Chaoda says to raise $356 mln to expand production 18 Aug 2010 09:18

HONG KONG, Aug 18 (Reuters) - Chaoda Modern Agriculture (Holdings) <0682.HK> plans to raise a total of $356 million via issues of bonds, options and shares to expand existing and establish new production areas in China.

In a filing to the Hong Kong bourse late on Tuesday, the Chinese agricultural products producer said it would issue up to $200 million in 3.7 percent secured guaranteed convertible bonds due 2015 and about $6 million worth of call options.

It also aims to raise $150 million through the sale of 154.84 million shares at HK$7.53 ($0.969) each, or a 12.03 percent discount to the previous close, to substantial shareholder Kailey Investment Ltd.

Trading in its shares, which was suspended on Monday, will resume on Wednesday.

Kailey's stake in Chaoda Modern will be diluted to 19.20 percent after the share sale from 20.13 percent.

IFR reported on Monday that Chaoda Modern planned to raise at least $400 million via share, bond and warrant issues. [ID:nTOE67F06H] (Reporting by Donny Kwok; Editing by Jonathan Hopfner) ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters Messaging: donny.kwok.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)) ($1=7.771 Hong Kong Dollar) Keywords: CHAODA BONDS

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UFufeng Group (HKG:0546) Convertible Bond Conversion Price 20% Above Current LevelFU

Hong Kong, May 13, 2010 (ABN Newswire) - Fufeng Group (HKG:0546) (PINK:FFNGY) has announced it will issue Rmb-dominated convertible bonds (CBs) to raise Rmb 820mil-1bil. As the initial conversion price (HK$7.03) is below both of the current share price and our current PT of HK$6.7, there is no dilution impact on our modeled numbers at present. Our initial take on the CB issue is that it is slightly positive to the company's financials as it can lock the company's interest costs in face of a potential interest rate hike. We leave our model, rating and PT unchanged.

Share capital enlarged by 10% if fully issued and converted: Details of the CB are shown in the exhibit below. We would like to highlight: (1) the conversion price of HK$7.03 is ~20% above the current share price and 5% above our PT of HK$6.7. (2) Fufeng will pay Rmb37mil-46mil of CB interest expense (settled in US$ in cash semi-annually), but we believe that this will largely be offset by an interest saving from a lower bank borrowing. The CB coupon rate is 4.5%, lower than the company's current borrowing rate (~6%, according to management). We believe the CB can help fix the company's interest costs in face of a potential interest rate hike.

-----------------------------------------------------------
Gross Proceeds                     Rmb 820mil - Rmb 1025mil
                                 (~US$ 120mil - US$ 150mil)
No. of new shares to be issued              132.6-165.7 mil                      
% Increase                                         8% - 10%
-----------------------------------------------------------
Annual Coupon rate (%)            4.5% (paid semi-annually)
Conversion Price (HK$)                                 7.03
Maturity                          Five years (Due Apr 2015)
CB Holder's Put Option           At year 3 (1st April 2013)
CB Listing                        Singaopore Stock Exchange
Use of Proceeds              Expansion capex, M&As, General
                                            working capital
-----------------------------------------------------------

Source: Company

For a better understanding, we have also calculated below the potential dilution impact on the company's EPS if the CB is fully converted now. However, as both the share price and PT is below the conversion price, there should not be any dilution due to the new shares to be issued from the CB conversion.
Potential Impact

-----------------------------------------------------------
Our current estimates                       FY10      FY11
Net Profit (Rmb mil)                        1049      1531
EPS (Rmb)                                   0.63      0.82
Impact (if Optional bonds issued in full)
Net Profit (Rmb mil)                        1,033     1,341
EPS                                         0.57      0.73
EPS dilution effect                        -10.2      -10.5
-----------------------------------------------------------

Source: Piper Jaffray Asia Securities

PRICE TARGET AND JUSTIFICATION:

We rate Fufeng Overweight with a PT of HK$6.7 (9.4x FY10E EPS of HK$0.72).

