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| Saturday, 29 August 2009, 20:36 HKT/SGT | |
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Source: IRG | |
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HONG KONG, Aug 29, 2009 - (ACN Newswire) - The following is the China excerpt from IRG's TMT Weekly Market Review Aug 17 - Aug 23. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT).
Internet
- Alibaba.com Ltd. decided to buy the business management software division from Alisoft Holding Ltd. for 208 million yuan (US$30.5 million) to increase operational efficiency. This is the first time Alibaba.com has acquired assets from its parent in a move to supplement its product offerings and generate new sources of revenue. The closing of the acquisition will be by Sept. 1. The business management software division, which has more than 250 employees, will be included with Alibaba.com's Information Technology Business Unit. The transfer of business management software division comprises application software product lines for small businesses, customer contracts and employees.
- Alibaba's consumer-focused e-commerce site Taobao recorded transaction volume of 80.9 billion yuan (US$11.8 billion) in the first half of 2009, climbed 97 percent year-on-year. Taobao's gross merchandise volume was equal to 1.4 percent of China's total retail sales in the first half of the year. Taobao's registered users grew 101 percent year-on-year to 145 million as of June 30, 2009. 47 percent of Taobao users are between the ages of 26-35, while 39 percent are between the ages of 16-25. spending per order declined by 51.5 yuan (US$7.54) from last year due to the economic slow-down, but the overall number of orders rose by 184 percent as e-commerce gained broader acceptance among China's online population. Household goods have become the top selling category in terms of total sales transaction value for the first time.
- Baidu Inc.'s new advertising system has slightly hurt revenue since its launch but could significantly boost revenue as soon as the current quarter. The new system more clearly differentiates paid advertisements from natural search results, and offers advertisers new tools to track the return on their investment. Baidu is in transition, using the new system for some but not all searches. Phoenix Nest began to have more criticism for not clearly differentiating ads from organic search results. Phoenix Nest has negatively affected its revenue due to incentives offered to advertisers to switch to the new system such as credit rebates to advertisers' accounts.
- China Finance Online Co. Limited had net revenues of US$12.28 million for the quarter, down 16 percent year-on-year but climbed 4 percent quarter-on-quarter, for the second quarter of 2009. Individual customer subscription service fees accounted for 88 percent of net revenues in the quarter. Net loss attributable to China Finance Online was US$2.4 million in the second quarter of 2009, compared to net income of US$4.56 million for same period of 2008 and net loss of US$128,000 for the previous quarter. Predicting continued influence from the economic crisis in the coming quarters, China Finance Online guided third quarter net revenues in the range of US$12 million to US$13 million, compared to US$15.23 million in the year-ago period.
Mobile/ Wireless
- China TechFaith Wireless Communication Technology Ltd. had net profit of US$ 4.5 million in the second quarter ended June 30, 2009. Net revenue is US$49.8 million in the quarter, increasing by 2.4 percent quarter on quarter. Gross profit is US$9.5 million, climbing to 7.6 percent quarter on quarter compared with US$8.8 million in the first quarter; gross margin 19 percent. Operating expenses US$7.3 million. The company's revenue is expected to range from US$47 million to US$52 million in the third quarter.
Software
- CDC Corporation had net income of US$3.34 million in the second quarter of 2009. Total revenues came to US$81.65 million over the period. CDC Corp's had subsidiary CDC Software remained the company's biggest revenue source, contributing US$50.61 million over the quarter, while CDC's IT consulting division, Global Services, brought in US$18.53 million. CDC Games had US$9.46 million during the three-month period, and separately listed portal operating subsidiary China.com added US$3.06 million.
- Omnix Software has appointed Beijing Sinoprof Information Technologies as its partner in China. Sinoprof, one of the leading ERP consulting service providers in China, works with Chinese telecommunication operators including China Mobile and China Unicom. Sinoprof is in a strong position to advice operators throughout the region on their MSS/OSS solutions. Omnix Software solutions will be targeted at Sinoprof's customers to assist them with extensive nationwide 3G site deployments. The upgraded networks are already being rolled out across China, but high quality, on-time service enhancements require a collaborative workflow system that can manage the processes for deploying the new equipment in the network.
Telecommunications
- China Mobile will likely report its first-half net profit rose 2.9 percent. Revenue for the six months ended June 30 likely rose 8.9 percent. China Mobile added 35.87 million subscribers in the first six months of this year, bringing its total subscriber base to 493.12 million at the end of June. Earnings growth momentum for China Mobile is slowing down due to the weakening economy and increasing competition from China Unicom and China Telecom. China Telecom is expected to report its first-half net profit likely fell 34 percent.
