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Nostradamus Supreme	31-Aug-2006 21:19        Nostradamus About Contact  Quote this Post!
x 1   x 0  Alert Admin	Rapid GDP growth. But are companies' earnings rising just as rapidly? Apparently not. Profits are falling instead. A drop in Chinese companies' profits, despite rising sales, suggests many firms are not benefitting as much as hoped from the booming economy and bodes ill for the second half of 2006, when economic growth may slow. Combined net profits of companies listed in Shanghai and Shenzhen fell 15% in the 1H06 yoy, excluding heavyweight Bank of China, according to calculations by Reuters and local securities analysts.   The drop occurred despite a 12.8% jump in the firms' turnover on the back of China's racing economy, which expanded 10.9% yoy in the first half. The contradiction between weak profits and strong economic growth suggests many firms are not well prepared to face any economic slowdown in China, where authorities have been tightening monetary policy, or globally. "The impact of macroeconomic adjustments will add to the problems of surging materials prices, fierce competition in many industries and the difficulty that upstream companies have in passing their costs downstream," said Qian Qimin, senior analyst at Shenyin & Wanguo Securities.   The official Shanghai Securities News said, the formal end of China's corporate reporting season, that 1,388 listed firms posted combined net profit of 127.8b yuan for H1, up 7.54%. Turnover rose 17.72% to 2.39t yuan, it said. But those figures were skewed by the inclusion of the first-half 2006 earnings of Bank of China, which listed in Shanghai only in July this year and whose first-half 2005 profit was left out of the newspaper's calculations. The bank reported a net profit of 19.5b yuan and turnover of 100b yuan in 1H06. Analysts said the first-half earnings season was disappointing overall and was one factor restraining the stock market. The benchmark Shanghai index is up 43% this year, but it has moved sideways in the past 2 months. Rising costs of raw materials and fuel, faced by most companies overseas, were largely to blame for weak profits, the Chinese firms said in their earnings reports. But Chinese companies are also grappling with two problems not faced to the same degree by most foreign competitors. One is surging wages - average urban wages were up 14% in 2Q06 yoy. The other problem is overinvestment, which has sparked brutal competition for market share and leaves companies exposed in the event of a downturn. "China's listed firms are not fully prepared for a possible economic slowdown," said Zheng Weigang at Shanghai Securities. He and others said any slowdown would probably be minor. But even a small one could prove hard to bear for some industries whose margins have already eroded sharply, such as airlines, steel, autos and home appliances. Most of China's listed airlines were in the red in the first half. China Eastern Airlines Ltd., one of the country's three big airlines, reported its operating profit margin more than halved to just 5.87%. Baoshan Iron and Steel Co. saw the operating margin on its core steel business almost halve to 18.38%. "Steel is a typical case - overcapacity built up during the economic boom of past years prevents producers from passing on costs to end-users," said Cai Haihong at E Funds Management. Capacity expansion has even eroded margins in some sectors that were previously little affected, such as power generation. Zhejiang Southeast Electric Power Co. said it used a smaller portion of its capacity, causing its operating margin to drop 1.63% to 23.8%. "Gone are the days when electricity producers used to see margins of over 30% due to power shortages," said industry analyst Yang Zhishan at CITIC Securities. "I expect the firms to see their margins stabilise at 20-25%." On the positive side, analysts said increased investment in R&D would help some companies become more efficient despite its negative impact on margins for now. And some raw materials sectors as well as banking, retail, food and railways are likely to continue to ride China's strong economy and financial reforms, analysts said. "Banks, for instance, will benefit from China's reforms to the foreign exchange regime, with appreciation of the yuan adding value to their large yuan assets and increasing their income," said banking analyst Wu Yonggang at Guotai Junan Securities.
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Nostradamus Supreme	14-Aug-2006 18:30        Nostradamus About Contact  Quote this Post!
x 0   x 0  Alert Admin	China's Shanghai stock index had the biggest drop among global benchmarks after China Petroleum & Chemical Corp. said it had no plan to buy out units Sinopec Shanghai Petrochemical and Sinopec Yizheng Chemical Fibre. The denial has damped the sentiment. China Merchants Bank Co. rose after it won government approval to sell shares in Hong Kong. The Shanghai Composite Index, which tracks yuan-denominated A shares and foreign-currency B shares, slid 2.2% to 1570.74, the biggest decline since July 31. The Shenzhen Composite Index, which tracks the smaller of the two Chinese markets, lost 2.4%, its steepest slide since Aug. 4. Shanghai Petrochemical, China's largest maker of ethylene, retreated 5%. Yizheng Chemical, China's largest chemical fiber maker, fell 2.7%. China Petroleum, Asia's biggest oil refiner, also known as Sinopec, said today in a statement it has no plan to take full private ownership of the two listed subsidiaries. Sinopec dropped 2.8% on concern the delay in the privatization plan will undermine its effort to reduce the intra-company competition. Stocks also fell after the China Securities Journal said, citing company reports, that foreign investors cut their holdings of the mainland's equities by 36% in the second quarter. They sold shares of such companies as China Vanke Co. and Hunan Valin Steel Tube & Wire Co., said the report. China Merchants, the nation's second-biggest publicly traded lender, added 0.8%. The lender said it received regulatory approval to raise about $2.4 billion in Hong Kong this year. The planned sale has still to be approved by the Hong Kong stock exchange.
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Nostradamus Supreme	04-Aug-2006 18:35        Nostradamus About Contact  Quote this Post!
x 1   x 0  Alert Admin	Shanghai Composite Index fell to 7-week lows. Lenders slid after state media said a former executive at Bank of China Ltd. was indicted for taking bribes. The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, lost 30.91, or 1.9 percent, to 1570.15, the lowest since June 15. The measure fell 5.5% for the week. "The bribe news has hurt investors' confidence in Bank of China's management," said She Minhua, an analyst at China Securities Co. in Shanghai. Bank of China, the nation's second-largest lender, slumped 4.6 % this week, have risen 6.8% since they were first sold to the public on July 5. Tan Zhixin, a former vice president at Bank of China's Hainan branch, was indicted for taking bribes worth 15.5 million yuan ($1.9 million), Xinhua News Agency said, citing court records. Tan allegedly took kickbacks from 25 companies and individuals from 1995 to 2005 in exchange for granting them loans without going through proper procedures, Xinhua said. China's banking supervisor uncovered 480 fraud cases at domestic lenders in the first half, about 16 percent less than the same period a year ago, as the government expanded efforts to clean up corruption and lending scandals.
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newmoon Veteran	07-Apr-2006 16:10        newmoon About Contact  Quote this Post!
x 0   x 0  Alert Admin	avoid stocks with heavy insider selling- paper, apple juice,wheels,cardiac stents etc.......
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singaporegal Supreme	07-Apr-2006 15:15        singaporegal About Contact  Quote this Post! Style: Technical   Mood: Yells: "Female TA nut"
x 0   x 0  Alert Admin	hey newmoon, so which stocks have good management? haha.. :)
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newmoon Veteran	07-Apr-2006 11:01        newmoon About Contact  Quote this Post!
x 0   x 0  Alert Admin	shanghai index is on an uptrend decisively- up again by 2.3 points today- renminbi is a strong currency and expected to be stronger because of stellar growth in china this year. China paper is just a drop in the ocean and does not represent the chinese economy-seen in perspective the bearish sentiment is overdone-just avoid stocks with dubious management.
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