LI, Tao @ Hong Kong

Small and medium enterprises (SMEs) need a market-based loan guarantee scheme much before the current arrangement is phased out, said a leading think-tank in the city. A study released Friday by the Bauhinia Foundation Research Centre has insisted that major financial institutions, not the government, guarantee loans for these SMEs.

“With a third party serving as a guarantor for bank loans, the scheme is more flexible in terms of coverage, maximum loan amount as well as guarantee amount and limit,” said Bauhinia Foundation Chairman Anthony Wu. “It also means more choices for financing in the city.

The Hong Kong government launched the Special Loan Guarantee Scheme (SpGS) in December 2008 to provide an 80 percent guarantee for commercial loans granted by participating lending institutions (PLIs) to eligible SMEs. That was part of its relief measures to help SMEs facing liquidity problems during the global financial crisis.

In April this year, it extended the application period for the special scheme by another six months, to December, in a bid to help SMEs consolidate their business at a time when the economy has just begun to recover.

As early as 2001, the Hong Kong government launched an SME Loan Guarantee Scheme (SGS), which guarantees SME loans up to HK$6 million with a maximum guarantee period of five years.

“The scheme can supplement the existing SGS, and form part of Hong Kong’s long-term SME loan guarantee mechanism,” said Wu.

Wu said the choice of guarantor is crucial in the new arrangement, for its sold financial strength, high credit rating as well as sufficient guaranteed loans will be essential for the new scheme to be viable.

He believes Hong Kong Mortgage Corporation (HKMC), a public limited company wholly owned by the government through the Exchange Fund, is one of the best choices.

“Since HKMC is a self-financing company, its guarantee will not involve any subsidy from taxpayers. Moreover, credits from its government background will encourage banks or lending institutions to sustain their scale of financing for SMEs in Hong Kong,” said Wu.

In Hong Kong, SMEs account for over 98 percent of all the enterprises, provide employment opportunities for 1.2 million works – almost half of the total working population.

The SpGS has helped stabilize about 300,000 jobs, contributing to “supporting enterprises and preserving employment”, the government said in April.

The new scheme will cover all non-listed enterprises and SMEs in the city, and is designated to include both term loans and revolving facilities to broaden support for SMEs, with the guarantee coverage ratio ranging from 50 percent to 70 percent.

China Daily

(HK Edition 09/04/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-09/04/content_11255410.htm

In what promises to presage a breakthrough in the Hong Kong Exchanges & Clearing’s (HKEx) efforts to rope in more international companies, Mongolian Mining Corp is set to sell stocks worth $700 million in an initial public offering in Hong Kong, the first IPO by a Mongolian company in the city.

Mongolian Mining, previously known as Energy Resources, said new shares account for 75 percent of the initial sale, which constitutes 20 percent of the company’s enlarged share capital. After the listing, it may exercise an option to sell additional shares equal to 15 percent of the offering.

It will use the proceeds to develop mines, fund transport infrastructure projects and acquire companies with mining rights, said the company. Earlier reports said the company plans to build a privately-owned railway directly from the mine to China at a cost of approximately $700 million. It is now in touch with some international banks discussing financing.

“Hong Kong investors dote on energy stocks as power consumption is always rising in fast-growing economies, particularly China,” said Alvin Chung of Prudential Brokerage.

Chung nevertheless voiced concerns about the amount Mongolian Mining plans to raise, for several other companies are also scheduled to list in the city’s bourse during that time.

“There are over 10 new IPOs in Hong Kong this September and, as far as I know, Mongolian Mining should be the largest among them,” said Chung.

Mongolian Mining also plans to price its shares on September 24 and start trading on October 5. It will become the first company listed in Hong Kong to be fully based and operated in Mongolia.

SouthGobi Energy Resources Ltd, the largest coal producer in Mongolia in terms of export sales, raised $436.3 million from its Hong Kong IPO, but headquartered in Canada.

Mongolia’s domestic companies seek foreign capital for expansion. Chairman of the Government of Mongolia’s State Property Committee, Dulam Sugar in June said the country plans to privatize State-owned assets in initial share sales in local and international stock markets, such as Hong Kong.

A $4-billion deal signed in October last year between Mongolia and Rio Tinto PLC and Ivanhoe Mines Ltd for a giant gold-and-copper deposit is an added incentive for the investors.

Charles Li, HKEx’s newly appointed CEO, had said the city is a regional platform capable of attracting more listings from mainland as well as international firms.

Hong Kong also amended one chapter of its Listing Rules in June, laying more comprehensive guidelines for listing of mineral companies. This “paves the way for mineral companies to become a major listing platform,” Benson Wong from PricewaterhouseCoopers said in an earlier interview.

According to July report cards, two mining companies have raised over HK$20 billion from their IPOs in Hong Kong, including the world’s largest aluminum company, Moscow-based United Co. Rusal which raised $2.6 billion in January and became the first Russian company to go public on the Hong Kong Stock Exchange.

China Daily

(HK Edition 09/02/2010 page2)

http://www.chinadaily.com.cn/hkedition/2010-09/02/content_11244137.htm

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