26 August 2008

Morning Bulletin News Headlines

Analysts: Edward FUNG 852-2268-0632 • Discount Table - “A” and “H” shares ...... 2 [email protected]

• Life (2628 HK, HK$27.85) - 1H08 results ...... 3 Ivan CHEUNG, CFA 852-2268-0634 [email protected] • Datang International (991 HK) - 1H08 interim results preview and Tariffs adjustments...... 4 Ivan LI 852-2268-0641 • China Yurun Food (1068 HK) - HK$450 3-year term loan facility ...5 [email protected]

Larry GRACE • Lung Kee (255 HK, HK$3.68) - 1H08 interim results better than our 852-2268-0630 expectation...... 5 [email protected] • (762 HK, HK$14.12) and China Netcom (906 HK, TAM Tsz Wang, CFA 852-2268-0636 HK$21.0) - 1H08 interim results...... 6 [email protected] • Xinyu Hengdeli (3389 HK, HK$2.86) - 1H08 results preview ...... 7 Emily LEE 852-2268-0631 • Yanzhou Coal (1171 HK) plans to continue to boost sales to steel, [email protected] avoiding price caps ...... 7

• Crude gains US$1 on Hurricane fears, though US inventory builds expected ...... 8

• Regal REIT (1881 HK, HK$1.53) - 1H08 net distributable income Index Indicator rose 106%...... 8

HSI 21,105 • Nagacorp (3918 HK) 1H08A results review ...... 9 HSCEI 11,324 Light Crude 113.15 • PetroChina To BUY 50% Of International JV For $11.8B ...... 10

ADRs • Significant Insiders...... 11 Last %Chg HSBC 76.95 +0.40 • Short Selling Record ...... 15 59.50 -0.42 Petrochina 125.64 -2.23 30.10 +0.67 CNOOC 141.39 +0.24 Hutchison 46.15 +0.65

Cheung Kong 13.25 +0.76

China Life 52.84 -0.73

Morning Bulletin 26 August 2008

Discount Table - “A” and “H” shares

H-share A - share A - share closing Equity closing closing Equity H -share price turnover A - share price price turnover stock (HK$) (HK$) stock (Rmb) (HK$) (Rmb) Discount Company name code 25 Aug 08 25 Aug 08 code 25 Aug 08 25 Aug 08 25 Aug 08 /(Premium) Tianjian Capital 1065 HK 1.32 5,436,220 600874 ch 5.74 6.55 33,467,570 79.84% Nanjing Panda 553 HK 1.44 853,220 600775 ch 6.18 7.05 23,024,010 79.58% Yizheng Chem 1033 HK 0.91 9,778,060 600871 ch 3.84 4.38 1,862,628 79.23% North East Electric 42 HK 0.79 92,040 000585 ch 2.78 3.17 29,605,100 75.09% Beijing Printing 187 HK 1.02 14,320 600860 ch 3.50 3.99 2,076,075 74.46% China Eastern 670 HK 1.58 17,085,960 600115 ch 5.37 6.13 40,969,780 74.21% Jingwei Textile 350 HK 1.15 777,400 000666 ch 3.80 4.34 5,912,149 73.47% Shangdong Xinhua 719 HK 1.37 112,200 000756 ch 4.16 4.75 3,332,705 71.13% Beijing N Star 588 HK 1.66 2,091,280 601588 ch 3.98 4.54 51,651,040 63.44% Shanghai Petrochem 338 HK 2.40 22,017,230 600688 ch 5.53 6.31 12,018,470 61.96% China Southern 1055 HK 2.46 25,986,520 600029 ch 5.57 6.35 134,922,300 61.29% Guanzhou Phar. 874 HK 4.20 1,498,610 600332 ch 8.60 9.81 7,190,660 57.19% Jiaoda Hightech 300 HK 5.40 1,547,301 600806 ch 10.55 12.04 4,766,663 55.14% China Shipping 2866 HK 1.97 100,151,600 601866 ch 3.78 4.31 30,670,040 54.32% Huadian Power 1071 HK 2.18 46,028,080 600027 ch 4.00 4.56 10,261,390 52.23% Chongqing Iron 1053 HK 2.23 5,455,906 601005 ch 4.06 4.63 5,806,046 51.86% China Oilfield 2883 HK 9.70 222,422,800 601808 ch 17.22 19.65 21,777,370 50.63% Air China 753 HK 3.75 68,502,500 601111 ch 6.11 6.97 132,905,700 46.20% Datang Power 991 HK 4.70 207,780,700 601991 ch 7.19 8.20 23,992,380 42.70% Chalco 2600 HK 6.71 247,172,000 601600 ch 9.91 11.31 64,825,210 40.65% Jiangxi Copper 358 HK 11.40 262,214,600 600362 ch 16.30 18.60 45,595,440 38.70% Petrochina 857 HK 9.94 1,685,090,000 601857 ch 13.61 15.53 130,732,800 35.99% Tsingtao 168 HK 16.00 54,391,050 600600 ch 21.56 24.60 22,570,220 34.95% Maanshan 323 HK 3.18 183,356,400 600808 ch 4.26 4.86 40,141,720 34.57% Guanzhou Ship 317 HK 13.52 13,077,400 600685 ch 17.88 20.40 26,968,610 33.72% Shenzhen Expressway 548 HK 3.90 3,975,126 600548 ch 5.12 5.84 5,773,885 33.24% Sinopec 386 HK 7.82 1,013,981,000 600028 ch 10.13 11.56 196,172,600 32.34% Guangshen Rail 525 HK 3.20 38,697,010 601333 ch 3.86 4.40 23,861,900 27.34% Citic Bank 998 HK 4.65 268,227,400 601998 ch 5.35 6.10 54,194,130 23.82% Yanzhou Coal 1171 HK 12.34 353,752,700 600188 ch 14.15 16.14 73,844,980 23.56% Weichai 2338 HK 33.95 50,823,600 000338 ch 38.70 44.15 126,702,100 23.11% China South Locomotive 1766 HK 2.89 684,035,500 601766 ch 3.27 3.73 779,910,300 22.54% Dongfang Electric 1072 HK 24.05 34,367,260 600875 ch 26.85 30.63 47,187,120 21.49% Huaneng Power 902 HK 5.49 171,784,300 600011 ch 6.12 6.98 42,799,720 21.37% 3988 HK 3.31 844,369,200 601988 ch 3.65 4.16 67,021,920 20.51% Shenhua Energy 1088 HK 25.45 559,028,900 601088 ch 27.66 31.56 118,548,700 19.35% China Cosco 1919 HK 14.56 370,093,500 601919 ch 15.03 17.15 248,378,000 15.09% Zijin Mining 2899 HK 5.04 117,274,800 601899 ch 5.00 5.70 132,362,000 11.65% ZTE 763 HK 33.40 210,172,200 000063 ch 32.30 36.85 80,721,690 9.36% Anhui expressway 995 HK 4.95 880,792 600012 ch 4.73 5.40 6,159,844 8.27% Jiangsu Express 177 HK 5.95 39,530,830 600377 ch 5.55 6.33 3,078,407 6.03% Angang 347 HK 10.60 272,438,000 000898 ch 9.84 11.23 42,344,090 5.58% ICBC 1398 HK 5.34 2,178,712,000 601398 ch 4.88 5.57 260,924,900 4.09% China Life 2628 HK 27.85 2,390,368,000 601628 ch 25.24 28.80 321,114,200 3.29% China Railway Group 390 HK 5.92 270,556,900 601390 ch 5.26 6.00 80,154,140 1.35% CM Bank 3968 HK 26.00 689,203,000 600036 ch 23.09 26.34 349,383,900 1.30% China Coal 1898 HK 12.66 254,832,400 601898 ch 10.92 12.46 114,528,300 (1.62%) 939 HK 6.19 2,104,184,000 601939 ch 5.32 6.07 126,794,800 (1.98%) China Ship Dev 1138 HK 18.00 198,998,000 600026 ch 15.00 17.11 78,219,290 (5.18%) China Railway Construction 1186 HK 11.42 129,826,800 601186 ch 9.48 11 204,324,800 (5.59%) 3328 HK 9.07 659,631,700 601328 ch 7.48 8.53 181,371,000 (6.28%) Ping An 2318 HK 53.90 837,568,000 601318 ch 43.47 49.59 522,589,800 (8.68%) Anhui Conch 914 HK 39.00 197,360,400 600585 ch 27.93 31.87 127,447,200 (22.39%) Total 17,443,571,215 4,543,049,492

2 Morning Bulletin 26 August 2008

Market / Corporate News

China Life (2628 HK, HK$27.85) - 1H08 results Analyst comment: Net profit and EPS declined 32% y-o-y to Rmb15.8b and Rmb0.56, respectively. No interim dividend was declared, as seen in 1H07 (Fig.1). BVPS dropped 19% during 1H08, a little bit lower than the 21% drop of Ping An over the same period.

