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Monday, 20 July 2009, 18:58 HKT/SGT

Source: IRG
IRG Technology, Media and Telecoms Weekly China Market Review

HONG KONG, July 20, 2009 - (ACN Newswire) - The following is the China excerpt from IRG's TMT Weekly Market Review July 13 - July 19. IRG is a financial advisory and investment firm focused on the core growth sectors in Asia with particular focus on the telecommunications, media and technology (TMT) sectors.


- China's Ministry of Commerce (MOC) has not ruled against the proposed merger between Sina and Focus Media; documents for the merger have not yet been put on MOC records. Focus Media CEO Jason Jiang is "quite anxious" about the merger, and said recently that the MOC has continuously asked for more documentation. The companies first submitted an application for their merger in late December 2008.

- As of the end of 2008, China saw a netizen base of 298 million, and an Internet penetration rate of 22.6 percent, outracing the global average level of 21.9 percent.


- A total of 13.21 million mobile phones were sold in China in May 2009, up 9.6 percent from the previous month. The number of GSM mobile phones sold in May increased by 12.5 percent month-on-month to 11.06 million units, while only 2.15 million CDMA handsets, which included 39,800 3G CDMA 1xEVDO handsets, were sold in May, down 3.4 percent from April. The dip in CDMA mobile phone sales is the result of China Telecom's shift in focus from 2G to 3G. In addition, both China Mobile and China Unicom implemented subsidies within their 3G service plans in 2009 to attract more users. Five foreign brands, Nokia, Samsung, Motorola, Sony Ericsson and LG, accounted for a 65.6 percent share of China's mobile phone market in May. Nokia had the largest market share of 31.9 percent last month. Domestic mobile phone manufacturer ZTE was the sixth-largest brand in May with a 3.8 percent market share.

- Z-Obee Holdings, which provides design services for mobile-telephone manufacturers on the mainland, has launched its own handset brand to meet the country's growing demand for stylish wireless devices. The Singapore-listed company's new "Vim" brand for the mainland mobile-telephone market will cater to price-conscious consumers keen on using fashionable, easy-to-operate handsets. The firm's production road map includes launching a new model every 45 days, which would enable it to introduce at least eight models in Hong Kong and on the mainland each year. The initial batch of Vim handsets being introduced on the mainland includes a his and hers model designed for couples that has a text message authentication function. This allows text correspondence between the pair to be decoded with a specific password for privacy. Each Vim handset has a voice diary function, allowing users to record appointments on the phone and be automatically reminded by the device at the designated time.


- China Mobile Ltd. will invest 70 billion yuan (US$10.2 billion) in building and upgrading its telecommunications networks, and promoting the use of its 3G services in the country's vast rural areas over the next three years. The ministry will help it promote the adoption of 3G-enabled applications in rural areas.

- China's three telecoms carriers, China Mobile, China Unicom and China Telecom, injected more than 100 million yuan (US$14.6 million) in online advertising for two consecutive months of May and June. Their online ads expenses amounted to 198 billion yuan in May, when it welcomed the World Telecommunications Day on May 17, and China Unicom started trial operation of WCDMA. China Unicom's online ads input reached 78.79 million yuan on that month. In the same period, the carriers paid large amount of money in TV advertising as well, shouldering into prime time of CCTV, China's leading television station. Their expenses on online advertising fell, but still stayed above 100 million yuan to 115 million.

- ZTE Corp. has captured 34 percent of the latest 8.6 billion yuan (US$1.3 billion) 3G network expansion tender by China Mobile Communications Corp. Huawei Technologies won 22 percent while partner Nokia Siemens Networks claimed 7 percent. Datang Mobile Communications Equipment and domestic partner FibreHome Technologies ranked third with a 21 percent share. The rest went to China Putian, New Postcom and Ericsson, each winning five to six percent. ZTE and Huawei were helped by their offers of a free upgrade in China Mobile's existing TD-SCDMA equipment, which was installed in the previous two phases of network construction. Industry watchers said China Mobile's preference for supporting domestic vendors and homegrown technologies also enabled ZTE, Huawei and Datang to take a bigger share. As a result, foreign vendors' share was shrinking. The latest tender was the third by China Mobile for a network covering 200 cities or 70 percent of the areas on the mainland. The original contract size was about 8.6 billion yuan for the installation of 39,000 base stations.