- China Mobile had a sharp slowdown in profit growth for the first half as competition intensified and it added low-income subscribers in rural areas. Earnings growth momentum for China Mobile is slowing down due to the weakening economy and increasing competition from China Unicom and China Telecom. After the commercial launch of its third-generation mobile service in January, China Mobile has been striving to improve its network coverage and handset quality to add subscribers. The slowdown in its subscriber growth was due to higher mobile penetration in urban cities, but the company still sees room for growth in central and western China.
- ZTE Corp. posted a 41.9 percent rise in second quarter net profit, boosted by huge spending on 3G networks by the country's three telecom carriers. ZTE second quarter earnings rose. Beijing has targeted spending of US$58.5 billion in 3G mobile network construction through 2011 after handing out long-delayed 3G licenses earlier this year. The results came after ZTE's first quarter profits rose 29 percent. The company's share price rose 72.3 percent in the first half of the year, almost doubling the 38.9 percent surge on Hong Kong's China Enterprises index over the same period.
- China Telecom has selected Huawei Technologies and Ericsson as the winners of its second round 40-gbps wave division multiplexing network equipment tender. Among the tender participants, which included all major WDM equipment suppliers in China, Huawei was selected to provide 87 percent of the total tender value, while Ericsson won 13 percent. The total value of the tender has not yet been revealed. The tender equipment will be used in the second phase of China Telecom's WDM network construction in the Yangtze River Delta and Zhujiang River Delta regions.
- China Telecom said a damaged nine undersea cables caused by a major earthquake in south east of Taiwan is the cause for the disruptions to international telecom services. Five of the cables are used by China Telecom. The cables support phone and Internet services from the Chinese mainland to Taiwan, the U.S., Japan, Korea, and Singapore. Traffic is being rerouted through operational cables as they repair the damaged cables. Time for repair work was not given. The breakdown of the FNAL/RNAL cable, a key information conduit for northeast Asia, had caused disruption to services from China to the United States and Europe.
- The three state-owned Chinese mobile operators, which were granted 3G licences in January, proposed to make 450 billion yuan (US$65.9 billion) investments in 3G services in the next two-and-a-half to three years. Each operator needs to develop at least 50 million 3G users, and try its best to reach 80 million in the next three years. With three 3G operators, the regulator expects to reach 240 million 3G users in three years, a target which is higher than the government's previous goal of 150 million in three years made in February. Analysts said the 240 million users target is much more aggressive and questioned how the government would achieve this. 3G penetration will reach 16 percent in 2012, based on a projection of a total number of mobile users of 938 million.
Information Technology
- VanceInfo Technologies, one of the leading offshore outsourcing companies in China, is looking at fresh domestic acquisitions to boost its presence in the backroom operations of the financial industry, as firms in its key markets the U.S. and Europe begin to recover. The company plans to buy a few Chinese banking software companies valued between US$2-5 million. VanceInfo brought Hong Kong-based customer relationship services firm TP Corp. The acquisition enabled the company to gain access to some key accounts in Hong Kong, China and Southeast Asia. VanceInfo was also looking to close deals with potential new customers from the United States and European markets worth between US$5-10 million each. VanceInfo may provide application software development services for those new projects.
Technology
- AirMedia Group Inc. had net loss of US$7.0 million for the second quarter of 2009. Total revenues grew 23.7 percent year-on-year and 12.3 percent sequentially to US$36.8 million, of which revenues from digital frames in airports increased 50.3 percent year-on-year and 36.7 percent quarter-on-quarter to US$16.5 million, while revenues from airport digital TV screens fell 30.6 percent annually and 25.5 percent sequentially to US$9.1 million. The company generated US$3.9 million from airplane-based digital TV screens. The fees represent 77.3 percent of the quarter's net revenues, compared to 40.0 percent in the same period one year ago and 59.9 percent in the previous quarter.
Hardware
- Dell is entering the smart phone market for the first time through a cooperation deal with China Mobile Ltd. Dell's handset model, mini3i, supports the company's new online platform which offers music, games, videos and other entertainment applications for download to mobile phones. The two companies are working together on the development of mobile devices. Major personal-computer makers, suffering from stiff competition and pricing pressure, have been turning their attention to a new market for growth - smart phones - which are mobile devices that offer access to e-mail and support other multimedia functions.