Figure 1: China Life 1H08 results 1H08 1H07 % change Attributable Profit (Rmbm) 15,838 23,289 (32) EPS (Rmb) 0.56 0.82 (32) DPS (Rmb) 0.00 0.00 0 Source: Company data, Kim Eng Securities

China Life did not report a quarterly figure under IFRS, but PRC GAAP figures were available (Fig.2). Note that 1H08 net profit dropped 36% y-o-y under PRC GAAP, but the percentage drop was much lower than the 61% in 1Q08, as 2Q08 profit was much higher q-o-q. IFRS and PRC GAAP certainly differ substantially, but the trend in PRC GAAP profits seems to suggest that earnings are improving.

Figure 2: China Life profit under PRC GAAP (for reference only) Rmbm 1Q07 2Q07 1H07 1Q08 2Q081H08 Net profit 8,887 7,986 16,873 3,474 7,298 10,772 y-o-y change - - - (61) (9) (36) Source: Company data, Kim Eng Securities

Investment income was Rmb19.5 for 1H08, versus Rmb37.2b in 1H07 (Fig.3). Total investment yield (incl. capital gain) was at 2.31%, while net investment yield (interest, dividend etc.) was 2.99%. Due to disposal and decline in value, equity investment now represents only 13% of investment portfolio, versus 23% at Dec07 (Fig.4).

Figure 3: China Life investment income 1H08 1H07 % change Investment Income (Rmbm) 19,549 37,175 (47) Recurrent 25,302 24,071 Gains (5,753) 13,104

Investment yield (%) 1H08 1H07 Total 2.31 5.19 Recurrent 2.99 3.36 Source: Company data, Kim Eng Securities

Figure 4: China Life investment portfolio Investment portfolio (%) 1H08 FY07 Deposit 26.2 23.2 Bond 58.6 52.1 Equity 13.3 23.0 Others 1.9 1.7 Total 100 100 Source: Company data, Kim Eng Securities

3 Morning Bulletin 26 August 2008

China Life recorded Rmb2.3b underwriting profit in 1H08, versus Rmb20b underwriting loss in FY07.. Net earned premium in 1H08 was Rmb78.7b, up 24% y-o-y (Fig.5). China Life’s market share in life insurance market increased to 42.8% at Jun08, versus 39.7% at Dec07.

Figure 5: China Life Breakdown of revenue Revenue (Rmbm) 99,284 101,429 (2) Investment 19,549 37,175 (47) Net premium 78,737 63,417 24

Revenue Composition (%) 1H08 1H07 Investment 20 37 Net premium 79 63 Source: Company data, Kim Eng Securities

With only 13% of its investment portfolio being equity investment, the volatile capital market will now have less impact on China Life’s earnings. We will probably maintain our HOLD rating on China Life.

Datang International (991 HK) - 1H08 interim results preview and Tariffs adjustments Analyst comment: Datang has already made an announcement stating that the net profit attributable to the Company’s shareholders for HY08 will decline by more than 70% year-on-year, based on the PRC accounting standard. The announcement pointed out that the net profit attributable to shareholders (including minority interests) for HY07 was Rmb 2.303 billion, thus the net profit attributable to the Company’s shareholders will not be higher than Rmb691m (including minority interests) Market is expecting Datang to post a net profit in the range of Rmb350m-451m, representing a y-o-y decline of 75% to 81%, respectively. We believe that the swing factor in the result will be the minority’s share of profit. Our forecast is slightly higher than the street, at Rmb 502m, on the assumption of a 25% increase in unit fuel costs. The highlights of the results will be threefold: (1) coal price outlook, (2) progress of the Company’s coal- related projects and (3) any hint of another tariff hike.

Separately, Datang also announced that pursuant to the notice issued by NDRC, the average on-grid tariffs (including VAT) of the Company’s coal-fired power plants would be increased by Rmb 19.93 per MWh (approximately an increase by 5.7%). The increase took effect on 20/8/08. The increase is slightly below the national average of Rmb 20 per MWh as some of the power plants are located in less coal-starved regions.

4 Morning Bulletin 26 August 2008

China Yurun Food (1068 HK) - HK$450 3-year term loan facility China Yurun Food announced that on 25/8/08, the Company entered into the Facility Agreement pursuant to which a syndicate of banks agreed to grant a HK dollar 3-Year term loan facility of up to HK$450m to the company. The facility includes a provision requiring that the controlling shareholder of the Company to remain as the chairman of the board of directors of the Company and, together with his family, to maintain at least 30% of the shares in capital of the company and to remain as the single largest shareholder of the company.

Analyst comment: The Chairman, Mr. Zhu Yicai, currently owns 44.2% of the total outstanding 1,530.6 million shares and chance of bridging the covenant at this stage looks remote. Balance sheet condition as at FY07 was fine with a net cash position of exceeding HK$720m. The drawdown of the loan facility is likely to be used as financing the Rmb 1.7 billion capex plan in FY08 as well as future expansion plan. Anyway, the company will announce its HY08 results today and we will revisit our rating subsequently.

Lung Kee (255 HK, HK$3.68) - 1H08 interim results better than our expectation Revenue increased by 25% to HK$1,554.5m and net profit increased by 43% to HK$177.7m.

Analyst comment: The results were better than our earning estimate of 6.4% decline (based on our full year estimate) and beating consensus of 6.5% growth. EPS was HK$0.2865. Interim dividend of HK$0.11 per share was proposed (vs HK$0.08 in 1H07)

Despite a slow down in the general economic environment, Lung Kee delivered a satisfactory revenue growth of 25% in first half of 2008, supported by a strong demand in auto sector. Gross profit (turnover less raw material cost) margin improved from 50.6% to 53%, demonstrating that the company can pass on the rising material costs to its customers. A lower depreciation as a percentage of revenue and a reduction in finance expenses also help enhance the bottom line figure.

The results were satisfactory overall. Before forecast revision, it now trades at 7x FY09 PER with 6.4% yield. We are likely to revise up our earnings estimate. Maintain BUY. Analyst briefing will be held at 4:30pm today.

5 Morning Bulletin 26 August 2008

China Unicom (762 HK, HK$14.12) and China Netcom (906 HK, HK$21.0) - 1H08 interim results Both China Netcom and China Unicom announced their 1H08 interim results yesterday.

Analyst comment: Excluding upfront connection fees China Netcom reported a revenue of Rmb40,620m, staying flat compared with the figure in 1H07. Net profit from continued operations grew by 11.9%. Note that the earnings were enhanced by a gain on a non-cash transaction. Stripping out the figure, net profit increased by 3.2% to Rmb5,420m. Overall, the results exceeded our expectations.

Of note, the innovative business segment (including broadband, information communication technology and media service, etc) grew by 26.2% and contributed ~40% to the total revenue. This gain was completely offset by the decline from the traditional voice business.

China Unicom has classified CDMA business as discontinued operation in the half year results. Accordingly, total revenue and net profit increased by 4% and 9%, respectively (excluding fair value change of CB).

GSM revenue rose by 4% to Rmb32,515m, lower than our forecast of 9% (based on our full year estimate). ARPU went down from Rmb47.3 in 1H07 to Rmb43.6 in 1H08. EBITDA margin was lowered from 45.6% to 43.6%. We believe CU will kick off its promotional campaign to boost up its subscribers after completion of restructuring in 4Q08. However, we expect continued declines in ARPU and EBITDA margin.

The company plans to increase GSM CAPEX from Rmb18.7 billion to Rmb35 billion for FY08. Total CAPEX was revised up from Rmb30.95 billion to Rmb 47.25 billion. The CAPEX for 3G will be Rmb 100 billion, spreading over FY09 and FY10. Our original forecast suggests that the enlarged group (after disposal of CDMA and the merging with CN) will be virtually debt-free. We believe the company will remain financially healthy with a net gearing of ~30% in FY10 after accounting for the aforementioned CAPEX.

