Investment Daily(HK)

Daily(H K).

HK Research Department May 25, 2009

HK Market 1. p.1 Close CHG % Market Outlook ...... HSI 17,063 (137) (0.80)  Hong Kong stock market recorded a drop last Friday. Wall Street HS-Finance 25,189 (235) (0.93) HS-Utilities 35,622 (113) (0.32) shares ’ weakness dragged Hong Kong stocks. HS-Properties 21,771 316 1.47 (HSI) fell 136.97 points or 0.8 per cent to close at 17062.52 points. HS-Com & Ind 9,399 (119) (1.25) HSCCI 3,614 (40) (1.10) HSI dropped below the gate of 17,000 once in intraday, following HSCEI 9,791 (136) (1.37) by recovery. HSI may test the support of 20-day moving average GEM 548 9 1.60 at 16500 point level. Supported by liquidity driven, we expect Market Turnover HSI will rebound and get new high next month. (HK$MN) Turnover CHG % Main board 64,355 3,415 5.6 HSI 22,389 3,506 18.6  Hang Seng China Enterprise Index (HSCEI) lost 136.49 points or HSCEI 16,146 1,313 8.9 GEM 766 96 14.3 1.37 per cent to close at 9790.79 points. HSCEI failed to stand

above the gate of 10000 points level in the morning trading Index Futures Over/Under Close CHG session and taking-profit trade makes the index drop. HSI MAY 09 3 17,066 43 HSI JUNE 09 (81) 16,982 38 HSCEI MAY 09 24 9,815 (6) 2. Market Information / Update ...... p2 HSCEI JUNE 09 (66) 9,725 (12)  Market Watch: According to liquidity driven, we expect HSI will Composite Index Close CHG % rebound and get new high next month. Large Cap 1,366 (3) (0.21) Mid Cap 3,416 (27) (0.77) Small Cap 1,608 (24) (1.46) 3. Industry Update ...... p.3-6 Composite Industry Index Close CHG %  PetroChina (0857.HK): PetroChina to pay HK$7.88 billion for Energy 9,945 (231) (2.27) Materials 7,859 (231) (2.86) 45.51% stakes in SPC; Industrial Goods 1,078 (8) (0.72)  Huiyuan Juice (1886.HK): Private equity firms seek to buy into Consumer Good 3,351 (44) (1.31) Services 2,521 (47) (1.82) Huiyuan Juice Telecom 1,526 (9) (0.58) Utilities 4,593 29 0.63 Financials 2,622 (27) (1.01) Prop and Constr 2,426 (6) (0.25) Info Tech 1,460 (22) (1.48) 4. Stock Recommendation ...... p. Conglomerate 1,688 (2) (0.12)

Foreign Markets Close CHG % 5. Price Information ...... p.7-9 Shanghai A 2,726 (14) (0.50) Shenzhen A 922 (2) (0.18)  ADR price of major HK stocks, Hang Seng H-Financial Index, China Nikkei 225 9,246 20 0.22 telecom sector, A-H stock comparisons, and Taiwan related stock. Taiwan(TWSE) 6,737 18 0.28 DJIA 8,277 (15) (0.18) Nasdaq 1,692 (3) (0.19) S&P 500 887 (1) (0.15)

Please refer the analysts and company disclosure, and disclaimers in the final page.

1 Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

Market Information / Update

HIS HSCEI

100 140 18000 90 11000 120 80 16000 70 100 9000 60 80 14000 50 7000 60 40 12000 30 wew 40 20 5000 10000 20 10

0 8000 0 3000 #N/A 9/3/09 23/3/09 6/4/09 22/4/09 7/5/09 21/5/09 #N/A 9/3/09 23/3/09 6/4/09 22/4/09 7/5/09 21/5/09 Requesting Requesting Data... Data... Source: Bloomberg. CSC Securities. (HK) Market Watch Supported by liquidity driven, we expect HS I will rebound and get new high next month.

