ChinaScope Daily Dim Sum: June 2012

Friday, June 15, 2012

Mengniu Dairy: CNY 3.5 Bn Investment in New Large-Scale Pastures

Source: Guangzhou Daily, ChinaScope Financial (Data)

+ Mengniu Dairy Co., Ltd. (2319.HK) recently formed a wholly-owned subsidiary named Inner Mongolia Mengniu Fuyuan Farming Co., Ltd., which plans to invest approximately CNY 3.5 billion in the construction of large-scale pastures in Northeast China, Hebei province, and Inner Mongolia autonomous region.

+ In Mengniu Dairy’s original pasture expansion plan, their pasture target would be met in 2016 or 2017. This deadline has now been moved to 2015.

+ The import of cows for dairy production has increased rapidly recently. Given quality problems of domestic dairy products, the Chinese government has enhanced its support to the sector. Preferential treatment in terms of taxation, loan and project approval will be offered to dairy companies which import cows.

China’s milk production has increased from 3.7 kg/capita in 1990 to 26.7 kg/capita in 2010

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Total Electricity Consumption Up 5.8% YoY in Jan-May

Source: National Energy Administration, ChinaScope Financial (Data)

+ Data released by the National Energy Administration (NEA) shows that China’s total electricity consumption was 406.1 billion kWh in May, up 5.2% year-on-year, and was 1.96 trillion kWh in the January-May period, up 5.8% year-on-year.

+ Electricity consumption in the secondary industry grew 3.8% year-on-year in the January-May period, accounting for 73% of total consumption.

+ The slower growth in electricity consumption is seen as a reflection of a cooler macroeconomic climate.

Growth of total electricity consumption declined to 5.2% YoY in May 2012, indicating a slowdown in macro economic activity.

Shanda Games: Net Revenues USD 220.7 Mn in 2012Q1, up 10.9% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ On June 11, Shanda Games Limited (NASDAQ: GAME), a leading online game developer, operator and publisher in China, announced its unaudited first-quarter financial results showing net revenues of CNY 1,389.4 million or USD 220.7 million, up 10.9% YoY or 2.5% QoQ. Operating income was CNY 492.9 million or USD 78.3 million, up 18.6% YoY or 11.3% QoQ. Operating margin was 35.5%, up from 33.2% in Q1 2011 and 32.7% in Q4 2011.

+ Average Monthly Active Users (average MAUs) for games operated in China were 19.1 million, compared with 20.4 million in Q4 2011. Average Monthly Paying Users (average MPUs) for games operated in China were 4.3 million, compared with 4.5 million in Q4 2011. Monthly Average Revenue per Paying User (ARPU) for games operated in China was CNY 99.9, compared with CNY 92.8 in Q4 2011.

China’s online gaming industry is mature and highly concentrated on 8 listed companies, which account for nearly 95% of the market. SNDA Game is among the industry’s top 3 and has a healthy and stable financial performance.

Trading Comparables

Coal Inventory at Chinese Ports and Power Plants High

Source: Guangzhou Daily, ChinaScope Financial (Data)

+ The latest data shows that the average price of 5,500kcal/kg steam coal in the Bohai Bay Rim closed at CNY 768/metric ton, a new low for the current year and a 3% decrease compared with previous high of CNY 795/ton.

+ Statistics show that as of June 7, coal inventory at Qinhuangdao port has reached 8.83 million tons. In addition, inventory at a number of power plants was also high, which in some cases can take a month to clear out. As of May 27, total coal inventory at major Chinese power plants was more than 96 million tons. On average, the current inventory can last for 27 days, much higher than normal.

Stocks of Qinhuangdao and other key electricity plants are at a high level.

Coal prices are at the lowest level in recent years.

Monday, June 11, 2012

China’s Railway Freight Volume Up 3.6% YoY in Jan-May

Source: Ministry of Railways, ChinaScope Financial (Data)

+ Data released by the Ministry of Railways on June 6th shows that the total railway freight volume was 1.68 billion metric tons in the January-May period, up 3.6% year-on-year.

+ In the same period, railway passenger traffic was 761.6 million, up 2.7% year-on-year.

Passenger traffic growth is on an upward trend while freight traffic growth is yet to pick up.

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Poly Real Estate: Contracted Sales CNY 10.77 Bn in May, Up 45.4% YoY

Source: Company Disclosure, ChinaScope Financial (Data)

+ According to a June 7 announcement by Poly Real Estate Group Co., Ltd (600048.SH), the developer recorded contracted gross floor area sales of 916,500 square meters in May, up 48.46% year-on-year, equivalent to a sales value of CNY 10.77 billion, up 45.4% year-on-year

+ Over the January-May period, Poly’s aggregate contracted floor area sold was 3.07 million square meters, up 26.36% year-on-year, equivalent to a sales value of CNY 34.78 billion, an increase of 23.76% year-on-year.

Sales of most developers has recovered from the low in Jan-Feb, and made month-on-month growth in May. Only Country Garden’s sales value was negative year-on-year.

Sino-Russia Bilateral Trade to Reach USD 100 Bn by 2015

Source: Ministry of Foreign Affairs, ChinaScope Financial (Data)

+ According to the Ministry of Foreign Affairs, China and Russia will expand their commercial relations. The two countries aim to increase bilateral trade to USD 100 billion before 2015 and to USD 200 billion before 2020 and will work towards closer cooperation in the fields of investment, energy, high-tech, aviation and aerospace, and cross-border infrastructure.

+ During President Putin’s visit to China the two countries signed a number of agreements covering industry cooperation, civil aviation, traditional energy, nuclear power, cross-border investment, tourism, media, export credit and insurance, and cooperation between Russia’s state-owned innovation hub Skolkovo and China’s Zhongguancun science-and-technology park.

China’s import from Russia is predominantly raw materials, whereas most of China’s export to Russia consists of engines, automobiles and low value added manufacturing products.

Friday, June 1, 2012

Direct Investment Overseas by Domestic Financial Institutions USD 1.55 Bn in 12Q1

Source: State Administration of Foreign Exchange, ChinaScope Financial (Data)

+ In order to increase the transparency of foreign exchange statistics, SAFE has decided to publish data on the foreign direct investment (FDI) inflow and outflow of domestic financial institutions on a quarterly basis and the stock of foreign direct investment on a yearly basis.

+ On May 30, SAFE released data showing that the balance of overseas direct investment by domestic financial institutions was USD 52.66 billion at the end of 2011. In 2012Q1, overseas direct investment by Chinese financial institutions was USD 1.55 billion. In 2012Q1, none of China’s financial institutions’ overseas direct investment was withdrawn, making the net overseas investment amount USD 1.55 billion.

+ As of the end of 2011, the balance of foreign direct investment into Chinese financial institutions was USD 68.43 billion. In 2012Q1, direct investment into domestic financial institutions was USD 660 million. In 12Q1 foreign direct investment in Chinese financial institutions worth USD 40 million was withdrawn, making the net FDI inflow USD 620 million.

Chinese financial institutions’ direct investment overseas is rapidly increasing