[Today's Guide]
> Executive meeting of State Council unties establishment of hospitals by social forces, private hospitals break development bottleneck
> Lithium-ion battery market to expand continuously, ‘Water Ten’ to bring market with RMB1 trln
> Huawei Technology to acquire TV assets, Jiuzhou Electric to acquire Haocen Electric
> Zhongyeda Electric to control gongkong. com, Jilin Power Share to develop wind power with over RMB4 bln
[XFA Focus]
○ Executive meeting of State Council unties establishment of hospitals by social forces, private hospitals break development bottleneck
------
Chinese Premier Li Keqiang hosted the executive meeting of the State Council on June 4 to promote healthy development of the establishment of hospitals by social forces and propose multi specific supporting measures including simplifying the approval of establishing medical institutions; incorporating the establishment of hospitals by social forces into regional medical resources planning and canceling restrictions on quantity and locations; supporting the establishment of hospitals by social forces to raise funds through equity financing, etc.; pushing forward multi-sited license of doctors; implementing tax preference, etc.
Comment: It is widely believed by the industry that administrative access and overmuch approval are the main barriers faced by the development of private hospitals. For specific operation issues like purchasing medical instruments, building departments, etc. usually need the nod of governmental departments. Private hospitals can better play their advantage of flexible mechanism after getting rid of these restrictions. Moreover, multi-sited license of doctors can help private hospitals to build talents team. As for listed companies, Xi'an International Medical Investment Company Limited (000516.SZ) recently cooperates with Alibaba to build cloud Internet hospital and plans to develop land around the hospital and improve diagnosis and treatment ability; Hengkang Medical Group Co., Ltd. (002219.SZ) and Jinling Pharmaceutical Company Limited (000919.SZ) acquire several hospitals in succession. Hengkang Medical recently completed the fundraising of 2.6 billion yuan through additional issuance of stocks.
◆ The executive meeting of the State Council also gives big push to popular entrepreneurship and innovation. It proposes to push forward domestic listing of venture enterprises with special stock-ownership structure and supports state-owned capital, foreign capital, etc. to develop venture capital investment.
[XFA Selection]
○ The capital raised by new funds this year has reached 852.4 billion yuan, amounting to over twice year-round amount of last year. 4 funds with 10-billion yuan scale were born in May.
○ Bank of Communications Co., Ltd. (601328.SH; 03328.HK) claims that it is actively studying on deepening reform and improving governance mechanism. Institutions are optimistic about the industrial catalytic effect brought by mixed-ownership reform.
○ Head of National Energy Administration recently went to China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec Group) and China National Offshore Oil Corporation (CNOOC) for investigation. He proposed to accelerate the reform of oil and gas system.
○ Five authorities distributed the construction task of returning farmland to forests or grassland by 10,000,000 mu this year; the government work report of this year also mentioned to develop an area of forestation of 90,000,000 mu.
○ Google Inc. (NASDAQ: GOOG; FWB: GGQ1) acquires micro electro mechanical system and sensor manufacturer with 85 million U.S. dollar, aiming to develop driverless cars.
○ The first case of suspected second-generation MERS patient infected through human-to-human transmission died in South Korea. The number of isolated persons climbs to 1,667.
[Industry Information]
○ Enterprises expand production to meet increasing demand on lithium-ion battery, industrial chain to see increasing orders
------
BYD Company Limited (002594.SZ; 01211.HK) announced on June 4 that it plans to raise 15 billion yuan through private placement to invest in the industrial chain of new energy car, among which, 6 billion yuan will be used to newly build 6GWH lithium battery capacity. The company explicitly indicates that the supply of lithium-ion power battery largely falls short of demand. XFA recently reported that due to the booming demand on lithium-ion battery, the price of lithium carbonate sees continuous hike.
Comment: As one of the 10 key development areas of “Made in China 2025”, new energy car industry will gain continuous policy support and see long-term investment value. New energy car industry enters explosive growth period in 2015 and the output of electrical car in the first four months in China sees a year-on-year growth of nearly 300 percent. Lithium-ion power battery and electric motor will benefit the most. As for listed companies, Cangzhou MingZhu Plastic Co., Ltd. (002108.SZ) is principally engaged in lithium battery diaphragm and is a supplier of BYD; China Baoan Group Co., Ltd. (000009.SZ) is a leading domestic graphite anode material and supplies anode material to BYD.