The results should not offer a big surprise to the market. We maintain our view that China Unicom will be the beneficiary under asymmetric regulations. BUY.

On the other hand, CDMA revenue dropped by 2.3% to Rmb15,532m. Pre-tax profit was Rmb655m, down 26% y-o-y. While subscribers grew mildly by 8.2%, ARPU declined by 10.5%. We are bearish on China Telecom (728 HK), who is going to acquire CDMA business from CU. We will re-visit CT’s operations after it announces its results on the 28th of August.

6 Morning Bulletin 26 August 2008

Xinyu Hengdeli (3389 HK, HK$2.86) - 1H08 results preview 1H08 results will be announced today. Consensus expects turnover and earnings to grow by 29.4% and 24.0% respectively for the full year. No analyst meeting will be held.

Analyst comment: Based on our full year forecast, we project sales and earnings to grow by 31.4% and 28.6% respectively for FY08. Despite the slowdown in growth observed in May resulting from the Sichuan earthquake, we expect same-store-sales growth of 20% and 15% for China and Hong Kong, respectively, to be achievable. Management indicated that ~20 stores were added in 1H08 to a total of ~190, in line with full year target of 50 stores addition for the full year.

Xinyu shares have retreated 35% since the beginning of the year, in light of worries over slowing economy growth as well as the mounting concerns from its peers, which have dragged down the valuations of the watch-retailing industry. Currently trading at 10.3X FY09 PER, it remains as highly attractive comparing to the historical PER of 20X, and other China retail peers’ valuations. We expect demand for its products to remain strong in the PRC, supported by the continual growth of Swiss-export to China and strong sector sales of >40% growth in the PRC.

Yanzhou Coal (1171 HK) plans to continue to boost sales to steel, avoiding price caps Yanzhou Coal Mining (SEHK: 1171) will continue to boost sales to mainland metal manufacturers to reap higher prices and avoid state-imposed price caps on power-station coal, according to its chief financial officer.

Shandong-based Yanzhou Coal raised sales to steel mills to 30 per cent in the first half of the year from 19 per cent a year ago. It sold about 50 per cent of its coal to power firms and the remainder to other metal smelters and customers in.

But as coking coal has been more expensive, its premium to power-station coal has widened to 364 yuan (HK$416) a tonne from 223 yuan.

"We will continue to adjust our product and customer mixes with a view to increase supply to the steel sector," said Yanzhou Coal's chief financial officer Wu Yuxiang. "Given the lack of volume growth, we have resorted to improving our product and client structure to boost profits."

Yanzhou Coal's contracts for this year's domestic sales of 17.31 million tonnes were priced 38 per cent more than those of last year, compared with 15 to 25 per cent increases for its rivals, Mr Wu said.

Analyst comment: Expect the regulation of coal prices to become more broadly enforced, to curtail overall inflation and provide necessary relief for power plants that have seen supplies threatened by this loophole around price controls. We do not cover the stock, but do cover the coking coal producer Hidili Industries (1393 HK), which is under relatively higher regulatory risks.

7 Morning Bulletin 26 August 2008

Crude gains US$1 on Hurricane fears, though US inventory builds expected Analyst comment: Crude gained US$1 on a potential Hurricane Gustav developing in the Caribbean that could hit Gulf of Mexico infrastructure later this coming weekend. Expect oil to be largely flat through the week, as the market expects slight crude builds in US inventories on Thursday according to a Reuter’s poll. USD gained slightly to 1.47 on the Euro with the Yen remaining near 1.09 Georgian problems appear relatively minor, and a cut in production by OPEC appears very unlikely at the September meeting. Expect oil to remain around the US$115 mark on net, and resume declines next week slowly towards US$100 over the following 1-3 weeks, as some traders wonder if oil is now oversold..

On the companies: Sinopec (386 HK) analyst meeting today to disclose its plans for 2H08, and how the company will balance financing its capex plan, manage its dividends and overall gearing with abysmal earnings and an already 56% geared balance sheet. Expect weakness today on the oil price increase. Medium-term, the company trades at a high forward PE premium (50%) to its potential earnings relative to domestic and international peers. The recent overall declines in oil price and hopes for fuel price reform are largely responsible for the premium. Maintain Sell.

CNOOC (883 HK) prepares for 30%+ gains in net income, and strong revisions to analysts recommendations to be released on Wednesday along with an analyst meeting. Combined with the still cheery mood in Shanghai on hopes of a stimulus package and slight increase in oil price, expect better performance today. Long-term Buy.

Petrochina (857 HK) is to report on Wednesday with an analyst meeting after trading hours. The news of the acquisition of the JV was well flagged back at the annual results, and should not have an impact today. While 1H08A should be weak, the company has a greater production base to defray the costs of higher crude than its fellow refiner, Sinopec. We have a Sell rating, and will review the recommendation post-results.

Regal REIT (1881 HK, HK$1.53) - 1H08 net distributable income rose 106% Gross rental revenue rose 83% to HK$375m while after tax net profit dropped 87% to HK$278m, due to the one-off gain in business combination in previous period. Net gearing of the REIT dropped slightly to 36.7% as at Jun 08, when compared with Dec 07’s 37.5%, however, finance costs rose 65% to HK$88m. Distribution per unit rose 45.6% to HK$0.083.

Analyst comment: Benefiting from the asset enhancement program, the hotels under the REIT have achieved an increase of 9.7% and 7.8% in average room rate and revenue per available room, respectively, when compared with 1H07A. The group has also committed HK$85m capital additions to enhance competitiveness. Looking forward, the revenue growth of the REIT will be dependant to Chinese tourist growth, which is the key segment the group is targeted to. We prefer Link REIT (823 HK, BUY, HK$18.04) in the same sector, amid the recent volatile market. Link has a forward FY3/09F yield of 4.8%.

8 Morning Bulletin 26 August 2008

Nagacorp (3918 HK) 1H08A results review Analyst comment:

1H08A results strong as expected with 2H08A set to build 1H08A continued to show strong net profit earnings growth of 26.9% h-o-h to US$25.5m, translating to an EPS of US 1.23 cents. Revenues increased by 68.5% to approx US$109.1m, while gross profit increased by only 34.3% to approx US$45.3m due to higher costs of Goods Sold (105.8% v. US$63.8m). An interim dividend of US 74 cents per share (HK 5.80 cents) was declared, representing a payout ratio of 60% in keeping with management policy, and will be paid on ~9/30/2008/

STG players growth steady, while public floor players drove revenues Among the customer segments, STG players continued to show steady revenue and gross margin expansion with public floor table players revenues almost doubled at the expense of lower gross margins. STG players increased their check-in amounts by 8.5% to US$32,442 per player with a better win rate of 3.25% versus 3.87% in 1H07. The net result left the segment's gross margins higher at 58.4% from 50.3% h-o-h, limited only by higher commissions paid to STG operators and associated expenditures incl. airfare, accommodation and F&B according to management(no amounts specified) .As for the public floor players segment, revenues surged by 195.4%, and was responsible for the jump in overall top-line revenues on the back of a 375% increase in total buy-in amounts and win rates falling to 17% from 27% h-o-h. The public floors are being driven by various low-cost programs, with 91% of revenues attributed to a program targeting Cambodians holding foreign passports.

Casino still under construction Going forward, the company plans to add another 48 gaming tables to its casino wing in the next 2 months to its 508 room hotel/137 gaming table facility. Management is also focused on growing the low 5-7% penetration rate into the Thai and Vietnamese markets, and attract a larger number of gaming operators from East Asia.

Maintain BUY rating and target price on solid future prospects We will maintain our Buy rating, and issue a note after the analyst meeting tomorrow.

Undemanding compared to regional peers on a trailing PE basis (10-11x vs. Naga’s (9.6x), with its casino still not completed. Current target price is HK$3.40, and the stock is trading at HK$1.81 with an implied annualized divided of 5.85% offers downside protection.

9 Morning Bulletin 26 August 2008

PetroChina To BUY 50% Of International JV For $11.8B From DJN, PetroChina Co. (PTR) has agreed to buy the 50% stake held by its parent company China National Petroleum Corp. in an international joint venture in a deal worth $11.8 billion, a person familiar with the situation said Monday.

PetroChina favors issuing new shares on the Shanghai Stock Exchange to finance the purchase of CNPC Exploration and Development Co., but is worried about the current weakness in the market, the person said.