 Hong Kong stock market recorded a drop last Friday. Wall Street shares’ weakness dragged Hong Kong stocks . Hang Seng Index (HSI) fell 136.97 points or 0.8 per cent t o close at 17062.52 points.

HSI dropped below the gate of 17,000 once in intraday , following by recovery. Turnover rose to HK$ 64.35 billion. Property sector outperformed with a gain of 1.47 per cent. SHK Property (16.HK)

and New World Development (17.HK) rallied 5.01 and 3.73 per cent, respectively. Other property stocks showed resilience. The foreign brokerage house upgraded property shares’ target price as

economy passed through the worst time. Those were the common reasons that foreign brokerage analysts’ common action when they didn’t know why share price rebound so much. HS I recovery the

jumping gap between 17062 and 17376 points and fell below the 5-day and 10-day moving average. HSI may test the support of 20-day moving average at 16500 point level. Supported by liquidity

driven, we expect HSI will rebound and get new high next month.

 Hang Seng China Enterprise Index (HSCEI) lost 136.49 points or

1.37 per cent to close at 9790.79 points. HSCEI failed to stand above the gate of 10000 points level in t he morning trading session and taking-profit trade makes the index drop. Steel, coals mining,

petrochemical and china financial sectors dragged index plunge.

Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

Industry/Company Update

PetroChina PetroChina to pay HK$7.88 billion for 45.51% stakes in SPC (0857 ；；；HK$8.39)  PetroChina, the mainland's largest oil producer, has agreed to buy 45.51 per cent of Singapore-listed Singapore Petroleum Co (SPC) for HK$7.88 billion and plans to buy out other shareholders of the company in a major move to expand abroad.

 The purchase, if successful, will be PetroChina's first cross-broader acquisition in a listed company, according to South China Morning Post’s report. The acquisition will be PetroChina's second overseas purchase in two months after it agreed last month to buy a 50 per cent stake in Mangistaumunaigas, an unlisted oil and gas producer in Kazakhstan.

 It is believed that a successful buyout would also make it the biggest takeover in Asia's refining industry. Singapore Petroleum will become a new pla tform for the implementation of their international strategy and will provide a broader foundation and stable path for development, according to PetroChina’s statement. Moreover, PetroChina said it planned to make an offer to buy out other Singapore Petroleum shareholders and delist the company.

 PetroChina will buy 234.5 million SPC shares from Keppel Oil and Gas Services at S$6.25 (HK$33.61) each in cash. Singapore government investment flagship Temasek Holdings indirectly controls Keppel Oil through Singapore-listed Keppel Corp. The offer price represents a 24 per cent premium on Singapore Petroleum's closing price of S$5.04 on Friday and 14 times the company's earnings per share for FY2008.

 Singapore Petroleum reported a net profit of S$230 million last year on revenue of S$11.1 billion. Singapore Petroleum has a 50 per cent stake in Singapore Refining, which owns a 285,000 barrels per day refinery and is one of the three major refiners in the city state. On the other hand, PetroChina and Keppel Co rp plan to explore opportunities in the offshore oil industry.

 The deal will enhance the refining capacity of PetroChina and comes after Beijing introduced a new system a few months ago to adjust state-controlled selling prices to enable refiners to make a profit.

 PetroChina produced 73.97 million tonnes of refined products, Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

including petrol, kerosene and diesel last year, up only 3.2 per cent. China Petroleum & Chemical Corp made 105.86 million tonnes by comparison, up 9.4 per cent. It is expected tha t PetroChina will gain some production and refining assets from the deal but it's nothing to get excited about. In terms of size, it's a drop in the bucket.

