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Business Tianjin Magazine - Business English Magazine in China
BYD lifts 2010 auto sales target 14 pct
Wednesday, 30 December 2009 16:26
HONG KONG, Dec 30 (Reuters) - Chinese battery and car maker BYD, backed by U.S. billionaire Warren Buffet, said it has raised its 2010 sales target, as it prepares to roll out its first electric cars.
BYD, 10 percent owned by Warren Buffett's Berkshire Hathaway, aims to sell 800,000 vehicles next year, up from a previous target of 700,000 units, said Paul Lin, manager of the company's marketing department.
He attributed the revision to robust demand from Chinese consumers following Beijing's 4 trillion yuan ($586 billion) economic stimulus plan, which includes several measures specifically aimed at boosting car sales.
"The company already reached its 2009 target of 400,000 vehicles in November, so now we are setting our 2010 target to double that number at 800,000 units," Lin said, adding that this year's final sales should come in at around 440,000 units.
BYD's F3 sedan was the best-selling car in China in the first 11 months of this year, leading other popular domestic and foreign models, such as, Hyundai Motor's new Elantra and Chery Automobile's QQ, official data showed.
To help meet market demand, BYD's new bus plant in the central Chinese city of Changsha and a car plant in the northwestern city of Xian will start operation next year, adding up to 700,000 units of capacity, Lin said.
Henry Li, general manager of BYD Auto's export arm, told Reuters in July that the firm aims to be a major global player by 2025, with vehicle sales of 8-9 million.
BYD, which had sold several hundred of its plug-in hybrid, F3DM, unveiled in December of 2008, plans to start selling its first electric car, the e6, in China in the first quarter of 2010, Lin said.
The e6 had passed government safety inspections in the country and received other necessary permits, he said, adding the firm remained committed to export the model to the United States next year.
BYD's shares, traded in Hong Kong, have surged more than 422 percent since the beginning of this year, leading a roughly 49 percent gain in the broader market and bolstering its founder, Wang Chuanfu, to the top of Forbes 2009 list of China's wealthiest.
The shares fell 3.78 percent in early afternoon trading on Wednesday, lagging a 0.51 percent fall of the market.
China CNR extends trend of weak debuts in Shanghai
Tuesday, 29 December 2009 13:25
SHANGHAI (Dow Jones)--Locomotive maker China CNR Corp. made a weaker-than-expected debut in Shanghai on Tuesday, building on a trend of new main-board listings performing feebly on their first day of trading in the last two months because of high valuations and increased supply.
At the midday break on the Shanghai Stock Exchange, CNR was up 3.1% at CNY5.73 from its initial public offering price of CNY5.56, while the Shanghai Composite Index was down 0.5% at 3174.51.
CNR opened at CNY5.80, up 4.3% from its IPO price, well below expectations of a 16.5% rise, according to the average forecast of four analysts surveyed earlier by Dow Jones Newswires.
"Investors' interest in IPOs will remain subdued as long as they can't secure a juicy profit when the stocks are listed," said Li Nian, an analyst at Shenyin Wanguo Securities.
CNR raised CNY13.9 billion (US$2.04 billion) in its IPO last week after pricing 2.5 billion yuan-denominated A shares, or 30% of its enlarged capital, at the top end of the indicative range.
The IPO price represented 49.21 times 2008 earnings. CNR's major rival, China South Locomotive & Rolling Stock Corp., is now trading around 40 times 2008 earnings.
The final offering size, widely considered a reduction from an original level of 3 billion shares, came after a decline on the local stock market because of concerns about the effect on market liquidity of a quickening pace of IPOs.
China's securities regulator approved 50 companies to conduct IPOs in December, the fastest pace since China ended a nine-month moratorium on IPOs in June, raising supply in hopes of cooling the market.
Despite dropping 8.7% from its year-to-date peak on Aug. 4, the Shanghai Composite Index is still up 74% since the start of the year.
CNR's debut was even weaker than those of two other recent large Shanghai listings, China Shipbuilding Industry Co. and China Merchants Securities Co.