PetroChina's A-shares closed Friday at CNY13.49, just above their lowest settlement of CNY13.31 on Aug. 18. China's largest-listed oil producer is due to disclose Wednesday its earnings for the first half of 2008.

The key asset within CNPC E&D is PetroKazakhstan Inc., which produced more than 10 million tons of crude in 2007, equivalent to around 200,000 barrels a day.

But the venture doesn't include CNPC's oil and natural gas assets in Sudan, which are politically sensitive and have been the focus of activists in the U.S., encouraging investors to sell out of PetroChina.

The acquisition price for CNPC E&D was finalized at the end of April, but the deal was held up for some months, partly because the parties differed over payment of capital gains tax, the person said.

However, that's been resolved as Beijing has agreed to exempt CNPC from paying capital gains tax on the sale, which would have totaled some $2.7 billion, the person added.

Analyst comment: the acquisition has been long expected by the market, and will likely make little difference on the verge of the company’s release of 1H08 interim earnings on Wednesday. SELL.

10 Morning Bulletin 26 August 2008

Significant Insiders

Disclosures of interest by individual and corporate substantial shareholders *Notes: (L) - Long Position, (S) - Short Position, (P) - Lending Pool

Name of listed Stock Class of Name of Date of Number of shares Previous Balance Present Balance corporation code shares substantial relevant bought / sold/ No. of shares (See % No. of shares (See % shareholder event involved *Notes above) *Notes above) Ajisen (China) 00538 Ordinary JPMorgan Chase 18/08/2008 224,000(L) 85,505,000(L) 8.01 85,281,000(L) 7.99 Holdings Ltd. Shares & Co. 7,338,000(P) 0.69 7,338,000(P) 0.69 Anhui Conch Cement 00914 H JPMorgan Chase 19/08/2008 2,190,000(L) 89,277,137(L) 20.61 91,467,137(L) 21.11 Co. Ltd. - H Shares Shares & Co. 2,700,000(S) 0.62 2,700,000(S) 0.62 34,873,137(P) 8.05 34,869,137(P) 8.05 Anhui Expressway 00995 H The Bank of New 19/08/2008 500,000(L) 29,520,030(L) 5.99 30,020,030(L) 6.09 Co. Ltd. - H Shares Shares York Mellon Corporation Artfield Group Ltd. 01229 Ordinary Ascent Goal 20/08/2008 97,008,000(L) 1,666,624,589(L) 217.75 1,569,616,589(L) 205.08 Shares Investments Limited Artfield Group Ltd. 01229 Ordinary China Sonangol 20/08/2008 97,008,000(L) 1,666,624,589(L) 217.75 1,569,616,589(L) 205.08 Shares International Limited Artfield Group Ltd. 01229 Ordinary Fung Yuen Kwan 20/08/2008 97,008,000(L) 1,666,624,589(L) 217.75 1,569,616,589(L) 205.08 Shares Veronica Artfield Group Ltd. 01229 Ordinary New Bright 20/08/2008 97,008,000(L) 1,666,624,589(L) 217.75 1,569,616,589(L) 205.08 Shares International Development Limited B.A.L. Holdings Ltd. 08079 Ordinary Shiu Stephen 20/08/2008 700,000(L) 18,942,583(L) 11.11 18,242,583(L) 10.70 Shares Junior Bank of China Ltd. - H 03988 H UBS AG 19/08/2008 67,248,443(L) 5,301,727,185(L) 6.97 5,368,975,628(L) 7.06 Shares Shares 1,114,106,280(S) 1.47 1,139,492,631(S) 1.50 Beijing Capital 00694 H Morgan Stanley 19/08/2008 4,053,664(L) 127,088,690(L) 6.76 125,950,690(L) 6.70 International Airport Shares 127,237,318(S) 6.77 126,161,318(S) 6.71 Co. Ltd. - H Shares BYD Co. Ltd. - H 01211 H LL Group, LLC 07/08/2008 1,366,000(L) 50,838,200(L) 8.95 52,204,200(L) 9.19 Shares Shares China 00552 H Morgan Stanley 19/08/2008 1,380,000(L) 166,177,597(L) 8.34 166,184,597(L) 8.34 Communications Shares 155,214,538(S) 7.79 155,293,538(S) 7.79 Services Corporation Ltd. - H Shares China Eastern Airlines 00670 H Barclays Global 19/08/2008 2,000,000(L) 86,573,370(L) 5.52 86,573,370(L) 5.52 Corporation Ltd. - H Shares Investors UK 16,940,000(S) 1.08 16,940,000(S) 1.08 Shares Holdings Limited China Eastern Airlines 00670 H Barclays PLC 19/08/2008 2,000,000(L) 86,573,370(L) 5.52 86,573,370(L) 5.52 Corporation Ltd. - H Shares 16,940,000(S) 1.08 16,940,000(S) 1.08 Shares China Infrastructure 03339 Ordinary UBS AG 19/08/2008 2,129,036(L) 77,995,951(L) 7.19 75,866,915(L) 6.99 Machinery Holdings 4,151,000(S) 0.38 4,151,000(S) 0.38 Ltd. China Insurance 00966 Ordinary JPMorgan Chase 19/08/2008 557,000(L) 99,354,993(L) 6.99 99,911,993(L) 7.03 International Holdings Class & Co. 48,000(S) 0.00 48,000(S) 0.00 Co. Ltd. 91,029,993(P) 6.40 91,586,993(P) 6.44 China Mining 00340 Ordinary Kwok Man 21/08/2008 5,300,000(L) 382,146,000(L) 6.34 387,446,000(L) 6.43 Resources Group Ltd. Shares China National 03323 H Morgan Stanley 19/08/2008 2,479,666(S) 57,386,947(L) 6.36 54,911,281(L) 6.09 Building Material Co. Shares 54,356,148(S) 6.03 51,876,482(S) 5.75 Ltd. - H Shares China Packaging 00572 Ordinary Citigroup Inc. 18/08/2008 30,439,550(L) 9,968,816(L) 1.60 40,408,366(L) 6.50 Group Co. Ltd. Shares China Petroleum & 00386 H UBS AG 19/08/2008 61,106,923(L) 1,034,964,613(L) 6.17 973,857,690(L) 5.80 Chemical Corporation Shares 447,718,196(S) 2.67 453,045,016(S) 2.70 - H Shares China Properties 00736 Ordinary Xie Hong Miao 19/08/2008 34,910,000(L) 83,660,000(L) 4.74 118,570,000(L) 6.72 Investment Holdings Ltd. China Shipping 02866 H UBS AG 19/08/2008 3,881,185(L) 224,298,512(L) 5.98 228,179,697(L) 6.08 Container Lines Co. Shares 75,880,080(S) 2.02 77,854,080(S) 2.07

