The9 Ltd is the leading online game operator and developer in China. Its main revenue drivers are affiliates operates licensed MMORPGs (massively multiplayer online role-play games) consisting World of Warcraft (WoW), Soul of Ultimate Nation (SUN), and Granado Espada (GE). During Q2 of FY2008, the company achieved excellent financial results due to the rising revenue from WoW and SUN. It also spent huge efforts in R&D and international affiliation. However, the results of those efforts are not foreseeable in the near future. The9’s limitation in self-developed game pipelines meant the company may suffer threats from its competitors such as Shanda and Netease. Furthermore, each game has its life cycle, The9’s over reliance on WoW may limit its future earning ability.

Here is a snapshot of today's big movers from the Chinese ADR universe. Focus Media Holdings defies overall trend, the DJIA lost almost 200 points today already, helped by better than expected 2008 Q2 results and strong Q3 outlook. Focus Media Holding shares jump on Q3 outlook. The stock is trading up $2.76 or 10.51% today.

In one hand, windfall tax load will be heavier for upstream companies because of soaring world oil price. On the other hand, domestic retail price increase is actually a "tiny" compensation and can not offset the loss of the downstream activities. Since consumer price index (CPI) remains high, government is facing pressure to tame inflation. I personally guess another retail price increase will probably not happen in a short run, which makes a conservative forecast for the downsteamers. Furthermore, the government is considering the cancellation of compensation for crude oil tariff deduction negatively effecting both Sinopec (SNP) and Petrochina (PTR).

Proposed merger of China Unicom Limited (CHU) and China Netcom group Corp. (Hong Kong) Ltd. by way of a scheme of arrangement of CN under section 166 of the Hong Kong companies ordinance
Notice of court meeting
Notice of extraordinary general meeting
Proxy Forms

Shares of Aluminum Corp. of China (ACH) jumped 6.42% in Hong Kong trading - related chart is here. The company was quick to announce in a public statement that there is no company specific events in the background that would have prompted such drastic share price change. See related press release below.

China Unicom (CHU) and China Netcom (CN) submitted a document of proposed merger of the two to the Hong Kong Stock Exchange today. According to the document, last day of trading for China Netcom ADRs will be October 6, 2008 followed by a complete withdrawal of CN ADRs from the NYSE listing as of October 15, 2008. China Netcom as we know it will cease to exist while China Unicom will get a new name. The document lays out a clear timetable of events. What's not in the document but is very important is this: CN's fixed network with 109 million strong subscriber base will get a mobile phone arm - CHU's GSM network. This is the better one of CHU not just by subscriber numbers but by dynamics, too. While CHU's GSM network boosts 125 million subscribers and is growing at a rate of 1.1 million a month, CHU's CDMA network - soon to join China Telecom - counts only 43 million subscribers with a growth rate of 0.4 million a month.

In Q2 2008, the advertising revenues of SINA increased 58% yoy and 35.8% qoq to $64.9 million, reaching the high end of the Company's guidance of between $64.0 million and $65.0 million. In Q1 2008, SINA delivered a growth of 51% yoy in its advertising revenue to 47.8 million dollars. The gross profits of advertising business grew 60.5% yoy and 43% qoq to $41.25 million.

As of 9 August 2008, the conditions precedent of the investor subscription agreement entered into among SIA, Temasek and the Company have not been satisfied, and pursuant to the terms thereof, the agreement automatically terminates. Accordingly, it follows that the transaction contemplated under the CEA Holding subscription agreement between China Eastern Air Holding Company (“CEA Holding”) and the Company cannot proceed to completion, and the shareholders agreement entered into among CEA Holding, SIA and Temasek is not effective.

Huaneng Power International, Inc. (the “Company”) announces that a 600MW supercritical air-cooling desulphurization coal-fired generating unit (Unit 5) of the Phase III Project at Huaneng Shangan Power Plant, which is wholly owned by the Company, has obtained approvals from the relevant authorities recently and commenced commercial operation on 1 July 2008. To date, the Company’s total generation capacity on an equity basis has increased from 36,393MW to 36,993MW. Unit 5 of Shangan Power Plant is the first 600MW supercritical air-cooling unit which commenced operation in the PRC. The project represents the integration of high-efficiency and low-consumption supercritical power generating technology with water-saving direct air-cooling technology for the first time in the PRC. The environmental protection benefits in terms of energy saving and water saving are significant.

Trading today showed again how much large cap companies matter. China Mobile (CHL), the largest cell phone carrier of the world by subscribers, weighted on the overall index. Shares of CHL lost $1.01 or 1.16% on expectations that it's going to be China Unicom (CHU) and China Netcom (CN) that will benefit from the telecom industry restructuring, while CHL will lose steam on the long run.

We use different technical tools to determine what stock stick out - all these before the market opens. This time we find the Overbought/Oversold indicator extremely useful. This tool picks up five stocks that are way oversold and thus offer turnaround opportunities today: China Eastern Airlines (CEA), Sina Corp. (SINA), Sohu.com (SOHU), CNOOC Ltd. (CEO) and China Mobile (CHL). As the following Google chart suggests, their slip yesterday in percentage points are somewhat different, - chart here - however unusual big moves are best picked up by a stock specific tool - such as the overbought/oversold indicator.

Chinese ADRs are caught in the wind along the DJIA and have gained significant momentum in the last three trading days. Number of Chinese ADRs trading above 50 day-moving-averages or DMAs increased from alst week to 13 with two of them reaching the "overbought" status, more than last week. Four ADRs are classified as oversold, less than last week. Overall, it's a pretty strong showing for the China plays.

China Shenhua Energy Co. Ltd., the largest Chinese coal miner reported that net income rose to RMB14,146 million ($2.06 billion) up 35.7% vs. same period last year. Jump in profits is attributed to strong coal prices in the first six months of the year. In a document submitted to the Hong Kong Stock Exchange Shenhua reported operating income to climb to RMB49,282 million ($7.176 billion) representing an increase of 26.8% vs. last year. Operating profit rose 32.5% contributing to the strong net income growth.