○ ‘Water Ten’ to bring market with RMB1 trln, industry continues to boom
------
The 9th Environment Technology Industry Forum 2015 hosted by the E20 Environment Platform and the School of Environment, Tsinghua University, was opened on June 4. Zhao Yingmin, director of the pollution control and management department of the Ministry of Environmental Protection, indicated that the implementation of the ‘Water Pollution Prevention Action Plan’ (the ‘Water Ten’) will drive the GDP growing by about 5.7 trillion yuan and bring another output of about 1.9 trillion yuan in the environmental protection industry. The direct purchase of environmental protection products and services will reach about 1.4 trillion yuan.
Comment: The environmental protection industry has transformed from end treatment into green production covering the whole life cycle. Driven by public opinion and the pressure on environmental testing, the industry demand will hike significantly, which provides an excellent environment for the high growth of environmental enterprises. Beijing Water Business Doctor Co., Ltd. (300055.SZ) indicates that it conduct more mergers and acquisitions in the future. It recently announced that it will raise 3 billion yuan for various PPO projects. Shanghai Safbon Water Service Co., Ltd. (300262.SZ) owns sufficient orders for industrial water treatment. It has participated in the establishment of a merger fund with 1 billion yuan to acquire enterprises above the designated size.
[Announcement Interpretation]
○ Huawei Technology to acquire TV assets with RMB1.2 bln, enterprises under Zhongzhi Enterprise Group to subscribe
------
Huawei Technology Co., Ltd. (002502.SZ) proposes to acquire 100 percent equities of Zhejiang Dream Stardom Film and TV Culture Co., Ltd. with 1.2 billion yuan. It will pay 360 million yuan in cash and the remaining will be paid by issuing shares at 15.28 yuan per share through private placement. Meanwhile, the company will raise a supporting fund of 444 million yuan by issuing shares at 17.12 yuan per share through private placement. Three institutes under the Zhongzhi Enterprise Group will subscribe 400 million yuan and the remaining 44 million yuan will be subscribed by the employee shareholding plan. Dream Stardom Film and TV Culture is principally engaged in the production and distribution of TV series. It committed that its net profit from 2015 to 2017 will be 100 million yuan, 134 million yuan and 165 million yuan, respectively.
○ Jiuzhou Electric to acquire Haocen Electric to expand industrial chain
------
Harbin Jiuzhou Electric Co., Ltd. (300040.SZ) plans to acquire 99.93 percent equities of Shenyang Haocen Electric Co., Ltd. priced at about 450 million yuan by issuing 60.60 million shares at 7.42 yuan per share through private placement. The counterparty committed that the net profit after extraordinary items of the subject asset from 2015 to 2017 will be 37.50 million yuan, 45 million yuan and 51 million yuan, respectively. Haocen Electric is professionally engaged in the manufacturing of energy-saving and environmental power transmission and distribution and control equipment in China. The acquisition will help the listed company enter into the solid insulation ring-network cabinet market and the power grid industry.
○ Zhongyeda Electric to control gongkong.com with RMB210 mln
------
Zhongyeda Electric Co., Ltd. (002441.SZ) intends to acquire 70 percent equities of gongkong.com with 210 million yuan. The latter is the first Internet-based platform and online media institute in the industrial electrical engineering and automation industry as well as the web portal with the biggest page view in the industry. The acquisition will integrate the offline sale channels of the company with the online channels network of gongkong.com.
○ Jilin Power Share to develop wind power with over RMB4 bln
------
Jilin Power Share Co., Ltd. (000875.SZ) proposes to raise 4,057 million yuan by issuing 424 million shares at no less than 9.57 yuan per share through private placement. The proceeds will be invested in the wind power plant in Changshan Town, Anqiao District, Anhui Province as well as other wind power plants, the acquisition of the 99MW wind power in-grid generation project in Santanghu area, the 150MW in-grid photovoltaic power generation project in Dingbian County, Shaanxi Province as well as supplementing the working capital. Jilin Energy and Transportation Corp., a wholly-owned subsidiary of the actual controller of the company, will subscribe no less than 25.58 percent. China Power Complete Equipment Co., Ltd. will subscribe no less than 1.14 percent.
