Recently, China is going to release the 3G mobile services and many companies are planning to get involve there.
In last week, SMIC (HK stock no. 981) announced that China company Datang telecom confirmed to invest USD 172 millions into SMIC as the biggest investor of SMIC,stock price buy at HKD 0.36 . we can think about that is it a good decision for Datang Telecom? and to SMIC ,is it a good decision to get this new investor?
For industry point of view, Semiconductor industry will face a tough business environment in coming days as worldwide economy is negative, we need to take care of this type of stocks. Current stock price of SMIC may indicate such poor outlook and SMIC stock price only 1/6 of her book value, worth to buy?
For management , Datang telecom will send 2 seniors into SMIC board of directors , so i think due to past bad performance of SMIC, new people will change somethings in business direction, at least same as Obama slogan " changes has come to America", will "Changes" come to SMIC ? probability is high I think.!
For marketing and biz consideration, after new injection, SMIC will co-operate with Datang telecom to co-develop China 3G TD-SCDMA, Datang supply 3G infrastructure, SMIC supply 3G chips , and SMIC will get many orders from Datang telecom because Datang telecom already confirmed become the No.1 biggest equipments vendor for China mobile's (HK stock no.941) 3G new project in CHina. This will affect SMIC business performance positively.
After new money injected into SMIC , new SMIC's book value is around HKD 1.00, Cash value is HKD 0.23,Net current assets is HKD 0.10-
and yesterday's Stock price closed at HKD 0.152 and remember Datang buy price is HKD 0.36 for the new investment.
So, Datang is a stupid investor or an Intelligent investor? i think the answer is obvious!
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