[Today’s Guide]
○ Growth line may be temporarily replaced by reform and transformation
○ Shanghai FTZ prepared to open capital accounts
○ Sales of Swellfun see large rebound and might stop loss this year
○ Rural e-commerce platform of Shindoo Chemi-industry concerned by institutions
[XFA View]
‘Reform and transformation’ may temporarily replace ‘new technology’ growth line
------
In the past week, the A-share market was characterized by various bearish rumors, many of which were clarified. It experienced significant diving during the trading hours but recovered during the closing hours. The SMEs and ChiNext Board stocks witnessed a new high with violent fluctuations. The market seemed entering a ‘seismic active period’ and confused many investors.
As a matter of fact, the market fluctuation was not caused by significant changes in policies or capitals. It was a result of the ‘internal reasons’ of the market, namely the over growth in the short-term market. Take the ChiNext Board as an example, the index has surged 165 percent in the years. It hiked an average of 14 percent in January and February and 22 percent in March and April. In May, it jumped by 24 percent. The first week in June saw an increase of 10 percent. Investors in the stock market were totally confused by the increasing surge trend and high growth.
Under the background of the industrial restructuring and industrial upgrading, the ‘new technology’ has dominated this round of bullish market. But it never means a hike without falls. The medium- and small-cap growth stocks with an average monthly increase of over 20 percent have the internal demand for restructuring. Certain individual technology and Internet-based stocks with huge growth are likely to experience significant fluctuations driven by the increasing financing demands of companies and the investment styles of institutes.
In the short term, such sectors as the property, nonferrous metals, finance and state-owned enterprises reform with smaller growth in the previous period are about to revalue. The capacity elimination in certain traditional industries is reaching the critical point. With the changes of external economic environment, the ‘new technology’ growth line may be temporarily replaced by the ‘reform and transformation’. (Hong Wen)
[Hotspot Investigation]
Shanghai FTZ prepared to open capital accounts
------
The Chinese authorities have been exploring the path and management of the convertibility of capital accounts in recent years to promote the internationalization of RMB and including RMB into the SDR basket. The free trade zones in Shanghai, Guangdong Province, Fujian Province and Tianjin Municipality have been appointed to achieve the target and they have been conducting pioneering financial experiments in different industries.
◆ Shanghai FTZ is technically qualified for the convertibility of capital accounts.
As a result of the special financial reform with ‘the opening of one place meaning opening the whole country’, the central bank announced recently that the Shanghai FTZ is technically qualified for the convertibility of capital accounts in terms of the free trade accounts system and the management of macro-prudential indicators after the gradual deregulation of management and regulation and relevant technical preparation in the early stages.
◆ Shanghai FTZ cross-border financing opening never caused hot money fluctuation.
The authoritative monitoring data from the regulatory authorities show that since the opening of cross-border financing, it has not resulted in huge outflow of hot money and capitals. It has no obvious effect on the exchange rate and the interest rate.
◆ FTZs in Guangdong, Fujian and Tianjin are exploring the convertibility in particular industries
It is reported that based on the close economic and trade contact between Guangdong and Hong Kong and Macau, Fujian and Taiwan and the early advantages of Tianjin in shipping and rental industries, the free trade zones in Guangdong, Fujian and Tianjin have explored the convertibility of various capital accounts in particular areas. The individual cross-border investment, namely the QDII2, is likely to be introduced in the first half and will firstly pilot in Shanghai, Shenzhen City, Tianjin and Wenzhou City. Such efforts will greatly promote the RMB to be included in the SDR basket.
[Institutions’ Movement]
Insurance capital to further explore private placement in primary market
------
The new premium, reinvestment on maturity and the improvement of capital use efficiency drive hundreds of billions of capitals seeking investment opportunities. It is reported that large insurance companies, including China Pacific Insurance (Group) Co., Ltd. (601601.SH), as well as private medium and small insurance companies are actively exploring the A-share targeted private placement opportunities. The private placement of two types of enterprises catches more attention. The first is local state-owned enterprises expected to conduct the mixed ownership reform and the second is companies in the consumption and technology industries with actual plans and proposed to expand the production lines other than telling stories in the Internet-based strategies.
The current lock-up period for equities made through private placement is about one year, which matches the one-year short-term insurance products sold by insurance companies. It is in line with the cash management mode of insurance companies and will expand the premium scale in short term. Such advantages may promote more insurance companies to explore private placement opportunities.
[Information Radar]
Sales of Swellfun see large rebound and might stop loss this year
------
After adjustment in marketing system, product line, de-stocking, etc., the sales of Sichuan Swellfun Co., Ltd. (600779.SH) has rebounded largely and it might stop loss this year. Rice, General Manager of Swellfun also indicated earlier that the spring of the company is coming. At present, the inventories of the distributors of Swellfun are all less than 30 days, indicating that the supply falls short of demand. The company has received over 50,000,000 yuan payment of goods in advance in the first quarter and might recognize the revenue in the second quarter. Swellfun completed a revenue of 260 million yuan and a net profit of 48.13 million yuan in the first quarter. The company plans to achieve a sales goal of 620 million yuan and stop loss this year.
