EQUITY UPDATE – 7 AUGUST 2012

ASIA

China Vanke Co. – Property developer reported 1HY12 profit to RMB 3.73 b (USD 585 m) vs RMB 2.98 b a year ago. EPS came in at RMB 0.34 a share vs RMB 0.27 a share a year ago. Revenues rose 54 percent to RMB 30.72 b as co. cut its property prices by 10.6 percent on average to increase sales in a market under strict government regulations. (Bloomberg)

Taiwan Semiconductor Manufacturing Co. – Co. will infuse EUR 1.11 b (USD 1.4 b) in ASML Holding NV for a 5 percent stake to develop technology in lithography. TSMC would join Intel Inc which has already acquired a stake in the co through a USD 4.1 b investment. (Bloomberg)

According to a report by UBS AG, China’s stock index is expected to rise 20 percent by the end of FY12. The firm also expects another rate cut by the central bank to stimulate the economy. (Bloomberg)

HTC Corp – Taiwan based smartphone manufacturer saw its stock price decline almost 7 percent to NTD (New Taiwan Dollar) 258.50 as it forecasted lower than expected revenues for the 3Q12 period. Estimates came in at NTD 70 – 80 b vs expectations of NTD 87 b. The co.’s One Series is expected to face stiffer competition from Samsung’s Galaxy phone which could be one of the reasons for the lower estimate. (Reuters)

INDIA

According to Fitch, the outlook on the Indian real estate sector will continue to be negative in second half of 2012. The rating agency cited the persistence of sluggish demand, high construction costs and liquidity pressures. High property prices and elevated inflation to keep demand sluggish. Further to this Fitch said that, real estate companies will continue to face margin compression from high construction costs for building materials and labour. (Financial Express)

The rating agency Fitch, downgraded its outlook on the Indian retail sector to ‘negative’ from ‘stable’. Fitch cited sustained deterioration in discretionary spending, which was unlikely to improve over the short-term. In addition to this, the funding requirement of most retailers were likely to increase, due to store expansions and possibly higher inventory-holding periods. Also private final consumption expenditure was the weakest in last seven years. (Business Standard/PTI)

FII’s made gross purchases of INR 1,738.14cr and made gross sales of INR 1,182.41cr. DII’s made gross purchases of INR 876.85cr and gross sales totalling INR 881.08cr. (Business Standard)

According to Bank of America Merrill Lynch, the worst was not over for rupee, as it stuck to it September end forecast of USD /INR at 57. The bank believed global risk flows and uncertainty over reforms will keep confidence fragile. (Yahoo/Reuters)

ICICI – ICICI ventures to sell its property in central Mumbai, according to sources. The deal is expected to fetch around INR 180cr. (MoneyControl/CNBC-TV18)

SAIL – A consortium of firms led by SAIL plan to make an investment of USD 75 m in the Hajigak iron ore mines in Afghanistan. (Economic Times)

INDIAN EARNINGS

DLF – Co. reported 1Q12-13 net profit at INR 292.79cr vs. previous 1Q11-12 net profit at INR 358.36cr. Consolidated income from operations at INR 2,197.71cr vs. previous INR 2,445.82cr. (Financial Express)

Essar Shipping – Co. reported 1Q12-13 net profit at INR 53.90cr vs. previous 1Q11-12 net profit at INR 18.83cr. Revenue at INR 925.18cr vs. previous INR 670.31cr. (Financial Express)

EIH – Co. reported 1Q12-13 net profit at INR 9.45cr vs. previous INR 15.45cr. Total income from operations at INR 241.55cr vs. previous INR 231.37cr. (Business Standard/PTI)

Uttam Galva – Co. reported 1Q12-13 net profit at INR 10.24cr vs. previous net profit at INR 9.10cr. Net sales at INR 2,057.72cr vs. previous INR 1,533.21cr. (Business Standard/PTI)

Cadila Healthcare – Co. reported 1Q12-13 net profit at INR 194.79cr vs. previous 1Q11-12 net profit at INR 229.82cr. Net sales from operations at INR 1,516.10cr vs. previous INR 1,173.51cr. (Financial Express)

Wockhardt – Co. reported 1Q12-13 net profit at INR 377.97cr vs. previous INR 193.96cr. Consolidated net sales at INR 1,425.82cr vs. previous INR 1,053.21cr. (Economic Times/PTI)

Britannia Industries – Co. reported 1Q12-13 net profit at INR 43.45cr vs. previous INR 41.80cr. Net Sales at INR 1,221.62cr vs. previous INR 1,102.97cr. (Financial Express)

EUROPE

The standoff between the ECB and the European Union over the provision of a bailout package to Italy and Spain could see a breakup of the eurozone, said Italian PM Mario Monti. The leaders of Spain and Italy will await the ECB’s plan of action on government bond purchases as they fear that a request for a full fledged bailout package could mean imposition of ECB’s strict conditions and austerity measures. (Bloomberg)

Greece and the troika of the European Commission, ECB and IMF have reached an agreement on the need for stronger policies to stabilize the economy. The discussions follow two weeks of talks to determine whether the nation would continue to receive international funding worth EUR 240 b from the rescue funds designed for the crisis. The country would have to reduce its budget for 2013 and 2014 by EUR 11.5 b in order to receive international aid. (Bloomberg)

Siemens AG – Co. won a INR 1988 cr supply contract from India-based miner NMDC. The project, which involves the construction of a steel plant in Chattisgarh, India, is expected to be completed by HY2015. (Economic Times)

Standard Chartered plc – Co. could have its U.S unit suspended over allegations that it conducted over USD 250 b worth of transactions with Iranian entities which violated money laundering laws. The imposition of sanctions on Iran saw most banks curtail or stop its funding or lending activities to Iran. (Bloomberg)

NORTH AMERICA

According to Federal Reserve Chairman Ben Bernanke, broader economic data, which may point to a recovery in the U.S, the economy could still witness subdued consumer spending and business activity. He stated that the financial conditions in the country had still not improved as individuals and businesses continue to witness lower demand. (Reuters)

Lending by banks in the U.S rose to its highest since June 2009 to USD 7.1 t for week ended 25 July 2012. New auto loan issuance saw a 56 percent rise to USD 134 b for the Jan-Apr period on a y/y basis over 2009. Easier regulations to access credit for buyers of automobiles could have contributed to the higher lending data amongst other reasons. (Bloomberg)

Best Buy Co. – Co.’s founder Richard Schulze has offered to purchase the co. at USD 24 – 26 a share valuing the deal at around USD 8.5 b. Schulze could finance the deal with USD 1 b in equity contribution from the stake sale in which he owns 20 percent. The rest of the funding would be through PE firms. (Bloomberg)

Knight Capital Group – Electronic trading firm received funding worth USD 400 m in cash through sale of convertible securities. The sale of these instruments is due to make do for the huge losses it suffered due to software errors during a trading session on 1 August 2012. (Bloomberg)



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