ANALYSIS-China's renewable curbs a boon to big players 30 Oct 2009 10:13

* Beijing trying to address overcapacity, collapsing prices

* Curbs to improve outlook for big wind, polysilicon firms

* Strong balance sheets, scale to support big players

(Repeats item first filed late on Thursday)

By Leonora Walet, Asia Green Investment Correspondent

HONG KONG, Oct 29 (Reuters) - China's efforts to curtail expansion in its renewable energy sector should brighten prospects for the country's more established wind equipment and solar companies, as curbs on excess capacity squeeze out smaller competitors.

Solar firm Yingli Energy Holdings <YGE.N>, wind gear maker China High Speed Transmission <0658.HK> and solar components company GCL-Poly Energy Holdings <3800.HK> are likely to survive the reforms largely unscathed thanks to their strong balance sheets and massive production capacity.

For smaller companies, the government's plan to withhold approval of new investments and shut off funding for projects is likely to deliver a crushing blow for this part of the sector that makes up nearly 50 percent of the market.

"Sadly for many, the party's over even before it began," said KK Chan, chief executive of private equity firm Nature Elements Capital. "But this is something the sector needs now and is consistent with the government's long-term goal."

Earlier this month, China launched its latest attempt to rein in industrial overcapacity targeting key sectors, chief among them steel and cement.

The move, however, also included Beijing's first moves to restrict investment in the renewables sector. It comes after more than a dozen companies piled into wind equipment and polysilicon-making projects, encouraged by state policies and cash perks launched early this year.

PRICES WEAK

Despite its efforts, Beijing's hard-line stance on expansion is unlikely to end the industry's struggle with collapsing prices and massive overcapacity.

"Capacities at factories are just so huge, China could easily supply all of the world's expected solar demand next year," said Wendy Wang, analyst at Yuanta Securities (Hong Kong).

Renewable energy accounts for just a fraction of a percent of China's total electricity output. Coal-dependent China hopes to bring that up to 15 percent by 2020.

By the end of 2009, capacity at China's polysilicon firms will reach 52,200 metric tons, according to Yuanta.

That's equivalent to feeding solar power stations with a combined capacity of 8.0 gigawatts, which is sufficient to supply the energy needs of a country the size of the Philippines.

Global solar demand in 2010 is expected at just 7.0 gigawatts and the over-supply has hammered prices.

Spot prices of polysilicon have fallen to $63 a kilogram now, from its peak of over $400 in August last year and compared to global production costs around $30-50 kg.

Larger, better resourced and more efficient polysilicon makers such as GCL, LDK Solar Co <LDK.N> and Renesola <SOLA.L> are expected to better withstand the slimmer margins than newer, smaller rivals.

WIND

Wind turbine prices have also slipped as combined capacity builds to hit an estimated 40 gigawatts this year, also far surpassing demand. China is estimated to add on average 10 to 15 GW of wind power yearly.

Xinjiang Goldwind Science and Technology Co <002202.SZ> and Dongfang Electric <600875.SS> are among biggest of 70 Chinese wind turbine suppliers.

"The wind turbine market has become competitive arena this year and price pressure will increase in 2010," said KGI analyst Stephen Wang.

GCL-Poly Energy, Yingli Energy, and China High Speed Transmission remain top picks by many brokerage houses in the renewables sector, thanks to their strong output and a wider customer base which is helping boost margins.

Shares in these companies have risen over 70 percent this year. (Editing by Lincoln Feast) ((leonora.walet@thomsonreuters.com; Reuters Messaging: leonora.walet.reuters.com@reuters.net; +852 2843 6358, Fax +852 2845 0636)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

Keywords: RENEWABLE/CHINA

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China Mobile 3Q results

Kevin Yim –kevin.yim@guoco.com (852) 2218 2861
Event: China Mobile and China Telecom reported 3Q09 results.
  China Mobile (941)’s 3Q09 earnings up 2.6% yoy to RMB 28.6bn, in-line with market consensus. 1H09 net
profit increased 1.4% yoy. Revenue grew 9.0% yoy in 3Q09 despite a 3.9% yoy decline in ARPU to RMB74.6.
MOU up 0.8% yoy to 490 as a result of higher portion of low usage customers. Blended revenue per minute
decreased 8.6% yoy due to intensified competition. EBITDA margin was the same as 2Q09 ’s 50.7%.
  While 3Q09 results were broadly in-line, September net adds improved to 5.43mn (Aug 09: 5.26mn) thanks to
continuous economic recovery. 3G net adds were still very weak at 328k, however.
  We believe CM will be lack of growth prospect from now on amid increasing competition and saturating highend
market. Nevertheless, CM is defensive for its strong net cash ($12.5 per share as at end-Jun) and stable
business. At 12.0x 2010 PER, valuation has fully reflected company’s fundamentals, in our view. We maintain
HOLD on CM with target price slightly revised down to $80.0, representing 12.0x 2010 PER. We recommend
investors to accumulate the stock when forward dividend yield reaches 4.0%, suggesting an entry point of
$75.0.
  China Telecom (728)’s 3Q09 earnings declined 47% yoy to RMB 2.98bn that were worse than market
consensus. Revenue increased 16.1% thanks to the CDMA business incorporated in 2009. It however rose only
1% qoq that was mainly due to poor fixed line operation. CDMA MOU and ARPU up 37% and 31% to 329 and
RMB 64 respectively, reflecting the increasing popularity of its CDMA2000 services.