Alternative Energy
- Trina Solar Ltd had net income of US$18.9 million in the second quarter of 2009, as the financing customer increases, European demand and government incentive programs pushed module shipments up 34.3 percent year-on-year and 30.9 percent sequentially to 63.9MW. The company had net profit of US$17.1 million in the year-ago period and a net loss of US$10.6 million in the previous quarter. Second quarter earnings is US$5 million accounts receivable write-off, and US$13.7 million foreign currency exchange gain, because of the appreciation of the Euro against the U.S. dollar. Net revenues increased to 13.5 percent sequentially to US$150 million in the second quarter, but had 26.5 percent year-on-year decline due to falling module prices. Gross margin was up by 27.4 percent from 17.2 percent and 23.2 percent in the previous quarter and year-ago periods, respectively, as average silicon purchase prices fell.
- Solargiga Energy Holdings had loss of 119.75 million yuan (US$17.5 million) in the six months ended June 2009. The company's turnover was down by 55.7 percent year-on-year. Solargiga attributed the decline in turnover to low product prices as last year's financial crisis knocked global demand. The group sees to put a new silicon ingot and wafer plant into full production in the fourth quarter of this year, bringing its annual output capacity to 4,000MT of ingot and 150 million wafers, equivalent to 400MW.
- Zhejiang Yuhui Solar Energy Source Co Ltd plans to invest 4.8 billion yuan (US$702.5 million) to build a 150-megawatt on-grid solar project in the Taiyangshan Development Zone in Wuzhong, Ningxia Hui Autonomous Region. The subsidiary plans to build the 3,600-Mu solar project in four phrases that will cost 640 million yuan (US$93.7 million), 1.92 billion yuan (US$281 million), 640 million yuan (US$93.7 million) and 1.6 billion yuan (US$234 million). The first phase will begin in January 2010. In addition, Zhejiang Yuhui Solar Energy Source also plans to invest 800 million yuan (US$117 million) to increase the annual output of a polycrystalline silicon plant in Jiashan County by 120-MW.
- ET Solar has sold a total of 4.2MW of multicrystalline modules to three large Italian commercial projects, including both ground mounted and rooftop installations. Prato (1.3MW), Perugia (1MW) and Imola (1.9MW) are the three projects. The first two projects have already begun operation, while the third will be fully connected to the grid next month.
- Yingli Green Energy Holding Co. Ltd. second quarter's total net revenues was 1,498.9 million yuan (US$219.5 million) with a PV module shipment volume increase of 72.3 percent quarter over quarter. Gross profit was 273.8 million yuan (US$40.1 million), with a gross margin of 18.3 percent. Operating income was 106.8 million yuan (US$15.6 million), with an operating margin of 7.1 percent. Net loss was 393.7 million yuan (US$57.6 million) and diluted loss per ordinary share and per ADS was 3.03 yuan (US$0.44) as a result of loss on debt extinguishment of 244.7 million yuan (US$35.8 million) and loss on derivative liabilities of 204.2 million yuan (US$29.9 million) in the quarter, both of which were non-recurring, non-cash charges.
- Suntech Power Holdings booked net income of US$10.0 million in the second quarter of 2009, climbed from US$1.8 million in the prior quarter. Total net revenues for the period came to US$321.0 million, an increase of 1.7 percent sequentially. Suntech sees third quarter 2009 shipments to show 50 percent growth on a quarterly basis, while fourth quarter shipments will slide slightly quarter-on-quarter due to seasonality factors.
- ReneSola has won the right to build a 150MW on-grid solar power project in Taiyangshan Development Zone in Wuzhong city, Ningxia Hui Autonomous Region. The project will have to require 4.8 billion yuan (US$706 million) in total investment and will be built in four phases over four years from 2010.
Media, Gaming and Entertainment
- Aurora Interactive, founded by former 17Game Chief Technology Officer Fang Xiaori, received funding. 17Game is a unit of CDC Corporation's online gaming unit CDC Games. Aurora was established nearly two years ago and recently began load testing the 3D MMO.
- Giant Interactive Group Inc. announced its unaudited financial results for the second quarter ended June 2009 with net revenue of 364.1 million yuan (US$53.3 million). Gross profit was 309.5 million yuan (US$45.3 million). Gross profit margin for the second quarter 2009 was 85.0 percent. Net income attributable to the company's shareholders was 231.9 million yuan (US$34.0 million). Basic and diluted earnings per AD) were 1.03 yuan (US$0.15) and 0.99 yuan (US$0.15). Non-GAAP net income attributable to the Company's shareholders excluding non-cash share-based compensation was 239.8 million yuan (US$35.1 million). The margin of non-GAAP net income attributable to the Company's shareholders excluding non-cash share-based compensation was 65.9 percent. Basic and diluted non-GAAP earnings excluding non-cash share-based compensation per ADS were 1.06 yuan (US$0.16) and 1.03 yuan (US$0.15).
