Asian Weekly News

Week ended 27 January 2011

Australia: Rio Tinto became the major shareholder of Canada’s Ivanhoe Mines, which has been expanding gold and copper assets in Asia. BHP Billiton received conditional approval to expand capacity at its harbour in Western Australia to boost iron ore exports to China.

China/Hong Kong: CNOOC, US-based ConocoPhillips and the Chinese government will settle compensation claims relating to the oil spill in Bohai Bay, with ConocoPhillips bearing the bulk of the costs. The move paves the way for production to resume.

India: In a landmark case, the Supreme Court overturned a Mumbai high court judgement requiring Vodafone to pay US$2.9 billion in capital gains tax for its US$10.9 billion acquisition of Hutchison Essar in 2007. The ruling, which is in line with global tax practices, bodes well for foreign direct investments into the country.

In earnings news, HDFC Bank posted solid earnings and loan growth in the December-quarter despite high interest rates. Grasim Industries’ net profits rose sharply as demand recovered; its unit Ultratech Cement’s earnings almost doubled on firmer selling prices. Godrej Consumer Products, Asian Paints and cigarettes maker ITC also delivered resilient results despite moderating domestic growth. Hero MotoCorp was aided by brisk sales of its rebranded motorbikes. Petrochemicals and gas pipeline operator GAIL saw double-digit growth in sales and profits.

Japan: Results of Shin-Etsu Chemical, Fanuc and Canon Electronics met our expectations. Separately, Shin-Etsu plans to set up its first overseas plant in Vietnam to meet regional demand. Kureha will invest ¥90 billion to ramp up resin output used in lithium-ion batteries. Toyota Motor raised its 2012 global sales forecast on expectations of higher demand for hybrid vehicles.

Korea: Samsung Electronics announced a 17% year-on-year rise in fourth-quarter profits thanks to its telecommunications division.

Malaysia: Permodalan Nasional Berhad (PNB) raised its takeover offer for SP Setia to M$3.95 a share. The new deal will see the chief executive stay on to provide management continuity and an opportunity for the developer to increase its land bank.

Philippines: Jollibee Foods completed acquiring a significant stake in Vietnam restaurant chain SuperFoods Group, which owns the Highlands Coffee and Pho24 chains across Asia, as well as the Hard Rock Cafe franchise in Vietnam, Hong Kong and Macau.

Singapore: Rig-builder Keppel Corp’s full-year results were bolstered by the solid performance of its core offshore and marine division, and record orders worth S$10 billion.

Sri Lanka: Aitken Spence finalised the sale of a 30% stake in a port-expansion project in Colombo to China Merchant Holdings on concerns the project would fail to meet initial targets. The move reflects the company’s focus on shareholder returns and should lift third-quarter earnings significantly.

Thailand: PTT Exploration & Production may buy UK-listed Cove Energy, in line with its overseas expansion strategy. Toronto-based Fairfax Financial Holdings will acquire a 25% stake in Thai Reinsurance. HSBC is selling its local retail business to Bank of Ayudhya for 3.56 billion baht. As expected, Kasikornbank and Siam Commercial Bank’s profits expanded on higher loans and decent margins whereas Siam Cement’s earnings were hurt by the floods. Dynasty Ceramic’s full-year results were boosted by higher sales despite a lacklustre fourth quarter.

We hold all the above companies highlighted.