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COLUMN-Investment gains in China lag economic growth: Wei Gu 21 Oct 2009 10:00

By Wei Gu

HONG KONG, Oct 21 (Reuters) - Investors should think twice before putting a big bet on China. The Chinese economy may have turned out to be more resilient than people thought, but returns on Chinese equities have been lacklustre when compared to its breakneck economic growth. This is because the stock market does not yet serve as a proxy for China's economy.

Despite a stellar performance this year -- the Shenzhen index <.SZSA1> is the world's top performer among large markets -- Chinese stocks have not been especially profitable over the long term.

The Shanghai Composite Index <.SSEC> is up about 3.5-4 times its level of 15 years ago, when it first "emerged", according to Charles Dumas of Lombard Research. This represents a compound annual gain of 8.5 percent to 9 percent, which is unimpressive in a country which enjoyed a 10 percent real annual growth rate over the same period and a nominal growth rate of 15 percent.

These figures raise questions about the current investment trend of increasing exposure to emerging markets. Moreover, returns on the Chinese market are even less impressive given the often violent fluctuations of stock prices when compared to, say, U.S. equities. This volatility makes share prices less useful guides for allocating resources and increases the cost of capital to corporations.

True, the 15-year timescale chosen by Dumas may seem a bit arbitrary, and returns can be a lot higher when you take the whole 19 years. Market indexes that track just blue-chip companies, rather than the broad Shanghai Composite, have also produced better returns. Nevertheless, it is worth asking why China has so far failed to translate fast economic growth into attractive investment returns.

This poor track record is not limited to China. Most emerging Asian stock markets -- with the exception of India -- have trailed the economic performance of the underlying economy. So did Japan over the past ten years. One explanation might be that most Asian markets are relatively young, with the century-old Indian market being a notable exception.

As recently as five years ago, China's stock market was mainly made up of uninspiring and second-rate state-owned enterprises. The most profitable SOEs, such as China Mobile <0941.HK>, went public in Hong Kong or New York, as the domestic market was deemed as too small for them. The result is that the Chinese market lacks blue-chip stocks.

The equity market is also too small to represent the economy. Although China's domestic market capitalization has recently edged above that of London, most shares are owned by the state and are therefore untradeable. China has 1,631 listed companies, small when compared to 6,013 in the United States, 4,946 in Mumbai, and 2,864 in London.

Foreign investors are probably better off getting exposure to China through Hong Kong, which hosts some of China's most profitable companies. Taking out the big swings at the start from 1994-1999, the Heng Seng Chinese Enterprise Index's <.HSCE> annualized return in the past ten years is almost 30 percent.

This suggests that the problem lies not with China's economy, but with the country's capital market. Boosting returns will require tackling fundamental problems such as fraudulent financial accounting, market price manipulation, rampant company cross-holding, a large amount of locked-up shares, and frequent government intervention.

Heavy-handed government policies have played a counter-effective role. China is one of the few countries where the regulator, not the market, decides when companies should raise money. This overly complex and often opaque application and approval process, which includes considerable administrative influence, increases transaction costs.

The quality of the market also suffers from the lack of an effective de-listing system. The market capitalization of companies delisted by the Shanghai Stock Exchange last year is less than 1 percent of the value lost by the New York Stock Exchange. Mumbai got rid of 20 times more than Shanghai did last year.

In addition, the delisting rules are often too simplistic -- they are related to whether or not a profit and loss statement shows a profit, which creates a great incentive to falsify accounts if a company is in danger of being de-listed, according to Zhou Qinye, executive vice president of the Shanghai Stock Exchange.

Rampant corporate fraud and market manipulation force investors to spend undue time and energy looking for legitimate trades, and avoiding opportunistic behaviour. This has scared serious investors away, and increased the risk premium and transaction costs.