- China Unicom aims to go up against market leader China Mobile for high-end users as early as October, thanks to its exclusive sales agreement for the popular Apple iPhone handset. Unicom and Apple are expected to announce a schedule for the iPhone's introduction soon. Meanwhile, industry sources have confirmed that Apple has already submitted the device to a Ministry of Industry and Information Technology laboratory for official approval. Unicom and Apple could not be reached for comment on the deal, but telecommunications sources said Unicom would launch the handset in the fourth quarter when its 3G mobile network will cover 284 cities across the country, up from 55 cities at the end of last month. The full commercial launch of its 3G network plus the exclusive deal with iPhone is expected to put pressure on China Mobile to defend its high-end users.


- Greater China is expected to see an almost fourfold increase in demand this year for mini-notebooks, commonly known as netbooks, as computer makers aggressively market the low-cost devices amid the economic downturn. That growth spurt is likely to boost sales for the market's leading notebook personal computer suppliers - including mainland Lenovo Group, Hewlett-Packard, Dell, Toshiba, Acer and AsusTek Computer and operators of high-speed 3G mobile networks. Netbook shipments on the mainland, Hong Kong and Taiwan are forecast to hit 3.9 million units, up nearly 260 percent from 1.1 million units last year. The market research firm said total industry shipments would reach nearly 33 million units, up from its earlier estimate of 27 million units. That would result in a global netbook penetration of about 20 percent and flat year-on-year demand for pricier, full-featured laptops. Many buyers were adjusting their discretionary spending and were buying netbooks as lower-priced alternatives to traditional laptops. Netbooks are smaller than typical laptops, carry few software applications and are mainly used for wireless internet access.

- Lenovo Group plans to expand its sales network coverage from more than 100 Indian cities to more than 300 within 2009. The company is currently restructuring to divide its global business into mature and emerging markets. Lenovo previously will open 30 retail locations in India to bring its store total to 150 and expand its service centers from 130 to 250.

- Shenzhen-based Coship Electronics Co., Ltd. has won an order worth US$21 million from EMB, an old customer in South America to supply digital TV set-top boxes. The order from EMB represents about 6.79 percent of Coship's total operating revenue in the entire 2008 and is the first overseas contract that Coship makes public this year. In November 2008, Coship got a set-top box order valued at US$12.21 million from the South American company. Coship had sold set-top boxes worth 120 million yuan (US$17.5 million) to EMB as of June 30, 2009, eight months after it secured the first order from the latter. The Shenzhen company, engaged in the production and sales of digital TV equipment and electronics, saw its digital TV set-top box software and hardware sales revenue account for 93.94 percent, 96.83 percent, and 95.94 percent of its revenue from major business in 2003, 2004, and 2005, respectively.

- TCL Corp. said that its net profit may plunge 80 percent from a year earlier to 85 million yuan (US$12.4 million) during the first half of this year. TCL Communication Technology Holdings Ltd, one of TCL's subsidiaries, saw sales of handsets and accessories slide 12.32 percent year on year to 1.02 million units last month, while its first-half sales declined 24.69 percent from a year earlier to 5.06 million units. TCL Multimedia Technology Holdings Ltd, another subsidiary of TCL Corp, sold 616,898 LCD TVs in June, up 60.3 percent from a year earlier, and 342,353 CRT TVs, down 56.1 percent year on year. TCL sold more than 2.31 million LCD TVs in the first five months of this year, representing a year-on-year increase of 103.7 percent. The sales volume of LCD TVs in the first five months accounts for nearly 60 percent of the company's sales in 2008.

Alternative Energy

- Suntech Power Holdings plans to invest 30 billion yuan (US$4.4 billion) in the four projects with a combined capacity of 1.8GW that it signed up to in recent weeks. The money represents just the initial investment. China's long term plan for the PV industry is 70 percent of projects will be on-grid and 25 percent building integrated PV.

- LDK Solar Co. has purchased a 70 percent stake in Italian systems integrator Solar Green Technology for an undisclosed sum. The move is expected to enhance LDK Solar's presence in the Italian photovoltaic sector. In addition, the deal will help Solar Green Technology grow further through its partnership with LDK Solar for several projects in Italy and Europe.

- ReneSola Ltd. has successfully commenced trial production on the first batch of polysilicon from Phase 1 of its two-phase, 3,000 metric ton annualized capacity polysilicon manufacturing facility located in China's Sichuan province. ReneSola's two-phase, 3,000 MT annualized capacity polysilicon manufacturing facility utilizes the Siemens process and a closed loop system to produce polysilicon. Phase 2 of the facility, representing approximately 1,500 MT annualized capacity, is scheduled to reach mechanical completion in September 2009.


