Early Bird

Early Bird 08-June-2015

XFA Premium News
2015-06-08 12:04

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[Today’s Guide]
> XPCC state-owned assets reform plan to release this month, more assets injection expected
> Beijing-Tianjin-Hebei traffic integration plan prepared, geographical information industry to see rapid development
> Lingnan Landscape to acquire Hirain Digital Technologies, China Resources Wandong Medical Equipment to expand main business through private placement
> Billions Chemicals to acquire Lomon Titanium Industry with blns of yuan, Sinocera Functional Material to expand production through private placement
 
 
 [XFA Focus]
○ XPCC state-owned assets reform plan to release this month, more assets injection expected
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XFA learnt that the plan on the state-owned assets reform in the Xinjiang Production and Construction Corps (XPCC) has been prepared and is likely to be released this month. Since the beginning of this year, the financial office of the XPCC has strengthened the coordination with financial institutes. The leading groups on financial work in each division have been actively study expanding financing channels to improve the assets securitization. Han Yong, deputy secretary of the Party Committee of the Xinjiang Uygur Autonomous Region, has been appointed as the political commissar of the XPCC, which is considered as an important signal of accelerating the state-owned assets reform in the XPCC.
Comment: The total assets of enterprises regulated by the State-owned Assets Supervision and Administration Commission of the XPCC reached 277.3 billion yuan by the end of last year. The construction and the agriculture and animal husbandry account for a large proportion. The total assets of 13 listed companies under the XPCC are only 63.2 billion yuan, which can receive assets injection of 4 times theoretically. In terms of listed construction companies, Xinjiang Tianye Co., Ltd. (600075.SH) has suspended trading last week to prepare for significant matters. The substantial shareholder of Xinjiang Beixin Road & Bridge Group Co., Ltd. (002307.SZ) reduced the shareholding by 4.98 percent through bulk transactions. All the shares were bought by a Shanghai-based business office. Its current stock price is below the transaction price. The listed agriculture and animal husbandry companies include Xinjiang Talimu Agriculture Development Co., Ltd. (600359.SH), Xinjiang Chalkis Co., Ltd. (000972.SZ) and Xinjiang Tecon Animal Husbandry Bio-Technology Co., Ltd. (002100.SZ).
 
○ Shenzhen SASAC mulls big moves in promoting similar resources consolidation
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Ma Xingrui, secretary of Shenzhen Municipal Committee of the Communist Party of China (CPC), indicated at the municipal congress of party representatives held recently that he hopes that there will be one enterprise in the global top 500 companies in the Shenzhen Municipal People’s Government State-owned Assets Supervision and Administration Commission (Shenzhen SASAC) system in 2020. The Shenzhen SASAC has required companies under it submitting plans on catching the global top 500 companies. XFA further learnt that Shenzhen City intends to strengthen the consolidation of assets and similar resources in the orientation of big energy, big finance and big people’s livelihood to promote the flowing of resources to listed companies.
Comment: Shenzhen City is a pioneer in state-owned enterprises reform in China. Shenzhen Gas Corporation Ltd. (601139.SH) firstly attracted strategic investors. Shenzhen Agricultural Products Co., Ltd. (000061.SZ) received huge insurance assets injection. In terms of the real estate industry, there are six A-share listed companies under the Shenzhen SASAC. The resources consolidation is inevitable to make them bigger and stronger. Shenzhen Zhenye (Group) Co., Ltd. (000006.SZ) and Shenzhen Tagen Group Co., Ltd. (000090.SZ) are directly held by the Shenzhen SASAC and catch much attention of institutes.
 
 
 [XFA Selection]
○ The Leading Group for Overall Reform deliberated and approved two documents on June 5, providing institutional guarantee systems to further deepening state-owned enterprises and assets reform.
○ The first One Belt and One Road document between China and European countries was signed on June 6. It will cooperate with Hungary in advancing the construction of the Hungary-Serbia Railway.
○ The China Securities Regulatory Commission (CSRC) planned on the fourth batch of cases in the special law enforcement campaign on June 5, mainly targeting at rumormongering on the stock market and other four behaviors.
○ The Ministry of Environmental Protection and governments of various regions held series of theme activities on the World Environment Day. Institutes are rosy about the integration of the environment monitoring and the “Internet plus’.
○China Business Journal reported that the National Development and Reform Commission (NDRC) has entrusted the Chinese Academy of Engineering to inspect the address for inland nuclear power stations. The construction of inland nuclear power stations may initiate during the 13th Five-year Period.
○ South Korea reported on June 7 that it has confirmed 64 MERS cases totally. The new confirmed patients were infected in hospital.
 
