Despite continued revenue growth, solar cell makers’ profits have shrunk significantly due to volatile currency markets.

China’s solar cell industry was an early victim of the euro’s decline as Europe absorbs more than 80 percent of solar cell exports.

Solar cells, also called photovoltaic or PV cells, are semiconductor devices that convert the energy of sunlight into electricity. They are most commonly used in solar panels.

Wuxi-based Suntech Power, the world’s largest manufacturer of solar cells, saw its gross margin squeezed to 19.5 percent in the first quarter of 2010 from nearly 24 percent in the last quarter of 2009, mainly owing to euro volatility.

Suntech’s profit was halved to $20.7 million from $49.9 million during the same period while revenues remained nearly flat, mainly owing to the fluctuating euro, the company said.

Other major Chinese solar cell makers also reported slower growth compared to previous quarters.

According to industry insiders, estimated total exchange losses are likely to exceed $1 billion within the industry since the euro began to depreciate.

But exports of solar cell products still doubled during the first quarter of this year.

European nations are likely to reduce stimulus spending in solar energy due to belt tightening. For example, Spain, Italy, Greece and Portugal are mulling spending cuts and may reduce or even eliminate solar subsidies, which could dent Chinese suppliers for several quarters, said industry analysts.

Coupled with the euro depreciation, this could mean a weaker industry outlook throughout this year and into 2011. The current situation will likely effect demand since all Chinese suppliers are significantly exposed to European markets.

To hedge the risks of a volatile exchange rate, some suppliers chose forward exchange settlements and financial derivatives, by which an agreement on future exchange rates was signed to offset price fluctuations, according to some industry players.

“Exchange losses are really not my top concern right now,” said Wang Xinghua, chairman of ET Solar, a Jiangsu-based solar energy equipment maker. “Finding new clients and new orders for next year is our priority,” he added.

The company lost 10 percent in profit as the euro dived as much as 20 percent but its revenue soared almost 80 percent, partly offsetting the losses, according to Wang.

Despite the exchange losses, solar cell suppliers are rather bullish on the market outlook.

ET Solar expanded its production capacity to 600 megawatts (mW) this year from 150 mW in 2009, partly driven by its ambition to explore emerging markets, such as the US.

The installed capacity in the US will double this year and solar energy markets in Asia as well as in Australia are also likely to take off, industry analysts estimate.

Yingli Solar said its exports to the US will triple to 100 mW this year and it is also optimistic about other fast-growing markets including Australia, the Czech Republic and Poland.

“Chinese PV makers are starting to face intensifying competition from foreign rivals who are gradually recovering from the economic downturn, forcing them to explore domestic markets while diversifying overseas,” said Jiang Qian, chief industry analyst with China Investment Consulting. — China Daily

What the BP disaster may also do is create an increased financial cost on Oil companies to maintain higher safety standards as well as making larger provisions for accidents.

This shift in the cost structure of Oil creates a bigger viable market for alternate energy sector. Comparative costs will start to shift in favor of alternate energy this year, 2010.

Electric Cars, Solar Power and better batteries will become a major market globally faster than many have estimated, Green Energy, like all other business is powered by the basic economic rules. We at Ebeling Heffernan and Heffernan Holdings have been making changes to our investments over the last few years that reflect what will be a new era in energy.

Many of the alternate energy companies that we own, invest in or cover via our news service are now highly competitive against their Oil based rivals, the strongest growth over the next few years will be the Solar Power Generation sector, Smart Grid Infrastructure (Products and Services), Electric Vehicles and Battery Technology.

Everyone should be repositioning their portfolio’s to reflect this new reality.

31 years after Jimmy Carter rose the prospects, Barak Obama yesterday repeated the decades old call for a shift away from Oil.

“We are at a turning point in our history … This intolerable dependence on foreign oil threatens our economic independence and the very security of our nation.
“The energy crisis is real. It is worldwide. It is a clear and present danger to our nation. These are facts and we simply must face them.”

Barack Obama, 2010? No, these are the words of Jimmy Carter, 31 years ago in an evening broadcast to the nation that became known as the “malaise” speech, a dour appraisal of the 1970s oil shocks and recession, Jimmy Carter made these statements.

