[Today's Guide]
> Ministry of Finance plans promotion of PPP mode, trln-yuan market to open
> Safety control of coal mines to see explosive demand, forestry resources to see improving value
> Price of pork to see further surger, institutes concern about Yongan Phar.’s strategic transformation
> Nanfang Pump Industry to acquire Jinshan Environmental Protection, Jiaxun Feihong Electrical to expand main business and UAVs
[XFA Focus]
○ Ministry of Finance plans promotion of PPP mode, trln-yuan market to open
------
The Ministry of Finance held a national video and telephone conference on June 8 to carry out “Guidance on Promoting PPP (Public-Private-Partnership) Mode in Public Service Area”. Leaders of the Ministry of Finance indicate that the top-level design of PPP mode has been launched. The key is to practically promote project construction in the future; finance departments of all levels should improve system construction as soon as possible and perfect policy supporting system. On June 9, Shandong province launched the first batch of 50 PPP projects, totaling an investment amount of over 100 billion yuan.
Comment: PPP mode is not only an important measure to maintain stable growth but also helps to improve the efficiency of public service and prevent the risks of local debts. Since the executive meeting of the State Council convened on May 13, governmental departments of all levels all launched measures to support PPP mode. National Development and Reform Commission has set a special column for PPP project library on its website. The scale of the first batch of projects reaches 1.97 trillion yuan. As reported by China Business Journal, the central-government-level demonstrative PPP fund has been approved by the Ministry of Finance and relevant document will be released at proper time. This helps to boost social capital’s confidence. As for listed companies, Tengda Construction Group Co., Ltd. (600512.SH) and Hongrun Construction Group Co., Ltd. (002062.SZ) are principally engaged in the contracting of municipal engineering; JSTI GROUP (300284.SZ) enjoys advantage in undertaking project design.
[XFA Selection]
○The issuing scale of new funds within the year might be over one trillion yuan this month and the hotspot falls on state-owned enterprises reform.
○ China Securities Regulatory Commission approved the IPO applications of 24 enterprises on June 9, including Guotai Junan Securities Co., Ltd. and three logistics companies.
○ Beijing bid team attended 2022 Olympic Winter Games Candidate City Briefing on June 9 in Lausanne, Switzerland. China’s vice premier Liu Yandong made statements on behalf of the Chinese government.
○ Relevant responsible person of the Publicity Department of Beijing indicated that the rumor that Beijing municipal government will move to Tongzhou Area is not credible. It is subjected to information released by authorities.
○ China Shenhua Energy Company Limited (601088.SH; 01088.HK) and China Coal Energy Group Co., Ltd. announce that they receive no information about integration and they never studied possibility of integration.
[Industry Information]
○ SAWS promotes construction of coal mines, safety control equipment to see explosive demand
------
Huang Yuzhi, deputy head of the State Administration of Work Safety (SAWS) went to China Coal Technology & Engineering Group Corp. to investigate coal mine safety technology on June 8. He emphasized to promote the construction of mechanization, automation, informatization and intellectualization of coal mines; reduce mines, quantity and labor; strive to make technological breakthrough in disaster prevention and control technologies in gas, water, fire, rock burst, etc. so as to effectively prevent and contain major accidents; push forward the upgrading and updating of safety monitoring system and improve the forecasting and alarming ability of safety production.
Comment: Along with the in-depth integration of informatization and industrialization and the rapid development of “Internet Plus”, promoting “the construction of mechanization, automation, informatization and intellectualization” of coal mines is the only way which must be passed to enhance actual safety level of coal mines and promote safe development of coal mines. Safety control equipment of coal mines might see explosive demand. As for listed companies, Uroica Mining Safety Engineering Co., Ltd. (300099.SZ) is principally engaged in the safety monitoring equipment of coal mine roof and can provide dynamic monitoring services for safe exploration of coal mines; Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ) is principally engaged in the monitoring equipment for safe production of coal mines as well as the development and sales of whole-set safety guarantee system.
