ChinaScope Daily Dim Sum: May 2012

Thursday, May 31, 2012

Consumer Goods Industry Value Added Growth Slows Down in Jan-Apr

Source: Ministry of Industry and Information Technology, ChinaScope Financial (Data)

+ Recent data from the Ministry of Industry and Information Technology (MIIT) shows that consumer goods enterprises with annual revenues of more than CNY 20 million from core businesses recorded value added growth of 13.4% year-on-year during the January-April period, down 0.9 percentage points compared with the figure during the January-March period.

+ Growth of value added for light industry, textile, pharmaceutical and tobacco industries were 13.2%, 12.6%, 15.35 and 14.2% in Jan-Apr, down 0.9, 0.5, 1.3 and 1.6 percentage points respectively compared with the first three months.

Compared to March, value added growth of the textile, medical and tobacco industry slowed down.

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Average Wage of Private Sector Employees Grows 12.3% in 2011

Source: NBS, NBS, ChinaScope Financial (Data)

+ Data released by the National Bureau of Statistics on May 29 shows that private sector employees average wage was CNY 24,556 in 2011, up 18.3% in nominal terms, and 12.3% in real terms.

+ The average wage of public sector employees was CNY 42,452 in 2011, a 14.3% nominal increase equivalent to an 8.5% real increase.

The average wage for public still exceeds that of private employees. The private employee average wages is, however, catching up.

According to the CSF demographics model, China’s working age population peaked in 2010, implying long term wage increases.

Focus Media: Net Profit USD 37.9 Mn in Q1, Up 85% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ Focus Media Holding Limited (NASDAQ: FMCN) released their first-quarter financial results yesterday showing total net revenue of USD 199.6 million in 2012Q1. Net profit was USD 37.9 million, up 85% YoY on 2011Q1.

+ The net revenue from the LCD display, in-store, poster frame and movie theater networks was USD 184.3 million, up 35% on 2011Q1, and higher than the company target of USD 177- 179 million.

Despite net revenue growth of over 35% in 2012 Q1, FMCN’s gross margin dropped 8.9 ppt.

The growth in revenue from poster frame network is the main contributor to overall revenue growth.

April: Banking Assets CNY 118.28 Trillion, Up 18.4% YoY

Source: China Banking Regulatory Commission, ChinaScope Financial (Data)

+ Data from the China Banking Regulatory Commission (CBRC) shows that total assets of China’s banking institutions were CNY 118.28 trillion at the end of April 2012, up 18.4% year-on-year, but down CNY 342.1 billion on March.

+ At the end of April, total assets of China’s five major commercial banks (BOC, ABC, ICBC, CCB and BOCOM) were CNY 54.59 trillion, up 14% year-on-year, accounting for 46.2% of industry total. Total liabilities of the five banks were CNY 50.97 trillion, up 13.8% year-on-year, accounting for 46.1% of industry total.

Assets and liabilities of state-owned banks decreased after the quarter-end supervision by CBRC, dragging down the banking sectors’ total assets and liabilities.

More SME support has resulted in a growing share of joint stock and city commercial banks in the banking sector.

Tuesday, May 29, 2012

GOME: Operating Profit at CNY 53 Mn in Q1, Down 92.26% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ The first-quarter financial report of GOME Electrical Appliances Holding Ltd. (493.HK) shows revenues of CNY 9.76 billion in 2012Q1, down 28.62% year-on-year. Operating profit was CNY 53 million, down 92.26% compared with CNY 685 million in 2011Q1.

+ Despite the large decrease in operating profit, GOME’s gross profit in Q1 only declined 10.63% year-on-year, to CNY 1.35 billion.

Revenue declined 28.62% YoY and net profit attributed to share holders declined 88% YoY in 2012Q1.

Although the gross margin ratio is improving, rise in selling and g&a expenses dragged down the operating margin ratio to 0.54% in 2012Q1.

Commodity Housing Area under Construction in Guangdong Rises 15.1% YoY

Source: Xinhua, ChinaScope Financial (Data)

+ Recent data published by the Guangdong province statistics bureau shows that in the January-April period, floor space of commodity housing under construction grew 15.1% YoY. In the same period, real estate developers in the province invested a total of CNY 127.62 billion, up 15.1% YoY.

