Hong Kong 23 December 2008 Morning Bulletin News Headlines Analysts: Edward FUNG 852-2268-0632 • Discount Table - “A” and “H” shares ...............................................2 [email protected] • China Mobile (941 HK) and China Telecom (728 HK) - operational Ivan CHEUNG, CFA 852-2268-0634 statistics of November .......................................................................3 [email protected] • New CDMA service launched by China Telecom (728 HK) .............3 Ivan LI, CFA 852-2268-0641 • PBOC lowers interest rates and reserve ratios ...............................4 [email protected] Larry GRACE • Fu Ji Food & Catering Services (1175 HK, HK$3.36) - interim 852-2268-0630 results review......................................................................................5 [email protected] • Coastal Greenland (1124 HK) to increase sales for welfare TAM Tsz Wang, CFA 852-2268-0636 housing drive ......................................................................................6 [email protected] • Significant Insiders.............................................................................7 Emily LEE 852-2268-0631 • Short Selling Record ........................................................................11 [email protected] Jacqueline KO 852-2268-0633 [email protected] Index Indicator Last % Chg HSI 14,622 -3.34 HSCEI 8,138 -3.52 Light Crude 38.59 -7.46 Baltic Dry Index 801 -2.08 ADRs HK$ HK Equiv.* close HSBC 72.24 74.05 China Mobile 77.53 77.00 Petrochina 6.68 6.81 CNOOC 6.87 7.00 Hutchison 38.61 39.10 Cheung Kong 75.74 77.05 China Life 23.76 23.50 Sinopec 5.17 5.16 * US$:HK$ = 1:7.8 SEE APPENDIX I FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS Morning Bulletin 23 December 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 22 Dec 08 22 Dec 08 code 22 Dec 08 22 Dec 08 22 Dec 08 /(Premium) Beiren Printing 187 HK 0.72 184,700 600860 ch 3.38 3.83 12,062,990 81.18% Nanjing Panda 553 HK 1.07 2,270,900 600775 ch 4.68 5.30 22,708,860 79.80% Yizheng Chem 1033 HK 0.93 21,117,800 600871 ch 4.03 4.56 14,498,480 79.61% Tianjian Capital 1065 HK 1.33 6,002,000 600874 ch 5.62 6.36 66,896,400 79.09% North East Electric 42 HK 0.67 1,459,780 000585 ch 2.77 3.13 15,268,720 78.63% Jingwei Textile 350 HK 0.82 845,580 000666 ch 3.19 3.61 16,151,040 77.29% China Eastern 670 HK 1.20 53,826,220 600115 ch 4.63 5.24 86,404,540 77.10% Shangdong Xinhua 719 HK 1.20 1,676,080 000756 ch 4.13 4.67 28,242,400 74.33% Shanghai Petrochem 338 HK 2.09 36,026,520 600688 ch 5.80 6.56 44,263,730 68.16% China Southern 1055 HK 1.35 60,118,900 600029 ch 3.73 4.22 192,496,600 68.02% Guanzhou Phar. 874 HK 2.75 16,674,360 600332 ch 6.88 7.79 123,940,400 64.68% Jiaoda Hightech 300 HK 3.27 4,659,200 600806 ch 8.09 9.16 37,722,280 64.28% China Shipping 2866 HK 1.21 75,028,020 601866 ch 2.96 3.35 68,638,880 63.88% Beijing N Star 588 HK 1.38 9,430,180 601588 ch 3.35 3.79 81,276,240 63.60% Huadian Power 1071 HK 1.85 13,302,000 600027 ch 4.01 4.54 20,717,180 59.23% Jiangxi Copper 358 HK 5.94 107,183,100 600362 ch 12.57 14.23 145,350,500 58.24% China Oilfield 2883 HK 6.40 46,896,050 601808 ch 13.08 14.80 132,580,200 56.76% Chongqing Iron 1053 HK 1.99 19,032,780 601005 ch 3.98 4.50 16,065,200 55.82% Shenzhen Expressway 548 HK 2.72 19,068,620 600548 ch 5.22 5.91 34,494,500 53.96% Guanzhou Ship 317 HK 7.40 14,956,080 600685 ch 14.19 16.06 72,474,860 53.92% Air China 753 HK 2.41 50,948,040 601111 ch 4.62 5.23 197,650,900 53.91% Yanzhou Coal 1171 HK 5.60 134,937,200 600188 ch 9.78 11.07 97,024,940 49.40% Datang Power 991 HK 4.14 90,973,160 601991 ch 7.21 8.16 16,521,350 49.26% Chalco 2600 HK 4.53 150,488,800 601600 ch 7.59 8.59 104,551,200 47.26% Petrochina 857 HK 