○ Commercial cutting of natural forest to fully stopped, value of forest resources to improve
------
XFA learns that pushed by forestry reform and the price hike of imported timber, etc., the price of mainstream timbers including domestic pine increases by nearly 8 percent since the beginning of this year. Deputy head of the State Forestry Administration indicated on the press conference by the State Council Information Office on June 9 that commercial cutting of natural forest will be fully stopped. Commercial cutting of state-owned natural forest will be stopped next year, while commercial cutting of collective and individual-owned natural forest will be stopped the year after next year.
Comment: Complete prohibition of commercial cutting of all natural forest will reduce industry supply and boom market price. At the meantime, import of China’s timbers accounts for nearly 50 percent. The price hike of international market also further improves the value of domestic forest resources. As for listed companies, Guangdong Yihua Timber Industry Co., Ltd. (600978.SH) owns 321,200 hectare forest resources in Gabon; Fujian Jinsen Forestry Co., Ltd. (002679.SZ) owns large amount of planted forest. It plans to produce and sell 150,000 cubic meters of timbers in 2015 and plant 7,800 mu forests.
○ Busy season to come, price of pork might further increase
------
Data released by National Bureau of Statistics on June 9 shows that the CPI in May sees a year-on-year growth of 1.2 percent, while the price of pork increases by 5.3 percent, contributing around 0.15 percent hike to CPI. According to the data released by the Ministry of Agriculture, the number of reproductive sow on hand recorded 39,710,000 nationally in April, indicating a year-on-year and a month-on-month drop of 14.9 percent and 1.7 percent, respectively. This is the first time for the figure to drop below 40,000,000 since there was data record. It also means a drop for the 20th consecutive month.
Comment: Institutions believe that the “de-capacity” of pig breeding goes far beyond expectation. The price of pig might surge. Since the third and fourth quarters are busy season of pork, pork price might see further hike. Meanwhile, the price drop of three raw material of fodder together pushes the reduction of breeding cost. Among A share companies, Ningbo Tech-bank Co., Ltd. (002124.SZ) and Muyuan Foodstuff Co., Ltd. (002714.SZ), etc. are leading domestic pig breeding companies.
[Companies Hotspot]
○ Institutes concern about Yongan Phar.’s strategic transformation
------
XFA learnt from the general meeting of Qianjiang Yongan Pharmaceutical Co., Ltd. (002365.SZ) on June 9 that the strategic transformation of the company’s healthcare products business is concerned by institutes. Yongan Phar. sells the well-known healthcare brand Jamieson through agents and cooperates with Tmall International, JD International and vip.com to expand in the domestic market. In addition, Yongan Kangjian, a wholly-owned subsidiary of Yongan Phar., has established. It has obtained the GMP qualification and put into production and operation in 2014. The company owns the most advanced production line for healthcare products. If it cooperates with Jamieson in the future, it may produce healthcare products meeting the quality criteria of Jamieson in China. Authorities indicate that the healthcare products enjoy a huge growth potential in China. The current market size is 200 billion yuan while the whole market demand is 2 trillion yuan with a growth potential of 10 times.
[Announcement Interpretation]
○ Nanfang Pump Industry to acquire Jinshan Environmental Protection with RMB1.8 bln to develop sewage treatment
------
Nanfang Pump Industry Co., Ltd. (300145.SZ) proposes to acquire 100 percent equities of Jinshan Environmental Protection Science and Technology Co., Ltd. by issuing 68.31 million shares at 26.26 yuan per share through private placement. The subject company is priced at 1,794 million yuan. Meanwhile, the company intends to raise a supporting fund of 50 million yuan by issuing shares at 28.43 yuan per share to the actual controller and senior management of the company through private placement. The counterparty committed that the net profit of Jinshan Environmental Protection from 2015 to 2017 will be no less than 120 million yuan, 190 million yuan and 300 million yuan, respectively.
