LI, Tao @ Hong Kong

Visitors walk past Dongfeng Motor Group’s booth at the Beijing Auto Show earlier this year. The country’s third largest automaker reported Friday its first-half net profit more than doubled from a year earlier. Tomohiro Ohsumi / Bloomberg News

Dongfeng Motor Group Co, the third-largest automaker by sales volume in the country, said its first-half net profit more than doubled from a year ago thanks to strong demand amid government stimulus measures to boost consumption.

Net profit for the six months ended June rose to 6.35 billion yuan from 2.56 billion yuan during the same period last year, 155 percent up, the company said in a statement to the Hong Kong stock exchange Friday.

The group’s total revenue was 61.9 billion yuan, up 59 percent from 39 billion yuan last year.

Dongfeng continually boosted its sales in the first half after the Central Government reduced consumption taxes for small-engine cars and offered subsidies to rural buyers.

The group manufactured 970,000 vehicles and sold 972,000 during the period, an increase of 65.6 percent and 59.2 percent respectively from a year ago, the company said in the statement accompanying its interim results.

Some 8.9 million were manufactured and 9 million vehicles were sold by domestic automobile manufacturers in the first half, up 48.8 percent and 47.7 percent respectively over the same time last year, according to the automaker.

Dongfeng enjoyed a market share of approximately 10.8 percent in terms of sales volume, the automaker said, which increased by 0.8 percentage points over the same period last year.

“The second half of 2010 will face various uncertainties at the macro-economy level and the automobile industry tends to grow at normal speed, but the seasonal fluctuation will aggravate,” said Chairman Xu Ping. He added that strong economic growth and the rising consumption capacity of local people will support sustainable growth in the automobile industry.

The government’s new subsidy policies for energy-efficient and new-energy vehicles will further stimulate consumption demand, Xu added. He said that the tier-2 and tier-3 automobile market will grow fast and provide great opportunities for the industry.

Dongfeng Motor joined another 15 state-owned enterprises in forming an alliance to develop technology and products for electric vehicles last week. The alliance aims to pool resources to promote the development of new-energy automobiles on the mainland.

Earlier, Dongfeng won regulatory approval for its plan to form a joint venture with Taiwan’s largest automaker Yulon Motor Co. The venture will have an annual capacity of 120,000 vehicles.

China Daily

(HK Edition 08/28/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-08/28/content_11217625.htm

A Cosco container is moved at the Kwai Chung shipping terminal west of Kowloon, Hong Kong, Cosco Pacific Ltd announced Tuesday its first-half net profit soared 82 percent year-on-year. Jerome Favre / Bloomberg News

Revenue climbs 40% to $222.7 million on global trade recovery

Cosco Pacific Ltd said it continues to look out for acquisitions, particularly in emerging markets, after posting 82 percent growth in first-half net profit on recovering global trade.

Asia’s third-largest container-terminal operator said net profit for the six months ended June rose to $189.9 million, or $0.08 per share, from $104.5 million, or $0.047 per share, a year earlier, the blue-chip port operator said Tuesday.

Revenue rose 40 percent to $222.7 million from $159.0 million as trading activities recovered globally from the slump last year following the global financial tsunami in 2008.

Net profit was also boosted by a one-off gain of $84.7 million from selling a 49 percent stake in Cosco Logistics Co to its parent, said Cosco Pacific, which owns stakes in 27 container terminals on the mainland and in Hong Kong, Singapore, Belgium, Egypt, and Greece. The company recommended a special cash dividend of HK$0.111 following the disposal and declared a first-half dividend of HK$0.137, down from HK$0.144 in the same period last year.

“Global trade recovery showed strong momentum in the first half of 2010 on the back of the economic stimulus measures when our business has almost returned to the peak in 2008 before the financial crisis took place,” said Xu Minjie, vice chairman of Cosco Pacific in a media briefing Tuesday.

“Even though the breakout of the European debt crisis in April curbed the global economic recovery, exports to Europe and the US did not post any significant slide, which remained strong during April and June as demand for Asian goods continued to revive,” Xu added.

He does not expect a major slowdown in the container-shipping demand in the fourth quarter, even though it is traditionally an off season.

Port handling charges are likely to rebound with increased container demand in the second half, according to Xu, which leaves room for the company to lift tariff rates to the peak levels seen in 2008.

“And it could be a good time for the company to look for some expansion opportunities, especially in emerging markets,” said Xu. But he believes acquisitions nowadays could be very costly as their peers may also plan for expansion in such a thriving market.