For the complete Fufeng Group Research Report, please refer to the following link:

http://www.abnnewswire.net/media/en/docs/62855-PJ-Mar-10-(100329).pdf

Link: http://www.abnnewswire.net/media/en/docs/62855-PJ-Mar-10-(100329).pdf

About Fufeng Group Limited

Fufeng Group Limited (US:FFNGY)(HKG:0546) is one of the leading vertically integrated manufacturers of corn-based biochemical products principally utilising fermentation technology in China, and mainly engaged in MSG related products and xanthan gum production. MSG segment includes production of MSG, glutamic acid, fertilisers, corn refined products and sweeteners. Fufeng is the largest glutamic acid manufacturer in China, and one of the top three leading xanthan gum manufacturers in the world.

Please visit the Company website for more details:
http://www.fufeng-group.com

Contact

Fufeng Group Limited Carine Wong Tel: +852-3185-0300 carinewong@fufeng-group.com.hk

Related Companies

>>>        Fufeng Group Limited
>>>        Piper Jaffray Companies

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ANALYSIS-China to set gold market alight as it opens up 06 Aug 2010 09:50

(Repeats story issued on Thursday)

* China liberalises domestic market, lures foreign players

* China's move seen positive, government eyes 2nd tier banks

* Investors shift money out of property markets

By Lewa Pardomuan and Langi Chiang

SINGAPORE/BEIJING, Aug 5 (Reuters) - China's moves to free up its gold market open the way for foreign players and local banks to tap growing demand for the precious metal, offering citizens a more attractive investment and promising to boost the country's clout over global prices.

With the Shanghai Composite Index <.SSEC> down 20 percent this year, and gold prices <XAU=> still up 9 percent despite a correction from a lifetime high hit in June, more retail investors are buying bullion as they diversify their wealth.

A clampdown on rampant property speculation could also drive investors to shift some hot money into gold, which many see as a sign of status and good fortune, as hopes for more Chinese demand pushed gold to a two-week high above $1,200 an ounce this week.

"What's happening in China right now is that a lot of wealth is being switched out of the property markets into the gold market," said Mark Pervan, senior commodities analyst at ANZ in Melbourne.

"This is an ongoing theme. This theme is likely to put a very high floor of price on the gold market. The property investor is very concerned the government is trying to cool that market. They've made a lot of money in property."

Investors have long bet that China will eventually overtake India as the world's top consumer, and Beijing's move to allow more domestic banks to export and import bullion underscores the hunger for gold among the country's burgeoning middle class.

More foreign firms are likely to become members of the Shanghai Gold Exchange <SGE/MENU> and analysts also expect Beijing to ease curbs on gold investment products such as exchange traded funds.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graphic of gold prices versus the Shanghai Composite

Index, click:

http://graphics.thomsonreuters.com/gfx1/LWP_20100508120808.jpg

For a graphic of demand for gold jewellery and investment in

China and other main consumers, click:

http://graphics.thomsonreuters.com/F/08/CN_GOLD0810.jpg

For a six-week gold technical analysis, click [ID:nSGE66Q0DL]

For a factbox on the top 50 official sector gold holders,

click [ID:nLDE66C11E]

For a factbox on how to invest in gold and key price drivers,

click [ID:nLDE6600NC]

For a factbox on precious metals holdings of exchange-traded

products, click [ID:nLDE6721DV]

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

SHARE OF GLOBAL GOLD DEMAND JUMPS

Although China is the world's largest gold producer, it still requires imports as demand can easily outstrip domestic output by more than 100 tonnes annually.