Carter’s address was a wake up call for America to stand on its own feet and to avoid the prospect of again being held hostage to Middle Eastern and other oil producers.

His solution was a range of measures to stem oil imports, to find more oil at home and to move the economy towards a renewable energy future. By 2000, he pledged, a fifth of US energy needs would be met by solar sources.

“From now on, every new addition to our demand for energy will be met from our own production and our own conservation,” Carter insisted.

And why not? Americans had put a man on the moon, after all, and in the American century, ingenuity and innovation were talismans that defined a nation.
“We are the generation that will win the war on the energy problem and in that process rebuild the unity and confidence of America,” said the former Georgia peanut farmer, thumping his fist.

Needless to say, Carter failed, although he did create a Department of Energy, pushed research into alternative energy sources and even fixed solar panels to the roof of the White House.

But fast forward to 2010 and the US is as reliant on foreign oil as it ever was. Accounting for just 2 per cent of known global reserves, America chews up 20 per cent of global oil production. Oil remains the bedrock of US economic growth, providing 40 per cent of America’s $US500 billion annual energy needs; renewable sources, including solar, about 7 per cent.

So when the 44th President opted for the Oval Office this week to brief Americans on the Gulf of Mexico oil spill, the expectation was that he would use America’s worst environmental disaster as leverage for ramping up his clean energy rhetoric.

His motivation obviously differed from that of his Democrat predecessor, climate change now the predominant driver in that hoped-for transformation.
But though he defined a clean energy future “to seriously tackle [America's] addiction to fossil fuels”, Obama declined to map out a path to getting there.
Contained in his 18-minute prime-time address was nothing so prescriptive as Carter’s proposed import caps, price controls and conservation targets. Yet there was eerie similarity in Obama’s words as he, too, conjured America’s technological knowledge as the elixir that would drive change in America’s energy landscape.

“The one answer I will not settle for is the idea that this challenge is too big and too difficult to meet,” Obama insisted. “You see, the same thing was said about our ability to produce enough planes and tanks in World War II. The same thing was said about our ability to harness the science and technology to land a man safely on the surface of the moon.

“And yet, time and again, we have refused to settle for the paltry limits of conventional wisdom … Even if we’re unsure exactly what [the future] looks like. Even if we don’t yet know precisely how we’re going to get there. We know we’ll get there.”

Just as the Iran hostage crisis proved Carter’s downfall, so the gulf oil disaster has loomed as Obama’s potential undoing, except for the fact that his administration has several big political ticks against its name: its $US800 billion stimulus rescued the economy from likely depression, its healthcare reform was the most comprehensive in decades and it stands on the verge of clinching significant regulatory reform of Wall Street.

Nevertheless, it could be how Obama ‘’sells” those triumphs to the electorate in the lead-up to November’s crucial midterm congressional elections – and how he placates anxieties over the nation’s debilitating debt – that will determine, ultimately, whether America gets comprehensive climate change legislation in the near future.

With the pace of economic recovery sluggish at best, the imposition of a carbon tax or cap and trade system is unlikely to pass muster among the jittery incumbents of Capitol Hill.

“Not in a wobbly economy,” says a Democrat insider of the policy challenge. “Americans are very ambitious when things are going really well. But that’s not now.”

At best, Obama and his party might expect a solid campaign to mitigate Democrat losses in November. But truth is, the next US Congress will be even more hostile to ambitious energy legislation.

One poll, conducted for National Public Radio of the 70 most tightly contested districts in the House of Representatives, pointed to the possible loss of 30 Democrats. (Other polls have been even more calamitous in their predictions.)

“Paranoia is striking deep among Democrats, and this poll will only aggravate the disorder,” wrote the Washington Post columnist E. J. Dionne. “In those competitive districts, Democratic incumbents will be tempted to hunker down, distance themselves from the President, urge their leaders to be cautious and run for the hills to seek refuge from a looming Republican wave.”

All of which sounds hardly threatening to the behemoth that is the oil industry.

While Obama has imposed a six-month moratorium on new deep-sea exploration in the gulf as a result of the Deepwater Horizon disaster, no one doubts that America’s overwhelming thirst for oil will continue to drive the hunt offshore.