+ Fixed asset investment in the province was CNY 411.27 billion, up 9.9% year-on-year in Jan-Apr, the first time since 2002 with growth rates below 10%.

+ The investment growth of real estate therefore exceeds that of fixed assets by 5.2 percentage points, suggesting that the real estate sector remains the main driver of Guangdong’s investment growth.

Total real estate development investment of Guangdong Province dropped in 2012.

Growth of floor space under construction declined and growth of site area of land purchased by developers was negative year-on-year in April.

Profit of Industrial Enterprises Fall 1.6% YoY in Jan.-Apr.

Source: NBS, ChinaScope Financial (Data)

+ Data released by the National Bureau of Statistics yesterday shows that from January to April, industrial enterprises with revenues from core businesses exceeding CNY 20 million, realized profits of CNY 1.45 trillion, down 1.6% year-on-year. Profits in April were CNY 407.6 billion, down 2.2% year-on-year.

+ In the first four months of 2012, state-owned and state-controlled enterprises made CNY 457.8 billion in profits, down 9.9% year-on-year; while profits made by private enterprises were CNY 425.7 billion, up 20.9% year-on-year.

The profit growth of state-owned and state-controlled enterprises was negative 9.9% YoY, while that of private enterprises was 20.9% YoY in April 2012.

Thursday, May 24, 2012

Qihoo 360: Operating Revenue Up 200% YoY in Q1, Net Profit USD 14.07 Mn

Source: Company Disclosure, ChinaScope Financial (Data)

+ Qihoo 360 Technology Co., Ltd. (NYSE: QIHU) released their unaudited financial statement on May 22, showing revenues of USD 69.28 million in 2012Q1, up 202.1% compared with USD 22.93 million in 2011Q1. Meanwhile, the company’s net profit was USD 14.07 million in 2012Q1, compared with a loss of USD 21.45 million in 2011Q1.

+ In March 2012, market penetration was 62% and the number of active users of 360 products reached a record high of 411 million, including 273 million 360 browser users.

Qihoo’s revenue is quickly growing; margin ratios remain stable.

With high penetration levels, MAUs of the 360 browser, as well as in aggregate, has reached a steady stage. However, average daily unique visitor of the 360 start-up page still have room for growth.

Tuesday, May 22, 2012

China’s Natural Gas Output 8.5 Bn Cu. M in April, Down 13% MoM

Source: NDRC, ChinaScope Financial (Data)

+ In April, China’s natural gas output was 8.5 billion cubic meters, up 9.5% year-on-year, but down 13% month-on-month. Meanwhile, apparent consumption of natural gas was 10.9 billion cubic meters in April, up 13.1% year-on-year, but down 16.5% month-on-month.

+ China’s rapid growth of natural gas imports has slowed down since the beginning of 2011. In April, 3.3 billion cubic meters of natural gas was imported, up 30.6% year-on-year.

Domestic output volume of natural gas maintains a slow growth rate. Since the beginning of 2011 import volume growth has dropped significantly.

The growth of apparent consumption volume has declined in 2012.

Thursday, May 17, 2012

Agricultural Products Prices Fall, Relieving Inflationary Pressure

Source: Ministry of Commerce, ChinaScope Financial (Data)

+ On May 15, statistics released by the Ministry of Commerce (MOFCOM) showed that prices of agricultural products either decreased or maintained slow growth in the past week. Pork prices have decreased significantly from the beginning of this year.

+ The wholesale Price Index of agricultural products released by the Ministry of Agriculture is also on a downward trend, and since food expenditure accounts for about 35% of the Chinese CPI basket, the lower food price will relieve some inflationary pressure.

The prices of cabbage and onion have increased since the end of 2011.

Price of fresh pork, on the other hand, has decreased significantly since the end of 2011. Price of fresh beef and mutton have increased slightly.

China Increased Holdings of U.S. Treasury Securities by USD 14.7 Billion in March

Source: US Treasury, ChinaScope Financial (Data)

+ According to the U.S. Department of the Treasury, China held a total of USD 1.17 trillion U.S. treasury securities at the end of March, 14.7 billion more than at the end of February.

+ China’s official foreign exchange reserve was USD 3.3 trillion in March, of which 35.4% was US treasuries.