Taiwan
- Chunghwa Telecom has merged with several smartphone suppliers and publishers to offer book downloads on mobile phones in its network. The service will allow users to download comic strips, book and magazine content on the phones including HTC's Hero and Magic phones. The service ends dependence on electronic readers, making download of e-books more convenient with a mobile phone. Industry watchers estimate the new service to bring Chunghwa more smartphone customers. The company has sold 80 percent of the island's smartphones, or around 10 percent of all types of mobile phone it has sold. Smartphone sales are projected to account for 16 percent of the company's revenue this year and 20 percent next year. The smartphone penetration in Taiwan is only 6 percent, or about 400,000 phones a year.
- D-Link Corp. recently signed an agreement with Sojitz Corp., an affiliate of Nissho Electronics Corp. (NELCO) of Japan, to form a strategic alliance to develop markets in Japan and Southeast Asia in the next three years. Sojitz has 570 distribution points in 95 nations. The partnership is expected to create additional business opportunities of US$100 million. D-Link has won orders from Japanese military units, aerospace industry and FTTH (fiber to the home) industry, but currently the Japanese consumer market is too competitive to go in.
Hardware
- Asustek set a modest 2010 shipment target of 1 million units for its newly launched smartphone, underscoring its vulnerability as a new player in the sector. That would mean it will have a market share of less than 1 percent in the fast-growing smartphone market, which research firm Gartner expects will grow to shipments of more than 200 million units next year. Dell is working with China Unicom to develop a line of mobile devices for the Chinese telecoms operator.
- Delta Electronics held a meeting of the Board of Directors, which announced the approved 1H 2009 financial results. Delta's consolidated 1H 2009 sales revenues were NT$54.8 billion (US$ 1.7 billion) with net income after tax of NT$5.2 billion (US$5.2 billion). Delta had strong 2Q09 EPS of NT$1.55 (US$.047), on higher gross margin, non-op income, and surprising one-off tax credits. 2Q09 GM of 21.2 percent was almost at a 7-quarter high due to commodity price decline, labor cost reduction, and positive product mix.
Media, Gaming and Entertainment
- Next Media has applied for a Taiwanese satellite-television license to broadcast news, entertainment, sports and finance channels on the island. The company filed the application with Taiwan's media regulator, the National Communications Commission. Next TV would team up with Chunghwa Telecom's Multimedia on Demand, which operates on the same lines as PCCW's Now TV in Hong Kong, using internet protocol television technology to deliver its service over broadband lines.
- NewMarket Technology, Inc. said the company will have its suggested fair value target price per share of US$1.00 to US$2.50 to be supported by NewMarket's Chinese operation making a larger than expected contribution to net income. NewMarket management is forecasting profitable revenue growth in 2009. The company had US$95 million in revenue in 2008 and US$93 million in 2007. Management anticipates accelerated revenue growth in the second half of 2009 resulting from strong offshore sales. In 2008, NewMarket had over US$40 million in revenue from its operations in China. The company's operation in China recently signed a US$2 million contract with a Hong Kong-based software company and a US$30 million outsourcing services contract.
Hong Kong
- A Hong Kong appellate court denied applications from PCCW Ltd. and its parent company to make a final appeal against a court ruling that rejected a US$2.1 billion plan to buy out PCCW's shareholders. The Court of Appeal didn't provide reasons of why it rejected the application but plans to issue a written judgment. The appellate court ruled against the takeover. A shareholder vote was influenced as PCCW investor handed out shares to local insurance agents who then backed the buyout. The SFC had urged the court to block the deal, as it had violated the rights of minority investors who opposed the deal.
- PCCW Ltd. said its first-half net profit edged lower from a year earlier because of a higher cost of sales and lower contributions from core telecommunications services due to the weakening Hong Kong economy. PCCW said its net profit for the six months ended June 30 was HK$654 million (US$83.8 million), down 0.3 percent. The company plans to continue to control costs and aims to develop new business opportunities in the second half. Revenue climbed 12 percent due to increased contributions from the company's property unit. PCCW's revenue from core telecommunications services fell 3.6 percent due to lower revenue from its local fixed-line business. Revenue from its broadband television business, Now TV, climbed 4.8 percent because of a higher subscriber base. The company recorded a 7 percent increase in the number of Now TV subscribers to 992,000 at the end of June, from 927,000 a year earlier.
Topic: Research / Industry Report
Source: IRG
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