○ China West Construction to expand main biz with RMB2.5 bln
------
China West Construction Group Co., Ltd. (002302.SZ) plans to raise 2.5 billion yuan by issuing 122 million shares at no less than 20.46 yuan per share through private placement. The proceeds will be invested in the construction of commercial concrete production sites, the improvement of commercial concrete technologies, the construction of industrial chains and research and development centers as well as supplementing the working capital. The controlling shareholder of the company will participate in the subscription with 205 million yuan of creditor’s rights.
○ Wasu Media to inject capital in subsidiary to develop new media
------
Wasu Media Holding Co., Ltd. (000156.SZ) intends to inject capital into its wholly-owned subsidiary Zhejiang Wasu Media & Network Co., Ltd. with the 4,425 million yuan raised from the shares issued to Hangzhou Yunxi Investment through private placement. 1 billion yuan will be invested in the registered capital of Wasu Media & Network and 3,425 million yuan will be accounted into capital reserve.
Comment: The actual controllers of Yunxi Investment are Shi Yuzhu and Ma Yun. The capital injection will benefit the company in developing the new network and media industries to build a comprehensive media platform with core competitiveness.
[Financial Reports Express]
○ Sanxia Paints proposes high share conversion and dividend
------
The chairman of Chongqing Sanxia Paints Co., Ltd. (000565.SZ) proposes an 8-for-10 conversion of capital surplus into shares combined with another 7 shares for every 10 shares in the profit distribution proposal in the first half of 2015.
[Trading Trends]
○ Five institutes buy Hanwei Electronics
------
The trading volume ranking list on June 4 shows five institutes bought Henan Hanwei Electronics Co., Ltd. (300007.SZ) with a total of 100 million yuan, accounting for 45 percent of its intraday turnover.
Comment: Hanwei Electronics has transformed from a sensor manufacturer into a services provider based on the Internet of Things. Institutes believe that the company maintained high growth in performance and has achieved market effects in the intelligent gas, chemical metallurgy, oil refining as well as operations. The introduction of the employee shareholding plan shows the confidence in the future of the company.
> Executive meeting of State Council unties establishment of hospitals by social forces, private hospitals break development bottleneck
> Lithium-ion battery market to expand continuously, ‘Water Ten’ to bring market with RMB1 trln
> Huawei Technology to acquire TV assets, Jiuzhou Electric to acquire Haocen Electric
> Zhongyeda Electric to control gongkong. com, Jilin Power Share to develop wind power with over RMB4 bln
[XFA Focus]
○ Executive meeting of State Council unties establishment of hospitals by social forces, private hospitals break development bottleneck
------
Chinese Premier Li Keqiang hosted the executive meeting of the State Council on June 4 to promote healthy development of the establishment of hospitals by social forces and propose multi specific supporting measures including simplifying the approval of establishing medical institutions; incorporating the establishment of hospitals by social forces into regional medical resources planning and canceling restrictions on quantity and locations; supporting the establishment of hospitals by social forces to raise funds through equity financing, etc.; pushing forward multi-sited license of doctors; implementing tax preference, etc.
Comment: It is widely believed by the industry that administrative access and overmuch approval are the main barriers faced by the development of private hospitals. For specific operation issues like purchasing medical instruments, building departments, etc. usually need the nod of governmental departments. Private hospitals can better play their advantage of flexible mechanism after getting rid of these restrictions. Moreover, multi-sited license of doctors can help private hospitals to build talents team. As for listed companies, Xi'an International Medical Investment Company Limited (000516.SZ) recently cooperates with Alibaba to build cloud Internet hospital and plans to develop land around the hospital and improve diagnosis and treatment ability; Hengkang Medical Group Co., Ltd. (002219.SZ) and Jinling Pharmaceutical Company Limited (000919.SZ) acquire several hospitals in succession. Hengkang Medical recently completed the fundraising of 2.6 billion yuan through additional issuance of stocks.
◆ The executive meeting of the State Council also gives big push to popular entrepreneurship and innovation. It proposes to push forward domestic listing of venture enterprises with special stock-ownership structure and supports state-owned capital, foreign capital, etc. to develop venture capital investment.