6.81 665,971,500 601857 ch 10.92 12.36 303,049,400 44.89% Dongfang Electric 1072 HK 18.26 16,347,550 600875 ch 28.50 32.25 85,559,800 43.39% China Cosco 1919 HK 5.65 195,446,400 601919 ch 8.72 9.87 566,160,200 42.75% Sinopec 386 HK 5.16 523,654,700 600028 ch 7.68 8.69 649,763,000 40.63% Citic Bank 998 HK 2.82 83,489,060 601998 ch 4.12 4.66 86,820,980 39.52% Anhui expressway 995 HK 2.86 18,796,190 600012 ch 4.13 4.67 16,690,760 38.81% Guangshen Rail 525 HK 2.87 15,642,490 601333 ch 4.01 4.54 172,334,400 36.76% Bank of China 3988 HK 2.27 526,611,200 601988 ch 3.13 3.54 112,069,300 35.92% Weichai 2338 HK 15.18 15,058,170 000338 ch 20.69 23.41 117,860,100 35.17% Huaneng Power 902 HK 5.38 91,062,820 600011 ch 7.22 8.17 56,449,510 34.16% Maanshan 323 HK 2.73 123,972,400 600808 ch 3.58 4.05 231,283,600 32.62% ZTE 763 HK 22.25 25,995,210 000063 ch 28.52 32.28 365,231,800 31.06% Tsingtao 168 HK 16.62 6,631,800 600600 ch 20.53 23.23 27,999,850 28.47% China Coal 1898 HK 6.11 106,932,500 601898 ch 7.45 8.43 240,839,700 27.53% China Ship Dev 1138 HK 8.15 117,864,600 600026 ch 9.86 11.16 197,361,100 26.96% Shenhua Energy 1088 HK 16.34 338,403,900 601088 ch 19.66 22.25 361,434,300 26.56% Zijin Mining 2899 HK 4.25 278,541,800 601899 ch 4.99 5.65 319,183,200 24.74% Jiangsu Express 177 HK 5.32 22,953,170 600377 ch 5.80 6.56 28,033,840 18.95% China South Locomotive 1766 HK 4.13 28,762,960 601766 ch 4.30 4.87 324,631,000 15.13% China Railway Group 390 HK 5.54 126,186,600 601390 ch 5.65 6.39 239,685,900 13.36% Angang 347 HK 8.26 124,882,800 000898 ch 7.70 8.71 187,433,400 5.21% China Construction Bank 939 HK 4.58 954,965,100 601939 ch 4.08 4.62 246,261,300 0.81% CM Bank 3968 HK 15.14 278,564,000 600036 ch 13.41 15.18 787,982,300 0.24% ICBC 1398 HK 4.30 835,720,300 601398 ch 3.78 4.28 380,292,400 (0.52%) China Life 2628 HK 23.50 1,260,372,000 601628 ch 20.32 23.00 397,316,600 (2.19%) Bank of Communications 3328 HK 5.70 226,997,300 601328 ch 4.91 5.56 190,428,700 (2.58%) China Railway Construction 1186 HK 11.88 98,218,660 601186 ch 9.97 11.28 272,681,700 (5.29%) Anhui Conch 914 HK 36.50 91,612,800 600585 ch 27.20 30.78 173,800,300 (18.57%) Ping An 2318 HK 38.85 397,209,600 601318 ch 28.73 33 1,292,491,000 (19.49%) Total 8,505,210,690 9,754,500,830 2 Morning Bulletin 23 December 2008 Market / Corporate News China Mobile (941 HK) and China Telecom (728 HK) - operational statistics of November China Mobile and China Telecom announced their monthly performance data of November yesterday morning. Analyst comment: China Mobile (CM) added 6.87m new subscribers in November, down 4.5% m-o-m. Total subscriber number reached 450.179m. It was the first time that CM had monthly addition below 7m in 2008, and we observed a clear down trend since it peaked off in February 2008. With a higher mobile penetration rate, room for further growth is obviously contracting. The slower economic growth will make new addition even more difficult. China Telecom (CT) lost 1.5m fixed-line users in November (vs 1.09m loss in October) and the total subscriber number reduced to 210.37m. Broadband continues to be a growth driver with net additions of 0.69m, down 1.4% m-o-m. Total number reached 43.57m. This is the second month that CT reporting KPI on CDMA business. It further lost 0.43m CDMA users (vs 0.68m loss in October). Total number reduced to 27.97m. Asymmetric regulation is the critical factor determining subscriber addition/reduction, in our view. Policies such as mobile number portability and network sharing will hit CM’s competitive power. Running the homegrown 3G business further burden CM. Maintain bearish outlook. We prefer China Unicom (CU, 762 HK) to CT between the two weaker players.