Swellfun will also speed up in overseas marketing and it sets the target of overseas sales as 46.00 million yuan this year, increasing by around 35 percent compared with last year. As for product structure, the company now still focuses on high-end wines with price over 400 yuan per unit.
Progress of rural e-commerce platform of Shindoo Chemi-industry concerned by institutions
------
Shindoo Chemi-industry Co., Ltd. (002539.SZ) will be involved in the investigation organized by institutions next week. Institutions are interested in the progress of the company’s Haha farm village rural e-commerce platform. It is learnt that the first batch of experience stores of Haha farm village, with functions including market promotion, product demonstration, after-sales service, market education, etc., will be open in July. More than 1,000 experience stores are under construction now and many are under decoration. The company plans to open 1500 stores by end-Sep. To build one distribution center in every county and to build experience stores in every town.
[Industry Observation]
Precision medicine to bring new opportunity for disease diagnosis and to see large mkt
------
The first session of “Precision Medicine and Gene Sequencing Conference” was convened in Beijing on June 6. Cheng Jing, academician of the Chinese Academy of Engineering, indicates that as gene detection ability grows stronger and stronger while cost is reduced gradually, richer individual medical health data will be accumulated. Through the accumulation and exploration of big data and the integration with individual information, “gene sequencing”, as a new detection means, brings new opportunity for the diagnosis and treatment of complicate diseases like cancer, etc.
Institutions predict that China’s gene sequencing market will see a compound growth rate of over 20 percent in next 5 years. Among A-share companies, Da An Gene Co., Ltd. of Sun Yat-Sen University (002030.SZ) and Shanxi C&Y Pharmaceutical Group Co., Ltd. (300254.SZ), etc. have made planning in gene sequencing.
Da An Gene is the company with the most comprehensive planning in gene sequencing business. According to the company’s introduction, overseas enterprises enjoy more advanced gene diagnosis technology, but domestic enterprises are more excellent in clinical application and domestic clinical market is large. As present, the company is exploring second-generation gene sequencing market including diagnosis of tumor, gene detection of hereditary disease, sound child rearing detection, pharmacogenomics, etc.
C&Y Pharmaceutical is also transforming towards gene industry. The company now owns the gene conservation business of Hangzhou En’s Gene Technology Development Company and will see large performance growth space. The company also founded industrial acquisition fund in last September. The industry estimates that the company will speed up in planning gene industry.
○ Growth line may be temporarily replaced by reform and transformation
○ Shanghai FTZ prepared to open capital accounts
○ Sales of Swellfun see large rebound and might stop loss this year
○ Rural e-commerce platform of Shindoo Chemi-industry concerned by institutions
[XFA View]
‘Reform and transformation’ may temporarily replace ‘new technology’ growth line
------
In the past week, the A-share market was characterized by various bearish rumors, many of which were clarified. It experienced significant diving during the trading hours but recovered during the closing hours. The SMEs and ChiNext Board stocks witnessed a new high with violent fluctuations. The market seemed entering a ‘seismic active period’ and confused many investors.
As a matter of fact, the market fluctuation was not caused by significant changes in policies or capitals. It was a result of the ‘internal reasons’ of the market, namely the over growth in the short-term market. Take the ChiNext Board as an example, the index has surged 165 percent in the years. It hiked an average of 14 percent in January and February and 22 percent in March and April. In May, it jumped by 24 percent. The first week in June saw an increase of 10 percent. Investors in the stock market were totally confused by the increasing surge trend and high growth.
Under the background of the industrial restructuring and industrial upgrading, the ‘new technology’ has dominated this round of bullish market. But it never means a hike without falls. The medium- and small-cap growth stocks with an average monthly increase of over 20 percent have the internal demand for restructuring. Certain individual technology and Internet-based stocks with huge growth are likely to experience significant fluctuations driven by the increasing financing demands of companies and the investment styles of institutes.
In the short term, such sectors as the property, nonferrous metals, finance and state-owned enterprises reform with smaller growth in the previous period are about to revalue. The capacity elimination in certain traditional industries is reaching the critical point. With the changes of external economic environment, the ‘new technology’ growth line may be temporarily replaced by the ‘reform and transformation’. (Hong Wen)
[Hotspot Investigation]
Shanghai FTZ prepared to open capital accounts
------
The Chinese authorities have been exploring the path and management of the convertibility of capital accounts in recent years to promote the internationalization of RMB and including RMB into the SDR basket. The free trade zones in Shanghai, Guangdong Province, Fujian Province and Tianjin Municipality have been appointed to achieve the target and they have been conducting pioneering financial experiments in different industries.
◆ Shanghai FTZ is technically qualified for the convertibility of capital accounts.
As a result of the special financial reform with ‘the opening of one place meaning opening the whole country’, the central bank announced recently that the Shanghai FTZ is technically qualified for the convertibility of capital accounts in terms of the free trade accounts system and the management of macro-prudential indicators after the gradual deregulation of management and regulation and relevant technical preparation in the early stages.
