China Stocks News and Analysis from Seeking Alpha

Ctrip.com Flies High on Strong Earnings

TraderMark — Thu, 12 Nov 2009 15:29:58 -0500

Trader Mark submits:

Ctrip.com (CTRP) is an old favorite of ours, probably the first Chinese-based stock we ever owned, and last night they delivered a stellar earnings report. It has been off our radar of late, so I had missed its recent (beautiful) breakout... the chart looks like this and that is without the 10% it tacked on in after hours. It is now trading in the $71s...

Some color on their earnings, with full report here:

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China Housing Market: It's 2005 All Over Again

Tim Iacono — Thu, 12 Nov 2009 14:41:58 -0500

Tim Iacono submits:
What Americans wouldn't give for a chart of home prices that looks like the one below from this report in CHINADaily. Granted, a year-over-year increase of 3.9 percent isn't much compared to what was seen during the halcyon days of the global credit bubble a few years ago, but for 2008 to 2009, it's pretty good.
The cost of a home in China rose sharply in October, with the price surging up at its fastest rate for 14 months.

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Asian Currencies: Expect More of the Same

Marc Chandler — Thu, 12 Nov 2009 10:36:51 -0500
Marc Chandler submits:
There may be much back-slapping over the fact that Asian-Pacific finance ministers have endorsed market-oriented exchange rates, consistent with the op-ed piece in Thursday's Wall Street Journal by the US Treasury Secretary and the finance ministers from Indonesia and Singapore.
But actions will speak louder than words, and there is much precedent for lofty platitudes to be followed up with little action. Mostly thunder, little rain.
A survey of the currency regimes in a number of East Asian countries reflect a reluctance to embrace market driven foreign exchange rates. Managed regimes are the rule, not the exception. Although APEC seemed to largely sidestep the issue about the Chinese yuan peg, there is speculation that China is signaling a change in its stance.
Recall that after allowing the yuan to appreciate for the three year stretch from July 2005 through July 2008, it has essentially been re-pegged to the dollar. In the PBOC's quarterly monetary report posted this week was a commitment to improve the management of the exchange rate by taking into account changes in major foreign currencies not just the dollar. This sounds like a return to the basket approach which it had opaquely said it used previously. At the same time, the PBOC dropped the official mantra that it desired to keep the yuan "basically stable at a reasonable and balanced level."
The indicative pricing of the 12-month CNY non-deliverable forwards have been trending higher, suggesting larger anticipated appreciation, now about 3.3%. The timing of this would seem to steal some of U.S. President Obama's thunder from his trip to China, where he said he would raise the currency issue. Although yesterday's slew of economic data was constructive, neither inflation nor exports improved as much as the market expected and it is clear that Chinese officials still regard their fiscal and monetary driven recovery as fragile, as do other APEC and G20 members for the most part. It does not appear that significant yuan appreciation is a likely near-term scenario.
Disclosure: No positions

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Yuan Appreciation Speculation Hits the Euro

Mitul Kotecha — Thu, 12 Nov 2009 08:25:43 -0500
Mitul Kotecha submits:
The USD index is trading close to a 15-month low and direction remains firmly downwards as risk appetite continues to improve and the USD’s status as a funding currency remains unaltered. Whether it’s a weak USD driving stocks higher or vice-versa, US stocks are currently trading at 13-month highs, maintaining the negative correlation with the USD index.
One currency that has failed to take advantage of the weak USD over recent days is EUR/USD and its failure to make a sustainable break above 1.50 highlights that momentum in the currency is fading. EUR/USD looks vulnerable on the downside in the short term, with resistance seen around 1.5050. Speculation that China will resume CNY appreciation has taken some of the steam out of the EUR given that it implies less recycling of intervention flows into the currency.

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China's 'Infrastructure for Resources' Policy

TraderMark — Thu, 12 Nov 2009 07:58:03 -0500
Trader Mark submits:
As the United States spends money it doesn't have (much of it borrowed from China ironically) to manipulate housing prices upward, and get its debt-laden consumers to spend with financial handouts, bail out its financial oligarchs and funnel money into states so its public sector employees have no need to make any necessary adjustments to reality, China continues to spend its surplus on "nation building" in return for access to other country's resources. [May 13, 2009: Commodities - It's China's World: We Just Live in It] .I literally could post a story each week as agreements or strategic purchases are made by China; much of the emphasis has been in Africa....

A $9 billion minerals-for-infrastructure deal is presented by Congolese President Joseph Kabila as a cornerstone of his plan to rebuild the Democratic Republic of Congo after years of war.