 The deal comes as Beijing is encouraging companies to expand overseas, especially in acquiring r esources as prices have dropped amid the global financial turmoil, to provide stable supply for the

 country's growing needs. China plans to set up 10 million tonnes of state fuel reserves by 2011, or about two weeks' worth of current consumption of petr ol, diesel and kerosene combined, according to Reuters. (Source: SCMP) Huiyuan Juice Private equity firms seek to buy into Huiyuan Juice (1886 ；；；HK$5.43)  China Huiyuan Juice Group had attracted interest from several major private equity funds looking at taking a minority stake, according to local media. However, a high asking price and the fu nds' lack of operating experience in the juice market would make it difficult to pull off a deal.

 Blackstone Group, Carlyle Group and TPG are among the global funds said to be looking at the company. The funds declined to comment. Huiyuan chairman and pr esident Zhu Xinli said on April 15 the company had been approached by several interested parties.

 Coca-Cola had tried to take over Huiyuan in a HK$19.65 billion buyout announced in September last year, but the Ministry of Commerce blocked the takeover in March, citing a new anti-monopoly law. The move was widely seen as an attempt to keep large domestic brands in local hands.

 Coca-Cola offered what was considered an ultra-rich HK$12.20 a share to buy the stakes held by Mr Zhu, French drinks maker Group Da none and US private equity firm Warburg Pincus. The bid was almost three times the HK$4.14 at which the stock was trading at the time.

 Market said last month that Coca-Cola had re-engaged Huiyuan in talks that could lead to a minority stake sale. Danone, which holds a 22.98% stake, and Warburg Pincus, which holds 6.81%, were also involved in the talks. Huiyuan, Danone and Warburg Pincus declined to comment. Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

 Investors expect Huiyuan to face stiffer competition from both domestic and international rivals. Coca-Cola, for example, recently kicked off a US$2 billion, three-year investment programme. Coca-Cola and Pepsi, another possible Huiyuan suitor, control 86% of the mainland soft drink market and are trying to expand into juice, dairy and other drinks.

 The company maintained its No 1 ranking in the pure juice market last year, but sales of those products declined 2.4% to 582 million yuan in 2007. It is the mainland's fourth-largest diluted juice maker and said it planned to grow that business by establish ing more distribution and marketing channels to raise that ranking. Huiyuan planned to reduce capital expenditure to about 200 million yuan this year from 1.32 billion yuan last year. (Source: SCMP) Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

Price Information

Major HK Stocks’ ADR ADR Close ADR Chang Transfer to HK Closing in HK US vs HK Code Stock (USD) (%) (HKD) (HKD) (%) 5 HSBC 42.47 (0.4) 65.84 65.65 0.3 % 338 35.77 (4.3) 2.77 2.80 (1.0 %) 386 China Petroleum 81.40 (0.5) 6.31 6.30 0.2 % 525 Guangshen Railway 23 .10 (1.9) 3.58 3.61 (0.8 %) 670 China Eastern Airlines 18.56 (2.3) 1.44 1.45 (0.8 %) 728 China Telecom 44.30 0.5 3.43 3.43 0.1 % 762 12.16 (0.8) 9.43 9.46 (0.4 %) 857 Petrochina 108.42 0.1 8.40 8.39 0.2 % 883 CNOOC 126. 78 (1.7) 9.83 9.99 (1.6 %) 902 Huaneng Power 25.57 0.1 4.96 4.96 (0.1 %) 941 46.94 0.3 72.77 73.30 (0.7 %) 945 Manulife Financial 19.30 2.3 149.61 147.00 1.8 % 981 Semiconductor 2.30 (5.7) 0.36 0.37 (2.3 %) 992 Lenovo 7.21 (3.9) 2.79 2.80 (0.2 %) 1055 China Southern Airlines 13.19 (1.9) 2.04 2.04 0.2 % 1137 City Telecom 4.08 4.6 1.58 1.56 1.4 % 1171 Yanzhou Coal Mining 11.76 (0.9) 1.82 9.44 (80.7 %) 2332 Hutchison Telecom 2.95 2.4 1.52 1.49 2.3 % 2600 Aluminum China 22.73 (0.9) 7.05 7.19 (2.0 %) 2628 China Life 52.25 (0.1) 27.00 27.05 (0.2 %) Source: Bloomberg, CSC Securities

