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Business Tianjin Magazine - Business English Magazine in China
China Eastern back in profit
Written by Financial Times Wednesday, 12 August 2009 15:27
China Eastern Airlines, one of the country's big three carriers, returned to profit in the first half because of fuel-hedging gains, in spite of a fall of almost 16 per cent in revenue.
The carrier, which last month announced its plan to acquire rival Shanghai Airlines for just under Rmb9bn ($1.3bn), said strong economic growth in China would boost the aviation market this year and that it would benefit from the World Expo to be held in Shanghai next year.
"China's economy would become the key pivot for the stability and recovery of the world's economy. The aviation market demand will be boosted by the economic transformation of the PRC, expansion in investment and [increased] consumption of China," said Liu Shaoyong, chairman.
In the first half, China Eastern reported a net profit of Rmb984.7m, compared with a loss of Rmb175.3m in the same period last year. Revenues fell 15.6 per cent to Rmb16.17bn.
Like many of its peers, China Eastern benefited from a Rmb2.79bn profit from fuel option contracts in the first six months of this year after a rise in oil price. Last week, Hong Kong's Cathay Pacific reported a paper profit for the first half thanks to similar gains.
Wrong-way bets on oil prices saw China Eastern lose Rmb15.3bn last year and led to the airline receiving Rmb7bn in government aid .
Domestic traffic, encouraged by the government's stimulus packages, rose 27 per cent from the same period last year, offsetting sharp falls in demand. But total revenue still fell sharply because intensified competition had put pressure on fares.
Copyright The Financial Times Limited 2009. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
China OKs shipbuilding firm's Shanghai IPO
Written by Reuters Tuesday, 28 July 2009 11:17
SHANGHAI, July 27 (Reuters) - China's stock regulator said on Monday it had approved an application by China Shipbuilding Industry Co (CSIC) to launch an initial public share offer worth around $1 billion for a listing on the Shanghai Stock Exchange.
CSIC, China's top shipbuilding company, is now among about 30 companies on a list awaiting the final go-ahead from the China Securities Regulatory Commission to launch its IPO, which is typically granted within a month after the approval.
The regulator has pushed a number of companies to launch IPOs over the last few weeks. China's Shanghai Composite Index has jumped nearly 90 percent so far this year, propelled by huge liquidity in the system.
CSIC said last week it plans to issue up to 2 billion A-shares denominated in the Chinese yuan, or 30 percent of its expanded capital after the IPO.
It needs around 6.44 billion yuan ($943 million yuan) to help it fund production of spare parts for ships, enhance its supplementary shipbuilding business and improve equipment supplies, it said in a draft prospectus.
CSIC has appointed China International Capital Corp (CICC) as the IPO's lead underwriter, it said.
China unveils new rules for foreign investment
Wednesday, 14 April 2010 15:56
BEIJING -- The State Council, China's Cabinet, released here Tuesday new regulations on overseas investment, promising good business conditions but restricting funds to environmentally unsound projects.
According to the new regulations, China still welcomes foreign investment in high-tech industries, services sectors, energy-saving and environmental protection, but polluting and energy-gorging or projects in industries running at overcapacity are not wanted.
According to the regulations, the State Council said China will continue to support Chinese A-share listed companies in further introducing strategic investors from home and abroad, and standardize foreign companies' investment in domestic securities and corporate merger and acquisition moves.
A national security examination mechanism will be built as soon as possible for foreign-funded companies' merger and acquisition operation in China, according to the regulations.
Qualified foreign-funded companies are allowed to go public, issue corporate bonds or medium-term bills in China.
Multinationals are encouraged by the regulations to set up regional headquarters, research and development centers, procurement hubs, financial management and other functional offices in China.
Importing items for scientific and technological development by qualified foreign-funded R&D centers will be exempt from tariffs, importing value added tax and goods and services tax by the end of 2010, according to the regulations.