11 Morning Bulletin 26 August 2008

Ltd. - H Shares China Shipping 01138 H The Northern 19/08/2008 0(L) 0.00 0(L) 0.00 Development Co. Ltd. Shares Trust Company 64,756,000(P) 5.00 64,732,000(P) 4.99 - H Shares (ALA) China Telecom 00728 H JPMorgan Chase 18/08/2008 26,044,000(L) 829,879,057(L) 5.98 855,923,057(L) 6.17 Corporation Ltd. - H Shares & Co. 203,350,515(S) 1.47 213,350,515(S) 1.54 Shares 503,613,676(P) 3.63 522,397,676(P) 3.76 DaChan Food (Asia) 03999 Common GMT Capital 19/08/2008 1,088,000(L) 60,030,400(L) 5.94 61,118,400(L) 6.05 Ltd. Shares Corp. Datang International 00991 H Morgan Stanley 19/08/2008 11,885,878(L) 316,380,470(L) 9.63 306,444,251(L) 9.33 Power Generation Shares 147,566,665(S) 4.49 137,586,446(S) 4.19 Co., Ltd. - H Shares Dongfeng Motor 00489 H Templeton Asset 19/08/2008 7,000,000(L) 200,792,000(L) 7.03 193,792,000(L) 6.79 Group Co. Ltd. - H Shares Management Ltd. Shares Dongfeng Motor 00489 H UBS AG 19/08/2008 15,246,000(L) 333,327,353(L) 11.67 348,573,353(L) 12.21 Group Co. Ltd. - H Shares 4,998,000(S) 0.18 4,998,000(S) 0.18 Shares Fong's Industries Co. 00641 Ordinary Aberdeen Asset 20/08/2008 500,000(L) 33,232,000(L) 6.02 32,732,000(L) 5.93 Ltd. Shares Management Plc and its Subsidiaries (together "The Group") on Behalf of Accounts Managed by the Group GOME Electrical 00493 Ordinary JPMorgan Chase 15/08/2008 7,962,000(L) 1,144,010,476(L) 8.97 1,151,972,476(L) 9.03 Appliances Holding Shares & Co. 12,650,000(S) 0.10 12,650,000(S) 0.10 Ltd. 910,751,476(P) 7.14 918,713,476(P) 7.20 Grand T G Gold 08299 Ordinary Lai Wing Hung 18/08/2008 7,920,000(L) 358,368,000(L) 6.10 350,448,000(L) 5.97 Holdings Ltd. Shares Grand T G Gold 08299 Ordinary Merry Shine 18/08/2008 7,920,000(L) 358,368,000(L) 6.10 350,448,000(L) 5.97 Holdings Ltd. Shares Investments Limited Grandtop International 02309 Ordinary Chu Yuet Wah 11/08/2008 138,720,000(L) 18.24 138,720,000(L) 17.12 Holdings Ltd. Shares Grandtop International 02309 Ordinary Chu Yuet Wah 20/08/2008 25,000,000(L) 138,720,000(L) 17.12 163,720,000(L) 20.21 Holdings Ltd. Shares Grandtop International 02309 Ordinary Kingston Finance 11/08/2008 138,720,000(L) 18.24 138,720,000(L) 17.12 Holdings Ltd. Shares Limited Grandtop International 02309 Ordinary Kingston Finance 20/08/2008 25,000,000(L) 138,720,000(L) 17.12 163,720,000(L) 20.21 Holdings Ltd. Shares Limited Grandtop International 02309 Ordinary Ma Siu Fong 11/08/2008 138,720,000(L) 18.24 138,720,000(L) 17.12 Holdings Ltd. Shares Grandtop International 02309 Ordinary Ma Siu Fong 20/08/2008 25,000,000(L) 138,720,000(L) 17.12 163,720,000(L) 20.21 Holdings Ltd. Shares Great Wall Motor Co. 02333 H JPMorgan Chase 18/08/2008 167,500(L) 45,361,006(L) 10.98 45,528,506(L) 11.02 Ltd. - H Shares Shares & Co. 220,906(S) 0.05 220,906(S) 0.05 41,840,100(P) 10.12 42,007,600(P) 10.16 Guangzhou R&F 02777 H Morgan Stanley 19/08/2008 4,462,800(L) 210,248,742(L) 20.71 215,160,142(L) 21.19 Properties Co., Ltd. - Shares 86,667,979(S) 8.54 86,500,179(S) 8.52 H Shares Guangzhou R&F 02777 H UBS AG 18/08/2008 3,402,200(S) 202,321,705(L) 19.93 202,855,505(L) 19.98 Properties Co., Ltd. - Shares 150,818,680(S) 14.86 154,220,880(S) 15.19 H Shares Guangzhou R&F 02777 H UBS AG 19/08/2008 7,762,800(L) 202,855,505(L) 19.98 210,618,305(L) 20.75 Properties Co., Ltd. - Shares 154,220,880(S) 15.19 161,241,080(S) 15.88 H Shares HC International, Inc. 08292 Ordinary Jayhawk Private 30/04/2008 150,522(L) 93,626,106(L) 18.99 93,776,628(L) 19.03 Shares Equity Fund, L.P. HC International, Inc. 08292 Ordinary McCarthy Kent 30/04/2008 160,000(L) 108,390,000(L) 21.99 108,550,000(L) 22.03 Shares C. Heng Tai 00197 Ordinary Pope Asset 20/08/2008 2,000,000(L) 77,503,775(L) 4.87 79,503,775(L) 5.00 Consumables Group Shares Management, Ltd. LLC Hop Hing Group 00047 Ordinary Datuk Seri 18/08/2008 25,602,332(L) 25,602,332(L) 5.19 0(L) 0.00 Holdings Ltd. Shares Panglima Lau Cho Kun

12 Morning Bulletin 26 August 2008

Hop Hing Group 00047 Ordinary Gek Poh 18/08/2008 25,602,332(L) 25,602,332(L) 5.19 0(L) 0.00 Holdings Ltd. Shares (Holdings)Sdn Bhd Hop Hing Group 00047 Ordinary Hap Seng 18/08/2008 4,267,055(L) 4,267,055(L) 0.86 0(L) 0.00 Holdings Ltd. Shares Consolidated Berhad Hop Hing Group 00047 Ordinary Hap Seng 18/08/2008 21,335,277(L) 25,602,332(L) 5.19 4,267,055(L) 0.86 Holdings Ltd. Shares Consolidated Berhad Huadian Power 01071 H JPMorgan Chase 19/08/2008 2,622,000(L) 159,614,000(L) 11.15 156,992,000(L) 10.97 International Shares & Co. 8,400,000(S) 0.59 8,400,000(S) 0.59 Corporation Ltd. - H 116,455,000(P) 8.14 116,455,000(P) 8.14 Shares Jiangsu Expressway 00177 Common FIL Limited 20/08/2008 1,216,000(L) 110,745,987(L) 9.06 109,529,987(L) 8.96 Co. Ltd. - H Shares Stock Jiangsu Expressway 00177 H Halbis Capital 19/08/2008 2,000,000(L) 73,492,000(L) 6.01 71,492,000(L) 5.85 Co. Ltd. - H Shares Shares Management (Hong Kong ) Limited Jiangxi Copper Co. 00358 H UBS AG 19/08/2008 10,268,816(L) 82,812,481(L) 5.96 93,081,297(L) 6.71 Ltd. - H Shares Shares 8,510,004(S) 0.61 8,560,004(S) 0.62 Launch Tech Co. Ltd. 08196 Ordinary Jayhawk China 30/07/2008 595,000(L) 65,403,500(L) 23.90 65,998,500(L) 24.12 - H Shares Shares Fund (Cayman), Ltd. Launch Tech Co. Ltd. 08196 Ordinary Jayhawk Private 02/07/2008 545,645(L) 35,269,367(L) 12.89 35,815,012(L) 13.09 - H Shares Shares Equity Fund, L.P. Launch Tech Co. Ltd. 08196 Ordinary McCarthy Kent 30/07/2008 595,000(L) 108,998,500(L) 39.84 109,593,500(L) 40.06 - H Shares Shares C. Maanshan Iron & 00323 H UBS AG 19/08/2008 5,429,243(L) 159,749,097(L) 9.22 154,319,854(L) 8.91 Steel Co. Ltd. - H Shares 42,914,530(S) 2.48 42,922,530(S) 2.48 Shares MAE Holdings Ltd. 00851 Ordinary Ko Hin Ting 19/08/2008 20,000,000(L) 30,000,000(L) 14.88 30,000,000(L) 11.92 Shares James Mascotte Holdings 00136 Ordinary Unity 21/08/2008 15,084,000(L) 159,189,000(L) 5.57 174,273,000(L) 6.10 Ltd. Investments Holdings Limited Melco International 00200 Common State Street 21/08/2008 0(L) 0.00 0(L) 0.00 Development Ltd. Shares Corporation 69,026,837(P) 5.61 74,456,837(P) 6.06 Midland Holdings Ltd. 01200 Ordinary JPMorgan Chase 19/08/2008 1,632,000(L) 57,148,674(L) 7.82 58,780,674(L) 8.04 Class & Co. 500,000(S) 0.07 500,000(S) 0.07 56,648,674(P) 7.75 58,280,674(P) 7.97 NagaCorp Ltd. 03918 Ordinary Citigroup Inc. 18/08/2008 103,873,916(L) 592,740(L) 0.03 104,466,656(L) 5.04 Shares 0(S) 0.00 0(S) 0.00 0(P) 0.00 0(P) 0.00 Plus Holdings Ltd. 01013 Ordinary Wai Chun 20/08/2008 20,000,000,000(L) 15,000,000,000(L)278.00 35,000,000,000(L)649.00 Shares Ventures Limited Plus Holdings Ltd. 01013 Ordinary Wai Chun 20/08/2008 11,000,000,000(L) 4,000,000,000(L) 74.00 15,000,000,000(L)278.00 Shares Ventures Limited Plus Holdings Ltd. 01013 Ordinary Wai Chun 20/08/2008 4,000,000,000(L) 0(L) 0.00 4,000,000,000(L) 74.00 Shares Ventures Limited Prosperity Investment 00310 Ordinary Favor Hero 19/08/2008 540,000(L) 64,580,710(L) 51.79 65,120,710(L) 52.23 Holdings Ltd. Shares Investments Limited Richfield Group 08136 Ordinary Tung Ching Yee, 21/08/2008 30,000,000(L) 1,251,394,000(L) 42.73 1,281,394,000(L) 43.76 Holdings Ltd. Helena Shimao Property 00813 Ordinary Citigroup Inc. 18/08/2008 18,335,600(L) 164,060,925(L) 4.97 182,396,525(L) 5.52 Holdings Ltd. 10,594,300(S) 0.32 11,384,900(S) 0.34 137,916,725(P) 4.17 157,759,125(P) 4.77 Shougang Concord 00521 Ordinary Cheung Kong 15/08/2008 174,069,394(L) 8.95 174,069,394(L) 9.04 Technology Holdings Shares (Holdings) Ltd. Limited Shougang Concord 00521 Ordinary Li Ka-Shing Unity 15/08/2008 174,069,394(L) 8.95 174,069,394(L) 9.04 Technology Holdings Shares Trustcorp Limited Ltd. Shougang Concord 00521 Ordinary Li Ka-Shing Unity 15/08/2008 174,069,394(L) 8.95 174,069,394(L) 9.04 Technology Holdings Shares Trustee Ltd. Company Limited Shougang Concord 00521 Ordinary Li Ka-Shing Unity 15/08/2008 174,069,394(L) 8.95 174,069,394(L) 9.04 Technology Holdings Shares Trustee