China's stock market remains largely off-limits to foreign investors, which may not be such a bad thing given the unimpressive returns. But it will be hard for China to enjoy sustained development without a mature capital market powerful enough to match its growing economic needs. Continued stock market reforms could benefit both China's economy and investors seeking emerging market returns.

- At the time of publication Wei Gu did not own any direct investments in securities mentioned in this article. She may be an owner indirectly as an investor in a fund -

Zhou's paper on the history and prospects of the Shanghai Stock Exchange can be found in China's Merging Financial Markets (John Wiley & Sons), which offer varied perspectives from top Chinese decision makers and Western financial industry leaders.

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TABLE-Asia's top department store operators 13 Oct 2009 11:40

     SEOUL, Oct 13 (Reuters) - The following table shows Asia's 
top listed department store operators by market value based on 
Thomson Reuters data. 
    For a related analysis, click on [ID:nSEO27038] 
    Company name                    PE      Est. PE   Market Cap 
                                  (time)     (time)  (bln US dlr) 
 Shinsegae          <004170.KS>    18.11      17.47         8.91 
 Lotte Shopping     <023530.KS>    12.03      13.26         7.67 
 Parkson Retail     <3368.HK>      38.90      33.20         4.83 
 Isetan Mitsukoshi  <3099.T>       80.05      17.02         4.18 
 Golden Eagle       <3308.HK>      34.76      35.14         3.34 
 J.Front Retailing  <3086.T>       36.87      39.89         2.99 
 Lifestyle Intl     <1212.HK>      23.45      22.61         2.76 
 Takashimaya        <8233.T>       18.76      29.03         2.46 
 David Jones        <DJS.AX>       18.22      16.94         2.51 
  
 Note: Some of the companies have a wider business portfolio in 
the retail sector, including discount and convenience stores. 
 (Reporting by Rhee So-eui; editing by Dhara Ranasinghe) 
 ((soeui.rhee@thomsonreuters.com; +82 2 3704 5650; Reuters 
Messaging: soeui.rhee.reuters.com@reuters.net)) 
 ((If you have a query or comment on this story, send an email to 
news.feedback.asia@thomsonreuters.com)) 

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Top 10 chocolate museums

SYDNEY, Oct 16 (Reuters Life!) - For people who love chocolate and love travel, what could be better than a chocolate museum.

The members and editors of VirtualTourist.com (http:\\www.virtualtourist.com) have compiled a list of the World's Top 10 Best Chocolate Museums. Reuters has not endorsed this list.

1. The Cologne Chocolate Museum; Cologne, Germany

Located on the Rhine River, this futuristic building gives visitors three floors of chocolate history to ponder, but the real centre of attention here is the famous chocolate fountain. Museum staff dip waffles in the hot liquid for salivating guests.

2. Musee les Secrets du Chocolat; Geispolsheim, France

Complete with theatre, tea room, and gift shop that sells chocolate pasta, chocolate vinegar, chocolate beer and decorative antique chocolate molds, this museum is every bit as elegant as the country it represents.

3. Pannys Amazing World of Chocolate, Phillip Island Chocolate Factory; Newhaven, Phillip Island, Victoria, Canada

This facility houses such tongue-in-cheek exhibits as statue of David replicas, a Dame Edna mural and an entire chocolate town. Aside from the eye candy, visitors are treated to real candy with a chocolate sample upon arrival.

4. Choco-Story Chocolate Museum; Bruges, Belgium

In addition to dedicating a section of the museum to the health benefits of chocolate, this museum also houses a quirky collection of chocolate tins that pay tribute to the Royal family.

5. Museu de la Xocolata; Barcelona, Spain

The sculptures at this museum are so impressive, you'll forget you're looking at chocolate. Subjects range from copies of serious religious works to whimsical cartoon characters.

6. The Chocolate Museum (Musee du Chocolat); St. Stephen, New Brunswick, Canada

This museum pays tribute to the Ganong Bros who were candy makers in the area and who have the distinction of introducing the world to the iconic heart-shaped chocolate box, many of which, not surprisingly, are on display here.

7. Choco-Story Chocolate Museum; Prague, Czech Republic

Chocolate may be a feast for the palate, but this museum is truly a feast for the eyes. With collections of stunning antique chocolate wrappers and demonstrations of the chocolate making process, it's hard to know what to look at first.

8. Candy Americana Museum, Wilbur Chocolate; Lititz, Pennsylvania

Started when the wife of the company president began collecting chocolate memorabilia at flea markets and antique shows, this now over-30-year old museum still admits visitors for free.

