Wednesday, 11 September 2013
UPDATE 1-Asian supplier shares fall as Apple's 5C iPhone stirs doubts
* Apple to sell lower-cost iPhone at $730 in China
* Concerns iPhone 5C demand will be weak in emerging markets
* Shares in Chinese, Japanese suppliers fall (Updates with iPhone offer price in China, analyst's comments, Chinese and HK-listed suppliers)
By Dominic Lau and Clement Tan
TOKYO/HONG KONG, Sept 11 (Reuters) - Shares of Apple Inc's component suppliers in Asia came under pressure on Wednesday as investors lock in recent gains on concerns that its lower-cost iPhone is still too expensive for its target audience in China and other emerging markets.
On Tuesday, Apple unveiled its flagship iPhone 5S with a fingerprint scanner to help it stand out among the smartest of phones. It also introduced the colourful 5C plastic model for emerging markets.
The cheaper, plastic-backed iPhone 5C will sell for 4,488 yuan ($730) in China, almost $200 more than the United States retail price of $549 and only 800 yuan less than its top-of-the-line sibling, the 5S.
"People were all expecting the 5C would be a low-cost model, but it doesn't look like it will be too competitive now," said Jackson Wong, Tanrich Securities vice president for equity sales in Hong Kong. "Everybody is now looking to the China Mobile announcement, which can happen anytime now."
Markets have been speculating that the California-based tech giant is on the verge of signing a distribution pact with China Mobile Ltd, the country's biggest wireless carrier with more than 740 million subscribers. China Mobile shares were down 1.4 percent.
Among the Japanese component makers, Taiyo Yuden Co Ltd , Murata Manufacturing Co Ltd and Ibiden Co Ltd were down between 1.4 and 2.9 percent.
Hong Kong-listed AAC Technologies Holdings Inc sagged 5.2 percent and Goertek Inc, which supplies speakers to Apple, plunged the maximum 10 percent limit in Shenzhen, while Taiwan's Hon Hai Precision Industry Co Ltd eased a more modest 1.3 percent.
Traders also said the cheaper model, which will go on sale on Friday and come in five colours - blue, green, pink, yellow and white - could crimp margins at suppliers.
"In terms of components, it's all a volume game with low margins. It's not a huge positive for component makers," a senior dealer at a foreign bank in Tokyo said.
Apple has been losing ground to Samsung Electronics Co Ltd and Huawei Technologies Co Ltd in emerging markets like China and India.
Other Japanese part suppliers that were hit on Tuesday included Mitsumi Electric Co Ltd, Japan Aviation Electronics Industry Ltd, Minebea Co Ltd, Alps Electric Co Ltd and Nidec Corp, off between 1 and 4.3 percent.
BUYING OPPORTUNITY
Another Tokyo-based trader disagreed that margins were under threat, saying Apple has long been squeezing its part suppliers so if the tech giant can increase sales, it would benefit component makers as well.
"It's not negative for the component makers because it's about volume. If anything, it is positive for component makers because you are now arguably going to be selling even more iPhones," he said, adding that the selloff in the Japanese component makers offered buying opportunities.
"The potential you've got here is not that you are going to be selling fewer iPhone 5S...What you are doing here is attacking a brand new market," the trader said. "Now they have come up with a mid-range phone because there is a huge market for entry level smartphones."
According to Thomson Reuters StarMine, suppliers Taiyo Yuden, Murata and Ibiden were 14 to 37 percent below their intrinsic value, which evaluates a stock based on projected growth over the next decade, using a combination of analyst forecasts and industry growth expectations.
($1 = 6.12 Chinese yuan) (Editing by Matt Driskill)
UPDATE 1-Sports Direct posts sales rise as FTSE 100 debut nears
* Q1 group sales 613.3 mln stg vs 519 mln year earlier
* Gross profit up 23.2 percent to 260.1 million stg
* Company set to be promoted to FTSE 100 index
By Neil Maidment
LONDON, Sept 11 (Reuters) - Sports Direct, Britain's biggest sporting goods retailer, posted an 18.2 percent rise in first-quarter sales, sustaining a strong performance that is set to lift it into the UK's leading share index.
