As resolved at the annual general meeting of the Company convened on 9 May 2008, it was approved to issue medium-term bonds with a total principal amount of not less than RMB3 billion and not more than RMB10 billion (the “Medium-term Bonds”). Pursuant to the approval granted by the National Association of Financial Market Institutional Investors on 22 May 2008, the Company may issue medium-term bonds with a total principal amount of up to RMB10 billion in the People’s Republic of China by various tranches effective on or before 20 May 2010.

Last week we published a study that looked at 10- and 30-day moving averages and their crossing patterns to find momentum stocks. We continue with some technical analysis today by introducing the Overbought/Oversold techincal indicator. The one we use gives investors a gauge of the market in a snapshot by laying down all Chinese ADRs on a single paper. This method makes it very easy to find stocks that are out of their normal trading characteristics; thus offering trading opportunities.

From the annual income statement, Chalco achieved major improvement in revenue, increasing from 37,826.5 million RMB in 2005 to 76,180.4 million in 2007. This significant increase was mainly due to its several acquisitions during 2006 and increasing global commodity price. The acquisitions increased the production capacity dramatically. Total revenue had increased 17.5% from 2006 to 2007. However, as the continuing strong demand from Asian countries especially from China had been pushing the sales price up, the global oil price had increased as well to push up the cost of the industry. Specifically, Chalco’s cost of revenue went up from 43,930.7 million in 2006 to 57,197.5 million in 2007, representing a 30% jump. The significant increase in cost resulted in the net income had dropped 15.6% from 11,726.5 million to 9,899.6 million. In addition, gross profit margin dropping from 32.2% in 2006 to 24.9% in 2007. Also, operating profit margin and net profit margin decreased 7.68% and 5.09% respectively during the period from 2006 to 2007.

A very dear Chinavestor client has been encouraging me to develop a filter that tracks 10-DMA and 30-DMA for Chinese ADRs and keeps track of the developemnt of such values. All basic and advanced technical tools widely used by the small investor comunity can draw charts to display the divergence between the two indicators. But the problem is that if someone wants to gauge all Chinese ADRs in the market, it takes time to visually observes each chart.

Wall Street saw better days then today. The DJIA is down over 300 points on high unemployment rate and record oil, approaching $150 a barrel. No wonder, shares of U.S. listed Chinese companies, or ADRs, follow suit measured by the broad China ADR Index or CAI. As the following table demonstrates, Chinese ADRs lost 3.41% today however there is a significant difference between NYSE and NASDAQ listed ADRs. While index heavy NYSE listed China stocks lost ground, measured by the China NYSE Index (CYI), NASDAQ listed Chinese ADRs hold ground thanks to a superb performance of NetEase (NTES), The9 and some solar companies.

Price of Aluminium Corp. of China (NYSE:ACH) is down 18% year-to-date. This should not surprise many as the company reported weak 2007 Q4 and an even worse 2008 Q1 financial results. The company had to tap into short term borrowings of RMB 4.7bln in order to keep cash flow position stable. However this took a hit on liquidity measures. Underlying reason is overcapacity of alumina. For additional info, read the following story.

The underlying reason for the drop is very simple. The company announced in a statement that the provincial government of Shandong, where Yanzhou Coal is headquartered, had introduced a temporary price cut for thermal coal in the next three months. The argument goes that the provincial government wants to secure electricity production for the upcoming summer months when demand peaks. We saw Huaneng Power (NYSE:HNP), China's largest independent power generator, to report an 80% drop in first quarter profits due to high coal prices. The problem is that state-set power prices have not been increased since June 2006. Some fear that high coal prices prevent local power generators to stock up coal before the peak summer season, endangering smooth power supply.

We have noted the recent decrease in the price of the H shares of the Company today and wish to state that we are not aware of any reasons for such decrease. We also confirm that there are no other negotiations or agreements relating to intended acquisitions or realizations which are discloseable under Rule 13.23 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), neither is the board of

The Company estimates that the 2008 Coal Export Contract will result in an increase in the Company’s revenue by RMB224.93 million for the year ending 31 December 2008, representing 1.4% of the revenue of the Company for the year ended 31 December 2007. This announcement is made pursuant to Rule 13.09(1) and 13.09(2) of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited.

The boards of directors of Unicom and Netcom refer to (1) the Announcement on Deepening the Reform of the Structure of the Telecommunications Sector dated 24 May 2008 jointly issued by the Ministry of Industry and Information, the National Development and Reform Commission and the Ministry of Finance of the PRC which states, among other things, that the PRC government will deepen the reform of the structure of the telecommunications sector, and encourage the formation of three market competitors where each has nationwide network resources, relatively comparable strength and scale, as well as full service operation capabilities, that the allocation of telecommunications resources will be further optimized and the competition structure will be improved, and that three 3G licences will be granted once the contemplated restructuring is completed, and (2) the announcements issued by Unicom and Netcom on 25 May 2008.

Chalco did not perform well in sales in the first quarter 2008. Its gross margin only reached 19% compared to yearly gross margin of 25% as of 31 December 2007. The declining trend had begun in the second-half of 2007 from which aluminum price in China declined and raw material costs increased. Company had been boosting output for the purpose of taking advantage of lower product price, but objectively suffered pressure on increased raw material price, power and transportation cost. By March 2008, quarterly net profit dropped to 1.3 billion yuan which is only 58% of the third quarterly net profit in 2007. Total cost of revenue, however, increased by 5% accompanied declining sales in the same period.