Jinshan Environmental Protection is engaged in industrial and municipal sewage treatment and the manufacturing and sale of sewage treatment equipment. It recorded a net profit of 73.45 million yuan and 88.07 million yuan in 2013 and 2014. Nanfang Pump Industry will expand from the manufacturing of pump products to the comprehensive sewage treatment business.
○ Jiaxun Feihong Electrical to raise RMB870 mln to expand main business and UAVs
------
Beijing Jiaxun Feihong Electrical Co., Ltd. (300213.SZ) plans to raise 874 million yuan by issuing 32.37 million shares at 27 yuan per share through private placement to Lin Jing, the controlling shareholder, and other participants. The proceeds will be invested in the LTE-based broadband wireless command and control system, increasing the shareholding of PowerVision Technology by 10.42 percent and supplementing the working capital. The 100 percent equities of PowerVision Technology are valued at 1.2 billion yuan with a value-added ratio of 52 times.
PowerVision Technology is a professional provider of unmanned aerial vehicles (UAVs) systems production and services. The company will hold 22.19 percent equities of PowerVision Technology after the transaction.
○ Hongqi Chain to raise RMB1 bln to develop main business
------
Chengdu Hongqi Chain Co., Ltd. (002697.SZ) intends to raise 1 billion yuan by issuing 84.75 million shares at no less than 11.80 yuan per share through private placement. The proceeds will be invested in the construction of new supermarket stores, the upgrading and improvement of supermarket stores, the construction and marketing of the community O2O service platform and its operation and the upgrading and construction of logistics distribution centers. The construction of new supermarket will achieve an annual net profit of 68.69 million yuan.
○ Dongxing Securities to raise RMB15 bln to increase capitals
------
Dongxing Securities Co., Ltd. (601198.SH) proposes to raise 15 billion yuan by issuing 400 million shares at no less than 33.22 yuan per share through private placement. The proceeds will increase the capitals of the company and supplement the working capital as well as expand the business scale of the company, facilitate the development of innovation businesses and optimize the business structure to improve the competitiveness and risk resistance capacity of the company.
○ Liyuan Precision Manufacturing raises bottom price for private placement by over 80 pct
------
Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ) plans to raise the proceeds from 3 billion yuan to 4 billion yuan and the bottom price for private placement from the original 9.57 yuan per share to 17.65 yuan per share, increasing over 80 percent. After the completion of the project, Liyuan Precision Manufacturing will have an annual production capacity of 1,000 railway passenger cars (including 400 bullet trains, 400 aluminum alloy urban rail metros and 200 stainless steel urban rail metros), 1,000 aluminum alloy trucks and 60,000 tons of highly processed aluminum profile products. The company will transform from a supplier of aluminum profile materials into a high-end equipment manufacturer.
○ Tongda Power Technology to develop 3D printing and military engineering
------
Jiangsu Tongda Power Technology Co., Ltd. (002576.SZ), Tianjin Xinqingyan Investment Management Co., Ltd., the technology team of Lin Feng and Tianjin High-end Equipment Research Institute of Tsinghua University entered into a letter of intent on the industrialization of the electron beam selective 3D printing technology. The first three intend to establish a joint venture as the subject of the cooperation. The technology team of Lin Feng is the first research institute conducting the electron beam 3D printing technology. Its printing technology and equipment are general mature and have achieved sale. It has initiated the application technical research in the aerospace and medical treatment industries.
Comment: The electron beam selective 3D printing is a high-end 3D printing technology for titanium alloy and other metal materials with high melting points and hard to take shape. The technology is applied in the manufacturing of aero engine blades, missile engine impellers and other components with complicated shapes and high performance requirements in the aerospace industry and the production of individualized medical implants. The cooperation will facilitate the company in transforming into the military engineering industry.