Proponents of an oil-led future point to the mishap as a rarity and their argument could be strengthened by findings of incompetence or criminal neglect unique to this case. Certainly, the ill-fated well’s legacy will be a more rigid – and more expensive – regulatory regime.

But that alone won’t make America’s domestic oil production a less attractive proposition. The notion of peak oil and the increasing cost of retrieving oil from deeper and less accessible pockets within the earth’s crust will be the prime drivers of the market, along with demand rising in tandem with the gathering economic recovery.

“We’re going to be with oil for a while,” suggests the Claremont Institute fellow and conservative broadcaster Bill Bennett. Though he concedes, “the whole issue of [offshore] drilling has to be addressed.”

Meanwhile, millions of dollars are being spent in media campaigns to sway Congress. In duelling full-page advertisements in the national press, Big Oil and clean energy advocates faced off yesterday.

“Senators: the energy policies that helped create the mess we’re in today won’t secure America’s future … We need a real solution that protects American workers and our environment,” a coalition of green business and conservation groups said.

“Oil and natural gas are vital domestic resources that power our way of life. We are committed to ensuring this energy is available – safely and with care for our environment – to all Americans today and into the future,” the American Petroleum Institute said.

Which all makes for a tense few weeks leading up to Congress’s summer recess, and as the window for a legislative breakthrough narrows. And while the oil continues to gush freely into the Gulf of Mexico any hard and fast push for a clean energy bill is likely to attract resentment – from the millions of Gulf Coast inhabitants who derive their livelihoods from the industry and from those who represent them in Washington.

“The house is burning down,” Senator George LeMieux of Florida said this week. “We’ve got to take care of the house burning down as the first and number one priority. I’m a supporter of alternative energy and energy independence and cleaner energy. I want to have that discussion. But I’m focused on trying to keep that oil off our beaches.”

Political nervousness points to legislation passed by the House last year withering on the vine. The American Clean Energy and Security Act, which was sponsored by the Democrats Henry Waxman and Ed Markey, includes a cap-and-trade scheme aimed at reducing US greenhouse emissions to 3 per cent below their 2005 levels by 2012, and to 83 per cent below 2005 levels by 2050.

Two prospective Senate bills are also in the wings including a draft filed last month by the Democrat John Kerry and the independent Joe Lieberman that proposes setting a price on carbon dioxide emissions produced by coal-fired power plants and other big polluters as a means of cutting emissions by 17 per cent by 2020 and by more than 80 per cent by 2050.

An assessment of the Kerry-Lieberman ”American Power Act” by the Environmental Protection Agency suggests that pricing carbon dioxide between $US17 and $US23 a tonne would mean an impost on US households of $US79 to $US146 a year, little more than the cost of a first-class stamp a day.

But Republican support is unlikely. The bill’s only Republican sponsor, South Carolina’s Lindsey Graham, withdrew his support last month, saying it would be impossible to pass the legislation in the current political climate. The Republican Senate leader Mitch McConnell was pointed: “Whatever its intentions, this bill is little more than a job-killing national energy tax.”

It seems unlikely the Senate Majority Leader, Harry Reid, could confidently take an energy and climate bill containing a price on carbon to the Senate floor any time soon. Yesterday, he remained noncommittal, despite the President’s pledge earlier this month that “a price on carbon pollution” was likely the best option for accelerating America’s transition to renewable energy.

After Senate Democrats met to consider their options, Reid simply reported: “There [were] a number of discussions about how to do what’s best for the country. Of course, pricing carbon was a part of the discussion.”

Though uncertainty prevails, an emerging certainty is the prospect of watered down legislation making its way to Congress.

Democrats will be keen to honour their commitment to a clean energy future and could seek the help of some moderate Republican senators such as Scott Brown, the former male pin-up who replaced the late Ted Kennedy in Massachusetts, to clinch less ambitious legislation that embraces non-binding reductions in emissions while increasing incentives for the renewable sector.

The compromise, according to the Republican Richard Lugar, could raise fuel-efficiency standards for cars and trucks, set targets for buildings to become more energy-efficient and help energy-intensive industries pay to become more efficient.

