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China Watch: Mixed Earnings Results of Major Chinese Corporations


Baidu and ZTE also make the news.

Despite the quarterly loss, ZTE expects to make a profit for the full year, with the consensus estimate currently at 642 million yuan.

"Things should move up from here, in terms of profitability and margins. We have to watch whether their telecom equipment business overseas picks up," Michael Li, an analyst with Everbright Securities in Hong Kong, told Reuters.

Bank of China (PINK:BACHY): The first of China's "Big 4" banks to report earnings for the third quarter, Bank of China set an optimistic tone for its rivals as it posted its largest quarterly profit increase in a year. Net profit jumped to 34.76 billion yuan (US$5.57 billion) from 29.8 billion yuan a year ago, when the consensus on the Street was 32.7 billion yuan.

Net interest margin also expanded to 2.12%, easing worries that loan profitability would fall when the Chinese central bank moved in June to loosen interest rate restrictions.

The rest of the "Big 4" -- Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank -- will report earnings through next week.

Baidu (NASDAQ:BIDU): Ahead of Baidu's earnings release on Monday, several brokers revised their price targets on the company. Stifel Nicolaus cut its price target on the Chinese search giant to $140 from $165 because of "an evolving and less certain search landscape in China." Stifel nonetheless believes that "the core growth opportunities for Baidu remain strong and the company has strong positions in emerging online businesses such as iQiyi (online video), and Qunar (online travel)." Likewise, Barclays also scaled back its price target on the company to $151 from $153.

This week, Baidu vice president Wang Zhan projected a note of confidence for investors, saying that his company expects advertising revenue to pass 20 billion yuan ($3.20 billion) in 2012, compared to 14.5 billion yuan in 2011.

BYD: Chinese car maker BYD, which is backed by Warren Buffett's Berkshire Hathaway (NYSE:BRK.A), announced its first overseas venture this week. The company has signed a deal to produce 50 of its e6 electric car for London cab service provider greentomatocars, according to Reuters. The fleet will be delivered to greentomatocars by the second quarter of 2013.

Launched in 2010, the e6 features BYD's proprietary Iron Phosphate (Fe) battery, which can last for 186 miles of traveling in "urban conditions" on a single charge, with a top speed of 87 MPH.

Earlier in the year, worries about the safety of the electric vehicle rose after an e6 taxi burst into flames in a fatal accident. However, an investigation ruled that the cause of the fire was not the car battery but the speed of the collision.

Twitter: @sterlingwong
No positions in stocks mentioned.
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