China's share of global gold demand jumped to 11 percent in 2009 from 5 percent in 2002, when the Shanghai Gold Exchange opened, and consumption is likely to double in the next decade from around 420 tonnes as income grows, the World Gold Council says. [ID:nTOE62S01M]

The People's Bank of China said on Tuesday it would allow banks to hedge bullion positions in overseas markets, urge banks to lend more to domestic gold firms looking to go abroad, and actively develop more yuan-denominated gold derivatives. [ID:nTOE67207V]

China is likely to let second-tier institutions such as Minsheng Banking Corp <600016.SS> and China Merchants Bank <600036.SS> join forces with four major state banks, including Bank of China, that are already allowed to offer such services -- bringing the number to at least eight.

"China's gold market is going to play an important role in the global gold market," said Albert Cheng, Far East managing director of the World Gold Council.

"It will become more accessible for both international and domestic players. Investors in China will benefit from greater availability of physical gold and gold-related financial products. Naturally this is very positive for gold."

Analysts say China wants more banks to trade with overseas counterparts, reduce their reliance on the Shanghai Gold Exchange for hedging and invite more foreign banking institutions to trade on the Exchange, where trading volumes have risen by more than half in the first half of this year.

Five banks, including HSBC <HSBC.L> and Standard Chartered <STAN.L>, are members of the Shanghai Gold Exchange.

WILL CHINA BOOST RESERVES?

Most gold investors trade via the Exchange but banking sources say more clients are chasing products such as gold saving accounts and gold bars while hedging services to miners have gone up -- suggesting a shift from equities or property markets.

Beijing has repeatedly stressed its determination to curb speculative demand and rein in overly fast price rises in the real estate market despite a slowdown in economic growth. [ID:nBJ003894]

"Investment demand for gold is expanding very fast, as we are now in a bull market and prices will rise in the mid- and long-term," said a wealth manager specialising in precious metals at a state bank in Guangzhou.

"No matter if it's the stock, property or gold market, Chinese people always flock in when prices are rising."

Will China boost reserves after announcing the new measures? The answer may be no because Beijing will focus on bringing more gold into the country to satisfy demand, rather than stirring up global prices through official purchases.

China has increased its official gold holdings by more than 400 tonnes in the past few years to 1,054 tonnes -- the world's sixth largest.

"The PBoC comments should not be taken as a sign the official sector will buy gold, but rather that current restrictions on gold imports and gold investment products, such as exchange-traded funds, will gradually ease," HSBC said in a report.

Indeed, business is booming in downtown Beijing.

"There has been a big jump in interest in gold over the past year," said Zhang Qi, a salesman surrounded by gold commemorative items on display in a store of China Golddeal, the country's only official minting company, on Financial Street.

"Everybody can see how the government is trying to control the real estate market, so there is more confidence that gold is something that will be able to hold its value. Parents want to pass gold on to their children because they think it is safe." (Additional reporting by Polly Yam in HONG KONG; Editing by Clarence Fernandez and Ramthan Hussain) ((lewa.pardomuan@thomson reuters.com; +65 6870 3834; Reuters Messaging: lewa.pardomuan.reuters.com@reuters.net)) ( (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))

Keywords: GOLD CHINA/

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RPT-BUY OR SELL-Singapore healthcare sector-Healthy or feverish?

Related Symbols:

SGX - RAFFLES MED GRP R01 SGX - THOMSON MEDICAL 5FV SGX - PARKWAY HLDGS LT P27 SGX - HEALTHWAY MEDI 5NG

RPT-BUY OR SELL-Singapore healthcare sector-Healthy or feverish? 03 Aug 2010 10:21

