Year of the bull: China's leaders plan major economic shift to boost growth, page-42

Today's news out of China is mixed (see full story below). On one hand the Chinese economy is still cooling but on the other there are signs that the government's stimulus efforts are beginning to have an effect.

Retail sales increased 11.9 % from a year earlier, compared with the 11.7 % predicted by economists. Retail sales growth in China is the best it has been in 4 months, although still down on the average growth rates for the first 6-8 months of 2014.

IF Oct-Dec sales growth data can be used as a trend guide to SBB's likely 4th Quarter receipts (and that's a big IF), then I reckon the number we will soon see might be a bit closer to Q3 receipts than say Q1 or Q2 (2014). That would likely mean FY2014 sales revenue somewhere @ $83-$88m (by my estimates) which could impact previous Gross & Net Profit estimates for the full year.

Whilst the market may view that as a disappointing result (assuming my FY estimates are in the ballpark), it will be interesting to see the impact (if any) on the SP because SBB appears relatively undervalued compared to it's peers IMO, plus FY NPAT and cash at bank should still be well in positive territory despite a likely fall in H214 NPAT vs H213 & H114.

However the announcement of a FY dividend should be the next kicker for the SP IMO and (by my estimates) the FY2014 EPS could end up somewhere @2-2.5 cents i.e. well below the 3.5cps FY2013 EPS but still positive nonetheless. That could in turn mean a o.5c divvy or thereabouts assuming the 25% of statutory profits policy as outlined in the prospectus is adhered to.

In any case, interesting times are ahead. GLTA

Note: my opinion and analysis (including my estimates) should not be relied upon nor considered as advice of any kind. Please DYOR.

http://www.bloomberg.com/news/2015-...s-leaving-2014-expansion-close-to-target.html

Chinese Growth at 7.4% Is the Slowest Since 1990
By Bloomberg News Jan 20, 2015 1:20 PM ET


Photographer: Tomohiro Ohsumi/Bloomberg
Workers labor at a construction site for a residential building on the outskirts of Beijing, China. The central bank cut interest rates for the first time in two years in November and the government accelerated the approval of infrastructure projects to boost an economy mired in a property slump and overcapacity.

China’s economic growth beat economists’ estimates last quarter, helping the full-year expansion remain close to the government’s target and suggesting stimulus efforts have started to boost demand.
Gross domestic product rose 7.3 percent in the three months through December from a year earlier, the statistics bureau said in Beijing, beating the median estimate of 7.2 percent in a Bloomberg survey of analysts. The economy expanded 7.4 percent in 2014, the slowest pace since 1990. The yuan rose and swap rates increased after the data.

The central bank cut interest rates for the first time in two years in November and the government accelerated the approval of infrastructure projects to boost an economy mired in a property slump and overcapacity. Robust external demand fueled by the U.S. recovery has helped underpin growth as the economy transitions away from investment-led expansion.

“Markets should breathe a sigh of relief as the economy enters 2015 in a better shape than had been expected,” said Dariusz Kowalczyk, an analyst at Credit Agricole CIB inHong Kong. “The data lowers the need for further stimulus, but there remains some room for easing as risks are skewed to the downside.”
China one-year interest rate swap advanced 3 basis points to 3.235 percent, while five-year contracts climbed 3 basis points. The yuan and the Australian dollar advanced.
Industrial Production

Industrial production rose 7.9 percent in December from a year earlier, compared with the 7.4 percent median estimate of analysts and November’s originally reported 7.2 percent. Retail sales increased 11.9 percent from a year earlier, compared with the 11.7 percent seen by economists.
Fixed-asset investment excluding rural areas expanded 15.7 percent last year, meeting the median estimate of economists surveyed by Bloomberg News.

Economists’ estimates for GDP growth last quarter ranged from 6.9 percent to 7.6 percent.
A recovering U.S. economy and demand from emerging Asian nations has helped underpin China’s expansion. Trade’s contribution to growth was about 10.5 percent last year, Vice Commerce Minister Zhong Shan said last week.
“Another important factor bolstering growth is services,” Zhou Hao, a Shanghai-based economist at Australia & New Zealand Banking Group Ltd., said before today’s data release. “China will take two or three years to switch from an old economy led by the property sector to a new one driven by services, high-end manufacturing and high-tech.”
-------------------------------------------------------------------------------------------------------------------------------
http://www.tradingeconomics.com/china/retail-sales-annual