[XFA Selection]
○ The capital raised by new funds this year has reached 852.4 billion yuan, amounting to over twice year-round amount of last year. 4 funds with 10-billion yuan scale were born in May.
○ Bank of Communications Co., Ltd. (601328.SH; 03328.HK) claims that it is actively studying on deepening reform and improving governance mechanism. Institutions are optimistic about the industrial catalytic effect brought by mixed-ownership reform.
○ Head of National Energy Administration recently went to China National Petroleum Corporation (CNPC), China Petrochemical Corporation (Sinopec Group) and China National Offshore Oil Corporation (CNOOC) for investigation. He proposed to accelerate the reform of oil and gas system.
○ Five authorities distributed the construction task of returning farmland to forests or grassland by 10,000,000 mu this year; the government work report of this year also mentioned to develop an area of forestation of 90,000,000 mu.
○ Google Inc. (NASDAQ: GOOG; FWB: GGQ1) acquires micro electro mechanical system and sensor manufacturer with 85 million U.S. dollar, aiming to develop driverless cars.
○ The first case of suspected second-generation MERS patient infected through human-to-human transmission died in South Korea. The number of isolated persons climbs to 1,667.
[Industry Information]
○ Enterprises expand production to meet increasing demand on lithium-ion battery, industrial chain to see increasing orders
------
BYD Company Limited (002594.SZ; 01211.HK) announced on June 4 that it plans to raise 15 billion yuan through private placement to invest in the industrial chain of new energy car, among which, 6 billion yuan will be used to newly build 6GWH lithium battery capacity. The company explicitly indicates that the supply of lithium-ion power battery largely falls short of demand. XFA recently reported that due to the booming demand on lithium-ion battery, the price of lithium carbonate sees continuous hike.
Comment: As one of the 10 key development areas of “Made in China 2025”, new energy car industry will gain continuous policy support and see long-term investment value. New energy car industry enters explosive growth period in 2015 and the output of electrical car in the first four months in China sees a year-on-year growth of nearly 300 percent. Lithium-ion power battery and electric motor will benefit the most. As for listed companies, Cangzhou MingZhu Plastic Co., Ltd. (002108.SZ) is principally engaged in lithium battery diaphragm and is a supplier of BYD; China Baoan Group Co., Ltd. (000009.SZ) is a leading domestic graphite anode material and supplies anode material to BYD.
○ ‘Water Ten’ to bring market with RMB1 trln, industry continues to boom
------
The 9th Environment Technology Industry Forum 2015 hosted by the E20 Environment Platform and the School of Environment, Tsinghua University, was opened on June 4. Zhao Yingmin, director of the pollution control and management department of the Ministry of Environmental Protection, indicated that the implementation of the ‘Water Pollution Prevention Action Plan’ (the ‘Water Ten’) will drive the GDP growing by about 5.7 trillion yuan and bring another output of about 1.9 trillion yuan in the environmental protection industry. The direct purchase of environmental protection products and services will reach about 1.4 trillion yuan.
Comment: The environmental protection industry has transformed from end treatment into green production covering the whole life cycle. Driven by public opinion and the pressure on environmental testing, the industry demand will hike significantly, which provides an excellent environment for the high growth of environmental enterprises. Beijing Water Business Doctor Co., Ltd. (300055.SZ) indicates that it conduct more mergers and acquisitions in the future. It recently announced that it will raise 3 billion yuan for various PPO projects. Shanghai Safbon Water Service Co., Ltd. (300262.SZ) owns sufficient orders for industrial water treatment. It has participated in the establishment of a merger fund with 1 billion yuan to acquire enterprises above the designated size.
[Announcement Interpretation]
○ Huawei Technology to acquire TV assets with RMB1.2 bln, enterprises under Zhongzhi Enterprise Group to subscribe
------
Huawei Technology Co., Ltd. (002502.SZ) proposes to acquire 100 percent equities of Zhejiang Dream Stardom Film and TV Culture Co., Ltd. with 1.2 billion yuan. It will pay 360 million yuan in cash and the remaining will be paid by issuing shares at 15.28 yuan per share through private placement. Meanwhile, the company will raise a supporting fund of 444 million yuan by issuing shares at 17.12 yuan per share through private placement. Three institutes under the Zhongzhi Enterprise Group will subscribe 400 million yuan and the remaining 44 million yuan will be subscribed by the employee shareholding plan. Dream Stardom Film and TV Culture is principally engaged in the production and distribution of TV series. It committed that its net profit from 2015 to 2017 will be 100 million yuan, 134 million yuan and 165 million yuan, respectively.
