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Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: Tom who wrote (2709)	3/2/1999 9:42:00 AM
From: WONG	Respond to of 2951

And you want to lend money to these guys??? Negative worth estimated at $13b LANA WONG (SCMP) Guangdong Enterprises (Holdings) had a negative net worth of $13.17 billion at the end of September, after incurring a larger than expected exceptional loss of $17.92 billion in the first nine months of last year. The information was revealed by accounting firm KPMG, appointed by the Guangdong provincial government to audit its Hong Kong investment arms for the period. A creditor bank official said: "Why is there such a big difference in their accounts? Has their reporting accountant done a proper job?" GDE's reporting accountant Deloitte Touche Tohmatsu was not available for comment yesterday. Some accountants reasoned KPMG had to be "ultra-conservative" in preparing the statements during GDE's troubled times and it had made large-enough provisions to clean up the company's balance sheet to ensure there would be no unpleasant surprises when financial data to the end of December was released. GDE had earlier cited improper accounting procedures and bad investment and management decisions as some of the reasons for the significant impairment in revenue and assets. Guangdong executive vice-governor Wang Qishan said he did not expect material changes in the financial positions of GDE and Guangnan (Holdings) in the period to December. The exceptional items included mainly provisions for bad and doubtful accounts. GDE's 40.5 per cent-held Guangdong Investment (GDI) showed a net loss of $2.18 billion in the period, dragged down mainly by a $1.88 billion exceptional loss on the fall in value of property, listed investments and provisions for doubtful debts. GDI's loss would result in technical defaults on loans, prompting it to start negotiations with bankers on debt rescheduling. It is understood its talks with banks would be easier for GDI than for GDE and Guangnan as it maintained a net asset value of more than $6 billion, meaning all creditors were expected to be repaid in full. GDI would probably emerge in the best position if the group is successfully restructured, as the potential assets to be injected into GDE fall in line with GDI's business focus. After the restructuring, GDI would focus on utilities, infrastructure, property and hotels. This would mean its interest in listed arms Guangdong Brewery Holdings, Guangdong Tannery, Guangdong Building Industries, and its manufacturing and finance businesses would be disposed of. Assets identified for possible injection into GDE include Dongjiang River water supply, which supplies water to Hong Kong and Shenzhen and has projected revenue of 2.73 billion yuan (about HK$2.54 billion) this year. Others include minority stakes in Shaoguan Power Plant D, Shantou Bay Bridge, Humen Bridge, the Huizhou section of the Guangzhou-Shantou Highway, Qinglian Highway, Huaji Highway, Yuehui Highway and Bridge and Huiguang Highway and Bridge. The identified assets are expected to be ultimately injected from GDE into GDI through the firm taking over part of GDE's debts and issuing new shares to the parent, a source familiar with the restructuring plan said. GDI would in no way be merged with Guangnan as it would defeat the purpose of streamlining their operations with a clear business focus, sources said. So far, none of the potential asset-injection targets are in line with Guangnan's businesses. Market observers wondered whether Guangnan's creditor banks would eventually need to face a cut in loan principal repayments or see the firm go bust, if it did not receive asset injections to return it into positive net worth position. Guangnan, 56.9 per cent held by GDE, showed a negative net worth of $1.28 billion as of September. It plunged into a loss of $3.29 billion, after booking exceptional items of $3.4 billion that included $2.28 billion in provisions for bad and doubtful debts.

To: Tom who wrote (2709)	3/6/1999 12:26:00 PM
From: Ron Bower	Read Replies (1) \| Respond to of 2951

I'm impressed with the rhetoric, but can he make it work? Ron Zhu warns of difficult year ahead VIVIEN PIK-KWAN CHAN in Beijing Premier Zhu Rongji warned China yesterday to brace for slower economic growth but vowed to tackle challenges and obstacles head-on to push ahead reform. In his first state-of-the-nation address in the Great Hall of the People, Mr Zhu told the 2,978 delegates to the National People's Congress of the threats and negative impact of the regional financial crisis on the national economy and warned finance and trade officials to prepare for a difficult year. ''With the impact of the Asian financial crisis widening, the world's financial markets in turmoil and deep-seated problems in our own country's economic activities gradually emerging, improvement in the performance of China's financial sector is of vital importance to the overall interests of reform, development and stability,'' Mr Zhu said. ''In addition, there are still quite a few unresolved and hidden problems in China. We must have a clear understanding of these and be prepared for even more formidable obstacles.'' He said that economic growth for this year would fall to seven per cent - down from 7.8 per cent last year. The deficit would soar 56 per cent to 150.3 billion yuan (HK$140.6 billion). He pledged to maintain currency stability and press on with campaigns to curb financial irregularities and to seek economic growth through boosting exports and encouraging domestic consumption. Mr Zhu showed his determination to push forward state enterprise and rural reforms by devoting two sections of his report to explaining his policies in the two areas. Facing the pressure of rising workers' protests and rural demonstrations, he urged officials at all levels to take a more restrained approach in dealing with social unrest. He told deputies that all means would be used to ''properly address contradictions among the people in this new situation and resolve them properly so as to eliminate such problems before they grow. ''Under no circumstances should we intensify problems by handling them in an oversimplified or crude way. Still less should we use dictatorial means against the people,'' Mr Zhu said. The Premier said he would never hesitate to punish corrupt officials involved in financial crimes or scandals, nor would he tolerate regional protectionism. ''We should oppose regional and departmental protectionism and see to it that all laws and administrative decrees are carried out promptly and to the letter.'' A Guangdong delegate said some members of the delegation believed this message was dedicated to the province where central leaders had moved to overhaul the Guangdong faction and started to clean up smuggling and financial irregularities. Mr Zhu also said: ''All government officials should stop 'empty talk' and rhetoric. They should be realistic and never make false reports and exaggerate to deceive their superiors and delude their subordinates. ''They should try to avoid issuing too many documents or holding too many meetings. They should overcome any tendency to engage in formalism or bureaucracy. Their energy should instead be devoted to study solutions to solve actual problems.''