Month: September 2007

Categories
China Stocks

One dollar is 7.50 Yuan

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Last Updated on September 16, 2007 by stlplace

Week in review 09/09 to 09/15

1) One dollar is 7.50 Yuan. This is the rate I got from China Construction Bank ATM today, using my BoA debit card.

2) The China People’s Bank raised interest rate (by 0.27%) again in the weekend.

3) Moon cake coupon: there are many “moon cake coupon” flippers these days, as mid-autumn festival is approaching. Basically they buy the moon cake coupon from people who got it from Danwei, and resell it to make a profit. The catch is most moon cake coupons will expire on Sept. 25, just like the stock options expires on the 3rd Friday of each month in the US market 🙂

4) Lots of books about stocks, investing in the book store: from Warren Buffett to Peter Lynch, and many “experts” I never heard of.

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Categories
China Stocks

Valuation of China A shares: raw materials

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Last Updated on September 14, 2007 by stlplace

Chinese stocks are becoming more and more expensive. From different statistics, average PE of the market is in 40s. This is not cheap compared to around PE 18 of US S&P 500. There are many reasons for that, and I’m not jumping into it. But I want to share an interesting phenomena here: these days the fund managers, and individual investors are looking for valuation safe haven, or in Chinese terms, 价值洼地.

What does that mean? Lately because some of the blue chips are so hot, they got PE of more than 50. For instance, Vanke (000002), is traded at 32 Yuan, the est. year 2007 earning is 0.60 Yuan, so the PE for 2007 is about 53. Note this is No. 1 weighted stock in Shenzhen Index (about 16%), and its market cap (more than 200 b Yuan, or $30 b) is more than top 4 US home builders combined. (Vanke is No. 1 builder in China and it has about 1% market share). China Merchants Bank (600036) has similar problems. By the way, I believe those are two best managed companies in China.

China merchants bank pic

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Categories
China Stocks

Ji Ming or Gu Ming?

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Last Updated on September 12, 2007 by stlplace

I remember seeing a book written by John Bogle (the founder of Vanguard) where he suggested “individual investors should buy mutual fund not stock”. I agree with some of his arguments, such as diversification. And I believe that’s also the fact in the US: where pension fund and university endowment fund invested in stocks, mostly through mutual funds. But I don’t agree with his conclusion.

Come back to China. Since the inception of Chinese stock market, invididual stock investors, or Gu Ming 股民 have been an important force. Some made money, more lost money in this process. New blood filled in when old guys got wiped out.

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Categories
Fun Stocks

Danbin and Zhu Ping

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Last Updated on September 11, 2007 by stlplace

I added some Chinese financial blog under “blogroll”. Two notables are Dan Bin (CEO of a private equity in Shenzhen), and Zhu Ping (Guangfa Fund manager, a graduate from Shanghai Univ. of Finance and Economics). Both are disciples of Buffett. Dan Bin bought a share of Berkshire so that he could attend the Berkshire annual shareholder meeting in Omaha.

Here is an interesting story written by Dan Bin.

关于2007年9月11日市场下跌的短信记录: (text message transcript: amid yesterday’s China market drop).

朋友:今天跌得好凶啊,还会跌吗?怕怕的。Friend: What a big drop! Will it continue to drop?
但斌:有可能。 Danbin: It’s possible.
朋友：啊！时间会长吗？ Friend: Ouch. Will the drop last long?
但斌：这个上帝知道。 Danbin: Only God knows.
朋友：：-（那咋办 Friend: What should I do?
但斌：等我有时间帮你给上帝打个电话问问。
Danbin: hold on, let me call the God and ask the question for you.
……

Categories
Travel

Shanghai budget hotels

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Last Updated on August 27, 2008 by stlplace

Looking for a cheap but clean (decent) place stay in Shanghai? I revisited this issue and have the following observations.

1) Home Inns, Jinjiang Inn, Motel 168 and Hanting Hotels are not the cheapest. But they offer the best value in terms of location (near metro station or major business center). I have stayed in Home Inns (Rujia) and Jinjiang Inn, they are both good. Motel 168 usually has bigger room, but not as efficent or cozy as the Rujia or Jinjiang. Never stayed in Hanting but they are growing very fast (recently they got another around of VC money, $85 m). Hanting should also be good because its founder Ji Qi is a person into details (hint: he is from Jiangsu province).

2) There are so called “Zhao Dai Shuo”, and their prices are slightly lower compared to the big four. But they are not as nice as the big four. Some have smaller rooms; some need to share the bath room, etc. They will exist in the market as long as there are some customers want to save a little, and their service is not too bad.