○ Jiuzhou Electric to acquire Haocen Electric to expand industrial chain
------
Harbin Jiuzhou Electric Co., Ltd. (300040.SZ) plans to acquire 99.93 percent equities of Shenyang Haocen Electric Co., Ltd. priced at about 450 million yuan by issuing 60.60 million shares at 7.42 yuan per share through private placement. The counterparty committed that the net profit after extraordinary items of the subject asset from 2015 to 2017 will be 37.50 million yuan, 45 million yuan and 51 million yuan, respectively. Haocen Electric is professionally engaged in the manufacturing of energy-saving and environmental power transmission and distribution and control equipment in China. The acquisition will help the listed company enter into the solid insulation ring-network cabinet market and the power grid industry.
○ Zhongyeda Electric to control gongkong.com with RMB210 mln
------
Zhongyeda Electric Co., Ltd. (002441.SZ) intends to acquire 70 percent equities of gongkong.com with 210 million yuan. The latter is the first Internet-based platform and online media institute in the industrial electrical engineering and automation industry as well as the web portal with the biggest page view in the industry. The acquisition will integrate the offline sale channels of the company with the online channels network of gongkong.com.
○ Jilin Power Share to develop wind power with over RMB4 bln
------
Jilin Power Share Co., Ltd. (000875.SZ) proposes to raise 4,057 million yuan by issuing 424 million shares at no less than 9.57 yuan per share through private placement. The proceeds will be invested in the wind power plant in Changshan Town, Anqiao District, Anhui Province as well as other wind power plants, the acquisition of the 99MW wind power in-grid generation project in Santanghu area, the 150MW in-grid photovoltaic power generation project in Dingbian County, Shaanxi Province as well as supplementing the working capital. Jilin Energy and Transportation Corp., a wholly-owned subsidiary of the actual controller of the company, will subscribe no less than 25.58 percent. China Power Complete Equipment Co., Ltd. will subscribe no less than 1.14 percent.
○ China West Construction to expand main biz with RMB2.5 bln
------
China West Construction Group Co., Ltd. (002302.SZ) plans to raise 2.5 billion yuan by issuing 122 million shares at no less than 20.46 yuan per share through private placement. The proceeds will be invested in the construction of commercial concrete production sites, the improvement of commercial concrete technologies, the construction of industrial chains and research and development centers as well as supplementing the working capital. The controlling shareholder of the company will participate in the subscription with 205 million yuan of creditor’s rights.
○ Wasu Media to inject capital in subsidiary to develop new media
------
Wasu Media Holding Co., Ltd. (000156.SZ) intends to inject capital into its wholly-owned subsidiary Zhejiang Wasu Media & Network Co., Ltd. with the 4,425 million yuan raised from the shares issued to Hangzhou Yunxi Investment through private placement. 1 billion yuan will be invested in the registered capital of Wasu Media & Network and 3,425 million yuan will be accounted into capital reserve.
Comment: The actual controllers of Yunxi Investment are Shi Yuzhu and Ma Yun. The capital injection will benefit the company in developing the new network and media industries to build a comprehensive media platform with core competitiveness.
[Financial Reports Express]
○ Sanxia Paints proposes high share conversion and dividend
------
The chairman of Chongqing Sanxia Paints Co., Ltd. (000565.SZ) proposes an 8-for-10 conversion of capital surplus into shares combined with another 7 shares for every 10 shares in the profit distribution proposal in the first half of 2015.
[Trading Trends]
○ Five institutes buy Hanwei Electronics
------
The trading volume ranking list on June 4 shows five institutes bought Henan Hanwei Electronics Co., Ltd. (300007.SZ) with a total of 100 million yuan, accounting for 45 percent of its intraday turnover.
Comment: Hanwei Electronics has transformed from a sensor manufacturer into a services provider based on the Internet of Things. Institutes believe that the company maintained high growth in performance and has achieved market effects in the intelligent gas, chemical metallurgy, oil refining as well as operations. The introduction of the employee shareholding plan shows the confidence in the future of the company.
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