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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Seeker of Truth who wrote (36326)	7/20/2003 9:03:47 AM
From: TobagoJack	Read Replies (2) \| Respond to of 74559

Hello Malcolm, <<Jay Chen recently bought shares in toll road companies in China>> … and quickly sold shares in toll roads Message 19094404 … because their implicit values were made explicit. I will buy them back, as I intend to with the Argentine shares and the Indian equities, and when the time is right, even a few US tech plays. Money has no loyalty :0) BTW, all of my trades are regularly aggregated here and posted to Pezz more or less real time achamchen.com as part of my altruistic give-back to where it all comes from. <<But I wonder…>> … I think a few strands of thoughts: (a) The Chinese government do not make decisions easily when these decisions might hurt overall investment climate, even though such decision are made that had temporarily hurt certain types of investment (i.e. a recent example was the outlawing of ‘guaranteed return’ type of joint ventures whereby one or the other partner is guaranteed a return even if the venture itself does not make the returns, thus having to be made good by the other partner – this after-the-fact retroactive amendment to the law hurt a bunch of investors who then approach folks like Jay to work matters out :0) (b) In an environment where the law is in flux, where regulations are being made more complete, investment is dangerous, and thus the returns are better, at least in theory; (c) My experience with China shares so far have been good, getting dividends, netting capital gains, and every-so-often, stumbling on to a mania or two; (d) But, yes, the land is strewn with investor bodies. Chugs, Jay P.S. <<I know a chemical company that wanted to build a plant in China to manufacture a certain insecticide. Serious negotiations began but in the end were not successful. A key sticking point was that the government wanted an upper bound to the selling price of the insecticide in China>> ... Malcolm, now you are talking about my bread, butter, cucumber soup, caviar, goose liver pate, black olives, red wine, and brie cheese of my reason for professional being. Next time when such or more complicated and even hopeless opportunities arise, get in touch with Jay, and we can work out a deal !

To: Seeker of Truth who wrote (36326)	7/24/2003 11:31:45 PM
From: TobagoJack	Read Replies (1) \| Respond to of 74559

Highway stocks hit roadblock Friday, July 25, 2003 markets.scmp.com BLOOMBERG Jiangsu Expressway and Zhejiang Expressway may have reached the end of a stock rally that lifted China toll-road shares over the past three months. Yet their retreat from record highs, some investors suggest, may be only a pitstop on the road to growth. Highway operators in China are constructing links to a new motorway connecting Beijing and Shanghai. Almost as fast as they can build, affluent Chinese are buying cars and taking to the road. The latest share rally, though, might have run ahead of the companies' likely profits, investors said. "The stocks have great potential in the long term because car ownership in China will continue to grow," said Martin Lau a fund manager at First State Investments Hong Kong. "But the rally is over for now. They're too expensive." Jiangsu Expressway and Zhejiang Expressway, the two biggest by revenue among mainland toll-road operators listed in Hong Kong, peaked on July 14 at their highest since they first sold shares to the public in 1997. Shares of Jiangsu added 0.81 per cent to $3.10 while Zhejiang gained 0.73 per cent to $3.45 yesterday. The stocks are now priced at 19 and 18 times past earnings respectively. That exceeds the 11.63 times average of firms in the H-share index. Even after their pullback, both stocks climbed 29 per cent in the past three months. Road King Infrastructure, which operates 22 toll roads in eight provinces, has surged 33 per cent. Its shares traded flat at $5. "The long-term outlook remains very good," said UBS analyst Henry Wu. "In five years, the share price of these companies will likely double or triple." China aims at achieving economic growth of at least 7 per cent a year until 2020 as it shifts from state control of business to private enterprise. The economy grew 8 per cent last year, according to the government. Rising personal incomes are boosting car purchases, putting more vehicles on the road and underpinning the highway operators' revenue. Car sales in China will triple to 5.8 million vehicles by 2010, McKinsey & Co forecasts, creating one of the world's fastest-growing vehicle markets. Jiangsu Expressway, which operates six roads and a bridge in its namesake province, posted profit of 243 million yuan (HK$227.73 million) for the first quarter, up 27 per cent from a year earlier. Traffic on its main highway linking Shanghai and Nanjing grew to 27,000 vehicles a day in the first half. That represented a slowdown in growth to 11 per cent, half the pace of a year earlier. The company blamed the Sars outbreak. Undaunted, it plans to widen the road to eight lanes from four, starting in September. Besides traffic growth, investors have been attracted to toll-road stocks by their dividend payouts. Jiangsu Expressway earmarked about 76 per cent of profit for dividends last year and Zhejiang Expressway paid about 63 per cent, said DBS Vickers Securities analyst Rachel Tsang in Hong Kong. Although traffic fell during the Sars crisis , the highway stocks may initially have benefited as investors gauged the impact of the outbreak on business. "People were looking for stocks to buy after Sars," said HSBC Securities analyst Maurien Yau. "They thought the impact on toll roads would be negative - but less negative than on other companies like airlines." The rally may be over for now. Revenue at the five Hong Kong-listed toll-road operators might be limited this year because maintenance was needed on roads that opened in 1997, said Lans He, an analyst at Credit Lyonnais. Zhejiang Expressway, whose second-half profit rose 11 per cent to 444 million yuan, is spending 10 times that amount to double the width of a highway linking Shanghai and the surrounding Zhejiang province by 2007. Road King, meanwhile, plans to invest 1.04 billion yuan in a 40 per cent stake in an expressway linking the cities of Baoding and Tianjin.