That would supplement Obama’s plan of increasing America’s reliance on natural gas and nuclear energy: the administration has signed more than $US8 billion in loan guarantees for firms to build two new nuclear plants. But it’s a long way from binding commitments to reduce emissions. — Shayne Heffernan www.livetradingnews.com

TSMC, the world’s top contract microchip maker by revenue, said it was taking a 21-percent stake in California-based Stion via its venture capital unit VentureTech Alliance.

Stion will license and transfer its thin-film technology to TSMC, which will provide solar modules to Stion using the technology, it said without elaborating.

TSMC announced last year an investment of about 192 million dollars for a 20-percent stake in Motech Industries Inc., Taiwan’s largest producer of solar cells.

As growth in the semiconductor business slows, TSMC and other companies in the sector hope to find new ways of making money, and solar energy is one area expected to see rapid expansion in coming years.

Taiwan has estimated its solar energy industry will be worth up to 200 billion Taiwan dollars (6.25 billion US dollars) by 2020.

The island’s parliament last year passed a major renewable energy bill aimed at adding between 6,500 and 10,000 megawatts of installed energy from renewable sources over the next 20 years. — AFP

The airline needs employees to agree to cuts in order to reduce its $3.6bn (£2.2bn) pension deficit and qualify for a state bail-out.

JAL shares rose by 3.4%, adding to the 31% jump seen on Monday.

On Sunday, the Japanese government agreed to double its offer of state-funded credit to the ailing airline.

JAL now has access to 200bn yen ($2.2bn; £1.3bn) of credit, although it has already made use of 55bn yen of that.

Separately, the airline applied for a government bail-out in October last year through the Enterprise Turnaround Initiative Corporation of Japan (ETIC) – a body able to draw on taxpayers’ money to prop up the business while it restructures.

A decision on that is due before the end of January, but the ETIC requires cost-cutting concessions including restructuring of pension arrangements.

JAL is battling 1.5 trillion yen of debt, and has been hit hard by the global fall in demand for air travel. — BBC News

That is the smallest first-day gain for a stock debut in China this year.

CNR has raised $2bn (£1.2bn) to upgrade its technology from the share market listing. It is the fourth-biggest Chinese listing this year.

A flood of firms have listed on the stock market in Shanghai this year since a ban was lifted in June.

Local media reported that in December alone, 35 new share sales were expected.

“The weak debut is actually good for the market as it sends a warning for future initial public offerings, forcing companies to think twice before they set sky-high prices,” said Chen Huiqin, senior stock analyst at Huatai Securities in Nanjing.

China has the world’s fastest-growing railway market. CNR is one of the country’s two biggest rail firms, competing with China South Locomotive to supply trains.

Beijing has pledged to increase spending fourfold over the next five years to improve infrastructure. — BBC News

The emerging free trade agreement (FTA) between China and the ten Southeast Asian countries that form ASEAN will no doubt serve as a gateway for the Asian community to further integrate and might give rise to a much broader, more Euro styled trading pact across the region.

The China-ASEAN free trade area covered a population of 1.9 billion and a combined gross domestic product close to 6 trillion U.S. dollars. It is the world’s largest trading bloc in terms of population covered and the third largest in terms of trading volume.
“There is a lot of expectation of this FTA,” said Jayant Menon, principal economist of ADB’s Office of Regional Economic Integration in Manila. Xinhua interviewed Menon on the eve of the establishment of the China-ASEAN free trade area on Jan. 1, 2010.

China and the ASEAN have come a long way in the past eight years so expect no fireworks on the 1stof January, but this is an important step. China-ASEAN is one of the worlds largest trading blocs in terms of population and economic growth. The improved trade the FTA brings will increase cross border relations and bring about more and more inter-Asian trade.

“But this FTA can be seen as a stepping-stone towards a broader agreement, and eventually, hopefully, a multilateralized trading arrangement whereby the achievements are offered to non-members in a non-discriminate manner,” Menon of the Asian Development bank told Xinhua.