(Repeats Aug 2 story with no changes to text) * Health sector index up as much as 23.4 pct since May * Shares have risen between 20 pct to 50 pct year to date * Strong fundamentals with ageing population, regional demand (For more Reuters buysells click [BUYSELL/]) By Eveline Danubrata SINGAPORE, Aug 2 (Reuters) - Singapore's healthcare sector, up more than a quarter this year, may be running ahead of fundamentals, boosted by a bidding war for Asia's biggest listed hospital operator Parkway Holdings <PARM.SI> The Singapore stock exchange's health sector index <.FTFSTAS4000> has jumped as much as 23.4 percent in a rally which started at the end of May when Malaysia's Khazanah announced its successful bid for Parkway after months of wrangling with Fortis Healthcare <FOHE.BO>. [ID:nSGE66P00J] But are Singapore healthcare stocks still a good buy? <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For StarMine comparisons click: http://r.reuters.com/was72n ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> GOOD BUYS Singapore's healthcare firms have strong fundamentals due to the city-state's ageing population, thriving medical tourism from the region and the roaring recovery of the local economy -- set to grow as much as 15 percent this year. [ID:nSGE66C0GX] "Healthcare provision is unusual in that it is both a defensive and a growth industry, so well-managed companies in the sector can be good investments," said Peter Elston, a strategist at Aberdeen Asset Management Asia, which oversees more than $68.5 billion and holds shares in Raffles Medical Group <RAFG.SI>. "Healthcare is defensive because people always need healthcare, so demand is not cyclical. And it is a growth industry because as people get richer they spend more on healthcare," he added. Raffles Medical, which posted a 20 percent rise in second-quarter profit last week, is expanding its flagship hospital in Singapore and has opened a medical centre in Shanghai. Healthway Medical Corp <HEMC.SI> is on track to open six medical centres in Shanghai and is eyeing other cities. "The healthcare firms are generally trading at higher valuations," said Lynette Tan, an analyst at DMG & Partners. She said these valuations had not been seen for a long time "but as long as the companies can still perform and their strategies come through, they might not be that expensive at all." Tan has buy ratings on Raffles Medical, Healthway Medical and Thomson Medical. TOO RICH FOR OTHERS "We believe growth in hospital and healthcare services is starting to show a deceleration," said James Tan, an analyst at Deutsche Bank. For the year to date, shares of Parkway and Raffles Medical have surged around 35 percent. Thomson Medical Centre <THOM.SI> has risen by about 21 percent and Healthway has gained more than 50 percent, outperforming the benchmark Straits Times Index's <.FTSTI> 3 percent. Tan has a "hold" rating on Raffles Medical. He said the stock is trading above its fair value and close to its long-term average of 23.6 times. The bank's revised target price of S$1.58 implies 22.3 times Raffles Medical's price-earnings ratio for its 2010 financial year. Lau Seu Yee, a Standard and Poor's analyst, warned about the threat from a possible slowdown in the United States and Europe economies and also of competition from neighbouring countries. "There is also competition (in the healthcare sector) from lower-cost places like Johor Bahru in Malaysia, Thailand and India," Lau said. For Parkway, analysts are calling for investors to reinvest proceeds from the general offer into other healthcare firms, given their estimated price-to-earnings multiple of 31 times 2010 earnings for the firm. ($1=1.362 Singapore Dollar) (Editing by Raju Gopalakrishnan and Valerie Lee) ((eveline.danubrata@thomsonreuters.com; +65 6403 5669; Reuters Messaging: (eveline.danubrata.reuters.com@reuters.net) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.co Keywords: BUYSELL/SINGAPOREHEALTH

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Fitch warns of growing bank risks in China

Business Times - 16 Jul 2010

Many engage in complex deals that hide size, nature of their lending, masking a coming wave of bad loans

(SHANGHAI) A week after the Agricultural Bank of China raised nearly US$20 billion from global investors in one of the biggest stock offerings in history, analysts are warning about growing risks to China's banking system.

A report released on Wednesday by Fitch, the credit ratings agency, said Chinese banks were increasingly engaging in complex transactions that hid the size and nature of their lending, obscuring hundreds of billions of dollars in loans and possibly even masking a coming wave of bad real estate and infrastructure loans.

The report also said that Chinese regulators significantly understated loan growth in the first half of the year, by 28 per cent, or about US$190 billion, and that many banks continued to secretly shift loans off the books, resulting in a 'pervasive understatement of credit growth and credit exposure.'