13 Morning Bulletin 26 August 2008

Ltd. Corporation Limited Sino Katalytics 02324 Ordinary Sellwell 14/08/2008 5,300,000(L) 294,150,000(L) 15.56 299,450,000(L) 16.20 Investment Shares Enterprises Corporation Limited Sino Katalytics 02324 Ordinary Sellwell 15/08/2008 2,000,000(L) 299,450,000(L) 16.20 301,450,000(L) 16.31 Investment Shares Enterprises Corporation Limited Skyworth Digital 00751 Ordinary Citigroup Inc. 18/08/2008 113,727,533(L) 61,755,105(L) 2.71 175,502,638(L) 7.69 Holdings Ltd. Shares 0(S) 0.00 0(S) 0.00 26,842,866(P) 1.18 26,842,866(P) 1.18 Skyworth Digital 00751 Ordinary Citigroup Inc. 19/08/2008 24,343,734(L) 175,502,638(L) 7.69 151,158,904(L) 6.63 Holdings Ltd. Shares 26,842,866(P) 1.18 11,515,866(P) 0.50 Skyworth Digital 00751 Ordinary Trophy Fund 15/08/2008 7,500,000(L) 206,884,000(L) 9.06 199,384,000(L) 8.73 Holdings Ltd. Shares 00669 Ordinary Och Daniel Saul 18/08/2008 135,000(L) 300,060,800(L) 19.99 300,195,800(L) 20.00 Co. Ltd. Shares Techtronic Industries 00669 Ordinary Och-Ziff Capital 18/08/2008 135,000(L) 300,060,800(L) 19.99 300,195,800(L) 20.00 Co. Ltd. Shares Management Group LLC Techtronic Industries 00669 Ordinary OZ Management 18/08/2008 135,000(L) 300,060,800(L) 19.99 300,195,800(L) 20.00 Co. Ltd. Shares L.P. Tianjin Development 00882 Ordinary Merrill Lynch & 14/08/2008 3,116,000(L) 62,350,014(L) 5.84 65,466,014(L) 6.13 Holdings Ltd. Shares Co Inc 172,000(S) 0.02 172,000(S) 0.02 Tysan Holdings Ltd. 00687 Ordinary Bofield Holdings 18/08/2008 256,325,000(L) 30.61 256,325,000(L) 30.58 Shares Limited UDL Holdings Ltd. 00620 Ordinary Harbour Front 19/08/2008 1,840,000(L) 7,160,109,672(L) 141.92 7,161,949,672(L) 141.96 Shares Limited Universal 08091 Ordinary Lau Yeung Sang 20/08/2008 1,360,000(L) 389,570,000(L) 25.90 390,930,000(L) 25.99 Technologies Shares Holdings Ltd. Universal 08091 Ordinary World One 20/08/2008 1,360,000(L) 389,570,000(L) 25.90 390,930,000(L) 25.99 Technologies Shares Investments Ltd Holdings Ltd. Weiqiao Textile Co. 02698 Common State Street 19/08/2008 0(L) 0.00 0(L) 0.00 Ltd. - H Shares Shares Corporation 20,091,960(P) 4.86 20,951,460(P) 5.07 Xian Yuen Titanium 00353 Ordinary Central Ocean 18/08/2008 196,000,000(L) 7.89 196,000,000(L) 7.55 Resources Holdings Shares Group Limited Ltd. Xian Yuen Titanium 00353 Ordinary Central Ocean 19/08/2008 196,000,000(L) 7.55 196,000,000(L) 6.75 Resources Holdings Shares Group Limited Ltd. Xian Yuen Titanium 00353 Ordinary Lam Shu Chung 18/08/2008 196,000,000(L) 270,950,750(L) 10.90 270,950,750(L) 10.44 Resources Holdings Shares Ltd. Xian Yuen Titanium 00353 Ordinary Lam Shu Chung 19/08/2008 270,950,750(L) 10.44 270,950,750(L) 9.33 Resources Holdings Shares Ltd. Xian Yuen Titanium 00353 Ordinary Leung Lai Ching 19/08/2008 3,889,520,000(L) 152.85 3,889,520,000(L) 133.95 Resources Holdings Shares Margaret Ltd. Zhaojin Mining 01818 H Merrill Lynch & 12/08/2008 3,373,000(L) 35,547,400(L) 8.13 33,074,400(L) 7.57 Industry Co. Ltd. - H Shares Co Inc Shares Zhuzhou CSR Times 03898 Ordinary The Hamon 19/08/2008 250,000(L) 40,824,000(L) 8.95 41,074,000(L) 9.01 Electric Co., Ltd. - H Shares Investment Shares Group Pte Limited

14 Morning Bulletin 26 August 2008

Short Selling Turnover (Main Board) Recorded Up To 4:00 pm 25 August 08:

