Explosive satellite launch dents China's TV aspirations
ONE thing that didn't go up in smoke in Sichuan on Thursday morning was the media theory that postulates: 'The satellite TV war will be won on the ground'.
It must be a linguistic virus which causes analysts to repetitively utter the phrase.
The theory goes that getting satellite dishes and decoders into Asian homes is a waste of time.
The thing to do is to rush around Jakarta and Kuala Lumpur strong-arming cable TV firms into taking your signals.
In return they get marketing support and help in upgrading their gear so that non-paying customers can be cut off from the distribution centre just like telephone subscribers without the hassle of repossessing the reception equipment.
Sign up enough and the adverts, which are thin to zero on most regional satellite channels, will appear.
Maybe. But Thursday's accident threw into sharp relief another important point - if you are not in the air and you are not on a satellite with the right companions and with the right technology: it doesn't matter.
China's poor record on satellite launches is going to cause it problems in winning future business.
Aptsat was a heavier unit than previous payloads and China has been busy tweaking its rockets to provide support for sophisticated satellites.
The side-effect is that the launch vehicles seem to be having trouble.
But smart satellites which can do multiple beam-splitting are going to be needed to provide a tailored service.
Otherwise you spend all your money broadcasting Mandarin films to Indonesians.
It also doesn't seem to matter to any of the current players that they are spewing the most appalling rot imaginable into the ether.
Hindsight says the satellite TV War will be won the same place that any such battle is won - in the studio. Bad TV stations, like bad newspapers or any other product, do not survive beyond the natal stages of an industry. With China's Long March rockets proving to be a Roman Candles (or should that be Asian Scandals?), a lot of players will have good cause to think about strategy.
TVB had a quick think about it and on Thursday afternoon the firm was telling reporters that nothing of any importance had happened.
The way the firm put it, one would think the whole ridiculous idea of having satellite channels had been a flash in the boardroom pan.
TVB had its Taiwan cable operation so all was wonderful in the garden. Methinks they do protest too much. That US$160 million orange ball of fire could also be used as an apt metaphor for the territory's market in the first half of this past week.
About 4.26 per cent burned off the Hang Seng Index on Monday taking it below 7,000 in a day with HK$3.06 billion of trade, which used to be considered thin but at current price-earnings is a reasonable day's trade.
Bank of East Asia (BEA) finally ended two years or more of dithering about revealing its inner reserves and told us how much profit it really made. If BEA had done so a year ago, its shares might have leapt on the positive sentiment aroused by the move - even with the numbers it displayed.
This time, it got hammered into the ground.
The love affair between analysts and BEA ended quite some time ago, although the bank is still in the ranks of the massive index out-performers over the past three or four years.
Brokers don't like the stock so much now because of the relatively low amount of equity. Analysts aren't keen because of its overweight position in the mortgage market.
It is about 10 per cent outside the HKMA's recommended limit. With the interest rate cycle still perhaps two per cent or more away from peaking and negative equity on the verge of making a Masque of the Red Death-style appearance, this is off-putting.
BEA's disclosure of transfers to reserves also worried analysts because the proportion of transfers to profit was a meagre 9.5 per cent, or $147 million, of the net profit of $1.54 billion and analysts rather hoped BEA had been stashing a bit more away. This week's auction saw most sites selling, which was the good news.
The bad news was that some of them attracted only one bid and the pricing wasn't exactly fierce.
Nevertheless, with property companies trading at massive discounts to net asset value (NAV), volatility was on the cards and the effects were mixed.
Sino Land put on 17 per cent on Wednesday, sending the share price to $5.45 on news of a plan to spin-off what Sino is pleased to call its 'hotels division'. Actually Sino Hotels will only own one hotel - the Garden City Hotel in North Point. It will have 25 per cent of the Tsim Sha Tsui Royal Pacific, a 4.3 per cent interest in Hong Kong and Shanghai Hotels and two restaurants.
Similar rumours surrounding Great Eagle's hotel interests sent its price soaring by 12 per cent on Thursday.
But before readers rush out crying 'Sell! Sell! Get out while you can!', please note that this pair has been trading at discounts to NAV which would - were Hong Kong's history not what we know it to be - only be justifiable if holding the shares had been linked to a wasting disease.
Today's graphs illustrate all too clearly the size of the task ahead of this pair, and the rest of the property sector, in coming back to previous valuations of property by the market.
The outcome of having property stocks trading at such huge discounts to NAV is unclear.
The market may be expecting reality to adjust to its perception - in other words an almighty property crash which would even lead to white-knuckles at the bank.
Or else it may have just decided that even if property prices do not come off that much, activity will be subdued until the interest rate cycle turns so there's no point in holding the shares and the effects will then be limited to property price-earnings ratios.
Either the firms or the punters get clobbered.
Hindsight hopes the Year of the Pig doesn't find readers caught in the gap as the elastic pings.
And you must remember: Bulls make money, bears make money. Pigs get slaughtered.