 
[Industry Information]
○ Medium and long-term planning outline for national basic surveying and mapping approved, geographical information industry to see rapid development
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The State Council approved the medium and long-term planning outline for national basic surveying and mapping 2015-2030 recently. It is estimated that an informatization surveying and mapping system will take shape in 2020 and a full digital geographical framework will be established. It will generally form a complete surveying and mapping geographical information services chain with the new-type basic surveying and mapping, the geography national conditions monitoring and emergency surveying and mapping as the core in 2030.
Comment: The plan covers a period of 15 years, showing the importance attached to the basic surveying and mapping by the government. Driven by the increasing demand on geographical information security and location-based services, the satellite surveying and mapping, the basic geographical information resources construction and services as well as other industries will see rapid development. The market enjoys a potential of hundreds of billions of yuan. In terms of listed companies, Hi-Target Navigation Tech Co., Ltd. (300177.SZ) enjoys advantages in the whole industrial chain covering data collection, provision and application. China Spacesat Co., Ltd. (600118.SH) is a leader in the research and production of small satellites in China with the business covering remote sensing surveying and mapping and other application industries.
 
 
○ Beijing-Tianjin-Hebei traffic integration plan prepared, rail transit to play important role in RMB1.5 trillion investment
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The Economic Observer reported that the plan on the traffic integration in Beijng, Tianjin Municipality and Hebei Province has been prepared and will be released. Experts estimate that the investment in transportation in the three regions will reach about 1.5 trillion yuan in the following six years.
Comment: The Outline on the Coordinated Development of Beijing, Tianjin and Hebei was deliberated by the Political Bureau of the CPC Central Committee in end-April, saying that it is a significant state strategy to promote the coordinated development of Beijing, Tianjin and Hebei. The traffic integration in the three regions is the pioneer in the strategy. The plan will build the ‘Beijing, Tianjin and Hebei on rail’ and rail transit will play an important role in the investment with 1.5 trillion yuan. Relevant companies will benefit significantly. Luoyang Bearing Science & Technology Co., Ltd. (002046.SZ) will benefit from the domestication of high-speed rail bearings. Zhejiang Yonggui Electric Equipment Co., Ltd. (300351.SZ) saw huge increase in the revenue from the connectors for bullet trains.
 
 
 [Announcement Interpretation]
○ Lingnan Landscape to acquire Hirain Digital Technologies, senior management of subject company to participate in private placement
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Lingnan Landscape Co., Ltd. (002717.SZ) proposes to raise 1.05 billion yuan by issuing 74.10 million shares at 14.17 yuan per share through private placement after the annual distribution. The proceeds will be used in repaying bank loans and supplementing the working capital. Yin Hongwei, the actual controller of the company, will subscribe 255 million yuan. The company announced that it will acquire Shanghai Hirain Digital Technologies Co., Ltd. with 550 million yuan in cash. The latter is principally engaged in providing overall solutions to theme digital experience. Peng Waisheng and Liu Jun, senior management of the subject company, will contribute 240 million yuan and 70 million yuan, respectively, in the private placement.
 
○ China Resources Wandong Medical Equipment to expand main business with RMB880 mln, Jack Ma to subscribe private placement
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China Resources Wandong Medical Equipment Co., Ltd. (600055.SH) plans to raise 880 million yuan by issuing 24.96 million shares at no less than 35.26 yuan per share through private placement to invest in the industrialization of high-performance DR, MRI and CT image diagnostic equipment, the medical image cloud platform and the construction of marketing service system, to pay off loans and to supplement working capital.
Wu Guangming (one of the actual controllers of the company), Yunfeng Xinchuang Industrial Fund (an industrial fund jointly set up by Jack Ma, board chairman of Alibaba Group, and Yu Feng, founder of Juzhong Media, etc.), SHAREWIN Equity Fund Management Co., Ltd., Shanghai Rosefinch Investment and Development Center (Limited Partnership), Tibet Winfast Investment and Development Company, Song Wenlei and the company’s staff shareholding plan will be involved in the subscription.
 
○ Billions Chemicals to acquire Lomon Titanium Industry with blns of yuan, capacity of titanium dioxide to increase largely
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Henan Billions Chemicals Co., Ltd. (002601.SZ) plans to raise 10.3 billion yuan by issuing 380 million shares at 27 yuan per share through private placement, among which, 9 billion yuan will be used to acquire 100 percent equities of Sichuan Lomon Titanium Industry Co., Ltd. and the rest will be used to pay off loans and supplement working capital. Xu Gang, Tan Ruiqing, He Benliu and Yang Minle, shareholders and senior management of the company, will be involved in the subscription of the private placement.
Lomon Titanium Industry is principally engaged in the manufacturing and sales of titanium dioxide and saw a net profit of 680 million yuan in 2014. Upon completion of the acquisition, the total capacity of the company will reach 560,000 tons, ranking the first in Asia and the fourth worldwide. The counterparty promises that its net profit in next three years will be no less than 700 million yuan, 900 million yuan and 1.1 billion yuan, respectively.
 