> Ministry of Finance plans promotion of PPP mode, trln-yuan market to open
> Safety control of coal mines to see explosive demand, forestry resources to see improving value
> Price of pork to see further surger, institutes concern about Yongan Phar.’s strategic transformation
> Nanfang Pump Industry to acquire Jinshan Environmental Protection, Jiaxun Feihong Electrical to expand main business and UAVs
[XFA Focus]
○ Ministry of Finance plans promotion of PPP mode, trln-yuan market to open
------
The Ministry of Finance held a national video and telephone conference on June 8 to carry out “Guidance on Promoting PPP (Public-Private-Partnership) Mode in Public Service Area”. Leaders of the Ministry of Finance indicate that the top-level design of PPP mode has been launched. The key is to practically promote project construction in the future; finance departments of all levels should improve system construction as soon as possible and perfect policy supporting system. On June 9, Shandong province launched the first batch of 50 PPP projects, totaling an investment amount of over 100 billion yuan.
Comment: PPP mode is not only an important measure to maintain stable growth but also helps to improve the efficiency of public service and prevent the risks of local debts. Since the executive meeting of the State Council convened on May 13, governmental departments of all levels all launched measures to support PPP mode. National Development and Reform Commission has set a special column for PPP project library on its website. The scale of the first batch of projects reaches 1.97 trillion yuan. As reported by China Business Journal, the central-government-level demonstrative PPP fund has been approved by the Ministry of Finance and relevant document will be released at proper time. This helps to boost social capital’s confidence. As for listed companies, Tengda Construction Group Co., Ltd. (600512.SH) and Hongrun Construction Group Co., Ltd. (002062.SZ) are principally engaged in the contracting of municipal engineering; JSTI GROUP (300284.SZ) enjoys advantage in undertaking project design.
[XFA Selection]
○The issuing scale of new funds within the year might be over one trillion yuan this month and the hotspot falls on state-owned enterprises reform.
○ China Securities Regulatory Commission approved the IPO applications of 24 enterprises on June 9, including Guotai Junan Securities Co., Ltd. and three logistics companies.
○ Beijing bid team attended 2022 Olympic Winter Games Candidate City Briefing on June 9 in Lausanne, Switzerland. China’s vice premier Liu Yandong made statements on behalf of the Chinese government.
○ Relevant responsible person of the Publicity Department of Beijing indicated that the rumor that Beijing municipal government will move to Tongzhou Area is not credible. It is subjected to information released by authorities.
○ China Shenhua Energy Company Limited (601088.SH; 01088.HK) and China Coal Energy Group Co., Ltd. announce that they receive no information about integration and they never studied possibility of integration.
[Industry Information]
○ SAWS promotes construction of coal mines, safety control equipment to see explosive demand
------
Huang Yuzhi, deputy head of the State Administration of Work Safety (SAWS) went to China Coal Technology & Engineering Group Corp. to investigate coal mine safety technology on June 8. He emphasized to promote the construction of mechanization, automation, informatization and intellectualization of coal mines; reduce mines, quantity and labor; strive to make technological breakthrough in disaster prevention and control technologies in gas, water, fire, rock burst, etc. so as to effectively prevent and contain major accidents; push forward the upgrading and updating of safety monitoring system and improve the forecasting and alarming ability of safety production.
Comment: Along with the in-depth integration of informatization and industrialization and the rapid development of “Internet Plus”, promoting “the construction of mechanization, automation, informatization and intellectualization” of coal mines is the only way which must be passed to enhance actual safety level of coal mines and promote safe development of coal mines. Safety control equipment of coal mines might see explosive demand. As for listed companies, Uroica Mining Safety Engineering Co., Ltd. (300099.SZ) is principally engaged in the safety monitoring equipment of coal mine roof and can provide dynamic monitoring services for safe exploration of coal mines; Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ) is principally engaged in the monitoring equipment for safe production of coal mines as well as the development and sales of whole-set safety guarantee system.
○ Commercial cutting of natural forest to fully stopped, value of forest resources to improve
------
XFA learns that pushed by forestry reform and the price hike of imported timber, etc., the price of mainstream timbers including domestic pine increases by nearly 8 percent since the beginning of this year. Deputy head of the State Forestry Administration indicated on the press conference by the State Council Information Office on June 9 that commercial cutting of natural forest will be fully stopped. Commercial cutting of state-owned natural forest will be stopped next year, while commercial cutting of collective and individual-owned natural forest will be stopped the year after next year.