US treasury securities accounted for 35.39% of China’s foreign exchange reserves in March.

PBOC: Position in Forex Purchase Decreased CNY 60.6 Billion in April

Source: People's Bank of China , ChinaScope Financial (Data)

+       According to data released by the People’s Bank of China on May 16, the Chinese banking systems’ forex purchase position was CNY 25.6 trillion at the end of April, down CNY 60.6 billion month-on-month.

+       This is the first month with decrease in the forex purchase position this year. In Q4 2011, the forex purchase position decreased for three consecutive months.

+       Slower growth in exports, and less FDI and hot money inflow are driving the downward trend in forex purchase. Meanwhile, foreign exchange demand might pick up if CNY depreciation expectations emerge.

Position in forex purchase declined by almost CNY 61 Bn in April.

MOFCOM: China’s FDI Inflow at USD 8 Bn in April, Down 0.74% YoY

Source: Ministry of Commerce, ChinaScope Financial (Data)

+ According to the Ministry of Commerce (MOFCOM), China’s net inflow of FDI decreased 0.74% to USD 8 billion in April, the sixth month in a row with year-on-year decreases.

+ From January to April 2012, the accumulative net inflow of FDI amounted to USD 37.9 billion, down 13.94% year-on-year.

+ China’s outward FDI, however, increased rapidly this year, driven by the higher CNY exchange rate and lower foreign asset prices. From January to April, Chinese non-financial companies invested a total of USD 23.16 billion in 1445 overseas projects in 109 different countries.

While the growth of FDI coming into China is slowing down, outward investment growth is picking up. In the first four months of 2012 incoming FDI from EU 27 decreased 27.9% YoY, from US increased 1.9% YoY, while that from other Asian countries remained almost unchanged growing at 0.6% YoY.

Wednesday, May 16, 2012

Renren: Loss Up 423% YoY to USD 13.6 Mn in Q1

Source: Company Disclosure, ChinaScope Financial (Data)

+ The 2012Q1 report of Renren Inc. shows that the company’s net operating revenue was USD 32.1 million, up 56.1% year-on-year. However, the company recorded a net loss of USD 13.6 million, up 423% compared with USD 2.6 million in 2011Q1.

+ In the first quarter, Renren’s revenue from online advertisement was USD 9.3 million, up 14.8% year-on-year, while its operating cost rose 206.6% year-on-year to USD 12.5 million.

Revenue of Renren increasingly rely on social games. Its profitability is deteriorating due to declining margins.

The mobile users are now the key contributor to log-ins and time spent on Renren.

No sign for profiting from Nuomi (Renren’s social group buying website), Renren’s overall profit will continue to be dragged down.

Trading Comparables

AirMedia: USD 6.9 Mn Loss in Q1

Source: Imeigu, Imeigu, ChinaScope Financial (Data)

+ The 2012Q1 report of AirMedia Group Inc. shows that the company’s operating revenue increased 10.1% year-on-year, while the gross profit fell 10.8% year-on-year to USD 3.3 million. The company recorded an operating loss of USD 6.9 million, up 28% year-on-year compared with USD 5.4 million in 2011Q1.

+ As of May 6, 2012, AirMedia had repurchased 3.4 million ADSs worth USD 11.1 million through open market operation, with an estimated average price of USD 3.26 per share.

Revenue of AirMedia has a significant seasonality. The digital frame advertising contributes about half of the total gross revenue.

The utilization rate of digital advertising devices in 12Q1 is at the bottom in recent years. The average revenue generation from each time slot or location maintained stable.

Trading Comparables

China Life Insurance: Direct Written Premium CNY 133 Bn in Jan-Apr, Down 8.53% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ China Life Insurance Co., Ltd. reported that the company’s direct written premium amounted to CNY 133 billion during the January-April period, down 8.53% year-on-year.

+ China Life Insurance’s premium income was CNY 113.8 in 2011Q1, down 7.5% year-on-year. The figure continued to fall in April.

China Life’s net profit dropped mainly due to declining direct written premiums since 2011.