9. Chocolate Museum; Jeju-do Island, South Korea

While the chocolate workshop, "Bean to Bar" showroom, and art gallery are all impressive, perhaps this museum's biggest draw is their working San Francisco-style trolley car.

10. Nestle Chocolate Museum; Mexico City, Mexico

Known more for its modern design and the speed with which it was built (by most estimates 75 days from start to finish), this futuristic building is an exhibit in itself.

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TIMELINE-Oil's wild ride: Price moves since 2008 14 Oct 2009 14:30

 Oct 14 (Reuters) -  Oil prices rallied for a fifth day on 
Wednesday to top $75 a barrel for the first time this year, 
stoked by a weak dollar and surprisingly strong China trade data 
that underscored a recovery in the world's No. 2 oil consumer. 
    Markets have been steadily rising after a dramatic collapse 
to near $30 a barrel in December and January, from a record peak 
of almost $150 in July last year. 
    Here is a brief timeline charting the price highs since 
January 2008. 
     
    Jan. 2, 2008: U.S. crude <CLc1> briefly breaks the $100 
barrier for the first time on the first trading day of 2008. 
Prices rise fairly steadily through the first half of the year. 
    March 5: Despite new record price highs of over $104 a 
barrel, the Organization of the Petroleum Exporting Countries 
(OPEC), which pumps more than a third of the world's oil, says it 
will not put more oil on the market. It says there is enough oil, 
and blames U.S. economic "mismanagement" for global prices. 
    June 6: Prices surge $11 to a record high near $139 a barrel 
on a slumping dollar and mounting tensions in the Middle East. 
Soaring crude leads a frenzied broad-based commodity rally on 
U.S. grains and oilseed futures markets.     
    June 7: Average retail price for regular gasoline tops $4 a 
gallon for the first time in the United States.     
    July 11: Oil peaks at $147.50 for Brent <LCOC1> and $147.27 
for U.S. crude. 
    July 15: A sell-off begins after remarks by Federal Reserve 
Chairman Ben Bernanke indicating a significant fall in demand in 
the United States, the world's top consumer.     
    July 18: Oil prices drop by more than $18 from a week ago to 
$128.88 per barrel. The price fall is triggered by a 3 million 
barrel increase in U.S. crude stocks and falling U.S. demand. 
    Aug 15: Prices continue sharp decline, falling to around $110 
a barrel for Brent crude.     
    Sept 15: Prices below $100 a barrel for first time since 
March 4, and still falling.     
    Sept 22: Oil spikes $16 in biggest one-day gain on record. 
Prices pop over $120 a barrel, extending a climb from a low near 
$90 the previous week after the United States unveils a sweeping 
rescue plan for its battered financial sector.     
    But soon after, oil prices begin a heavy slide.     
    Nov 21: National average price of regular gasoline falls 
below $2 a gallon for first time since March 2005 -- dropping 3.1 
cents to $1.989.     
    Dec 19: Oil drops below $34 a barrel -- charting about a 75 
percent loss of value since July.     
    Jan 2, 2009: Oil falls more than $3 on first day of trading, 
with U.S. crude at $41.25 a barrel and Brent at $42.18.     
    Aug 25: U.S. crude rises to touch this year's resistance 
level of $75 a barrel, the first time since late-Oct 2008. 
    Sept 10: At its meeting, OPEC kept output targets steady at 
the reduced levels agreed in September 2008, as high oil prices 
of above $71 meant there was no need for action. 
    Sept 25: Saudi Oil Minister Ali al-Naimi said that $75 was a 
fair price for crude and he saw no need for OPEC to change 
production ahead of its next meeting in December. 
    Oct 14: U.S. crude rises to $75.15 a barrel, the highest in 
2009, underscored by a soft dollar and optimism over a global 
economic recovery. 
     
    Source: Reuters, Energy Information Administration 
(http://www.eia.doe.gov/emeu/cabs/MEC_Past/2008.html)  
 ((gill.murdoch@thomsonreuters.com, +65 6417 4681, Reuters 
Messaging gill.murdoch.reuters.com@thomsonreuters.net))  
 ((If you have a query or comment on this story, send an email to 
newsfeedback.asia@thomsonreuters.com))  
  

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FACTBOX-Valuation ratios of Southeast Asian telcos 12 Oct 2009 14:34

   KUALA LUMPUR, Oct 12 (Reuters) - Malaysia's top telecom 
firm, Maxis Berhad, is expected to be relisted in November in 
Southeast Asia's largest IPO in more than a decade. 
     
