TCHI

Yum! Brands, McDonald’s: ‘Big Trouble in Little China’

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Source: Dragon TV 00:27 / 08:28 Source: Dragon TV 00:35 / 08:28 Source: Dragon TV 01:19 / 08:28 The pictures above are allegedly from a Chinese plant of Shanghai Husi Food, owned by OSI Group, which is based in Aurora, Illinois. This link source will take you directly to the actual news footage from local Dragon TV (it is not translated to English, but the video is of high quality). Shanghai Husi Food is a key local meat supplier in China to KFC, owned by Yum! Brands (YUM), and McDonald’s (MCD)—as well as Starbucks (SBUX), but to a lesser extent. All three US-based restaurants have since halted buying meat products from the company. What makes this story worse is that … Read more

Iron Ore Prices Plunge

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Worries about the pace of China’s economic expansion are hurting prices for iron ore. According to data from the Steel Index Ltd, benchmark iron ore dropped more than 8% to $104.70 a dry ton March 10, falling the most since August 2009. Over the weekend, news revealed that Chinese exports dropped a surprisingly 18.1% in February, relative to expectations calling for a 7.5% increase. According to customs data released March 8, China’s imports of iron ore were 61.24 million metric tons in February, significantly below the 86.83 million tons registered in January. The news, while not shocking, wasn’t very pleasant. Still, we’re taking the recently-released February numbers with a grain of salt. Scares regarding the pace of China’s economic growth … Read more

Is the Worst Behind China?

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Summer was not very kind to the Chinese economy. We’ve seen the country hit by concerns of credit overexpansion, as well as negative manufacturing data and declining exports. On top of macro issues, companies that usually prosper in China like Nike (click ticker for report: ) and Yum! Brands (click ticker for report: ) posted weak results. However, after bottoming out at 47.7 during July, the HSBC China Manufacturing PMI compiled by Markit turned modestly positive at 50.1 during the month of August (anything above 50 represents expansion). Industry destocking appears to be mostly completed, and manufacturers are receiving more new orders. HSBC’s lead Asian economist Hongbin Qu implied the economy had bottomed, saying in the press release: “The final … Read more

Rio Tinto Improves Cash Flow in Weak Mining Environment

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Key Takeaways ·         Cost cuts helped Rio Tinto stomach weak commodity end markets. ·         Production increases buffered weak iron ore prices. ·         China remains a key driver of growth. Country data flow continues to contradict. ·         We continue to hold Rio Tinto in our Best Ideas Newsletter portfolio…but we think it could be a wild ride. Best Ideas Newsletter portfolio holding Rio Tinto (click ticker for report: ) announced weak, but better-than-expected, financial performance for the first half of 2013 Thursday. Earnings per share declined 71% year-over-year to $0.93, though revenue declined only 3% year-over-year to $24.5 billion as production increases were able to partially offset commodity price weakness. Underlying earnings per share, which is adjusted for one-time charges, exchange rates, and write-downs, … Read more