Trading Comparable

Monday, May 14, 2012

China Export USD 163.25 Bn in April, up 4.9% YoY

Source: China Customs, ChinaScope Financial (Data)

+ According to data released by the General Administration of Customs on May 10, in April China’s export was USD 163.25 billion and imports was USD 144.83 billion, up 4.9% and 0.3% year-on-year respectively. A USD 18.42 billion trade surplus was realized in the same month.

+ After seasonal adjustment, China’s April exports increased 9.4% month-on-month and 7.2% year-on-year. The growth rate for imports was 4.8% year-on-year and 7.3% month-on-month.

With weak import growth of 0.3% and export growth of 4.9%, China’s trade surplus increased to USD 18.42 Bn in April

Import growth of main commodities failed to pick up in April.

April’s Inflation Numbers: CPI up 3.4%, PPI Down 0.7%

Source: NBS, NBS, ChinaScope Financial (Data)

+ Data published by the NBS this morning shows CPI up 3.4% in April, but down 0.2 ppt on March, in line with the market expectations. Food inflation was 7% while non food-food inflation was 1.7%.

+ PPI was down 0.7% in April and down 0.4 ppt on March.

CPI was 3.5% in April, down 0.2 ppt from March’s 3.6%, PPI was negative 0.7%, down 0.4 ppt from March.

Friday, May 11, 2012

Noah Holdings Limited: Net Profit Halved to USD 2.7 Million in 2012Q1

Source: Imeigu, ChinaScope Financial (Data)

+ According to a recent disclosure, Noah Holdings Limited made net revenues of USD 16.8 million, a 10.8% year-on-year increase in the first quarter. Net income attributable to shareholders in 2012 Q1 was USD 2.7 million, a 52.6% year-on-year decrease.

+ As of March 31, the company’s total number of registered clients was 29,814, up 61.0% year-on-year. This figure includes 28,924 registered individual clients, 824 registered enterprises and 66 wholesale clients. Active clients in the reporting period were 952, a year-on-year increase of 44.5%.

Net revenue and net profit growth both declined in 2011. Steep drop in number of registered clients aggravated the downward trend in 12Q1.

51job, Inc.: Net Profit USD 19.1 Million in Q1, up 31% YoY

Source: Imeigu, ChinaScope Financial (Data)

+ The first-quarter report released by 51job, Inc. on May 10 shows that its operating revenue was CNY 380.8 million (USD 60.5 million) in 2012Q1, up 17.3% year-on-year. Net profit amounted to CNY 120.5 million (USD 19.1 million) during the same period.

+ Online recruitment services revenues for the first quarter of 2012 were CNY 229.1 million (USD 36.4 million), a year-on-year increase of 32.6%. The increase was primarily due to higher average revenue per unique employer as well as a greater number of unique employers using the company’s online recruitment services.

+ In 2012Q1, the company’s average revenue per unique employer increased 19.7% year-on-year, and unique employers increased 10.8% year-on-year to 171,545.

51Job enjoys healthy revenue growth. Other HR Services is making up an increasing share of revenue but online recruitment services remain the company’s major revenue generator.

Possibly due to higher management efficiency and economies of scale, operating margins have improved at a rate of 10% since 2010Q1. The company is also enhancing its profitability through non-operating activities, seen from the rapid increase of investment income.

In terms of website traffic, 51job is China’s No.1 online recruitment website.

Trading Comparables

Passenger Car Sales Increase 12.4% YoY in April

Source: China Association of Automobile Manufacturers, ChinaScope Financial (Data)

+ Data released by the China Association of Automobile Manufacturers on May 9 shows that 1.65 million automobiles were produced in April, down 12.39% month-on-month but up 7.81% year-on-year. Meanwhile, 1.62 million automobiles were sold, down 11.65% month-on-month but up 5.19% year-on-year.

+ In April, 1.31 million passenger cars were produced and 1.28 million sold, down 10.35% and 8.85% month-on-month, but up 13.55% and 12.46% year-on-year.

+ During the Jan-April period, automobile production increased 0.47% year-on-year to 6.43 million, while automobile sales decreased 1.33% year-on-year to 6.42 million.

The passenger vehicles sales volume growth rebounded in April with a 5.19% YoY growth. Commercial vehicles’ demand remains weak.

With a 33.59% YoY growth in April, SUV growth was the highest among passenger vehicles.