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Yuan's Appreciation Will Boost Solar Earnings

Kelvin Schulle — Thu, 12 Nov 2009 03:58:18 -0500
Kelvin Schulle submits:
Investors who favor emerging markets such as Chinese markets will become more confident as Beijing signaled on Wednesday that it will allow the Yuan to appreciate against the greenback (well actually against a basket of currencies). This is seen as a boost to exports of US and EU companies as a stronger yuan makes goods cheaper for the Chinese people, which is a big positive for the US market preparing for its next leg up for the months ahead.
The sector which will benefit the most is the renewable energy sector, particularly companies whose businesses are growing in China. Revenue of Asian renewable energy companies will get a boost when China's strategic Golden Sun project and wind farm projects kick off later this year. These projects are targeting to achieve the nation's 20% electricity generated from solar and wind. When revenue is received in yuan and reported in USD, investors may see surprising earnings for the coming years. The following companies are growing business aggressively in China as the local government strongly supports them.

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American Oriental Bioengineering: Questionable Acquisitions

Manuel Asensio — Thu, 12 Nov 2009 03:37:34 -0500

GLP Acquisition:
On April 18, 2006, American Oriental Bioengineering, Inc. (AOB) completed the acquisition of a privately-held Chinese company called Guangxi Lingfeng Pharmaceutical Company Limited (“GLP”). AOB paid approximately $24.5 million for GLP, comprised of $18.9 million in cash and $5.6 million in stock, according to AOB’s 2006 10-K.

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Ctrip.com Q3 2009 Earnings Call Transcript

Thu, 12 Nov 2009 00:30:21 -0500

Ctrip.com International, Ltd. (CTRP)

Q3 2009 Earnings Call

November 11, 2009 8:00 pm ET

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New Love for WidomTree's Chinese Yuan ETF

Gary Gordon — Wed, 11 Nov 2009 16:04:52 -0500
Gary Gordon submits:
The WisdomTree Chinese Yuan Fund (CYB) has been waiting for a day like November 11, 2009. Rather than continue pegging its currency to the U.S. dollar ad infinitum, China’s Central Bank announced “Following the principles of initiative, controllability and gradualism, with reference to international capital flows and changes in major currencies, we will improve the yuan exchange-rate formation mechanism.”

Translation? The Chinese aren’t willing to let their currency go down with the dollar ship.

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China's Recovering Export Sector: Less than Meets the Eye

Michael Panzner — Wed, 11 Nov 2009 10:50:24 -0500
Michael Panzner submits:
It's early in the trading day, but the bulls are already charged up by apparent good news out of China. According to Bloomberg,
production rose 16.1 percent from a year before, the most since March 2008, the statistics bureau said in Beijing today. Retail sales gained an annual 16.2 percent in October, it said. The trade surplus almost doubled from September, to $24 billion, as the slide in exports eased to the slowest pace this year.

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China's 10 Most Profitable Banks

David Hunkar — Wed, 11 Nov 2009 10:41:55 -0500
David Hunkar submits:
We reviewed China’s largest banks by 2008 assets on November 9th.Today let's take a look at some of China's most profitable banks.

China’s 10 Most Profitable Banks based on Net Income in 2008:

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Did China Buy Too Much Copper?

The Macro Trader — Wed, 11 Nov 2009 06:54:52 -0500
The Macro Trader submits:
There is some interesting news out of China: they may in fact re-export some of their copper stockpiles. Here is the link to the Bloomberg story “China May Re-Export Copper on Stockpiles.”
While not a rally killer by itself, this is pretty damning evidence that a major part of the rally in commodities came from Chinese stimulus buying. This was more bargain buying than an actual demand driven rally. The news could lead to a good sized move down as demand has not picked up inline with supply and now China is not only done buying but may even start to sell.

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Asian Tech Stock Weekly Review (November 2-8, 2009)

IRG — Wed, 11 Nov 2009 05:37:35 -0500

Japan

Mobile/ Wireless

• Aurora Feint has agreed to sell a 20 percent stake to Japanese online and mobile commerce and entertainment provider DeNa. DeNA gaming industry partner Hudson, has agreed to use OpenFeint in their game lineup starting with Bomberman for the Christmas season.

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China and Its Predatory Currency Policy

The LFB — Wed, 11 Nov 2009 04:42:44 -0500
The LFB submits:
Mercantilism is alive and well in China this article reveals. China is now the world’s third largest economy although well down the leader board in per capita terms. Chinese monthly economic figures for exports, industrial production, and investment will be reported today.
A massive three-dimensional policy stimulus from low interest rates, deficit fiscal spending and intervention to maintain a highly undervalued yuan has the Chinese economy revving back to pre-global downturn speeds in a hurry. Re-pegged against the dollar since July 2008 at roughly 6.83, the yuan has followed the greenback southward in 2009 against almost all other world currencies. The last thing the global adjustment process needs is for the biggest surplus economy to have a depreciating currency.