- Taiwan's largest phone company Chunghwa Telecom Co. expects its income before tax to be NT$11.8 billion (US$358.8 million) in the third quarter and revenue in the third quarter to be NT$45.85 billion (US$1.4 billion), down 1.8 percent on year, due to the economic slowdown, stiffer competition among peers, and tariff reductions imposed by the telecom regulator. The company's operating cost is expected to increase 5 percent on year in the third quarter, mainly due to higher electricity rates and increased handset costs.

- Hon Hai Precision Industry Co., Ltd. posted better-than-expected sales of NT$128 billion (US$3.9 billion) for June, sharply up 39.7 percent from NT$91.6 billion (US$2.79 billion) in May and 19.1 percent from last June to hit a single-month high of this year. Institutional investors indicated that as shortages of supply of key electronic components, like display panels, have been easing recently, Taiwan's major EMS providers and IT product suppliers hence have seen their shipment and sales significantly turn around in June. Hon Hai reported aggregate revenue of NT$592 billion (US$18.05 billion) for the first half of this year, effectively improving its revenue decline to only 3.79 percent from a year earlier. Edmund Ding, spokesman for the Hon Hai Group, noted that increasingly strong demand for PCs and consumer electronics, like Apple's iPhone 3GS, has helped to fuel his firm's sales growth in the month.

- Flextronics International Ltd. plans to add 1,500 Taiwan-based research and development employees before the end of 2009 as the company seeks to expand its notebook computer contract manufacturing business, Peter Ju, general manager at its notebook division. Flextronics, which competes with the Foxconn Group to make electronics for clients including Dell and Hewlett-Packard, expects its notebook computer shipments and revenue to grow by double-digits in 2009 from a year earlier. Flextronics plans to increase its notebook computer manufacturing capacity to 1.5 million units a month in the second half of 2010, sharply higher from its monthly production capacity of around 300,000 units earlier this year. Flextronics hires 700 R&D workers in Taiwan, most of whom develop desktop PC products.

- With demand for LED (light emitting diode) staying strong, Epistar Corp. scored a single-month high of NT$1.147 billion (US$34.98 million) in sales for June, up 17.2 percent from May and 35.7 percent from last June. The firm has total sales of NT$3.1 billion (US$94.9 million) for the second quarter of this year, surging 50 percent from the first quarter. However, affected by a slow market in the first quarter, the firm suffered a 7.52 percent annual decline in its aggregate revenue to NT$5.1 billion (US$156.7 million) in the first half of the year. Epistar indicated that popularity of LED backlights used in notebook PCs and LCD (liquid crystal display) TVs has boosted market demand for LED chips. Epistar's Taiwanese counterpart Formosa Epitaxy Inc. also saw its June revenue hit a record high of NT$168 million (US$5.123 million), up 3.95 percent from May and 35.8 percent from last June. Formosa posted aggregate revenue of NT$466 million (US$14.21 million) for the second quarter and NT$708 million (US$21.59 million) for the first half of the year.

- Delta Electronics, Inc. recently participated in local DynaPack's private fund raising. DynaPack is the second-largest maker of notebook PC lithium-ion battery packs in Taiwan. The firm issued NT$1 billion (US$30.6) worth of convertible bonds, in which Delta bought the majority of NT$860 million (US$26.5 million). Industry sources pointed out that Delta's move is not aimed at notebook PC battery business but the high-potential automotive battery field. Delta claimed that major considerations of its investment in DynaPack include good operation efficiency and strong battery-cell packaging capability of the investment target. Delta lacks such technologies and the investment also opens possible future partnerships.

Hong Kong

- Richard Li Tzar-kai, chairman of PCCW Ltd, the biggest telecom carrier in Hong Kong, recently again raised his shareholding in PCCW to 28.75% from the previous 28.74%, according to the bourse operator Hong Kong Exchanges and Clearing. HKEx said that Li bought 744,000 shares of the company on July 10 for HK$1.48 million (US$0.19 million). The average share price of the transaction was HK$1.99 apiece. This is the fifth time Li has increased his stake in PCCW since the buyout offer for the telecom operator was rejected. On July 7, Li bought 2.614 million of PCCW shares for HK$4.31 million (US$0.56 million) with an average share price of HK$1.99 and on July 3, Li bought 4.28 million shares of PCCW at HK$1.989 per share.

Topic: Corporate Announcement
Source: IRG

Sectors: Media & Marketing, IT Individual, Wireless, Apps
From the Asia Corporate News Network

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