○ Sinocera Functional Material to raise RMB800 mln to expand production, president and staff shareholding plan to subscribe private placement
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Shandong Sinocera Functional Material Co., Ltd. (300285.SZ) plans to raise 800 million yuan by issuing 21.97 million shares at 36.42 yuan per share to invest in the nano-scale compound zirconia material project with an annual production of 3,500 tons, the high-purity ultrafine alumina material project with an annual production of 5,000 tons and the upgrading of research center. Zhang Xi, president of the company, Zhuang Li and Shangzheng Guoci No.1 staff shareholding plan will fully subscribe the private placement.
 
○ Haoningda Meters to control www.tuandai.com with RMB660 mln to develop Internet finance
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Shenzhen Haoningda Meters Co., Ltd. (002356.SZ) plans to acquire 66 percent equities of Guangdong Junte Tuandai Network Information Service Co., Ltd. Hanqiao Machinery Factory, controlling shareholder of the company, will transfer 20.18 million shares of Haoningda Meters held by it through negotiation to pay 660 million yuan needed by the transaction. The credit and debt relationships with Haoningda Meters will be negotiated by Hanqiao Machinery Factory and Haoningda Meters.
www.tuandai.com, focusing on providing financial services concerning Internet credit of small and micro businesses, provides the owners of small and micro businesses and individual investors with efficient and convenient investment and financing service. The counterparty promises that the net profit of www.tuandai.com from 2015 to 2017 will be no less than 25.00 million yuan, 70.00 million yuan and 115.00 million yuan, respectively.
 
○ Toread Outdoor Products to raise RMB2.1 bln through private placement  to build outdoor ecosphere
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Beijing Toread Outdoor Products Co., Ltd. (300005.SZ) plans to raise 2.1 billion yuan by issuing 80.00 million shares through private placement to invest in Toread cloud project, camping, skiing and outdoor multi-functional experience center project, Lvye outdoor tourism O2O project, outdoor products vertical e-commerce project and outdoor security assurance service platform, and to supplement working capital. The company indicates that it will resort to “Internet Plus” to accelerate the implementation of its outdoor ecosphere strategy.
 
 
[News Tracking]
○ Zoomlion Heavy Industry Science and Technology to acquire Huai’an Chenjie to transform to environmental protection
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Zoomlion Heavy Industry Science and Technology Co., Ltd. (000157.SZ) plans to invest 45.74 million yuan to acquire 96 percent equities of Huai’an Chenjie Company which owns 25-year franchise rights of the kitchen waste treatment project in Huai’an City. The company will take Huai’an Chenjie as a platform to transform from environmental service equipment manufacturer to a comprehensive service provider of environmental treatment. Previously, XFA reported that the company acquired overseas environmental protection asset.
 
 
[Weekly Review]
○ More studies to companies’ performance
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Is the single-day drop similar to the drop in Feb 27 or May 30? Does the signal mean surging or not?  … Similar topics keep emerging recently. It seems that stock analysts are everywhere.
However, stock market is not gambling. The market will not always surge or drop. At most of the time, it is the performance of listed companies that count. The study on companies’ performance is not as easy as just talking about a bullish or bearish market but brings real assets accretion.
Speaking of performance, price surge of products comes to our mind first. Thousands of commodities see price surge or drop every day. XFA figures out varieties whose supply-demand structure truly supports continuous price hike through wide statistics and in-depth analysis. What is in common between lithium carbonate and the real estate in Shenzhen? The answer is limited supply and growth. But, the innovative transformation of Chinese economy is pushing up the demand. Jiangxi Ganfeng Lithium Co., Ltd. (002460.SZ) and Shenzhen Centralcon Investment Holding Co., Ltd (000042.SZ) are engaged in totally different businesses, but they see new records of their stock prices due to similar reasons last week.
For many large-cap stocks, their surge is limited when signals showing improving performance just occur. The market knows earlier that the investment in extra-high voltage will be accelerated this year, but China XD Electric Co., Ltd. (601179.SH) does not see continuous soar to the daily 10 percent limit until the projects really kick off; Guotai Junan Securities Co., Ltd. will be listed sooner or later, but the stock price surge of Shenzhen Energy Group Co., Ltd. (000027.SZ) is still in line with the listing pace of Guotai Junan Securities. XFA will keep focusing on the progress of similar events and help you to catch good investment opportunities.
 
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