The Asian Development Bank also said other regional economic powers such as Japan, South Korea and the United States are expected to join once this FTA expands. That step, although distant now, will bring about a new round of growth in the Asian nations.

Trade between China and ASEAN countries have picked up rapidly in the past decade. Official statistics indicated that trade between China and the ASEAN bloc expanded to a total worth of 231.1 billion U.S. dollars in 2008, from 19.5 billion U.S. dollars in 1995. Trade has especially doubled in the past four years and continues growing.

Agreements on the trade of goods and services and a pact to encourage inter-regional investment have been separately signed. The reduction of many duties has begun since 2005 and more than 7,000 trading items covered by the agreements will be tariff-free products by Jan. 1, 2010.

While the Free Trade Agreement is good, yet another deal that would see a free investment environment in Asia is yet another huge potential stimulus to an already booming region. China now is already a big investor in the region and there is a lot of room for allocation of investments in the region to facilitate the type of product fragmentation network trade that has already taken place.  The other set to be big winners here identified by Ebeling Heffernan are Thailand, The Philippines and Indonesia.

Gains from the FTA will not be in the short term future, rather the agreements are setting a base for a more developed Asian region over the next 5 to 10 years. Initially as with all such agreements there will be some economic pain to some. This will be offset by the long term great gains of the economies in Asia.

Gains will come in the long run and for instance a lot of farming communities could benefit by specializing in different commodities and doing two-way trade of commodities within agriculture. Ebeling Heffernan have noted such gains  in the mutually beneficial farm trade between China and Thailand covered by the free trade agreement.

While it may take many generations before an integrated Asia moving close to a European Union style economic union the process of a more unified Asia is underway.

An ADB study shows that 60 percent of the manufactured goods in the region eventually entered the Western market and China’s role as an assembling hub for the region’s goods has not changed. 

As ASEAN countries developed and as China gets richer, there is still enough room for the increase of regional demand to sustain some of the growth, and the surrounding economies to develop into better stronger economies.

Shayne Heffernan

Background

The Kingdom of Thailand was established in the mid-14th century. Known as Siam until as recently as 1939, Thailand is the only Southeast Asian country never to have been taken over by a European power.The country remains firmly independent of external influences. A bloodless revolution in 1932 led to the formation of the current constitutional monarchy.

In September 2006, a Military Coup ousted then Prime Minister Thaksin Shinawatra. The interim military government then held elections in December 2007 that saw the former pro-Thaksin People’s Power Party (PPP) emerge at the head of a coalition government. The anti-Thaksin People’s Alliance for Democracy (PAD) in May 2008 began street demonstrations against the new government, eventually occupying the prime minister’s office in August. Clashes in October 2008 between PAD protesters blocking parliament and police resulted in the death of at least two people. The PAD occupied Bangkok’s international airports briefly, ending their protests in early December 2008 following a court ruling that dissolved the ruling PPP and two other coalition parties for election violations. The Democrat Party then formed a new coalition government and Abhisit Wetchachiwa became prime minister.

The primary goals of AFTA seek to:

Increase ASEAN’s competitive edge as a production base in the world market through the elimination, within ASEAN, of tariffs and non-tariff barriers; and Attract more foreign direct investment to ASEAN.

The primary mechanism for achieving the goals given above is the Common Effective Preferential Tariff (CEPT) scheme, which established a schedule for phased initiated in 1992 with the self-described goal to increase the “region’s competitive advantage as a production base geared for the world market”.

The countries in AFTA have a combined population of 1b people.

Export Growth

Chairman of the Federation of Thai Industries (FTI) Santi Vilassakdanont projected that the country’s exports would expand at least 10 per cent next year. Mr Santi said his projection was based on the country’s ability to expand its export markets in member countries of the Asean and in other countries who are Thailand’s trade partners under the free trade agreement (FTA) such as China and India.

Thailand’s gross domestic product should increase by at least three per cent next year, Finance Minister Korn Chatikavanij predicted on Thursday.

“The Thai economy has passed its lowest point and it is capable of expanding by four to five per cent in 2010,” Mr Korn said.

However, the fragile global economy and the country’s political uncertainty could impede growth and lower the confidence of investors next year.

