Daily Morning Watch - 31 August 2012

SINGAPORE

City Developments Ltd (CIT) announced it is selling an industrial site in Singapore's northwestern Kranji area jointly with Hong Leong Investment Holdings to BS Capital Pte Ltd for S$240M.

US indices fell on Thursday pressured by technology hardware & equipment and semiconductors & semiconductor equipment sectors. On the US economic data front, initial jobless claims were unchanged at 374,000 (370K expected) in the week ended August 25th. Personal income rose 0.3% MoM as expected in July while personal spending increased 0.4 MoM (+0.5% expected). Regarding US stocks, Pandora Media (P US +14.29% to $11.52) announced its 2Q revenue was up 51% YoY to $101M with a LPS of $0.03 compared with a LPS of $0.04 a year ago. Separately, Gap (GPS +2.67% to $36.11) said August net sales increased 9% YoY to $1.2B. Comparable sales for August were up 9% compared with a 6% decrease for August 2011.

In Europe , in Euro Zone, the economic sentiment index declined to 86.1 in August from 87.9 in July. The consumer confidence fell to -24.6 in August from -21.5 in July. Confidence in services fell to -10.8 in August from -8.5 a month ago. In Germany , the unemployment increased 9,000 to 2.90 million in August from July. The jobless rate remained unchanged at 6.8% in August. Regarding stocks, WPP dropped after the company cut its sales-growth forecast. Carrefour and Vivendi climbed after earnings topped analyst estimates. This morning, the Nikkei225 index opened lower, and broke below its 20-day moving average.

CHINA - HK

Hong Kong 's July retail sales grew 3.8% YoY to HK$36.5B in value (+11.0% to HK$34.8B in June) and were up 1.3% in volume (+8.5% in June) according to the government.

ICBC (1398) posted 1H net income up 12.5% YoY to 123.2B yuan. Net interest income increased 16.9% to 204.0B yuan while net fee & commission income climbed 1.9% to 54.8B yuan. ROE declined to 24.31% from 25.12% a year earlier. Core capital adequacy ratio rose to 10.38% at end-June from 10.07% at end-December, while non-performing loans ratio declined to 0.89% from 0.94%.

Bank of Communications (3328) reported 1H net income up 17.8% YoY to 31.1B yuan. Net interest income grew 17.8% to 58.4B yuan and net fee & commission income was up 12.4% to 11.0B yuan. ROE rose 1.30 percentage points over the half year to 21.82%, core capital adequacy ratio climbed to 9.58% from 9.27%, while impaired loans ratio was down to 0.82% from 0.86%.

CITIC Securities (6030)'s 1H net income fell 24.4% YoY to 2.2B yuan on revenue of 6.4B yuan, down 23.2%.

China Railway Group (390) posted 1H net income down 2.2% YoY to 2.4B yuan on revenue of 190.9B yuan, down 11.0%. 1H net contracted signed amounted to 290.4B yuan, up 21.7%. Separately the Co said it has agreed with parent group China Railway Engineering Corp (CRECG) to jointly set up China Railway Finance "for the purpose of providing capital and financial management services to the CRECG Group". The Co will contribute 1.4B yuan, or 95% of total, to the JV's registered capital.

Huadian Power International Corp (1071) announced 1H net income surged 169.0% YoY to 284M yuan on turnover of 29.4B yuan, up 11.5%, citing "the increase in the power generation and the tail-raising effect of on-grid tariffs adjustments in 2011".

Zoomlion Heavy Industry Science and Technology Co (1157) said 1H net income rose 21.5% YoY to 5.6B yuan on turnover of 29.1B yuan, up 20.6%.

Metallurgical Corp of China (1618) swung to a 1H net loss of 186M yuan from a net income of 2.0B yuan in the previous year on revenue of 106.8B yuan, up 1.0%.

Weichai Power Co (2338)'s 1H fell 45.8% YoY to 1.9B yuan on revenue of 27.1B yuan, down 26.1%. The Co pointed out: "Affected by the downturn of the heavy-duty truck market, the Cos aggregate sales of heavy-duty truck engines amounted to 126,300 units during the Period, representing a YoY decrease of 39.9%."

China Eastern Airlines Corp (670) announced 1H net income plunged 64.6% YoY to 807M yuan and operating profit dropped 21.3% to 1.8B yuan on revenue of 40.2B yuan, up 5.6%.

Beijing Enterprises Holdings (392) posted 1H net income up 10.2% YoY to HK$1.8B on revenue of HK$18.2B, up 16.0%. Gas sales increased 21.4% to HK$10.3B while beer sales were up 13.5% to HK$7.7B.

Shanghai Industrial Holdings (363) reported 1H net income down 19.8% YoY to HK$2.5B on revenue of HK$6.2B, down 16.3%, citing "the continued slowdown in real estate sales against Chinas related policies".

Chow Sang Sang Holdings International Ltd (116) unveiled 1H net income down 11.5% YoY to HK$439M on turnover of HK$9.1B, up 9.8%. Jewellery retail was up 26.5% to HK$7.3B. The Co said: "Hong Kong and Macau accounted for 59% of the turnover from jewellery retail of which 52% might attribute to visitors from the Mainland. Same store growth in turnover was 16%."

Semiconductor Manufacturing International Corp (981) swung to a 1H net loss of $36M from a net income of $7M a year earlier on sales of $755M, up 4.4%.

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