China Shipbuilding Industry opened 14% higher than its IPO price on Dec. 16, while China Merchants Securities gained 13% on its IPO price on its debut Nov. 17.
Both China Shipbuilding Industry and China Merchants Securities have since drifted below their respective IPO levels.
Chinese industrial profits top pre-crisis levels
Monday, 28 December 2009 17:17
Dec. 28 (Bloomberg) -- Chinese industrial companies’ profits surpassed pre-crisis levels in the past three months, underscoring a strengthening economic rebound in response to record fiscal stimulus and credit growth.
Net income rose 7.8 percent in the 11 months through November from the same period a year earlier, to 2.59 trillion yuan ($379 billion), the statistics bureau said today in Beijing.
China’s benchmark stock index rose to its highest level in almost two weeks on optimism earnings will keep accelerating as Premier Wen Jiabao maintains the stimulus measures. Wen yesterday recommitted his government to a “proactive” fiscal stance, “moderately loose” monetary policy and a stable exchange rate that has aided China’s exporters.
“Companies’ profits will continue to improve as China’s recovery gains momentum,” said Lu Ting, an economist at Bank of America-Merrill Lynch in Hong Kong. “Industrial companies are enjoying better price margins and expanding domestic demand.”
The Shanghai Composite Index advanced 1.7 percent to 3,193.70 as of the 11:30 a.m. break in trading local time.
The eleven-month profit figure is the highest on record, statistics bureau data show. Electricity companies’ profits more than tripled as Datang International Power Generation Co. and Huaneng Power International Inc. tapped increased demand.
Growth Rate
China’s economy has accelerated in the past two quarters, growing 8.9 percent in the three months through September from a year earlier. The fourth-quarter figure will be released in January. The nation is poised to overtake Japan as the world’s second-biggest economy next year, according to the International Monetary Fund.
Oil processors swung to an 82 billion yuan profit compared with a loss of more than 120 billion yuan a year earlier. A fuel-pricing system introduced last year guarantees a profit margin for state oil refiners and has encouraged China Petroleum & Chemical Corp. and PetroChina Co. to expand capacity to meet rising demand.
Stimulus spending and a record $1.3 trillion of new loans in the first 11 months of 2009 are driving up demand. China’s economy is leading the recovery in Asia. Japan reported today its biggest gain in industrial output in six months.
Manufacturers reporting higher earnings include China Resources Enterprise Ltd., the Chinese partner of SABMiller Plc, and Beijing Automotive Industry Holding Co. , which is buying technology from General Motors Co.’s Saab unit to speed the development of own-brand models to meet growing domestic demand.
Steel, Mining
Today’s report also showed that the chemical-fiber industry had a 187 percent gain in profit for the first 11 months of 2009 from a year earlier. The steel and mining industries pared declines.
The profits of industrial companies overall recovered throughout the year after a 37 percent slump in the first two months. Sales through November rose 7.1 percent to 47.5 trillion yuan, today’s data showed. Released every three months, the numbers are for businesses with annual sales of more than 5 million yuan in 39 industries, including steel, chemicals, electricity, telecommunications and mining.
On Dec. 25, the statistics bureau said the economy grew 9.6 percent last year, more than the 9 percent initially reported. That narrowed the gap with Japan.
China revises up 2008 growth to 9.6 per cent
Friday, 25 December 2009 14:12
BEIJING, Dec 25 - China on Friday revised up its 2008 growth rate to 9.6 per cent, taking it well above the originally reported 9.0 per cent after calculating that the service sector had been more productive than previously thought.
The upward revision underscored that China was well on track to surpass Japan as the world’s second-largest economy in 2010, if not sooner, and has burnt through less energy to deliver each additional ounce of growth.
China’s economy grew at 7.7 per cent in the first three quarters of 2009 compared with the same period a year ago. Peng Zhilong of the National Bureau of Statistics said the government would likely revise up growth figures reported thus far this year.
The hidden strength found in China’s services sector was a modicum of good news for policymakers in China and abroad, who have said that promoting the development of the country’s non-tradeable sector is a key ingredient in rebalancing the global economy.
