Seaspan Buoys N.Y. Index Advance as PMI Bolsters Outlook: China Overnight
Chinese stocks traded in the U.S. rose, led by Seaspan Corp. (SSW), after data showing that manufacturing expanded for a third month bolstered the outlook for the world’s second-largest economy.
Seaspan, a Hong Kong-based container ship operator, soared to a 10-month high as plans to boost a quarterly dividend and buy back shares spurred two analysts to reiterate “buy” recommendations. Macau casino operator Melco Crown Entertainment Ltd. (MPEL) traded at a 2.5 percent premium to Hong Kong shares as gaming revenue soared 22 percent in the city. The Bloomberg China-US 55 Index (CH55BN) of the most-traded Chinese stocks in the U.S. added 0.4 percent to 108.61 yesterday in New York.
China’s purchasing managers’ index rose to 51.0 last month, from 50.5 in January, government data released yesterday showed. Above the 50 level that is the threshold for expansion, the February reading was the highest since September and beat a 50.9 median estimate of economists surveyed by Bloomberg. The Bloomberg China-US 55 measure sunk 8.3 percent last year as Europe’s debt crisis and sluggish U.S. growth damped prospects for the world’s largest exporter, where the economy expanded at the slowest pace for 10 quarters at the end of 2011.
“The PMI was obviously encouraging and China is going to have a soft landing in decent growth,” Greg Lesko, who manages $700 million at Deltec Asset Management in New York including investments in Chinese stocks, said in a phone interview yesterday.
Seaspan surged 7.2 percent to $18.51 in the U.S., the highest level since May 2.
The company said on Feb. 29 that it will increase quarterly dividend payments by 33 percent to to 25 U.S. cents per share and that payouts to stockholders in 2012 will total $1 per share, according to a statement issued after U.S. markets closed on Feb. 29. The board of Seaspan also approved a plan to buy back as much as $50 million of common shares without an expiration date.
Analysts at Dahlman Rose & Co LLC and Cantor Fitzgerald LP reiterated their “buy” recommendations on the stock yesterday, while strategists at Credit Suisse Group AG and Wells Fargo & Co. rated Seaspan shares “neutral” or “market perform.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., was little changed at $40.32 yesterday, after advancing 3.8 percent last month. The Standard & Poor’s 500 Index (SPX) climbed 0.6 percent to 1,374.09, extending a three-month rally, after government data showed that U.S. jobless claims declined to a four-year low.
Mindray Medical International Ltd. (MR), China’s biggest medical-device supplier, advanced 4.5 percent to $31.98 in New York trading, the highest level since Aug. 9. CLSA Ltd. analyst Jacqueline Mei upgraded her recommendation on the shares to “outperform” from “underperform” on Feb. 29 while nine other analysts maintained ratings of “buy” or “outperform,” after the company released fourth-quarter results.
Mindray, based in Shenzhen, said in a Feb. 27 statement that fourth-quarter sales rose 25 percent from a year ago to $264.1 million, beating the $259.2 million average of five analysts’ estimates compiled by Bloomberg.
The company will pay a 40-cent cash dividend per share in April from its 2011 net income, which rose 7 percent from the previous year to $166.6 million. Mindray forecast adjusted net income will climb at least 13 percent this year, more than the average growth rate predicted by 16 analysts surveyed by Bloomberg.
Gaming Revenue Increase
Melco Crown, which runs casinos in the world’s biggest gaming hub, advanced 3 percent to a six-month high of $13.01. Gaming revenue in Macau, the only Chinese city where public gambling is allowed, increased 22.3 percent in February from a year ago to 24.3 billion patacas ($3 billion), the city’s Gaming Inspection and Coordination Bureau said yesterday.
Melco’s American depositary receipts, each representing three common shares, traded 2.5 percent above stock listed in Hong Kong, from a discount of 0.5 percent on Feb. 29.
Macau gambling shares may deliver 30 percent to 50 percent returns this year, Billy Ng, a Hong Kong-based gaming analyst at Bank of America Merrill Lynch, said in an interview with Bloomberg Television yesterday. Melco Crown is returning 35 percent in 2012.
Chinese economic growth is expected to slow to about 8.5 percent this year, from 9.2 percent in 2011, China’s Ministry of Industry and Information Technology said on Feb. 29. Policy makers are already loosening monetary policy to ease access to credit for smaller businesses, cutting the amount of cash large banks need to keep in reserve for the second time since December on Feb. 24. Benchmark rates have been on hold since July.
“They are going to loosen more on the fiscal side than the monetary side because they still want to see housing prices stay,” Deltec Asset’s Lesko said.
Home prices in China posted the biggest decline in 19 months in February as the government pledged to maintain curbs on property, SouFun Holdings Ltd. (SFUN), the nation’s biggest real- estate website owner, which began compiling data in July 2010, said in an e-mail yesterday.
China Eastern Airlines Co. (CEA), the country’s third-largest carrier by market value, rose 2 percent to $19.37 yesterday, rising for the third day. The ADRs traded 0.5 percent higher than China Eastern’s Hong Kong stock, which was unchanged at HK$2.99, the equivalent of 38.6 U.S. cents. The airline’s Shanghai-traded shares added 0.5 percent to 4.31 yuan yesterday, or 68 U.S. cents.
Investors should buy shares of China’s air carriers as the companies have a “robust” earnings outlook for this year and are trading at or below book value, HSBC Holdings Plc. analyst Zhe Wei Sim wrote in a report yesterday. He upgraded China Eastern to “overweight” from “neutral.”
ADRs of Tudou Holdings Ltd. (TUDO), China’s second-largest video website, tumbled 19 percent, the most since the company’s initial public offering in the U.S. on Aug. 16 and the biggest decline on the Bloomberg China-US 55 measure yesterday. The Shanghai-based company reported a net loss in the fourth quarter, from profit in the previous three months. The ADRs closed at $12.89 yesterday, the lowest level since Jan. 26.
Tudou incurred a net loss of 148.9 million yuan ($23.6 million) in the last quarter of 2011, compared with a loss of 263.7 million a year earlier and net income of 52.5 million yuan in the three months to Sept. 30 last year, the company said in a statement yesterday after U.S. markets closed.
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