“The government will continue launching new measures to bolster the economy continuously such as tax measures, the expansion of the third generation (3G) mobile broadband network and the establishment of a national savings fund.” he said.

Federation of Thai Industries (FTI) chairman Santi Vilassakdanont predicted the export sector would expand at least 10 per cent next year.

Mr Santi said his forecast was based on the country’s ability to expand its export markets in Asean member countries and other countries that are Thailand’s trade partners under the free trade agreement (FTA) such as China and India.

He said the recovering economies in the United States, the European Union and Japan were still fragile.

The FTI chairman pointed out that oil price fluctuations and foreign currency devaluation were two key risk factors for the export sector.

“If other countries devalue their respective currencies, Thailand should also consider devaluing the baht to maintain its competitiveness,” Mr Santi said.

He said the production capacity utilization in the industrial sector stood at about 60 per cent. The figure should increase to about 65 to 70 per cent next year due to the improvement in several industries, including automobiles, electronics and food industries.

The construction industry should also see substantial growth, thanks to the government’s Thai Khem Kaeng (Strong Thailand) stimulus scheme.

Thailand is an investment destination not to be overlooked.

Japan’s economy grew at a dramatically slower pace than previously thought in the three months to September, in a further sign that the country’s fledgling recovery is already running out of puff.

The economy grew at an annualised pace of 1.3% from July to September, drastically down on an earlier estimate of 4.8%, the cabinet office said today.

Last month’s estimate had failed to factor in a huge decline in corporate spending as Japan’s export-led economy struggles under the weight of weak demand and the soaring yen.

While Japan was expecting capital investment to grow by 1.6%, today’s figures revealed that it actually contracted 2.8%.

The revision comes a day after the government announced a ¥7.2tn (£50bn) stimulus package in another attempt to prevent the economy from sliding back into recession.

The GDP data means the world’s second-biggest economy, which only emerged from its worst postwar recession earlier this year, grew a mere 0.3% compared with the previous quarter, compared with an initial estimate of 1.2%.

Officials were clearly taken aback by the size of the revision. “When releasing the preliminary figures, I commented with hope that a path for domestic demand-led recovery may have emerged, but now we need to re-examine that,” Keisuke Tsumura, parliamentary secretary of the cabinet office, told reporters.

The strength of the yen and falling prices have created a rift between the government and the Bank of Japan, which last week made ¥10tn available to commercial banks in an apparent sop to the finance ministry.

Japan’s faltering recovery has also opened up divisions in the coalition government. Shizuka Kamei, the outspoken banking minister, successfully lobbied the prime minister, Yukio Hatoyama, to add a further ¥100bn to the stimulus package.

That portion will be covered by a bond issue, placing further strain on Japan’s vast public debt.

Japan has introduced four emergency spending packages since September last year, totalling more than ¥29tn.

Hatoyama defended the new measures, but acknowledged, with considerable understatement, that the economy was “not necessarily doing well”.

Analysts did not expect the package, which includes support for jobseekers and smaller companies, as well as more incentives to buy eco-friendly products, to have much of an impact.

Ryutaro Kono, chief economist at BNP Paribas in Tokyo, said that while Asia would continue to fuel the recovery in exports, poor demand at home would continue to slow growth.

“The fact that manufacturers are saddled with excessive capacity and employment that cannot be undone by a cyclical upturn means cost cutting will continue for some time,” he said. — The Guardian

The unprofitable company should spend more money to finance factory closures and job cuts to focus on growing businesses such as trains and medical systems, said Amir Anvarzadeh, senior Asian equity salesman at BGC International in London. Hideyuki Suzuki, a Tokyo-based analyst at SBI Securities Co., also said Hitachi needs extra funds to reorganize.

Hitachi is seeking to reverse a multi-decade strategy of expanding into everything from televisions to vacuum cleaners and nuclear reactors after reporting a record loss for a Japanese manufacturer last fiscal year. The company plans to reduce about 200 units, merge its unprofitable chip subsidiary with a rival and relocate workers in its plasma-display and automotive units to cut 260 billion yen in costs this year.

“Hitachi has been a very sleepy giant, who hasn’t been on the forefront of restructuring,” Anvarzadeh said. “They will absolutely have to raise more money, because the way the group is situated results in so much overlap.”