◆ Shanghai FTZ cross-border financing opening never caused hot money fluctuation.
The authoritative monitoring data from the regulatory authorities show that since the opening of cross-border financing, it has not resulted in huge outflow of hot money and capitals. It has no obvious effect on the exchange rate and the interest rate.
◆ FTZs in Guangdong, Fujian and Tianjin are exploring the convertibility in particular industries
It is reported that based on the close economic and trade contact between Guangdong and Hong Kong and Macau, Fujian and Taiwan and the early advantages of Tianjin in shipping and rental industries, the free trade zones in Guangdong, Fujian and Tianjin have explored the convertibility of various capital accounts in particular areas. The individual cross-border investment, namely the QDII2, is likely to be introduced in the first half and will firstly pilot in Shanghai, Shenzhen City, Tianjin and Wenzhou City. Such efforts will greatly promote the RMB to be included in the SDR basket.
[Institutions’ Movement]
Insurance capital to further explore private placement in primary market
------
The new premium, reinvestment on maturity and the improvement of capital use efficiency drive hundreds of billions of capitals seeking investment opportunities. It is reported that large insurance companies, including China Pacific Insurance (Group) Co., Ltd. (601601.SH), as well as private medium and small insurance companies are actively exploring the A-share targeted private placement opportunities. The private placement of two types of enterprises catches more attention. The first is local state-owned enterprises expected to conduct the mixed ownership reform and the second is companies in the consumption and technology industries with actual plans and proposed to expand the production lines other than telling stories in the Internet-based strategies.
The current lock-up period for equities made through private placement is about one year, which matches the one-year short-term insurance products sold by insurance companies. It is in line with the cash management mode of insurance companies and will expand the premium scale in short term. Such advantages may promote more insurance companies to explore private placement opportunities.
[Information Radar]
Sales of Swellfun see large rebound and might stop loss this year
------
After adjustment in marketing system, product line, de-stocking, etc., the sales of Sichuan Swellfun Co., Ltd. (600779.SH) has rebounded largely and it might stop loss this year. Rice, General Manager of Swellfun also indicated earlier that the spring of the company is coming. At present, the inventories of the distributors of Swellfun are all less than 30 days, indicating that the supply falls short of demand. The company has received over 50,000,000 yuan payment of goods in advance in the first quarter and might recognize the revenue in the second quarter. Swellfun completed a revenue of 260 million yuan and a net profit of 48.13 million yuan in the first quarter. The company plans to achieve a sales goal of 620 million yuan and stop loss this year.
Swellfun will also speed up in overseas marketing and it sets the target of overseas sales as 46.00 million yuan this year, increasing by around 35 percent compared with last year. As for product structure, the company now still focuses on high-end wines with price over 400 yuan per unit.
Progress of rural e-commerce platform of Shindoo Chemi-industry concerned by institutions
------
Shindoo Chemi-industry Co., Ltd. (002539.SZ) will be involved in the investigation organized by institutions next week. Institutions are interested in the progress of the company’s Haha farm village rural e-commerce platform. It is learnt that the first batch of experience stores of Haha farm village, with functions including market promotion, product demonstration, after-sales service, market education, etc., will be open in July. More than 1,000 experience stores are under construction now and many are under decoration. The company plans to open 1500 stores by end-Sep. To build one distribution center in every county and to build experience stores in every town.
[Industry Observation]
Precision medicine to bring new opportunity for disease diagnosis and to see large mkt
------
The first session of “Precision Medicine and Gene Sequencing Conference” was convened in Beijing on June 6. Cheng Jing, academician of the Chinese Academy of Engineering, indicates that as gene detection ability grows stronger and stronger while cost is reduced gradually, richer individual medical health data will be accumulated. Through the accumulation and exploration of big data and the integration with individual information, “gene sequencing”, as a new detection means, brings new opportunity for the diagnosis and treatment of complicate diseases like cancer, etc.
Institutions predict that China’s gene sequencing market will see a compound growth rate of over 20 percent in next 5 years. Among A-share companies, Da An Gene Co., Ltd. of Sun Yat-Sen University (002030.SZ) and Shanxi C&Y Pharmaceutical Group Co., Ltd. (300254.SZ), etc. have made planning in gene sequencing.
Da An Gene is the company with the most comprehensive planning in gene sequencing business. According to the company’s introduction, overseas enterprises enjoy more advanced gene diagnosis technology, but domestic enterprises are more excellent in clinical application and domestic clinical market is large. As present, the company is exploring second-generation gene sequencing market including diagnosis of tumor, gene detection of hereditary disease, sound child rearing detection, pharmacogenomics, etc.
C&Y Pharmaceutical is also transforming towards gene industry. The company now owns the gene conservation business of Hangzhou En’s Gene Technology Development Company and will see large performance growth space. The company also founded industrial acquisition fund in last September. The industry estimates that the company will speed up in planning gene industry.
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