3) Hostels: we found this Maggie International Youth Hostel on Tianshan Rd., it was set up in a senior living compound. We checked out the room. Both 4 bed room (50 Yuan per night) and the double bed room (160 per room) are clean. From budget point of view, this is probablly the best deal 50 Yuan can buy in Shanghai.

maggie youth hostel

Categories
China

Apply US visa in Shanghai

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Last Updated on September 11, 2007 by stlplace

The saga of applying the US visa. Warning: for entertainment purpose only. I am not providing any advice for visa application.

Last Friday I went to the US consulate Shanghai for the worker visa, with my wife applying H-4. Ten years have passed since I first applied the student visa. A lot things have changed: namely Internet and call center. These technologies have been integrated into the visa application process, such as the calling card (issued by China Citic Bank) and the appointment system. Here is how it works: the applicant buys the calling card from the bank, call the 400 number (like 800 # in the US), talk to the representative and schedule the appointment. We got our appointment that way. But when we reached the West Nanjing Rd. at 12:45 PM, wait for our 1:15 PM appointment, we found a long line already being formed. Later we learned the appointment system is used for the consulate to estimate how many people will show up, in reality the applicants still show up in early morning or afternoon, waiting the line. Because most everyone (except me, and few others) is so eager to visit US 🙂

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Categories
Business China

Price war leaves bad taste to loyal customers

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Last Updated on September 10, 2007 by stlplace

Last week one of the biggest news in consumer electronics arena is Apple decided to cut the iPhone price. Consider Apple just started shipping iPhone in late June, this move is a blow to its most loyal customers (early adopters). Apple quickly responded to the angry customers by offering $100 credit (source: Apple.com).

From my own experience, US car makers do those kind of price cut all the time. They carry out price wars mainly in two ways: rebate and/or low interest loan. Sometimes I saw a $8000 rebate on a 20 to 30 k truck or SUV. One side effect of those kind of promotion is the lower residual value of pre-owned cars (trucks), compared to similar model Japanese cars/trucks.

Interestingly, this car price wars are now extended in China, for the good or bad of consumer. On the good side, the new customers can buy the cars on the cheap; on the other hand, the early (loyal) customers paid a premium for the car. This is an Chinese article talking about Hyundai cars. The war is not limited to Korean car makers. It appears to me low end car makers have most to lose; while high end cars such as BMW still have much price power. (Picture below: Hyundai Coupe).

hyundai cars pic

PS, after I wrote the above, I realized there is difference between price cut and price war. But I think there is a strong connection between the two: price cut is the tactics of a price war, e.g., Apple announced a price war against its competitors (Motorola, Palm, RIM etc.) by cutting the iPhone price. Now the competitors will have to respond by cutting their prices if they don’t want to give up market share.

Categories
China Stocks

WuXi Pharma Tech Q2 results

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Last Updated on September 9, 2007 by stlplace

Here are the results from Yahoo Finance, some highlights:

Second Quarter 2007 Highlights:

— Total net revenues increased 99.3% over the second quarter of 2006 to
US$30.2 million. (1H revenue $64 m, slight decline over Q1 2007?)
— Net income increased 482.1% over the second quarter of 2006 to US$7.1
million.
— Diluted earnings per American Depositary Share (“ADS”) for the second
quarter of 2007 was US$0.11. Diluted earnings per ADS excluding share-
based compensation expenses (non-GAAP) for the second quarter of 2007
was US$0.13.

The stock took a hit last Thursday because the market expected more for its year 2007 outlook. Currently the company expects rev of $128 to 132 million.

On business level, I like Wuxi’s business model and the global outsourcing trend in the pharma R&D. One concern of outsourcing is margin. I’m listening to its Conference Call now, will add comments if I find anything interesting.

Categories
Business Technology

Week in review 09/02-09/08

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Last Updated on September 7, 2007 by stlplace

1) Howard Schultz, Chairman of Starbucks, talked about competition from McDonald and Dokin Donuts.

Starbucks is not an advertiser. If other companies are going to advertise and promote specialty coffee, Starbucks is going to benefit in the long term,” he said.

2) iPhone price cut and iPod touch launch: Steve Jobs announced Apple will cut 8GB iPhone from $599 to $399, discountine to offer 4GB iPhone, and offer an iPod touch, which is “an iPhone without phone capability”. In other words: iPod touch will have touch screen, music and video capability, WiFi, Internet, etc. You can check out latest iPod lineup from apple.com

Categories
Business Fun

iTune at Starbucks

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Last Updated on September 6, 2007 by stlplace

That’s the new services to be offered by two great companies: Apple and Starbucks. According Seattle Post Intelligence:

Apple’s new wireless iPod music player, iPhone or any laptop computer running iTunes will automatically recognize the iTunes store without a connection fee when customers enter a Starbucks shop that has Wi-Fi access.

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