'The growing amount of credit moving out of the banking system through these channels is one of the most disconcerting trends we've seen in China in recent years,' Charlene Chu, a Beijing-based banking analyst at Fitch, said of the practice of repackaging loans and moving them off bank balance sheets.

While China's economy remains robust, the report is troubling because the country's recovery has been fuelled by aggressive lending and soaring property prices. Lending by state-run banks was one of China's most aggressive forms of economic stimulus last year, but analysts constantly warned that banks could face the risk from overbuilding and nonperforming loans.

Beijing is trying to tame housing prices, rein in overly aggressive lending and stop banks from shifting loans off their books.

China's biggest banks, like Bank of China and China Construction Bank, are relatively healthy, analysts say. But many banks could face sizable risks if borrowers failed to repay the loans.

The Fitch report does not name any banks specifically, but it raises concerns about the health of China's banks as many begin to raise capital through initial public offerings. The Agricultural Bank yesterday began trading in Shanghai, while three other big state banks, including the Bank of China, have each raised billions of dollars in public listings in the last five years.

Analysts say that trying to rein in growth is a delicate and precarious balancing act and that even regulators are struggling to keep up with the rapid innovation in the banking system.

Chinese banks reported a sharp drop in lending in the first half of the year after record amounts in 2009, suggesting that the economy was growing at a strong clip with more normalised lending.

But Fitch said on Wednesday that lending had continued to be aggressive - powering the economy, but raising the risk of non-performing loans.

Much of the lending through off-balance-sheet channels is fuelled by privately owned trust companies that are partnering with banks and engaging in complex deals that involve repackaging loans into investment products - akin to an informal type of securitisation.

The deals are essentially disguised loans, analysts say. Beijing has tried repeatedly to stop the practice, but analysts say that banks and trust companies have come up with innovative ways around the rules.

Last week, the China Banking Regulatory Commission ordered banks to stop working with trust companies to securitise or repackage loans, according to industry analysts. But the regulator made no official announcement.

A spokesman in Beijing for the commission declined to comment on Wednesday.

Analysts are examining what appears to be a widespread practice of funnelling billions of dollars into real estate and government infrastructure projects through off-balance-sheet deals with trust companies.

Stephen Green, a Shanghai-based analyst at Standard Chartered Bank, said trust companies in China were acting as intermediaries and partnering with banks to raise and then lend money to a variety of projects.

According to his estimate, trust companies raised hundreds of billions of dollars in 2009 and the first five months of 2010, partly because depositors were frustrated by low interest rates at banks, and trust companies were willing to offer double that amount with the principal guaranteed.

Mr Green called the practice troublesome.

Worries about a potential wave of bad loans have led regulators to pressure Chinese banks to raise more capital and strengthen their balance sheets.

Banks have also been pressed to lower their exposure to local government debt - money often raised for huge infrastructure projects.

But analysts now say they believe that banks are lowering their exposure to local debt and hiding the size of their lending by working even more aggressively with trust companies.

Analysts say that last year the process worked something like this: A bank would hand over a big loan, say US$50 million, to a private trust company in exchange for US$50 million in cash. Then the trust company would create a wealth management product out of the loan and give it to the bank to sell to investors and depositors. The money raised would be given back to the trust company.

Investors would receive as much as double the regular saving rate and their principal when the loan was repaid.

That US$50 million would then be given to the trust company as if it were an investment; in fact, it was a short-term, high-interest loan to finance a real estate project.

Now, analysts say, to get around new regulations, the transactions are much more complex, but have the same aim - to pretend that a loan is an investment.

If the developer or trust company fails and cannot repay the loan, analysts say the banks could face huge, unrecognised risks. But curtailing the practice will not be easy, Ms Chu at Fitch Ratings said\. \-- NYT

Copyright © 2010 Singapore Press Holdings Ltd. All righ

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Temasek, Hopu invest US$247m in China pork firm: source

Business Times - 22 Apr 2010

HONG KONG - Chinese buyout firm Hopu and Singapore wealth fund Temasek have bought US$247 million worth of shares in China Yurun Food from the pork producer and distributor's controlling shareholder, a source said, in a move aimed at tapping the country's booming consumer market.

