China Corporate News: Eastern Airlines Steps Up Business in North China; New Oriental Probed in US

CNOOC Pushes Ahead South China Sea Tender Despite Vietnam Spat
CNOOC Ltd (NYSE: CEO, HKG: 0883), China's biggest offshore energy explorer, said its tender for oil and gas exploitation in the South China Sea is going well, playing down Vietnamese claims that some of the prospective blocks involved its waters. Some American firms had shown interest in cooperating in the projects, CNOOC chairman Wang Yilin said, without naming them. CNOOC invited tender in late June to co-develop nine blocks in the west of the resource-rich South China Sea. Experts say such a tender would not interest multinational oil companies because of the escalating tensions in the area.

Eastern Airlines Steps Up Business in North China
China Eastern Airlines Corp (NYSE: CEA, SHA: 600115, HKG: 0670), the nation's second biggest carrier by passenger traffic, is injecting the assets of its Hubei province branch into China United Airlines in a bid to play a greater role in Beijing as well as the entire northern China market, Yicai.com reported. The move will pit China Eastern Airlines against Air China Ltd (SHA: 601111, HKG: 0753), which is based in Beijing. China United Airlines is the sole operator at Nanyuan Airport, the sole airport located in downtown Beijing.

Sinopec Gets Nod for ¥250b Xinjiang Gas Projects
Sinopec Group, the parent of China's largest refiner Sinopec Corp (NYSE: SNP, SHA: 600028, HKG: 0386), said it has won regulatory approval to build two coal gas pipeline projects in the Xinjiang region, worth a combined ¥250 billion. The projects are expected to attract ¥370 billion of investments in related infrastructure and become operational by 2016.

New Oriental Probed in US
New Oriental Education & Technology Group Inc (NYSE: EDU) said US securities regulators are probing the company in the latest scrutiny of a once-popular investment structuring for US-listed Chinese companies, the Wall Street Journal reported. The education company said it believes the investigation concerns whether there is sufficient basis its Beijing New Oriental Education & Technology unit to be included in the company's consolidated financial statements. New Oriental said the company is a variable interest entity, which refers to a structure that has enabled a wave of Chinese firms to list overseas by circumventing Chinese rules against foreign investment in sectors like the Internet. The structure uses a series of contractual agreements to enable an offshore holding company owned by foreign investors to effectively run a business inside China that is not allowed to be foreign owned. But the structure has come under scrutiny by both US and Chinese officials.

Air China Foresees 50% Drop in 1H Earnings
Air China Ltd (SHA: 601111, HKG: 0753), the nation's third biggest carrier by passenger traffic, said it expects its 1H net profit to plummet 50% from the ¥4.06 billion booked a year earlier due to weak global demand for air services, rising aviation fuel and losses from foreign exchange exposure. China Southern Airlines Ltd (NYSE: ZNH, SHA: 600029, HKG: 1055) and China Eastern Airlines Corp (NYSE: CEA, SHA: 600115, HKG: 0670), its larger rivals, previously made the same negative forecast.

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