The company, controlled by billionaire Newcastle United soccer club owner Mike Ashley, said trading in the 13 weeks to July 28 had been ahead of its expectations, with group sales reaching 613.3 million pounds ($964 million) versus 519 million a year earlier.
Gross profit increased 23.2 percent to 260.1 million pounds, while quarterly retail sales rose 14.5 percent. Sales in its premium lifestyle unit, which includes USC, jumped 98.3 percent.
The company is set to be promoted to the FTSE 100 share index on Wednesday after its share price jumped to all-time highs following a 40 percent surge in profit in July.
Sports Direct, which owns Sports Direct.com and Lillywhites stores as well as brands including Slazenger, Dunlop and Lonsdale, has grown rapidly in Britain during the downturn, thanks partly to the demise of rivals such as JJB Sports, as well as growing online sales and staff motivated by a lucrative bonus scheme.
The firm, which has around 400 UK stores, has set its sights on a greater presence across Europe where it operates in 19 countries and expects to move into two or three new territories this financial year.
The firm said it would continue to target underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of 310 million pounds for 2013-14, before a charge for bonus share schemes, as it focuses on integrating recent acquisitions in the UK, Austria and the Baltic region.
Shares in Sports Direct have doubled since its stock market listing in February 2007 and closed on Tuesday at 715.5 pence, valuing the business at almost 4.3 billion pounds.
UPDATE 1-Barratt Dev says housing recovery spreads outside London
* FY pretax before one-offs up 74 pct to 192.3 mln stg
* Average selling price 194,800 stg vs 180,500
* Says recovery moving well beyond southeast England
By Brenda Goh
LONDON, Sept 11 (Reuters) - Housebuilder Barratt Developments said queues were forming for its housing schemes for the first time since the financial crisis, as the market recovery spreads beyond southeast England.
Barratt, Britain's largest housebuilder by volume, said on Wednesday that buyer appetite for its homes was so strong that for some sites it was making five to 10 sales on the day of a scheme's launch.
"Recovery is moving well beyond the southeast, we're seeing some very strong performances around the country and that's probably the first time in five years where we've been able to report that," Chief Executive Mark Clare told Reuters.
"We are seeing some very, very strong interest on new sites that we're launching around the country, even to the point where we're starting to see queues ... which is not something we have seen for many, many years."
He said cities such as Aberdeen and Edinburgh in Scotland, as well as Bristol in southwest England, were seeing particularly high levels of interest. "Where we're opening, people are waiting to get into those new show homes," he said.
Britain's housing market, which declined following the financial crisis, has revived in recent months thanks to government efforts to ease mortgage lending, as well as a general increase in confidence in the health of the economy.
While house prices in London and southeast England stayed relatively robust through the crisis, prices in other regions continued to fall up to the end of last year, before the government launched its Help to Buy scheme.
A survey on Tuesday showed British house prices recorded their fastest rise in almost seven years last month.
Barratt, which reported a 74 percent increase in full-year profit before tax and exceptional items to 192.3 million pounds, has been a big beneficiary of Help to Buy, which accounted for almost 30 percent of its reservations in the first 10 weeks of the current financial year.
The company said it had seen a 29.4 percent increase in average net private reservations across the group, while private forward sales were up 44.4 percent to 880.4 million pounds ($1.3 billion) at Sept. 8.
Its average selling price rose to 194,800 pounds from 180,500 a year ago.
At 0729 GMT, shares in Barratt were up 0.1 percent, valuing the company at 3.26 billion pounds.
UPDATE 1-U.S. aluminum users slam LME's plan to solve warehousing crisis
By Josephine Mason
NEW YORK, Sept 10 (Reuters) - A group of aluminum users, including MillerCoors LLC and other makers of drink cans, have said the London Metal Exchange's proposal to overhaul its controversial warehousing policy will "fall short" of solving the long wait times and inflated prices.
In a letter dated Sept. 9, the so-called "aluminum users group" called on the LME to implement even bigger changes, which they say will end long wait times, increase transparency for physical pricing and restore user confidence in the exchange.
Without that, there will be "more dysfunction, more manipulation and more harm", the letter from the group said. It also asked for a meeting with the LME.
The letter was in response to dramatic changes announced by the LME on July 1, aimed at soothing irate industrial users who say the LME's warehousing policy has led to record high physical premiums for aluminum and long wait times to take delivery.