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Breakouts on Big Volume; Detailed Option Trade for Home Inns

Marco Hickey — Wed, 11 Nov 2009 04:33:26 -0500
Marco Hickey submits:
Here is a list of stocks which traded higher Tuesday November 10, 2009 on unusually higher volume. I will keep an eye on these stocks Wednesday to see if there is continued buying pushing the stocks higher. This method is just one of the ways I use to pick stocks to structure particular option trades. This post requires the knowledge of stock options. To learn more about the option strategies outlined in this post, risks, pricing, calculations, other strategies, and options in general, click here.

The table below shows the company, ticker, per share % increase, and volume increase (% increased compared to 50 day average). For your convenience I have ranked the stocks in order from greatest to least volume % change.

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BMP Sunstone Partners with Pfizer to Distribute Endometriosis Treatment in China

ChinaBio Today — Wed, 11 Nov 2009 04:29:12 -0500
ChinaBio Today submits:
BMP Sunstone Corporation (NSDQ: BJGP) and Pfizer China (NYSE: PFE) have formed a strategic partnership to distribute and promote Depo-Provera (Medroxy-progesterone Acetate), a Pfizer product used to treat endometriosis, in China. Endometriosis is a medical condition in women of childbearing age that can cause significant pain. Financial details of the agreement were not disclosed.

The partnership is interesting because Pfizer has its own drug distribution network in China. But the big pharma decided that in this niche, it could do better by forming an alliance with BMP Sunstone, which has an established line of women’s and infant medical products. BMP acquired the products by buying Sunstone in 2007, which made and distributed the Hao Wawa (Good Baby) brand for children's healthcare and Kang Fu Te (Comfort) for women's healthcare. After the acquisition, BMP became known as BMP Sunstone.

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If Fed Is Looking to Inflate, What Should Asia Do?

Edward Harrison — Tue, 10 Nov 2009 23:17:15 -0500
Edward Harrison submits:
Andy Xie thinks the Fed is on an inflationary path. Last month, he wrote an article in Caijing which says that ‘stagflation lite’ is the Federal Reserve’s preferred outcome. What’s interesting is his recent article about the need for China and Japan to join forces under an ASEAN umbrella, rejecting the APEC umbrella shared with the U.S.

In last month’s article, Xie said:

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China's Improbable Economic Growth Figures

Joseph Trevisani — Tue, 10 Nov 2009 13:56:16 -0500
Joseph Trevisani submits:
China largely escaped the ruin that came over Western financial institutions last fall, but it could not avoid the economic effects of the debacle. The Chinese government has attempted to sustain its economy by spending more than $900 billion of its own and state bank’s funds to support its $4.3 trillion economy until the global trade system recovers and demand for goods once again flows to Chinese factories.
Chinese economic growth since the crash of last September has never approached the standard recession definition of two consecutive quarters of negative GDP. Third quarter growth as recorded by the government was 8.9%. It was 7.9% in the second and 6.1% in the first.

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Sovereign Credit Ratings: China Up; U.K., U.S., Japan and France in Question

Washington — Tue, 10 Nov 2009 13:35:55 -0500
Washington's Blog submits:
I have previously written numerous articles about sovereign credit ratings, asking whether the UK would lose its AAA rating, and pointing out that the credit rating agencies were playing games to avoid stripping the U.S., UK, Ireland and Spain of their AAA ratings.

Reuters notes today that the UK is indeed in danger of losing its AAA rating:

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Using 'Mycroft' Method to Valuate Duoyuan Printing

Chimin Sang — Tue, 10 Nov 2009 09:33:41 -0500

I became a fan of Peter “Mycroft” Psaras when he first started publishing on SeekingAlpha. If you don’t yet know who he is, check out his instablogs, articles and profile.
The way he is different is that he clearly outlined a simple and effective framework for valuation. In what he called a "Main Street" view, he calculates a ratio called FROIC, Free Cash Flow over Invested Capital. If FROIC is above 20% consistently in the past several years, the business is very likely to be a good money-making business. He then buy such a business at a Price to Free Cash Flow ratio (PFCF) below 15 and sell at the ratio above 30, which is his "Wall Street" view. To make things easier for common investors, he simplifies the calculation of free cash flow to only adjust for depreciation and fixed assets investment.

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