The company last year acquired some operations in Greece’s Piraeus port, which “contributed significantly to the growth in revenue but affected the group’s gross profit in the first half because of the high operation cost in the initial period of operation,” said Xu. The Piraeus terminal recorded over $10 million in losses during the period.

Since Cosco Pacific fully took over the port on June 1 and the company could start hiring its own employees losses have started to narrow down, Xu said. He expects the port to start recording a profit earlier next year.

“Basic expenditure in the first half amounted $690 million and is likely to reach $1.15 billion throughout the year, against the $460 million whole-year expense in 2009,” Cosco Pacific’s financial controller Eddie Lui said.

China Daily

(HK Edition 08/25/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-08/25/content_11197998.htm

This undated photo shows a CNOOC Ltd floating production, storage and off-loading vessel approaching a CNOOC facility in the Bohai Sea. The nation’s largest offshore oil and gas producer said Thursday its first-half net profit more than doubled year-on-year. Ding Jianzhou / Imaginechina via Bloomberg News

Offshore oil producer offers an interim dividend of HK$0.21/share

CNOOC Ltd, the largest offshore oil and gas producer in China, beat market estimates by doubling its interim net profit on strong production growth and higher oil prices.

Net profit for the first half ended June surged 109.6 percent to 25.99 billion yuan from 12.4 billion yuan a year earlier as revenue more than doubled to 83.2 billion yuan from 40.6 billion. The company declared an interim dividend of HK$0.21, up from HK$0.20 a year earlier.

The oil explorer, with five new discoveries and five successful appraisals made so far this year, achieved a record production of 149 million barrels of oil equivalent during the period, representing a 40.8 percent growth year-on-year.

The international crude oil price maintained an upward trend in the first half, averaging around $78 per barrel, which was 52 percent higher from the same period last year. In parallel, CNOOC realized an average oil price of $76.59 per barrel, up 55.2 percent year-on-year.

Looking into the second half of the year, further good news could be expected from the company, according to Ida Cheng, an analyst with Phillip Securities.

“We think oil price reached its low point in late May this year, and any price below $67 per barrel is not likely,” she said in a research note.

“As the crude price bounces back, CNOOC will show stronger performance as well,” Cheng added.

CNOOC targets a full year output of 290 million barrels of oil equivalent. With production of several new projects in the pipeline, the company’s whole-year goal remains deliverable, some analysts said.

Apart from its established core areas of exploration and production, including the country’s continental shelf and the South China Sea, the company is also counting on overseas exploration for its long-term growth.

CNOOC acquired 50 percent interest in Bridas this May, which will help the company expand its production by about 16.8 million barrels a year on average.

Future merger and acquisitions will be conducive to the company’s medium- and long-term growth, CNOOC said in a statement accompanying its interim results.

Despite the second-best interim profit ever, the rising cost of oil exploration and production remains a great challenge to the company’s profitability.

“Even though we have led the industry in terms of profitability in recent years, our cost is undoubtedly under upward pressure,” the company said in the statement.

Along with its earnings report, the company announced that CEO Fu Chengyu will resign from the post and be replaced by President and CFO Yang Hua. “I’m glad we were able to locate an ideal successor, Yang Hua, who has devoted himself to CNOOC Ltd for more than 20 years and has proven himself a robust operator in the toughest circumstances,” said Fu in a statement, who will remain chairman of the board.

Li Fanrong, a non-executive director, will replace Yang as president.

China Daily

(HK Edition 08/20/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-08/20/content_11179348.htm

Ordinary Hong Kong people who want to get an apartment of their own may be at a loss these days, even if they seem able to afford a down payment and monthly installment. The city’s home prices have ridden a rocket-like recovery after a temporary fall during the financial crisis. Property analysts believe many of the city’s properties are no longer worth investing.

“Hong Kong home buyers who missed the last entry point are in pain right now, especially those who are determined to have a place of their own,” CLSA’s property research head Nicole Wong told China Daily.

“It takes an average household 46 years to earn enough for an average 500 square-foot home in Hong Kong right now, and home prices show no sign of going down, which are already very, very expensive,” she said.

The last good entry point was not the period in early 2009, when the latest price correction bottomed out, but when house prices went all the way down from their historic high in 1997 to a recent-years low in 2003, a “70 percent slump” according to Wong.

“In 2003, you could buy some apartments for only HK$4,000 per square foot on the city’s most prestigious Peak. Right now, you could buy only one tenth,” she said.

The Hong Kong government in July auctioned a prime residential site in Peak district at a sky-high price of HK$32,000 per square foot of gross floor area.