While some of the group's suggestions may be hard to enforce, the seven-page letter will likely increase pressure on the LME and its new owner, Hong Kong Exchanges and Clearing , to deal with the problem as regulatory, legal and political scrutiny of the exchange intensifies.
Several changes that called for greater regulation and increased transparency at the exchange also underscored prolonged criticism among some industrial users and traders about how the 136-year old exchange is run.
Some consumers say a lack of regulation in the United States and Britain is partly to blame for the problem.
"We encourage the LME to work towards a coordinated regulatory framework across countries and regions. This will help guard against manipulation of LME rules and ensure a fair and open marketplace for metal," it said.
In July, MillerCoors, the second largest brewer in the United States, raised the issue in a hearing at the U.S. Senate Banking Committee, saying high physical prices have cost U.S. consumers an extra $3 billion a year in expenses.
Alongside Goldman Sachs and other banks and traders that now own many of the world's biggest warehousing companies, the LME is facing several class action lawsuits alleging "anticompetitive behavior" in aluminum warehousing.
U.S.and UK regulators are also investigating the issue.
At the heart of the issue are several companies with warehouses registered by the LME, including Glencore-owned Pacorini, Trafigura's NEMS and Goldman Sachs' Metro. These companies have found a lucrative business in building up big stocks, charging rent for storage and delivering metal out of storage only at a limited rate.
In its third effort to resolve the problem in as many years, the LME has proposed linking the rate at which a warehouse, with big stockpiles and long wait times of more than 100 days, is required to load out material to the rate at which it brings in new metal.
In Monday's letter, the group called on the LME to also rein in "exceptional" incentive payments made by warehouses to attract metal and limit charges for moving metal in and out of storage sheds.
Among other changes aimed at improving transparency, it said the LME should have more balanced representation on its committees, provide more information about its auditing of warehouses and enforce firewalls between owners of warehouses and merchants to prevent conflicts of interest, the letter said.
In highlighting flaws in the new plan, it said the maximum wait time of 100 days set by the new rules is still too long and the rules could lead a warehouse to refuse to take delivery of new metal or shift metal to non-LME registered facilities.
The deadline for submitting comments on the LME's plan is Sept. 30. Warehousing companies and trading firms have also given their feedback on the plan, sources have said.
Some of the users' suggestions may be difficult for the LME to implement. Any move to limit rent increases would be deemed as price fixing by the European Union and therefore anti-competitive, the LME has said.
A final decision on whether to implement the changes is expected to be made at a scheduled LME board meeting in October and if approved, the new rules would come into force on April 1 next year.
"The changes we seek are simple and straightforward, and would ultimately result in the LME operating like other commodity exchanges around the world," said the Beer Institute, which represents brewers and beer importers who are part of the user group, in an email to Reuters.
UPDATE 1-Syria war crimes worsen in battle for territory - UN report
(Adds detail from report)
By Stephanie Nebehay
GENEVA, Sept 11 (Reuters) - U.N. human rights investigators said on Wednesday Syrian government forces had massacred civilians, bombed hospitals and committed other war crimes in widespread attacks to recapture territory from rebels this year.
Opposition forces, including Islamist foreign fighters, have also perpetrated war crimes including executions, hostage-taking and shelling of civilian neighbourhoods, the investigators said in their latest report, covering the period of May 15-July 15.
"The perpetrators of these violations and crimes, on all sides, act in defiance of international law. They do not fear accountability. Referral to justice is imperative," said the report by the U.N. commission of inquiry, which is led by Paulo Pinheiro of Brazil.
The independent experts said they had received allegations about the use of chemical weapons "predominantly by government forces ... On the evidence currently available, it was not possible to reach a finding about the chemical agents used, their delivery systems or the perpetrators. Investigations are ongoing," the report said.
The team of some 20 investigators carried out 258 interviews with refugees, defectors and others in the region and in Geneva, including via Skype, for their 11th report in two years. They have never been allowed into Syria despite repeated requests.
The report called for a political solution to Syria's civil war and urged other states to "stop weapons transfers in view of the clear risk that they will be used to commit serious violations of international law". (Reporting by Stephanie Nebehay, editing by Tom Miles and Mark Heinrich)