Foreign-funded enterprises are also encouraged to increase their investment in China's central and western regions, particularly in environment friendly and labor-intensive companies.
China’s trade surplus climbs to $28.7 billion
Tuesday, 10 August 2010 13:22
The Chinese government announced on Tuesday the country’s biggest trade surplus in a year and a half, as an unexpected surge in Chinese exports and weakening of imports pointed to the prospect of renewed frictions with the United States and other countries over China’s international economic policies.
China’s surplus climbed to $28.7 billion in July, the highest since January of last year and much more than the consensus expectation of economists for a surplus of roughly $19 billion. The country had posted a trade surplus of $20 billion in June.
Exports leaped 38.1 percent from an already strong showing in the same month last year, the General Administration of Customs said, while imports rose a more modest 22.7 percent.
China’s central bank announced on June 19 that it would begin to allow the country’s currency, the renminbi, to fluctuate more against other currencies, a decision that the Obama administration and others expected to lead to the renminbi’s appreciation against the dollar. But the pace of that appreciation has been very slow so far, with the renminbi rising only 0.8 percent against the dollar since then.
A stronger renminbi would make Chinese exports more expensive in foreign markets, and would make foreign goods more affordable for Chinese buyers.
China’s policy of releasing a quick snapshot of trade less than two weeks after the end of each month provides one of the earliest glimpses of the strength of international demand, particularly for the consumer goods for which China increasingly dominates global markets.
Some economists had expected growth in Chinese exports to weaken last month in an early sign of a possible double-dip recession in the West.
Some Chinese corporate executives are still worried about the possibility of a slowdown in exports in the months ahead.
Allen Dong, the export manager of Ningbo Deye Domestic Electrical Appliance Technology Co. in Ningbo, China, said that the orders for future exports of the company’s dehumidifiers to the United States and Europe had begun to weaken this summer.
“I think this may be partly due to the fluctuations in the renminbi exchange rate against other currencies, and also the forever changing economic situation overseas,” he said.
Like many Chinese companies, Ningbo Deye is trying to cushion its reliance on volatile exports by selling more in the domestic market. Domestic sales are now 55 percent of revenues and exports are the rest, compared to an even split last year, Mr. Dong said.
On Tuesday morning, the central bank set the opening value of the renminbi in Shanghai trading at 6.7745 to the dollar. That meant the renminbi was actually slightly weaker than on Monday, when it traded at 6.7685 to the dollar.
The central bank dominates trading of the renminbi through heavy intervention in the Shanghai market, selling renminbi heavily and buying dollars so as to prevent China’s trade surpluses and inflows of foreign investment from pushing up the value of the renminbi.
China’s National Bureau of Statistics announced separately on Tuesday morning that average home prices in 70 large and medium-sized Chinese cities were unchanged in July from June and up 10.3 percent in July compared to the same month last year.
The Chinese government has been trying since the spring to cool speculation in real estate markets. It has done so partly to limit the potential vulnerability of banks to mortgage defaults if real estate prices fall later, but also in response to a public outcry within China about the high cost of housing, as many young people question how they will be able to afford their first home.
July marks the third consecutive month of slowing in the appreciation of real estate prices from a year earlier.
The Shanghai stock market dropped 1.3 percent by late morning on renewed concern that China’s double-digit economic growth may be slowing slightly.
Google may announce China plans next Monday
Friday, 19 March 2010 16:44
(Reuters) - Google Inc may make an announcement next Monday about whether it will pull out from China, the China Business News reported on Friday, quoting an unnamed Google employee.
The report also said a local authorized agent had received unconfirmed information that Google would leave China on April 10.
"I have received information saying that Google will leave China on April 10, but this information has not at present been confirmed by Google," the agent was quoted as saying.
Google officials were not immediately available for comment.
Google Chief Executive Eric Schmidt said last week he hoped to have an outcome soon from talks with Chinese officials on offering an uncensored search engine in the country.
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