Spreadtrum Leads Jump on Smartphone View: China Overnight
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese stocks in the U.S. added 2.1 percent to 92.33, the steepest gain in two months. Spreadtrum surged to the highest level since November, while China Mobile Ltd. (941), the world’s biggest wireless carrier by subscribers, climbed after reporting third-generation mobile users jumped the most on record. Yingli Green Energy Holding Co. (YGE) led gains on the China-US gauge after signing a deal for solar panel materials.
China Mobile added 9.5 million 3G subscribers in February, a third monthly record, the company said yesterday. China Telecom Corp. (CHA), the nation’s third-largest phone operator, yesterday reported October-December profit that beat analysts’ estimates as customers using Apple Inc.’s iPhone helped boost sales of wireless data. Jefferies Group LLC upgraded Spreadtrum to buy from hold, citing chip demand from China Mobile.
“The big jump in 3G users of China Mobile last month was a boost to companies related to the mobile phone market,” Jeff Papp, a senior analyst at Oberweis Asset Management Inc., which manages about $700 million of investments including Chinese stocks, said by phone from Lisle, Illinois. “Low-priced smartphones are selling very well in China, helping people beef up their projections for smartphone shipments this year.”
The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., jumped 2.5 percent to $37.25 in New York, rallying the most in more than two months. The Standard & Poor’s 500 Index (SPX) gained 0.7 percent to 1,558.71.
The Hang Seng China Enterprises Index (HSCEI) surged 2.2 percent to 10,978.75 yesterday in its first advance in four days. The Shanghai Composite Index (SHCOMP) of domestic Chinese shares surged 2.7 percent to 2,317.37, the biggest rally in two months, as Market Studies LLC’s Tom DeMark said the index will climb as much as 28 percent by September.
Spreadtrum’s American depositary receipts jumped 7.8 percent to $19.69, the highest close since Nov. 8.
Jefferies analysts led by Ken Hui raised the price target for Spreadtrum by 20 percent to $24 in a note yesterday, implying a 31 percent gain from the March 19 closing price. Hui increased his projection for China Mobile’s handset purchases by 54 percent to 139 million units in 2013.
“This will clearly be a strong tailwind for Spreadtrum,” according to the report.
China Mobile’s ADRs gained 1.6 percent to $53.03, the first advance in four days.
The company, based in Hong Kong, said 3G users reached 104.5 million by the end of February, from 95 million in January. The monthly addition was the most on record and may help the carrier achieve its goal of selling 120 million 3G phones this year, Praveen Menon, a Bloomberg Industries telecommunications analyst, said in a report yesterday.
Semiconductor Manufacturing International Corp. (SMI), a Shanghai-based chip foundry, climbed 7.1 percent to $3.03 in New York, the highest price in six weeks. Its 2 percent discount to Hong Kong shares was the smallest in four days.
China Telecom’s ADRs climbed 2 percent to $51.33, rising the most in a week.
Net income at the Beijing-based company fell 17 percent to 2.36 billion yuan ($380 million) from 2.84 billion yuan a year earlier, it said in a statement yesterday. That surpassed the 2.04 billion yuan average of six analysts’ estimates compiled by Bloomberg.
Trading in Suntech Power Holdings Co. (STP) was suspended after a two-day, 16 percent tumble. The company, once the world’s top solar manufacturer, may become the largest renewable-energy insolvency after its main unit entered bankruptcy proceedings in China.
Eight Chinese banks filed a petition for insolvency and restructuring of its main solar manufacturing unit, Wuxi, China- based Suntech said yesterday in a statement. Suntech said it won’t object to the filing in Wuxi Municipal Intermediate People’s Court. Suntech defaulted last week on $541 million of bonds.
Yingli surged to $2.52. The Baoding, China-based solar panel maker agreed to buy raw materials from GCL-Poly (3800) Energy Holdings Ltd. as part of a three-year agreement.
Yingli, the world’s biggest solar panel maker by shipments, will purchase polysilicon and solar wafers from Hong Kong-based GCL-Poly to meet future expansion needs and get cheaper prices for bulk orders, the two companies said yesterday in a joint statement. GCL-Poly will use Yingli’s products for its solar farms as part of the accord.
Melco Crown Entertainment Ltd. (MPEL), a casino operator in the Chinese territory of Macau, jumped 6.9 percent to $21.64, the steepest gain since August. Grant Bowie, Chief Executive Officer of MGM China Holdings Ltd. (2282), said he expects Macau’s mass market casino revenue to grow “mid to high teens” on a percentage basis in an interview yesterday. March casino revenue is “pretty solid,” he said.
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