But it was still far from mission accomplished on that front.
China’s services sector accounted for 41.8 per cent of gross domestic product last year, up from the previously reported 40.1 per cent. In developed economies, services often contribute more than 70 per cent of GDP.
"China always finds it hard to get accurate statistics about the services sector, and the upward revision is not a surprise," Zhang Xiaojing, a researcher with the Chinese Academy of Social Sciences (CASS), said. ”But we cannot say China’s economic structure is reasonable simply because of that.”
The revisions were also unlikely to have much, if any, impact on the country’s current policy stance. The government has already begun to rein in its ultra-loose pro-growth measures adopted in the face of the global financial crisis.
Mr Zhang of CASS said the overall picture of a sharp slowdown late last year and a strong recovery this year was still intact.
China’s central bank earlier this week reaffirmed its long-standing commitment to maintain an ”appropriately loose” monetary policy. The government this week also pledged to deliver the second half of its promised two-year Rmb4,000bn ($585bn) stimulus package in 2010.
Yet beneath this headline stability, Beijing has started to wind down some parts of its stimulus.
Over the past month, it has scaled back a tax exemption on property sales, increased a tax on automobile purchases, vowed to crack down on speculation in the sizzling housing market and outlined how it will more strictly control bank lending.
The revisions also showed that China has made more progress towards its goal of cutting energy intensity, or the amount of energy it uses to produce each dollar of national income.
The country used 5.2 per cent less energy per GDP unit in 2008, a bigger drop than the previously reported 4.6 per cent fall, the statistics bureau said.
The country set a goal of cutting energy intensity by 20 per cent over the five years to 2010, even as overall energy consumption continues to rise.
Originally presented as part of a drive to reduce reliance on overseas oil and gas and to curb damaging pollution, in recent years the efficiency target has also been promoted as a key part of efforts to curb growth in greenhouse emissions.
China is under pressure as the highest annual emitter of the gasses that cause global warming. It has faced a firestorm of international criticism after climate negotiations in Copenhagen ended last week with a broad, non-binding accord that fell short of hopes for a robust global agreement on how to curb emissions.
Beijing says that its emissions per capita and over the course of history are lower than those of rich nations that went through long, dirty periods of industrialisation.
The GDP and energy intensity revisions reflected the results of China’s second national economic census, completed earlier this year.
The first census, conducted in 2005, resulted in revisions to growth rates from 1993 to 2004. Mr Peng, the statistician, said China was still working on revising figures for 2005 through 2007.
Copper May Decline After China Expands Stockpiles, Survey Shows
Thursday, 24 December 2009 16:20
Dec. 24 (Bloomberg) -- Copper may drop on speculation bigger stockpiles in China, the world’s largest user of the metal, will keep imports below record levels, a survey showed.
Eleven of 22 analysts, investors and traders surveyed by Bloomberg said copper would fall next week. Nine predicted higher prices and two were neutral.
Copper stockpiles tracked by the Shanghai Futures Exchange have risen almost sixfold to 104,377 metric tons, from 17,822 tons at the beginning of the year, according to the exchange. Unaudited inventories may be 900,000 tons to 1 million tons, Royal Bank of Scotland Plc estimates.
“China has been a key driver in prices but the nation has been accumulating stockpiles from imports,” Daniel Major, an analyst at RBS, said by phone. “That’s one of the headwinds we see going for next year.”
The red bars on the attached chart are derived by subtracting the bearish forecasts from the bullish estimates, with readings below zero signaling the majority of respondents expecting a decline. The green line shows the copper price. The data shown are as of Dec. 18.
Shipments of refined copper into China totaled 194,388 tons in November, 15 percent more than in October. That’s 49 percent below record imports of 378,943 tons in June.
Copper for three-month delivery rose 2.3 percent this week to $7,005 a metric ton by 5 p.m. yesterday on the London Metal Exchange.
The weekly copper survey has forecast prices accurately in 33 of the past 69 weeks, or 48 percent of the time.
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