployment this year. We update assumptions and maintain a ‘buy’ rating with a fair value of S$4.05 at parity to RNAV.

Me: Nothing to do with balance sheet strength or profitability. Investors are concerned with its large China exposure. And I hear hedgies are shorting it as a proxy bet against Chinese property.

Go buy an island

In China on 03/03/2011 at 8:32 am

What with the uncertainty in Libya and the coming GE, time to take a break from trying to find gd investments, here and overseas.

Go do sumething more productive? Like fishing? Or buy a Chinese island?

Two more reasons to avoid S-Chips

In China on 01/03/2011 at 7:04 am

Two S-Chips have been suspended because of audit problems.

What more dangers lurk in the S-Chip swamp? Whatever the case, those Ozzies who don’t want ASX to be taken over by SGX have two more reasons.

China Water Play: and its not an S-Chip

In China, Infrastructure on 08/02/2011 at 9:44 am

United Envirotech is owned by local blue chip UEL

OCBC likes the stock despite revising its value downwards by 5% to 0.65. When report was issued on 2 February, the stock had closed at 0.455. Read the rest of this entry »

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