Hang Seng H-Financials Index H-Share Close CHG H-Share Mkt Cap A-Share Close H-A Share differ Code Stock (HKD) (%) (HKD $BN) (RMB) (%) 1398 Ind & Comm 4.78 (0.2) 1,597 4.26 (1%) 939 China Construction 4.80 (1.4) 1,122 4.50 (6%) 3988 2.90 (0.7) 736 3.53 (28%) 3328 6.78 (1.7) 332 7.05 (15%) 3968 14.36 (2.3) 223 16.65 (24%) 2628 China Life 27.05 (1.3) 765 23.08 3% 2318 Ping An 50.25 (1.7) 369 39.44 12% 2328 Picc Property & Casualty 4.97 (2.2) 55 N/A N/A Source: Bloomberg, CSC Securities

Hang Seng H-Telecommunications Index H-Share Close CHG H-Share Mkt Cap A-Share Close H-A Share differ Code Stock (HKD) (%) (HKD $BN) (RMB) (%) 941 China Mobile 73.3 (0.6) 1,470 N/A N/A 762 China Unicom 9.5 (0.3) 225 N/A N/A 728 China Telecom 3.4 0.6 278 N/A N/A 763 ZTE 25.9 (1.5) 37 35.38 (36%) Source: Bloomberg, CSC Securities

Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

A-H share stocks H-Share Close CHG H-Share Mkt Cap A-Share Close H-A Share differ Code Stock (HKD) (%) (HKD $BN) (RMB) (%) 0857 Petrochina 8.39 (1.1) 1,536 12.86 (43%) 0386 China Petroleum 6.30 (2.0) 546 10.24 (46%) 1088 24.45 (1.8) 486 26.09 (18%) 0939 4.80 (1.4) 1,122 4.50 (6%) 1398 Ind & Comm Bank of China 4.78 (0.2) 1,597 4.26 (1%) 3328 Bank of Communication Co 6.78 (1.7) 332 7.05 (15%) 3968 China Merchants Bank 14.36 (2.3) 223 16.65 (24%) 3988 Bank of China 2.90 (0.7) 736 3.53 (28%) 0753 3.64 (0.3) 45 6.30 (49%) 1055 China Southern Airlines 2.04 (1.9) 13 5.21 (66%) 0670 China Eastern Airlines 1.45 (2.0) 7 5.14 (75%) 0525 Guangshen Railway 3.61 (4.2) 26 4.55 (30%) 0177 Jiangsu Express 5.30 1.0 27 5.99 (22%) 0548 Shenzhen Expressway 3.33 (5.9) 7 5.39 (46%) 0995 Anhui Expressway 4.56 0.4 8 5.15 (22%) 1138 China Shipping Development 10.18 (3.2) 35 13.09 (32%) 0991 Datang Intl Power Gen 3.74 (1.6) 44 7.42 (56%) 0902 Huaneng Power 4.96 0.4 60 7.57 (42%) 1071 Huadian Power 2.01 (1.0) 12 4.78 (63%) 0347 Angang Steel 10.86 (2.7) 79 9.86 (3%) 0323 Maanshan Iron & Steel 4.00 (5.4) 31 4.12 (15%) 1053 Chongqing Iron & Steel 2.96 (1.3) 5 5.17 (50%) 0168 Tsingtao Brewery 20.90 (2.3) 27 23.65 (22%) 0588 Beijing North Star 2.42 (1.6) 8 5.22 (59%) 2338 Weichai Power 27.40 (2.1) 23 35.91 (33%) 1065 Tianjin Capital 2.06 0.0 3 6.58 (72%) 0338 Sinopec Shanghai 2.80 (4.8) 20 7.85 (69%) 0874 Guangzhou Pharmaceutical 3.23 (2.7) 3 7.69 (63%) 0358 Jiangxi Copper 11.26 (3.8) 34 27.33 (64%) 1171 Yanzhou Coal Mining 9.44 (3.5) 46 15.01 (45%) 2899 Zijin Mining 6.60 (0.6) 96 8.84 (34%) 0914 51.45 (1.1) 91 43.96 3% 0553 Nanjing Panda 2.23 3.7 1 6.23 (68%) Source: Bloomberg, CSC Securities

Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

Taiwan Related stocks Mkt Cap Close CHG of 1D CHG of 5D CHG of 1M CHG of YTD Code Stock (MN) (HKD) (%) (%) (%) (%) 151 Want Want China 47,815 3.62 0.8 (4.7) (6.2) 12.8 157 Natural Beauty 2,261 1.13 0.0 4.6 11.9 (6.6) 210 Prime Success 5,323 3.25 (2.7) 9.1 27.5 157.9 220 U-Presid China 12,778 3.55 (7.1) 0.6 12.3 77.6 258 Tomson 3,256 2.46 (3.1) 2.1 38.2 69.7 319 China Metal 1,160 1.15 0.9 4.5 15.0 32.2 322 Tingyi Holdings 64,807 11.60 3.2 9.0 28.0 29.2 334 Proview 153 0.20 (3.4) 36.6 48.9 23.8 360 New Focus Auto 477 1.06 7.1 6.0 11.6 17.8 422 VMEP 690 0.76 (5.0) 5.6 26.7 33.3 425 Minth Group 5,508 5.77 (0.5) 8.9 21.7 86.1 469 Capxon 144 0.17 (2.9) 13.3 39.3 86.8 471 Global Flex 148 0.09 (2.1) (5.1) 78.8 158.3 482 Sandmartin 507 0.91 (1.1) (5.2) (9.9) (27.2) 516 Pyxis Group 516 0.22 1.9 2.4 0.0 0.0 531 Samson Holding 3,140 1.03 1.0 5.1 35.5 3.0 551 Yue Yuen 27,933 16.94 1.9 6.0 (2.5) 10.6 597 China Res Micro 1,581 0.27 0.0 1.9 1.9 143.2 636 Fubon Bank 4,431 3.78 (2.8) (0.5) 49.4 51.2 660 Nority 2,898 0.27 (5.3) 3.8 12.0 (35.7) 667 HannStar Board 1,264 0.96 12.9 28.0 45.5 115.7 676 Pegasus 1,016 1.39 0.7 2.2 1.5 (0.7) 722 DNI 2,023 1.69 0.0 (0.6) (1.7) 39.7 743 Asia Cement 9,026 5.80 (1.7) (1.7) (8.8) 48.7 757 Solar Giga 4,658 2.74 3.8 14.6 42.7 39.8 903 TPV 6,819 3.23 (4.2) 4.9 17.9 29.2 915 Linmark Group 154 0.23 (7.7) 0.4 8.6 51.0 990 Theme 161 0.18 (2.7) (6.7) 93.5 136 .8 1041 Fulbond Holding 415 0.03 (3.0) 23.1 113.3 100.0 1116 Mayer Holdings 328 0.57 0.0 0.0 3.6 3.6 1129 Water 473 0.25 (5.7) (15.3) 13.1 152.5 1136 TCC 4,592 3.58 (3.0) (1.6) 27.4 95.6 1163 Bright 164 0.32 (3.0) 10.3 30.1 (5.9) 1223 Symphony Holdings 445 0.26 (3.8) 24.4 40.9 15.9 1808 Tai-I 194 0.33 (4.4) 27.5 48.4 (1.5) 1836 Stella Holdings 9,612 12.10 1.7 14.2 15.2 92.1 1868 Neo-Neon 1,926 2.53 (5.9) 8.6 41.3 67.5 1991 Ta Yang Group 576 0.72 (5.3) 5.9 26.3 38.5 1997 RMIH 1,230 1.23 5.1 10.8 18.3 95.2 2038 Foxconn 36,720 5.20 (1.3) 0.6 11.3 102.3 2317 Vedan 723 0.48 (1.0) 0.0 25.0 13.1 2398 Good Friend 423 1.26 0.0 31.3 40.0 46.5 2788 Yorkey Optical 1,209 1.46 1.4 1.4 17.7 58.7 2878 Solomon Systech 831 0.34 (5.6) 15.3 9.7 89.9 3336 Ju Teng 4,800 4.80 10.9 17.4 72.0 196.3 3999 DaChan Food 1,455 1.44 0.0 (2.7) 5.9 27.4 8013 Pine 129 0.14 (0.7) (0.7) 32.4 32.4 8041 Intcera 395 0.05 16.3 8.7 38.9 56.2 8043 ERA 80 0.20 0.0 (4.8) 106.2 100.0 Source: Bloomberg, CSC Securities

