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Mindray Leads Declines on Earnings Forecast: China Overnight

Mindray Medical International (MR) Ltd., the country’s biggest medical-device supplier, sank the most among the most-traded Chinese stocks in the U.S. after failing to lift its profit forecast. Semiconductor Manufacturing International Corp. (SMI) dropped after reporting a quarterly loss.

Mindray tumbled 12 percent, the most since Aug. 10, to $24.56 as of 2:15 p.m. New York time. Semiconductor Manufacturing, China’s biggest chipmaker, slid 5.1 percent to $2.62 after reporting a third-quarter net loss of $88.1 million. The Bloomberg China-US 55 Index gained 0.7 percent.

Mindray, based in Shenzhen, left its 2011 estimate for non- GAAP net income growth at 10 percent while increasing its sales growth forecast to 20 percent from 16 percent. The company also said in a statement Nov. 7 that its board approved a plan to buy back as much as $100 million of its shares.

“Investors have some concern about Mindray as it raised its top line guidance while the bottom line remained the same,” a move that the company’s executives didn’t provide a “good explanation” for, said Yale Jen, an analyst at Maxim Group LLC in New York. “The company’s share buyback plan shows it has no better use of its cash for mergers and acquisitions than returning it to shareholders.”

The Bloomberg China-US 55 Index (CH55BN) reversed earlier losses as U.S. stocks extended gains after Italy’s president said Prime Minister Silvio Berlusconi will resign, bolstering optimism the nation will appoint a new leader who can tame the debt crisis. The Shanghai Composite Index fell 0.2 percent yesterday.

Huaneng Power

The American depositary receipts of Huaneng Power International Inc. (HNP), the listed unit of China’s biggest producer, jumped 8.6 percent, the most since March 2009, to $20.34 after Deutsche Bank raised its recommendation to “buy” from “hold.” Each ADR represents 40 common shares. Its Hong Kong- traded shares jumped 11 percent to HK$4, or the equivalent of 51 cents a share.

Hong Kong-based Deutsche Bank analysts led by Michael Tong said in a report yesterday that they expect China to allow a 2.5 percent to 5 percent tariff increase in January because inflation has peaked and power shortages will pick up over the next three years.

China’s inflation rate fell to 5.4 percent in October from 6.1 percent in September, according to the median forecast of economists surveyed by Bloomberg before a statistics bureau report on Nov. 9. China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, the least in two years.

Yuan Strengthens

The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 1.5 percent to $38.77. The Standard & Poor’s 500 Index added 0.6 percent.

The Chinese yuan strengthened 0.1 percent to 6.3465 a dollar yesterday, according the China Foreign Exchange Trade System. The currency has risen 4.1 percent this year, the best performance among the 25 emerging-economy currencies tracked by Bloomberg.

Trina Solar Ltd. (TSL), China’s fifth-largest supplier of solar panels, rose 1.4 percent to $7.94 after its chief executive officer said most of the biggest solar-equipment makers may disappear in the next few years as plunging prices erode margins and drive the weakest out of business.

“This is the decade of mergers and acquisitions,” Jifan Gao, CEO of Changzhou, China-based Trina, said in an interview yesterday. “From now until 2015 is the first phase, when about two-thirds of the players will be shaken out.”

Suntech Power Holdings (STP), the world’s largest maker of solar panels, increased 4.6 percent to $2.76. LDK Solar Co. (LDK), the second-largest maker of wafers, slid 2.1 percent to $3.74 after the company was given a new “reduce” recommendation at Mirae Asset Securities by equity analyst Ricky Ng.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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