Hitachi, Japan’s fourth-largest company by revenue, has lost 19 percent in Tokyo trading since announcing its share-sale plans on Nov. 16. Yesterday, the company said it sold 250.7 billion yen in stock and 100 billion yen in convertible bonds to help fund new businesses and pay off debt.

Additional Sales

Hitachi isn’t currently planning additional share sales, spokesman Masanao Sato said. Yesterday’s offering will help bolster capital to about 13.5 percent of assets from 10.9 percent, Sato said. That’s short of the 20 percent target Chief Financial Officer Takashi Miyoshi said in July the company should aim for in a “few years.”

Japanese financial institutions and investors track the capital ratio as a key measure of viability that influences companies’ ability to raise money, said Fumihito Gotoh, head of Japan credit research for UBS AG in Tokyo. Panasonic Corp., Mitsubishi Electric Corp. and Sony Corp. have ratios exceeding 20 percent, according to their latest financial reports.

Hitachi is forecasting a fourth straight annual loss after the global recession drove the company to a record 787.3 billion yen in the 12 months ended March 31. The reorganization may help Hitachi post profit next fiscal year, according to analyst estimates compiled by Bloomberg.

‘Unresolved Issues’

“The company still has unresolved issues and a lot work ahead,” said Takeo Miyamoto, a Deutsche Bank AG analyst who has a “hold” rating on Hitachi. “The share sale will help bolster the company’s prospects short term, but the move is really aimed at the credit ratings agencies as a show of good faith.”

Hitachi’s debt is rated A3, four levels above junk, at Moody’s Investors Service and BBB+, three levels above non- investment grade, at Standard & Poor’s.

To speed up consolidation and the reduction of overlapping operations, Hitachi in July offered 282.2 billion yen to buy out five subsidiaries and affiliates. Further buyouts may be needed for the company to reduce its number of units, SBI’s Suzuki said.

“The most pressing issue is the rationalization of the businesses, as exemplified in the buyout of the five subsidiaries,” said Suzuki, who doesn’t have a rating on Hitachi’s stock. “They will need more money.”

Speedier Reforms

Speedier reforms may also help Hitachi sells more stock should the company need to in the future, said investors including Takeshi Kamoshita.

“Without a clearly stated business strategy, another round of fundraising is not likely to be well received by the markets,” said Kamoshita, who manages about $450 million in pension funds at DIAM Co. in Tokyo. “The company will need to carry out rather drastic reforms of the group structure and operations to achieve the 20 percent target.”

Hitachi plans to use proceeds from its first stock sale in 27 years to help invest about 100 billion yen for facilities at its Power & Industrial Systems unit that makes power plants and manufacturing machinery, it said last month. The company also seeks to spend 90 billion yen for the Information & Telecommunication division that makes hard drives and computers.

Hitachi followed Toshiba Corp., NEC Corp. and Nomura Holdings Inc. in selling shares to replenish capital. Japanese companies have raised 3.9 trillion yen in stocks and equity- linked securities this year, more than double the 1.5 trillion yen raised in 2008, as equity markets recover from the bankruptcy of Lehman Brother Holdings Inc. last year, according to data compiled by Bloomberg.

“Hitachi exemplifies the problems some of the Japanese companies are having now,” BGC’s Anvarzadeh said. “When you have a poor balance sheet, one of the things you can’t do is, paradoxically, restructure.” — Bloomberg

The “A+”-rated bonds would be divided into three tranches, with the four-year issue, worth 2 billion baht, carrying a coupon of 3.90 percent, and the five-year bonds, worth 3 billion baht, having a 4.30 percent coupon, it said.

The last tranche of 3 billion baht of six-year bonds would have a coupon of 4.80 percent.

It would open for subscription between Nov. 19 and 24, the statement said. ($1=33.42 Baht)
If nibbling on a chicken wing while surfing the Net is your thing, Charoen Pokphand (CP Group) is the company for you. CP Group, Thailand’s largest agriculture conglomerate, supplies seafood, poultry, and pork products; it also has an expanding suite of telecom offerings. CP’s agri-business, which includes subsidiary Charoen Pokphand Foods, produces pet and livestock feed and horticultural products and machinery. It also distributes vegetable and flower seeds, fertilizer, and cultivates seafood. The telecom side of things includes fixed-line and mobile phone service, cable TV, Internet service, and Web design and development under the name True Corporation.

