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TBG News Flash for July 12-18, 2008
TBG in the News
Stories from the Chinese media:
Policy and Economy
Alternative Energy
Automotive
Consumer and Agrifood
Financial Services
Industrials
Mining, Oil & Gas
TBG in the News
Western Prospector Endorses Cash Offer of C$74 Million by TBG advisee Tinpo Holdings
Western Prospector Group Ltd. and Tinpo Holdings Industrial Company Limited announced Tuesday an agreement for Tinpo to acquire all outstanding common shares of Western Prospector for C$1.34 per share, valuing the company's equity at approximately C$74 million. The cash offer represents an 86% premium on Western Prospector's closing price of C$0.72 on July 14 and a 130% premium on the unsolicited takeover bid by Khan Resources Inc. in May of 2008.
Western Prospector's Board of Directors unanimously supports the offer. Tinpo has also entered into an agreement with Anchorage Capital Master Offshore Ltd. whereby Anchorage will acquire an equity interest in the new consolidated company in exchange for Anchorage's current 19% stake in Western Prospector. Western Prospector and its subsidiaries are in the business of acquiring, exploring and developing mineral properties. All of its mineral property interests, consisting of various uranium and coal properties, are located in Mongolia.
"Tinpo's offer represents a significant premium to the recent trading price of Western and to Khan's bid. We are pleased that Western's Board of Directors unanimously supports this offer," said Howard Balloch, Financial Advisor to Tinpo. The Balloch Group played a crucial role in the successful negotiations of the support agreement with Western Prospector and the cooperation agreement with Anchorage.
Policy and Economy
More Chinese brands among world's top 500
According to an announcement released on Sunday, fifteen Chinese brands were listed among the world's top 500 brands in 2008. China National Petroleum Corporation, China Merchants Bank and Tsinghua Tongfang were three newcomers to the list, while 12 Chinese brands retained their position from the previous year, including Haier, Lenovo, Industrial and Commercial Bank of China, State Grid, Bank of China, China Life, Changhong, China Railway Group, Air China and Sinopec. China had the seventh largest number of companies on the list, moving up one place from last year. (Summarized from Xinhua News, July 14, 2008)
Alternative Energy
Gansu invests RMB17 billion to develop wind power
Two 1 million kW wind power projects, one in Yumenchangma and the other in Anxi, have recently been inked in Gansu province. The projects are jointly invested in and developed by China Longyuan Electric Power Group Corp. and Gansu Provincial Electric Power Investment Group Corp. The total investment is expected to be RMB17 billion (US$2.5 billion). The annual power generation capacity of the two projects will be 4.7 billion kW-hr when completed, saving 1.86 million tons of coal and 5.6 tons of carbon dioxide emissions each year. (Translated and summarized from BHI.com.cn, July 11, 2008)
Automotive
Japanese and German cars lead import growth
According to China Automobile Trading Co., Ltd., China imported 171,413 cars in the first five months of 2008, a 58.22% over the same period one year earlier. 71.15% of imported cars were Japanese and German. SUV imports increased 91.3%, showing the fastest growth rate of all the imported vehicle models. (Summarized from Gasgoo.com, July 17, 2008)
Consumer and Agrifood
Household contract system for forestry land goes nationwide
China is set to promote a household contract system for the management of collective forestry land and ownership of wood nationwide. Production and management in the forestry industry will be entrusted to farmers through 70-year contracts, while the land and resources will remain under collective ownership. The system comes into effect immediately, and has been recognized as another milestone in the country's transformation of rural industries. China has 2.55 billion mu of forestry land under collective ownership. More than half of the country's population lives in these areas. One of the country's pillar industries, the forestry sector realized an output of RMB1.17 trillion (US$167.1 billion) last year, up 9.85% year on year. (Summarized from Xinhua News, July 15, 2008)
Free bicycles available for tourists in Beijing
Beijing began on Wednesday to supply 10,000 free bicycles for tourists in 119 Olympic contracted hotels. The government encourages residents and tourists to take bicycles or public transport in a bid to create a convenient “Green Olympics” environment during the busy summer of 2008. (Translated and summarized from Beijing Business Today, July 17, 2008)
Financial Services
Auditors to strengthen audit on foreign aid, loans projects
The National Audit Office (NAO) announced in its five year work plan last Friday that it would step up auditing efforts for projects funded by foreign aid or loans and for the country's dispatched agencies overseas to better its financial and accounting management system. The NAO vowed to undertake regular auditing of the country's banking, securities and insurance industries over the next five years. It plans to set up a resource and environmental audit and assessment system by early 2012. (Summarized from China Daily, July 17, 2008)
Industrials
Chinese oil giants continue to receive Value Added Tax rebates
According to sector sources, Chinese oil refining enterprises will continue to receive VAT rebates from the government on imported finished oil in order to guarantee strong gasoline and diesel supply in the third quarter of the year. The Ministry of Commerce has agreed to refund taxes charged on 3.5 million tons of finished oil imported by PetroChina and Sinopec during second quarter. Refining enterprises will receive more than RMB1 billion (US$147 million) in tax refunds. China has raised finished oil price ceilings in hope of encouraging refining enterprises to increase the production of finished oil by reducing profit pressure on them. The continuation of VAT rebate policy will lead to an increase in demand for imported gasoline and diesel from abroad. China imported a record-breaking 960,000 tons of diesel in June. (Translated and summarized from Beijing Business Today, July 17, 2008)
China's LCD TV output surges in first five months
According to the Ministry of Industry and Information Technology, China manufactured 8.359 million LCD televisions in the first five months of 2008, soaring by 60.5% year-on-year and accounting for more than 25% of China's total color television output. In most large Chinese cities, flat panel LCD televisions made up for more than 90% of color television sales. The 2008 Beijing Olympic Games are offering good opportunities for the manufacturing and sales of LCD televisions in the country, as many consumers are buying high-end LCD flat panel televisions to better enjoy the Games. (Summarized from www.chinainfoworld.com, July 14, 2008）
Mining, Oil & Gas
China's smelters agree to cut production by 10%
Following an agreement with aluminum smelters to reduce production through September last week, China's 27 lead and zinc smelters agreed to cut production by 10% between July and September, in a move to prop up market prices and relieve electricity shortages. From January to May this year, China's lead consumption has seen a decrease of 50,000 tons, but the manufacturing capacity continues to see increases. Analysts said lead and zinc smelters will continue to see 2008 and 2009 as challenging times with rapid growth in global mine production and slowed growth in demand. (Summarized from China Daily, July 15, 2008)
Sinopec and CNPC to import 720,000 tons of crude oil in July
China Petrochemical Corporation (Sinopec) and China National Petroleum Corporation (CNPC) plan to import 720,000 tons of crude oil in July (up 19% over June) to meet the demand led by the eastern provinces. Sinopec will supply imported gasoline and diesel oil to markets in Jiangsu, Zhejiang and Fujian Provinces as well as to Shanghai Municipality, while CNPC will transport imported oil to Ningbo, Zhoushan, Nantong and Jiangyin Cities as well as to Shanghai Municipality.（Summarized from www.chinainfoworld.com, July 14, 2008）
For more mining news, read the weekly TBG Resource Flash.
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