[20081121] CICC English Daily--China Mobile (941.HK)/ China Telecom (728.HK)/
Listco Updates
China Mobile (941.HK): BUY Page 3
China Telecom (728.HK): BUY
Oct. Operating Stats: CT Enjoys CDMA User Write Down;
CM Net-adds Stable but Burdened
CM and CT released October 2008 operating data. CM net adds totaled 7.2mn (-0.7% MoM, +9.0% YoY).CT lost 1.09mn access lines (vs. 0.58~1.22mn net loss in the first nine months of 2008). Broadband net adds totaled 0.70mn (-4.1% MoM, +27.3% YoY). CDMA registered a net loss of 0.68mn subs. CT wrote down CDMA subscriber numbers from 40mn to barely 30mn. We regard this as good news for CT. CM net adds in October still stable, but we expect pressure from three areas: 1) CM may lower high-end margins; 2) ARPU decline trend; 3) CDMA threat beginning year-end 2009.
China Unicom (762.HK): ACCUMULATE Page 6
Oct. Stats: GSM Bracing for Bumpy Road Ahead;
Fixed-line Hurt by Integration Friction
CU published October operating data: GSM net adds 1.2mn (-3.7% MoM, +7.7% YoY); Fixed line net loss totaled 0.79mn; Broadband net added 0.34mn (-43% MoM, -25% YoY). GSM net adds in October were still fine because CDMA was still transitioning from CU to CT and CM changed its strategy to focus on protecting high-end market share. Going forward, we expect CT to be a big threat for CU as early as November and more obviously in January 2009. Fixed line (including broadband) was and will likely continue to be hurt by the friction of integration.
Baidu.com (BIDU.US): HOLD Page 9
Baidu Will Survive Trust Crisis
We believe Baidu will not be destroyed by this affair; it will survive this crisis of trust and maintain its leading position in the Chinese paid search market. Key takeaways from analyst conference held by Baidu: 1) Baidu has not violated any laws; 2) No intention to change existing business model; 3) Remove questionable customers from search results and review relevant licenses; 4) No impact on search traffic so far; 5) Too early to tell financial impact. 6) The Company will strengthen internal control process to avoid malpractice from salespersons; 7) Baidu has vowed to continue to improve its technology and increase the relevance of search results.
China Ping An (2318.HK): SELL Page 13
October Premium Income under PRC GAAP
Ping An Life’s October premium income maintained steady growth thanks to the higher credit rate for universal policies, but operating risks arising from continued net consumption of provisions cannot be neglected. Ping An P&C might show underwriting loss in 2008 as its premium income growth continued to slow. We maintain our SELL rating on China Ping An-H to reflect the foreseeable premium income growth slowdown, consistent funding cost pressure, and potential for lower investment returns.
Sector Updates
Construction: October Data on China’s Overseas Page 17
Contracted Projects
October new contract value hit a monthly low in 2008. January~October value of new overseas contracted projects grew 57.9% YoY to US$81.65bn. Revenue was flat MoM. January~October revenue from overseas contracted projects grew 46.4% YoY to US$42.92bn. We remind investors to stay alert to Middle East exposure in view of the oil price plunge and the region’s sluggish property market. At present, the Middle East backlogs of CRG, CRCC and CCCC make up 1.8%, 10.8% and 4.0% of their respective 1H08 totals.
Impact of Economic Stimulus Policies on Cement Sector Page 24
The infrastructure and low-rent housing stimulus policies released so far have a positive impact on the cement sector, and the possibility sector fundamentals will improve in 2H09 is increasing: If all policies can be implemented smoothly in 2009, cement demand growth might be as high as 7% or 100mn tonnes, bringing supply and demand into balance. A-share investors may hold stocks as further upside is still possible in the near term, while Anhui Conch Cement H-share investors may sell on rallies considering its expensive valuation: In our view, the fair valuation for the industry bellwether should stand at 15x 2008E EPS.
Chemicals: Adjustment to Export Tariffs and Method Page 30
of Taxing Some Chemical Products and Fertilizers
The State Council decided to adjust the export tariffs (including provisional and additional) on some chemical products and fertilizers, effective from December 1, 2008. There is also a notable change in the way of levying export tariffs on fertilizers. The tariff adjustments overall are positive to the fertilizer industry, despite being a little late. Fertilizer to deliver steady performance in 2009. The uncertainty is that the state may readjust export tariffs at any time if export prices of China’s fertilizers rise significantly.
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发表于 2008-11-21 09:09
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