Investment Daily(HK) dailyljlkjlkjkljlkjl Daily

Hong Kong Research Department Address: 32/F, Suite 3204-3207, Cosco Tower, 183 Queen’s Road Central, Hong Kong Email: [email protected] Fax: (852) 2105 1196 / (852) 2105 1198

Analysts Coverage Tel Email Jaseper, Wing Kin Tsang Researc h Director (852) 2105 1105 [email protected]

Shinhui, Shin Hui Huang Strategy / Economics (852) 2105 1103 Hh_huang @e-capital.com.hk

Sophie, Shuo Fen Fan Retails / Beverage / Foods (852) 2105 1112 [email protected] Financials / Properties / Barry, Tsang Shing Chan (852) 2105 1101 [email protected] Shipping

Capital Company

Hong Kong Taiwan Shanghai CSC Securities (HK) Limited Capital Securities Corporation CSC International Holdings CSC Asia Limited Limited CSC Financial Services Limited (Representative Office) CSC Futures (HK) Limited

32/F, Suite 3204-3207, Capital Square 14/F 18/F, No. 360 Pu Dong Nan Road Cosco Tower No. 101 Sung Jen Road New Shanghai International Tower 183 Queen’s Road Central Taipei 110 Shanghai Hong Kong Taiwan, R.O.C PRC

TEL: (852)2530 9966 TEL: (8862) 8789 2918 TEL: (8621) 5888 7188 FAX: (852)2104 6006 FAX: (8862) 8789 2958 FAX: (8621) 5888 2929

Disclaimer This publication is issued by CSC Securities (HK) Limited (“CSCSL”), a licensed corporation to carry on Type 1, 2 & 4 regulated activities under Securities and Futures Ordinance (CAP. 571) in Hong Kong, for sophisticated investors who understand the meaning of risks in investments and is produced solely for information purposes and should not be construed as an offer to buy or sell any securities or commodities .Thus investors must make their own determination in relation to the appropriateness of an investment in any securities referred to herein base on the legal, tax, accounting considerations and investment strategy applicable to such investors. The information, opinions, and projections contained in this report are based upon sources believed to be reliable, but they have not been independently verified. Neither CSCSL, nor any of the companies of the Capital Company, nor any individual connected with the Company shall accept responsibility or liability for any loss occasioned by reliance placed upon the contents hereof. The information and opinion contained in this report are subject to change without notice. The Capital Company of which CSCSL is member, and/or their affiliated companies and/or directors, representatives, employees or officers as such, may from time to time perform investment, advisory, or other services for the companies mentioned in this publication, where applicable law permits. The above-mentioned entities or individuals may have used the research materials before publication or may have positions (as principal or otherwise) in, or otherwise be materially interested in, any of the securities mentioned herein. This report may not be reproduced, distributed or published in any medium for any purpose without prior written approval.