Analysts said the development project could end up including apartment units for sale at HK$40,000 per square foot of finished gross floor area and individual houses for sale at up to HK$70,000 per square foot.

Even though prices for luxury homes are steaming ahead, Wong said they may be the only type of properties worth investing in at the moment because most mainland investors who buy properties here target the high-end market.

“We could expect prices of luxury homes to keep climbing as money is not a problem,” she said.

Middle- and low-end homes are likewise very costly, and most ordinary Hong Kong residents may have to set aside more than half of their incomes for mortgage installments when interest rates go back up.

According to statistics complied by CLSA, the number of both high-income households earning more than HK$40,000 a month and low-income households with incomes of less than HK$20,000 a month have grown significantly since 1997, while the sandwich group in the middle has barely changed in size.

As home prices have shot up, many in the middle-income range have found themselves in a bad spot and they may end up buying into a life-long burden rather than a sweet home.

Another research head at CLSA, Francis Cheung, agrees with Wong that the city’s home prices are very expensive and it is hard to find a good entry point now even with a long-term perspective.

Though home prices are beyond the affordability of many people in the city, Cheung believes the market is still sound, as Hong Kong’s property market is “very mature.”

“Unlike many mainlanders who believe that home prices will never collapse because the government will always back them up, Hong Kong people have experienced ups and downs in the property market and they are more cautious,” Cheung said.

According to the city’s leading property broker house Centaline, both home prices and rental rates in the private residential property market are fast approaching the record levels of 1997 when the city’s real estate market peaked.

“The rental rates will also keep on climbing at a pace of 15 to 20 percent a year or so,” said Wong. “This upward trend is showing no signs of reversing.”

China Daily

(HK Edition 08/17/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-08/17/content_11161369.htm

Lender offers an interim dividend of HK$0.38 per share

Bank of East Asia Ltd, the city’s third-largest lender by market value, could achieve record earnings this year if the local economy remains stable in the second half, Chairman and Chief Executive David Li said after the lender reported a 78 percent jump in its net profit for the first half.

The lender’s net profit for the six months ended June 2010 rose to HK$2.08 billion, up from HK$1.17 billion a year earlier.

The surge in profit was driven by strong gains in interest and fee-based incomes, as well as lower impairment losses, which dropped 66 percent to HK$168 million, said the lender.

The bank recommended an interim dividend of HK$0.38 per share, up from the HK$0.28 per share for the same period in 2009.

“If Hong Kong’s economy stays at current (stable) state, we are looking forward to bouncing back to the profitable level of 2007,” Li said during a press briefing for the bank’s interim results Thursday.

The bank earned a record net profit of HK$4.2 billion in 2007. But its net profit plunged over 97 percent to HK$104 million in 2008 after disposing of its entire collateralized debt obligations, which resulted in a HK$3.5 billion write-down.

“Though we are still cautiously optimistic towards the second half of this year, I am expecting another record profit,” said Li.

The lender’s net interest income from its core lending operations rose 14 percent to HK$3.67 billion from a year earlier, thanks to a higher net interest margin and loan growth. Its net interest margin which measures the loan profitability, widened to 1.84 percent from 1.77 percent a year earlier, said Chief Financial Officer William Cheng.

The bank has spent the past three years expanding its operation on the mainland, with mainland outlets growing to more than 70. Li referred to the bank’s mainland business as “a great asset”, which accounted for 45 percent of the group’s profit in 2009.

BEA’s mainland operation recorded a pre-tax profit of HK$780 million in the first half of 2010, up from HK$717 million a year earlier.

The lender’s strong first-half result was also boosted by a gain from the disposal of a 70 percent stake in wholly-owned BEA (Canada) to the Industrial and Commercial Bank of China (ICBC) in January. Net profit would have increased 56.5 percent year-on-year, excluding the one-off gain.

Li said the bank will sell another 10 percent stake in BEA (Canada) to ICBC next year, but denied that the bank is undertaking any merger or acquisition.

“No one has approached me to talk about the buyout of BEA,” said Li, adding that Hong Kong banks’ capital adequacy ratios are higher than the global average, which makes them very expensive to acquire.

Shares of BEA erased morning losses to gain 2.6 percent at the close in Hong Kong Thursday after the earnings announcement. Unlike many of its peers on the Hang Seng Finance Index, which has lost 1.1 percent so far this year, Bank of East Asia has risen by 2.1 percent.

China Daily

(HK Edition 08/13/2010 page3)

http://www.chinadaily.com.cn/hkedition/2010-08/13/content_11147456.htm