Here is a table of key valuation ratios of Southeast Asian 
telecom firms: 
     
Company      RIC         P/E   Price/Sales Price/Cash Flow   ROE 
     
PT Indosat  <ISAT.JK>   12.0     1.3          3.4           12.3 
PT Telkom   <TLKM.JK>   13.1     2.4          5.6           30.5 
AIS         <ADVA.BK>   15.8     2.5          7.6           25.5 
DTAC        <DTAC.BK>   14.1     1.5          5.6           10.8 
Axiata      <AXIA.KL>   15.9     1.9          6.2            8.8 
DiGi.com    <DSOM.KL>   14.9     3.1          8.0           59.0 
TM          <TLMM.KL>   19.7     1.3          4.0            8.2 
SingTel     <STEL.SI>   11.7     3.1          9.3           17.2 
Starhub     <STAR.SI>   10.8     1.5          6.0          253.1 
     
 Source: Thomson Reuters, I/B/E/S 

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UPDATE 2-Strong Wynn Macau IPO puts pressure on debut, rivals 30 Sep 2009 15:04

Wynn Macau prices IPO at HK$10.08/share - sources

* Company raises $1.63 billion, fourth largest IPO for 2009

* Successful deal puts pressure on Sands upcoming HK IPO

* High price makes strong debut more difficult - analyst

(Adds analyst quote, byline)

By Michael Flaherty and Sui-Lee Wee

HONG KONG, Sept 30 (Reuters) - Las Vegas casino company Wynn Resorts <WYNN.O> raised $1.63 billion after pricing its Asian IPO at the top of its indicated range, a sign that demand is still strong for certain offerings despite a glut of Asian stock deals.

Wynn Macau <1128.HK>, the fourth-largest global IPO this year, now faces the challenge of its Hong Kong trading debut, where several new listings have been battered by increasingly selective investors.

Wynn Macau sold 1.25 billion shares Hong Kong-listed shares at HK$10.08 each, according to two sources with direct knowledge of the deal but were not authorised to speak publicly about it.

The IPO's range was HK$8.52-HK$10.08, with Wynn selling 25 percent of the business to the public.

But some brokers said the high price may make a strong debut more difficult for Wynn.

"The valuations are really high and market sentiment is not that good now," said Conita Hung, head of equity research for Delta Asia Financial Group. "I don't expect this to be a good one."

On a 2010 enterprise value to earnings before interest, tax, depreciation and amortisation ratio (EV/EBITDA), Wynn Macau trades around 16 times, much higher than Macau gambling tycoon Stanley Ho's flagship casino firm SJM Holdings' <0880.HK> 7.5 times, according to Credit Suisse analyst Gabriel Chan.

The Macau gambling sector EV/EBITDA average trades at around 14.5 to 19.4 times, Chan said.

"It'll get a big hit," said Linus Yip, strategist at First Shanghai Securities, referring to the Wynn Macau debut. "The main concern is the price range."

"MCC had set its price at the middle of its range, but it still fell below the issue price. Valuations for Wynn are definitely still a concern."

The dismal debut of Metallurgical Corp of China (MCC), a building and engineering firm, last week has weighed heavily on investor sentiment for new share offerings in Hong Kong.

Wynn's successful sale also puts pressure on arch-rival Las Vegas Sands <LVS.N>, which plans to raise billions of dollars through a public offering in Hong Kong at the end of November or early December.

NOW THE HARD PART

The Wynn Macau offer is especially important given the deal's potential impact on the company's flagship Las Vegas operations. Wynn is hoping a high valuation through the Hong Kong listing will boost valuations at its other divisions.

U.S. casino operators, grappling with high debt levels and a recovering economy, are hoping to boost valuations through spinoffs in China's gambling hub, Macau, the former Portuguese colony located an hour away from Hong Kong by ferry.

Macau now hosts the world's biggest gambling market, which raked in record bets in August. [ID:nHKG238575]

While institutional and retail demand for Wynn Macau was strong, now comes the hard part: a strong debut that will vindicate those investors who lined up for the offering.

JPMorgan <JPM.N>, Morgan Stanley <MS.N> and UBS AG <UBSN.VX> are joint sponsors and global coordinators of the deal, with BofA-Merrill Lynch <BAC.N> and Deutsche Bank <DBKGn.DE> as joint bookrunners.

Wynn Macau attracted a combined $250 million from several so-called "cornerstone investors," or investors who take a substantial stake in the company before the offering, one of the sources said.

Among them is Thomas Lau, billionaire managing director of Lifestyle International <1212.HK>, the retailer that operates the Sogo department stores in Hong Kong's Causeway Bay and Tsim Sha Tsui districts and the Jiuguang Department Store in Shanghai.

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