Willie Holdings, the controlling shareholder of Yurun, one of China's largest pork distributors, is selling 166 million of its shares at a 9 per cent discount to Yurun's closing price on Wednesday, netting HK$3.96 billion (US$510.3 million).

Hopu Investments, run by Chinese dealmaker Feng Feng Lei and former Goldman banker Richard Ong, has taken up US$167 million worth of the shares, a source close to the deal said.

Temasek has bought US$60 million worth of shares and its investment arm, Seatown, has taken up worth US$20 million, the source, who declined to be identified because of the sensitive nature of the deal, said.

Yurun did not identify the investors in the share placement. Hopu declined to comment, while Temasek and Seatown were not available for comment.

Hopu was one of two Chinese entities that invested about US$800 million in July for a 20 per cent stake in China Mengniu Dairy. Mengniu was one of the Chinese dairies found to have sold milk containing melamine during the 2008 tainted milk scandal, a discovery that sent its shares down nearly 70 per cent.

A month before Hopu's deal for Mengniu, private equity firm Kohlberg Kravis Roberts & Co completed a series of investments in Ma Anshan Modern Farming Co Ltd, a leading dairy farm company headquartered in China's central Anhui province.

Private equity and investment firms have, for the past several years, tried hard to put money into China's booming consumer sector, though, surprisingly, few of these deals have been completed.

Brothers-in-arms
Seatown is run by Richard Ong's brother Charles Ong, who was previously Temasek's chief strategist.

The investment in China Yurun is now one of several deals connecting the Ong brothers.

While Charles was at Temasek, the fund and Hopu bought a stake in Iron Mining International, an iron ore producer.

Temasek and Hopu were also among the buyers for Bank of America's US$7.3 billion stake in China Construction Bank in May.

The stake of Willie Holdings, which is selling the 166 million China Yurun shares at HK$23.88 each and will buy 90 million new shares on completion of the sale at the same price for $277 million, will be reduced to 29.98 per cent on completion of the transactions from 36.14 per cent now.

China Yurun said it will use the net proceeds to expand its production capacity.

Morgan Stanley and UBS are the share placement agents.

China Yurun shares fell 10.5 per cent to a four-week low of HK$23.50 on Thursday morning. They trimmed the losses to trade at HK$24 by midday.

The shares had risen 14.13 per cent from the start of 2010 through Wednesday's close, bucking a 1.65 per cent drop in the broader market. -- REUTERS

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FACTBOX-Five facts about Pulverised Coal Injection (PCI) 09 Apr 2010 09:50

April 9 (Reuters) - Australian miner New Hope Corp <NHC.AX> launched a $3.45 billion offer for Macarthur Coal <MCC.AX>, topping an earlier offer from U.S. coal miner Peabody Energy <BTU.N>. Singapore-listed Noble Group <NOBG.SI> is waiting in the wings with a deal to take a one-quarter stake in Macarthur. [ID:nSGE6370MK]

Macarthur is the top producer of specialty pulverised coals, and the world's biggest exporter of PCI coal, much in demand from major steelmakers.

Following are some key facts about Pulverised Coal Injection (PCI)-type coal:

* PCI coal is crushed (pulverised) into a fine powder and injected into blast furnaces as a replacement for coke in the production of pig iron.

* Typically, 1 tonne of PCI coal can replace 1.5 tonnes of more expensive coking coal.

* PCI coal has been the fastest growing segment of the coal market since the 1990s.

* Miners have struck 2010 contract PCI prices of $170-$180 a tonne, around double the previous year's level amid red-hot demand from China's steel sector.

* Macarthur Coal is the world's biggest supplier of PCI coal for the seaborne market. (Reporting by James Regan, Editing by Ian Geoghegan)

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