Mainland stocks were pummeled yesterday, entering a technical bear market amid rumors of imminent tightening measures, and the turmoil spread to Hong Kong. The Shanghai Composite Index plunged 125.300 points, or 4.3 percent, to end the day at 2,785.584. The Shanghai and Shenzhen bourses were the worst-performing markets in Asia. Rumors swirled yesterday that China's Vice Premier Wang Qishan had met with the heads of the mainland securities, banking and insurance regulators to discuss upcoming tightening policies. The market was also abuzz with talk that Beijing will clamp down on illegal funds entering the property market. In Hong Kong, the Hang Seng Index shed 1.7 percent, breaking through the 20,000 level to close at 19,954.23, down 352.04 points. The Hong Kong dollar softened during the day as some funds flowed out of the territory.
Basic Materials: Anhui Conch Cement (914 HK) said first-half net profit fell 2.33 per cent year-on-year to 1.27 billion yuan, dragged by a drop in selling prices and gross margin. The company proposes no interim dividend. In facing the rapid competition in the market, the company will maintain its business strategies in the western part of China that raise its operating efficiency. Qunxing Paper (3868 HK) expected its gross profit margin to stay at 28 per cent in the second quarter, similar to that in the first quarter, as prices of raw materials are likely to remain steady in the near term. The company earlier reported a net profit of 149 million yuan in the first half, down 21 per cent from a year earlier, but gross profit margin rose 2.7 percentage points on lower raw materials prices. Qunxing Paper is currently debt-free and holds a net cash of HK$1.2 billion. It plans a capital expenditure of HK$656.1 million and HK$459.4 million respectively for this and next year.
Financials: Bank of Communications (3228 HK) China’s fifth-largest lender, recorded a net profit of 15.56 billion yuan for the first half, edging up 0.3 per cent from a year earlier. The company attributed the net profit, though lower-than-expected, to an offset of net interest margin squeeze by its growth in new loans. Earnings per share were 0.32 yuan. An interim dividend of 10 fen per share was declared.
Properties: Beijing North Star (588 HK) said it posted a 425 per cent surge in interim net profit to 786 million yuan, due to good sales in mainland properties. Contract sales amounted to 1.6 billion yuan in the first half, which accounts for 57 per cent of the company’s full-year target. Shanghai Forte (2337 HK) posted a net profit of 286 million yuan for the first half, surging 697 per cent year-on-year on a recovery of mainland property market and good sales.The developer had acquired three pieces of new lands in the period and its land reserve was now 10.8 million sq ft, it said.
Consumer: Golden Eagle (3308 HK) reported a net profit of 75 million yuan for the first half, down 78 per cent from a year earlier. No interim dividend was declared. Ju Teng International (3336 HK), a seller and manufacturer of computer shells, said its interim net profit grew 2.2 per cent year-on-year to HK$290 million for the year ended June 30.Turnover was down 8.9 per cent to HK$3.12 billion. The basic earnings per share was HK$0.283. The company has no plan to list in Taiwan, given that Hong Kong is more international, it said. Vinda International Holdings (3331 HK), one of China’s leading toilet paper, facial tissue and napkin makers, it expected net profit for the first half to grow significantly from HK$61.76 million a year earlier. The company attributed the improvement to low raw material costs and growth in sales. Vinda closed up 4.49 per cent at HK$5.12 yesterday on the news.
ZTE Corporation (763 HK), an I.T. hardware corporation in China, announced a first-half net profit of 783 million yuan, up 40 per cent from a year earlier. Earnings per share were 45 fen. The company proposes no interim dividend. ZTE said its net profit rise was attributable to the release of 3G licenses in the mainland which lead to an increase in the investment in 3G facilities.
BYD (1211 HK) announced yesterday the appointment of Mr. David L. Sokol as non-executive director of the company, effective from August 4. Sokol, 52, is chairman of MidAmerican Energy, Johns Manville and NetJets, each subsidiaries of Berkshire Hathaway, which is controlled by billionaire investor Warren Buffet.
Advanced Semiconductor Manufacturing (3355 HK)’s loss widened to 56.1 million yuan in the first half from 6.6 million yuan a year earlier on declining demand. The company, however, made a profit of HK$17.9 million in the second quarter, against a first-half loss of HK$80 million. The company expected to see a stable performance in the third quarter, it said.
China Shipping Development (1138 HK) reported a net profit of 613 million yuan for the six month ended June 30, plunging 80 per cent compared with a year ago. Earnings per share were 18 fen. The company proposes no interim dividend. The dive was mainly due to the shipping market downturn, the company said. The company expects its net profit for the first three quarters to drop 50 per cent from a year earlier.
Sources: Sing Tao Finance, Hong Kong Economic Journal, Hong Kong Economic Times, The Standard