yuan appreciation (impact of 5% revaluation)

From a Chinese corporate earnings perspective, CSFB (China) this morning updated their corporate earnings impact.

In brief:
1.
major beneficiaries = those industries:
- with "a highly internationalised cost structure"; and
- focused on domestic sales.
Example: airlines.
2.
makor losers = those "sectors heavily depende(nt) on:
- export demand; or
- having an internationalized product price, but with a large domestic cost components
Example = commodities.

China Southern Airline is cited as likely having the biggest proportional positive earnings impact of a 5% revaluation, followed by:
China Eastern Airline;
Air China;
Lenovo; and
Zhenhai Refining.

As for likely losers (based on proportional earnings impact), they are, in order of impact:
Yizheng Chemical;
Zijin Mining;
Chalco;
CNOCC; and
PetroChina.

Very interesting (if not very coincidental), China Southern Airlines overnight placed a US$2.6B - US$3.0B order for 45 new airplanes with Boeing (details, below).

-------------------------------
China Southern Airlines to buy 45 Boeing aircraft
05.10.2005, 10:29 PM

BEIJING (AFX) - China Southern Airlines Co Ltd (SHA 600029; HK 1055; ADR ZNH) said it will purchase a total of 45 aircraft from Boeing Co.

China Southern Airlines, one of the country's top three airlines, said in a statement the deal includes 12 B737-700s - which have a catalog price of 50.5 to 59 mln usd per aircraft; and 33 B737-800s, with a catalog price of 61.5-69.5 mln.

It did not say what discounts off the catalog price it won in negotiations with Boeing.

The statement said 15 of the aircraft will be ordered for Xiamen Airlines, China Southern Airlines' subsidiary.

China Southern Airlines said the new aircraft will boost capacity by 15 pct. It added that funding will come mostly from bank loans, without providing further details.

Boeing will deliver all the aircraft between 2006 and 2008, China Southern Airlines added.