• Wed
  • Aug 27, 2014
  • Updated: 9:18pm
Lai See
PUBLISHED : Thursday, 04 July, 2013, 12:00am
UPDATED : Thursday, 04 July, 2013, 3:48am

Magnetic attraction: Citic Pacific and Clive Palmer

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

Clive Palmer's relations with his mainland business partner Hong Kong-listed Citic Pacific continue their downward spiral.

Citic Pacific recently denied claims by the mining billionaire that it was paying him A$500 million (HK$3.5 billion) a year. The supposed payments were in respect of royalties in connection with Citic's ill-fated Sino Iron project in Western Australia.

In 2006, Palmer sold Citic the rights to mine magnetite iron ore in return for royalty payments. Citic agreed to build the infrastructure, but the "deal of the century", as analysts call it, because it heavily favours Palmer, has taken a heavy toll on Citic. The original budget of US$2.5 billion has soared to US$8 billion and could reach US$10 billion. That is not counting the bungled US$2 billion attempt at hedging the company's Australian dollar risk that cost chairman Larry Yung Chi-kin his job.

Citic recently lost a dispute over royalty payments to Palmer. A Citic spokesman told BRW magazine: "Matters relating to royalties for Sino Iron are currently before the Australian courts, where we believe these issues will be dealt with fairly."

There are three other court cases between these two parties relating to Sino Iron. The project is three years behind schedule and the date for the first shipment has repeatedly been delayed. The latest hitch has seen it delayed from the end of May until some time in the second half of the year. But don't hold your breath.

 

Esprit tries new attitude for fit

Esprit yesterday announced the opening of its largest store, in East Kowloon, all 10,000 square feet of it. Located in Megabox, the store will be a "hot spot for stylish and discerning shoppers", according to a company press statement.

Interestingly, the statement adds that the new store "reaffirms the core values of the Esprit brand and is an expression of its positive new attitude". This contrasts with the less than positive "old attitude" of six weeks ago when chief executive Jose Manuel Martinez Gutierrez told investors store closures would lead to a decline in sales with a gradual recovery to be expected next year. The company suffered the ignominy of being removed from the Hang Seng Index last month.

 

This one's not for shorting

Analysts have been raising their forecasts for revenue and earnings before interest, taxes, depreciation and amortisation for Qihoo 360 Technology.

Brokerage Stifel has raised its target price on the mainland internet company to US$55, while Citigroup lifted its target to US$65, according to Reuters. This is almost 40 per cent higher than its recent close of US$47. This is all rather embarrassing for short sellers Citron and Anonymous Analytics. When the stock was about US$20 last year, they said the company was a fraud and was heading towards US$5. The stock is up almost 60 per cent this year. "Its nothing more than an illusion that defies validation by any third-party source," Citron wrote last year.

 

Smell of opportunity

The mainland is pressing ahead with its deep sea exploration programme and will hire six new "oceanauts" over the next few months, including two women. The programme already has two such deepsea explorers, says China Daily, but the bar will be higher for the next intake.

As well as being divers they will also have to be scientists, Liu Baohua, deputy director of the National Deep Sea Centre, told a press conference in Beijing recently. Applicants must meet 119 requirements relating to, among other matters, height, weight, age, mental health and knowledge of mechanical engineering and the ocean.

He singled out one attribute: "If a person doesn't smell good, he or she is not qualified to be an oceanaut. Because of the small space of the Jialong, the Chinese submersible, and the long hours they will spend in there, it would be a disaster." One can only imagine how aspiring oceanauts will be tested for their smell.

 

Now, where to park them

Beijing is rapidly being engulfed by the irrepressible growth of the vehicles on its streets. These numbered 5.31 million at the end of May and are growing at the rate of 20,000 a month. Experts say the capital will need an additional 2.5 million parking spaces over the next two years. In 2010, there were 2.17 million spaces, but they have not kept up with the growth in vehicle numbers.

 

Have you got any stories that Lai See should know about? E-mail them to howard.winn@scmp.com

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