Turnover CODE NAME OF STOCK (SH) ($) 939 CCB 34,624,000 213,348,150 941 CHINA MOBILE 2,114,500 197,020,225 386 SINOPEC CORP 22,248,000 173,676,160 3328 BANKCOMM 15,037,000 136,489,880 2628 CHINA LIFE 3,684,000 102,172,850 388 HKEX 993,700 99,478,170 5 HSBC HOLDINGS 763,200 92,352,480 688 CHINA OVERSEAS 5,630,000 70,147,560 914 ANHUI CONCH 1,814,000 69,692,600 902 HUANENG POWER 10,284,000 56,634,480 2318 PING AN 1,211,000 65,041,050 11 428,400 64,091,040 347 ANGANG STEEL 5,180,000 55,570,040 2866 CSCL 19,638,000 38,830,230 998 CITIC BANK 9,502,000 43,982,440 1919 CHINA COSCO 3,187,000 45,841,370 2 CLP HOLDINGS 626,000 42,072,625 883 CNOOC 3,529,000 39,148,520 3968 CM BANK 1,566,000 40,615,250 16 SHK PPT 404,000 41,775,500 1 CHEUNG KONG 394,000 41,078,100 857 PETROCHINA 3,752,000 37,323,700 2388 BOC HONG KONG 2,114,500 38,816,880 1109 CHINA RES LAND 4,404,000 35,367,140 1088 CHINA SHENHUA 1,489,500 37,588,000 3323 CNBM 2,830,000 35,902,240 3 HK & CHINA GAS 1,991,000 35,086,880 1138 CHINA SHIP DEV 1,958,000 35,041,120 330 ESPRIT HOLDINGS 373,700 29,542,325 1800 CHINA COMM CONS 2,089,000 27,459,560 2823 A50CHINATRACKER 2,163,000 26,981,432 6 HK ELECTRIC 575,500 28,484,500 19 SWIRE PACIFIC A 361,500 28,376,500 13 HUTCHISON 360,000 26,139,050 762 CHINA UNICOM 1,700,000 23,817,240 1186 CHINA RAIL CONS 2,034,000 23,215,020 3368 PARKSON GROUP 2,071,500 22,478,980 2328 PICC P&C 4,694,000 18,727,840 3988 BANK OF CHINA 5,425,000 17,871,280 1898 CHINA COAL 1,634,000 20,446,100 2777 R&F PROPERTIES 1,560,800 20,415,928 992 LENOVO GROUP 3,328,000 18,405,820 83 SINO LAND 1,442,000 18,374,200 1171 YANZHOU COAL 1,466,000 18,010,640 494 LI & FUNG 762,000 18,230,800 551 YUE YUEN IND 917,500 17,856,160 101 HANG LUNG PPT 768,000 17,917,550 694 BEIJING AIRPORT 2,682,000 15,621,540 297 SINOFERT 3,326,000 14,744,320 1038 CKI HOLDINGS 471,000 17,352,950 293 CATHAY PAC AIR 1,104,000 16,313,540 1398 ICBC 2,647,000 14,014,130 23 BANK OF E ASIA 477,800 14,675,660 728 CHINA TELECOM 2,934,000 11,512,200 302 WING HANG BANK 160,000 14,222,175 552 CHINACOMSERVICE 2,016,000 12,116,180 2319 544,000 12,327,000 1393 HIDILI INDUSTRY 1,232,000 10,928,040 323 MAANSHAN IRON 2,720,000 9,313,860 813 SHIMAO PROPERTY 1,254,000 10,366,310 1068 YURUN FOOD 825,000 10,593,960 2883 CHINA OILFIELD 1,016,000 9,851,820 836 CHINA RES POWER 546,000 10,227,240 4 WHARF HOLDINGS 336,000 10,401,850 267 CITIC PACIFIC 379,000 10,236,400 44 HAECO 118,000 10,458,960 69 SHANGRI-LA ASIA 620,000 9,724,280 2600 CHALCO 1,298,000 8,838,960 2899 ZIJIN MINING 1,684,000 8,439,400 1133 HARBIN POWER 864,000 9,032,960 906 CHINA NETCOM 444,000 9,311,950 291 CHINA RESOURCES 422,000 8,287,160

15 Morning Bulletin 26 August 2008

1224 C C LAND 2,178,000 6,366,760 682 CHAODA MODERN 900,000 7,321,600 2038 FIH 1,212,000 6,794,420 700 115,200 7,697,620 358 JIANGXI COPPER 606,000 7,065,080 658 C TRANSMISSION 473,000 7,084,680 2314 LEE & MAN PAPER 893,200 6,562,116 2332 HUTCH TELECOM 661,000 6,609,310 242 SHUN TAK HOLD 1,206,000 5,556,940 392 BEIJING ENT 214,000 6,065,100 2343 PACIFIC BASIN 567,000 5,702,060 1044 HENGAN INT'L 214,000 5,592,700 303 VTECH HOLDINGS 113,000 5,603,050 66 MTR CORPORATION 217,500 5,419,150 763 ZTE 150,800 4,983,020 493 GOME 1,198,000 3,936,030 3993 CMOC 858,000 4,091,990 203 DENWAY MOTORS 1,282,000 3,463,160 8 PCCW 817,000 3,893,030 12 HENDERSON LAND 100,000 4,501,250 589 PORTS 200,500 4,388,300 555 REX FINANCIAL H 2,950,000 1,513,000 3808 529,000 3,307,295 1055 CHINA SOUTH AIR 1,060,000 2,636,560 3983 CHINA BLUECHEM 664,000 3,020,640 14 HYSAN DEV 155,000 3,208,250 341 CAFE DE CORAL H 198,000 3,049,120 2007 693,000 2,494,180 322 TINGYI 314,000 2,786,540 200 MELCO INT'L DEV 517,000 2,488,560 2727 SH ELECTRIC 656,000 2,055,460 368 SINOTRANS SHIP 612,000 1,967,960 34 DEV 199,000 2,364,440 2338 67,000 2,282,100 670 CHINA EAST AIR 900,000 1,425,740 349 ICBC (ASIA) 128,000 2,155,800 20 WHEELOCK 102,000 2,027,340 753 AIR CHINA 438,000 1,649,100 144 CHINA MER HOLD 70,000 1,927,600 308 CHINA TRAVEL HK 738,000 1,248,640 991 DATANG POWER 346,000 1,633,920 2018 AAC ACOUSTIC 270,000 1,697,380 10 HANG LUNG GROUP 60,000 1,903,150 270 GUANGDONG INV 500,000 1,395,340 440 DAH SING 34,000 1,730,640 2828 HS H-SHARE ETF 15,000 1,701,000 511 TVB 37,000 1,609,650 45 HK&S HOTELS 137,000 1,470,520 3383 AGILE PROPERTY 240,000 1,331,340 981 SMIC 1,155,000 410,030 2689 ND PAPER 295,000 1,267,650 316 OOIL 55,000 1,445,400 1205 CITIC RESOURCES 532,000 949,100 54 HOPEWELL HOLD 47,000 1,364,250 2331 LI NING 72,500 1,330,040 683 KERRY PPT 38,000 1,335,875 168 TSINGTAO BREW 80,000 1,268,600 669 TECHTRONIC IND 162,500 1,184,180 1211 BYD COMPANY 131,000 1,202,780 165 CHINA EB LTD 90,000 1,172,840 525 GUANGSHEN RAIL 292,000 936,380 2827 WISE CSI300 ETF 42,800 1,145,600 823 LINK REIT 55,500 1,001,050 697 SHOUGANG INT'L 406,000 765,680 2020 185,000 930,860 489 DONGFENG GROUP 266,000 812,380 3339 CIMH 130,000 845,140 127 CHINESE EST H 81,000 893,860 3377 SINO-OCEAN LAND 207,000 742,500 285 BYD ELECTRONIC 212,000 698,530 41 GREAT EAGLE H 39,000 857,650 338 SHANGHAI PECHEM 248,000 592,260 274 GLOBAL GREEN 424,000 368,820 1071 HUADIAN POWER 244,000 531,920 1880 BELLE INT'L 85,000 627,520 17 NEW WORLD DEV 57,000 653,500 651 WONSON INT'L 620,000 42,580