Name
Type of Business
% Direct & Indirect Holdings

Subsidiaries that have operations in Thailand
and have operations related to Thailand’s operations

1. Bangkok Feedmill Co., Ltd.
Animal Feedmill and Livestock Farming
99.99

2. B.P. Feedmill Co., Ltd.
Animal Feedmill and Livestock Farming
99.99

3. Charoen Pokphand Industry Co., Ltd.
Animal Feedmill and Livestock Farming
99.99

4. Rajburi Feedmill Co., Ltd.
Animal Feedmill and Livestock Farming
99.99

5. Bangkok Livestock Processing Co., Ltd.
Animal feed production, animal farming
& meat processing
99.99

6. Bangkok Farm Co., Ltd.
Animal farming & meat processing
99.99

7. C.P. Agro-Industry Co., Ltd.
Animal farming
99.99

8. C.P. Food Products Co., Ltd.
Foods processing
99.99

9. Vee Food Products Co., Ltd.
(formerly Inter-Consumer Foods Co., Ltd.)
Foods processing and distibution
99.99

10. C.P. Merchandising Co., Ltd.
Asset investment & international trading
99.99

11.Universal Foods and Marketing Co., Ltd.
Wholesale and Retail of Food products,
and Fast Food Kiosks
99.99

12.International Pet Foods Co., Ltd.
Wholesale and Retail of Pet Food products
99.99

13.C.P. Food Industry Export Co., Ltd.
Foods processing
99.98

14.Bangkok Agro-Industrial Products Plc.
Animal feed production & animal farming
99.98

15.Charoen Pokphand Northeastern Plc.
Animal feed production & animal farming
99.61

16.Bangkok Produce Merchandising Plc.
Aquaculture Business in Thailand
99.44

Aquaculture Business in Thailand

17.Pokphand Aquatech Co., Ltd.
Aquatic feed production and distribution
99.99

18.Chanthaburi Aquaculture Farm Co., Ltd.
Shrimp farming
99.99

19.Seafoods Enterprise Co., Ltd.
Shrimp processing & shrimp feed distribution
99.99

20.Klang Co., Ltd.
Shrimp processing & shrimp feed distribution
99.98

21.Trad Prawn Culture Co., Ltd.
Shrimp farming
99.91

22.Thai Prawn Culture Center Co., Ltd.
Shrimp farming, shrimp processing and shrimp
feed distribution
99.89

23.Savee Farming Co., Ltd.
Shrimp farming
99.84

Businesses Related to Operations in Thailand

24.Aqua Beauty, Inc.
Import and distribution of food products in the USA
99.99

25.Aqua-Agri Foods International, Inc.
Import and distribution of food products in the USA
99.99

26.CPF Europe S.A.
Import and distribution of meat and food products
in Europe
99.99

27.Fusion Foods Limited
Import and distribution of meat and food products
in the United Kingdom
52.00

28.CPF Tokyo Co.,Ltd.
Import and distribution of meat and food products
in Japan
99.99

Other Businesses in Thailand

29.CPF IT Center Company Ltd.
Information technology services
99.99

30.CPF Training Center Company Ltd.
Training services
99.99

Overseas Business

31.C.P. Food Product (Shanghai) Co., Ltd.
Thai restaurant business in China
100

32.C.P. Aquaculture (Beihai) Co., Ltd.
Aquatic feed production & distribution in China
100

33.C.P. Aquaculture (Hainan) Co., Ltd.
Animal feed production & distribution in China
100

34.CPF Investment Ltd.
Investment holdings
100

35.C.P. Standart
(incorporated in Turkey)
Animal Feedmill, Chicken Farming and Processing
Plant
98.89

36.BKP Holdings Limited
Investment holdings
99.44

37.Charoen Pokphand(USA),Inc.
Chicken business in USA.
99.95