16 Morning Bulletin 26 August 2008

737 HOPEWELL INFRA 95,500 560,795 903 TPV TECHNOLOGY 130,000 514,120 2868 BJ CAPITAL LAND 250,000 391,820 272 SHUI ON LAND 90,500 541,965 384 CHINA GAS HOLD 220,000 400,400 1114 BRILLIANCE CHI 334,000 270,500 904 CHINA GREEN 72,000 519,120 868 XINYI GLASS 122,000 461,920 1688 ALIBABA 54,000 505,500 1212 LIFESTYLE INT'L 53,500 504,845 2337 FORTE 216,000 333,360 659 NWS HOLDINGS 29,000 491,760 1033 YIZHENG CHEM 264,000 248,240 806 VALUE PARTNERS 74,000 425,440 1886 HUIYUAN JUICE 96,500 391,510 177 JIANGSU EXPRESS 70,000 415,960 604 SHENZHEN INVEST 158,000 318,600 2356 DAHSING BANKING 34,000 391,424 2380 CHINA POWER 125,000 290,490 257 CHINA EB INT'L 156,000 257,010 995 ANHUIEXPRESSWAY 70,000 339,160 817 FRANSHION PPT 108,000 291,720 656 FOSUN INTL 71,500 315,005 27 GALAXY ENT 90,000 291,070 142 FIRST PACIFIC 64,000 307,400 548 SHENZHENEXPRESS 74,000 286,080 1818 ZHAOJIN MINING 56,500 299,320 1836 STELLA HOLDINGS 24,500 313,500 3311 CHINA STATE CON 112,000 199,300 1833 INTIME 63,000 232,760 882 TIANJIN DEV 54,000 240,900 754 HOPSON DEV HOLD 36,000 245,720 35 FE CONSORT INTL 101,000 176,750 606 CHINA AGRI 47,000 228,180 190 HKC (HOLDINGS) 119,000 155,380 123 GUANGZHOU INV 128,000 134,440 86 SUN HUNG KAI CO 37,000 215,560 2688 XINAO GAS 18,000 219,880 709 GIORDANO INT'L 60,000 176,400 135 CNPC(HONG KONG) 60,000 163,300 1199 COSCO PACIFIC 18,000 189,400 133 CHINA MERCHANTS 10,000 188,440 861 DIGITAL CHINA 36,000 153,510 522 ASM PACIFIC 3,700 182,930 220 U-PRESID CHINA 44,000 130,360 148 KINGBOARD CHEM 5,000 165,150 1208 MIN RESOURCES 68,000 100,440 53 GUOCO GROUP 2,000 164,000 183 CIFH 23,000 136,920 1813 KWG PROPERTY 33,000 115,180 966 CHINA INSURANCE 9,000 129,000 2831 LYXORETF RUSSIA 3,200 117,365 390 CHINA RAILWAY 16,000 95,980 1072 DONGFANG ELEC 3,800 93,670 2006 JINJIANG HOTELS 38,000 47,820 1888 KB LAMINATES 15,000 66,750 179 JOHNSON ELEC H 20,000 62,425 2880 DALIAN PORT 16,000 63,500 2812 LYXORETF WORLD 5,640 60,235 1200 MIDLAND HOLDING 14,000 43,760 576 ZHEJIANGEXPRESS 8,000 38,320 2810 LYXORETF INDIA 400 42,320 1111 CHONG HING BANK 2,000 38,000 2826 LYXORETF NASDAQ 600 36,210 809 GLOBAL BIO-CHEM 10,000 27,860 3389 XINYU HENGDELI 8,000 22,720 178 SA SA INT'L 8,000 24,480 410 SOHO CHINA 6,500 24,685 210 DAPHNE INT'L 6,000 23,100 3382 TIANJINPORT DEV 6,000 17,980 196 HONGHUA GROUP 5,000 12,270 1098 ROAD KING INFRA 1,000 7,100 2698 WEIQIAO TEXTILE 1,000 6,320 696 TRAVELSKY TECH 1,000 4,560 1389 MING AN HOLD 4,000 4,400 672 ZHONGAN REALEST 2,000 3,600 3378 XIAMEN PORT 2,000 2,640

17 Morning Bulletin 26 August 2008

1881 REGAL REIT 1,000 1,560

Total No. of Securities recording Short Selling : 227 Total No. of Designated Securities recording Short Selling : 227 Short Selling Turnover Total Shares (SH) : 262,792,940 Short Selling Turnover Total Value ($) : HKD 2,913,715,620 *Total No. of non-Designated Securities recording Short Selling : 0 Short Selling Turnover Total Shares (SH) : 0 Short Selling Turnover Total Value ($) : HKD 0

*Short selling of non-Designated Securities is allowable only by respective liquidity providers and hedging participants for their respective liquidity provision and hedging purpose.

18 ANALYST’S COVERAGE /RESEARCH OFFICES

SINGAPORE MALAYSIA TAIWAN Stephanie WONG Head of Research YEW Chee Yoon Head of Research Kevin CHANG Head of Research Regional Head of Institutional Research +603 2141 1555 [email protected] +8862 2547 1512 [email protected] +65 6432 1451 [email protected] ƒ Strategy ƒ Strategy ƒ Banks Jack CHANG ƒ Small & Mid Caps ƒ Telcos 8862 2546 4965 Gregory YAP ƒ Property [email protected] +65 6432 1450 [email protected] ƒ Shipping ƒ Non-Tech ƒ Conglomerates ƒ Oil & gas Jill HUANG ƒ Technology & ƒ Gaming 8862 2546 4171 ƒ Transport & Telcos ƒ Media [email protected] Rohan SUPPIAH ƒ Power ƒ PC / Notebook +65 6432 1455 [email protected] ƒ Construction Eric LIN ƒ Airlines ƒ Food & Beverage 8862 2546 0618 ƒ Marine & Offshore ƒ Manufacturing [email protected] ƒ Resources ƒ Plantations ƒ Optical Pauline LEE ƒ Tobacco Chialin LU +65 6432 1453 [email protected] ƒ Electronics 8862 2714 9840 ƒ Bank & Finance [email protected] ƒ Consumer ƒ Communications ƒ Retail INDONESIA Tess WANG Wilson LIEW Katarina SETIAWAN Head of Research 8862 2719 8105 +65 6432 1454 [email protected] +6221 3983 1458 [email protected] [email protected] ƒ Hotel & Resort ƒ Consumer ƒ Financial ƒ Property & Construction ƒ Infra Johnny TEO ƒ Shipping +65 6432 1431 [email protected] ƒ Strategy THAILAND ƒ Engineering ƒ Telcos David BELLER ƒ Logistics ƒ Others +662 658 6300 x 4740 [email protected] ƒ Media & Entertainment Ricardo SILAEN ƒ Banks Anni KUM +6281 3983 1455 [email protected] ƒ Shipping +65 6432 1470 [email protected] ƒ Auto Naphat CHANTARASEREKUL ƒ Chemicals ƒ Energy +662 658 6300 x 4770 [email protected] ƒ Industrials ƒ Heavy Equipment ƒ Energy ƒ REITs ƒ Property Piya ORANRIKSUPHAK David LOOMIS ƒ Resources +662 658 6300 x 4710 [email protected] +65 6432 1417 [email protected] Teguh SUNYOTO ƒ Property ƒ Special Situations +6221 3983 1455 [email protected] Supattra KHONGRUNGPHAKORN ƒ Cement +662 6586300 ext 4800 [email protected] ƒ Construction ƒ Electronics KELIVE Singapore ƒ Pharmaceutical ƒ Automotive ONG Seng Yeow Head of Research ƒ Retail ƒ Tourism +65 6432 1832 [email protected] Adi N. WICAKSONO Kanchan KHANIJOU TAN Chin Poh +6221 3983 1455 [email protected] + 662 658 6300 x 4750 [email protected] +65 6432 1859 [email protected] ƒ Generalist ƒ Construction GOH Han Peng Arwani PRANADJAYA

+65 6432 1857 [email protected] +6221 3983 1455 [email protected] (for retail clients) Geraldine EU ƒ Technical analyst KELIVE Thailand +65 6432 1469 [email protected] George HUEBSCH Head of Research Ken TAI +662 658 6300 ext 1400 [email protected]

+65 6432 1412 [email protected] PHILIPPINES Ed BANCOD Head of Research VIETNAM +63 2 849 8848 [email protected] LE Huy Hoang Head of Research HONG KONG / CHINA ƒ Strategy +84 8 838 6636 x 160 [email protected] Edward FUNG Head of Research ƒ Banking ƒ Strategy +852 2268 0632 [email protected] Laura DY-LIACCO Nguyen Thi Ngan Tuyen ƒ Power +63 2 849 8843 [email protected] +84 8 838 6636 x 163 [email protected] ƒ Construction ƒ Utilities ƒ Pharmaceutical Ivan CHEUNG ƒ Conglomerates ƒ Confectionary and Beverage +852 2268 0634 [email protected] Lovell SARREAL ƒ Oil and Gas ƒ Property +63 2 849 8871 [email protected] Ngo Bich Van Ivan LI ƒ Consumer +84 8 838 6636 x 264 [email protected] +852 2268 0641 [email protected] ƒ Cement ƒ Bank ƒ Bank & Finance ƒ Media ƒ Insurance Larry GRACE Robin SARMIENTO Ngo Thuc Vu +852 2268 0630 [email protected] +63 2 849 8831 [email protected] +84 8 838 6636 x 167 [email protected] ƒ Oil & Gas ƒ Ports ƒ Fisheries ƒ Energy ƒ Mining ƒ Power TAM Tsz Wang Ricardo PUIG Nguyen Doan Quang +852 2268 0636 [email protected] +63 2 849 8846 [email protected] +84 8 838 6636 x 168 [email protected] ƒ Small Caps ƒ Property ƒ Port and Logistics Emily LEE ƒ Telcos ƒ Transportation +852 2268 0631 [email protected] ƒ Small Caps Recommendation definitions Our recommendation is based on the REGIONAL Luz LORENZO Economist following expected price +63 2 849 8836 [email protected] performance within 12 months: ƒ Economics +15% and above: BUY -15% to +15%: HOLD -15% or worse: SELL

19 Morning Bulletin 26 August 2008

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