Comment: Complete prohibition of commercial cutting of all natural forest will reduce industry supply and boom market price. At the meantime, import of China’s timbers accounts for nearly 50 percent. The price hike of international market also further improves the value of domestic forest resources. As for listed companies, Guangdong Yihua Timber Industry Co., Ltd. (600978.SH) owns 321,200 hectare forest resources in Gabon; Fujian Jinsen Forestry Co., Ltd. (002679.SZ) owns large amount of planted forest. It plans to produce and sell 150,000 cubic meters of timbers in 2015 and plant 7,800 mu forests.
○ Busy season to come, price of pork might further increase
------
Data released by National Bureau of Statistics on June 9 shows that the CPI in May sees a year-on-year growth of 1.2 percent, while the price of pork increases by 5.3 percent, contributing around 0.15 percent hike to CPI. According to the data released by the Ministry of Agriculture, the number of reproductive sow on hand recorded 39,710,000 nationally in April, indicating a year-on-year and a month-on-month drop of 14.9 percent and 1.7 percent, respectively. This is the first time for the figure to drop below 40,000,000 since there was data record. It also means a drop for the 20th consecutive month.
Comment: Institutions believe that the “de-capacity” of pig breeding goes far beyond expectation. The price of pig might surge. Since the third and fourth quarters are busy season of pork, pork price might see further hike. Meanwhile, the price drop of three raw material of fodder together pushes the reduction of breeding cost. Among A share companies, Ningbo Tech-bank Co., Ltd. (002124.SZ) and Muyuan Foodstuff Co., Ltd. (002714.SZ), etc. are leading domestic pig breeding companies.
[Companies Hotspot]
○ Institutes concern about Yongan Phar.’s strategic transformation
------
XFA learnt from the general meeting of Qianjiang Yongan Pharmaceutical Co., Ltd. (002365.SZ) on June 9 that the strategic transformation of the company’s healthcare products business is concerned by institutes. Yongan Phar. sells the well-known healthcare brand Jamieson through agents and cooperates with Tmall International, JD International and vip.com to expand in the domestic market. In addition, Yongan Kangjian, a wholly-owned subsidiary of Yongan Phar., has established. It has obtained the GMP qualification and put into production and operation in 2014. The company owns the most advanced production line for healthcare products. If it cooperates with Jamieson in the future, it may produce healthcare products meeting the quality criteria of Jamieson in China. Authorities indicate that the healthcare products enjoy a huge growth potential in China. The current market size is 200 billion yuan while the whole market demand is 2 trillion yuan with a growth potential of 10 times.
[Announcement Interpretation]
○ Nanfang Pump Industry to acquire Jinshan Environmental Protection with RMB1.8 bln to develop sewage treatment
------
Nanfang Pump Industry Co., Ltd. (300145.SZ) proposes to acquire 100 percent equities of Jinshan Environmental Protection Science and Technology Co., Ltd. by issuing 68.31 million shares at 26.26 yuan per share through private placement. The subject company is priced at 1,794 million yuan. Meanwhile, the company intends to raise a supporting fund of 50 million yuan by issuing shares at 28.43 yuan per share to the actual controller and senior management of the company through private placement. The counterparty committed that the net profit of Jinshan Environmental Protection from 2015 to 2017 will be no less than 120 million yuan, 190 million yuan and 300 million yuan, respectively.
Jinshan Environmental Protection is engaged in industrial and municipal sewage treatment and the manufacturing and sale of sewage treatment equipment. It recorded a net profit of 73.45 million yuan and 88.07 million yuan in 2013 and 2014. Nanfang Pump Industry will expand from the manufacturing of pump products to the comprehensive sewage treatment business.
○ Jiaxun Feihong Electrical to raise RMB870 mln to expand main business and UAVs
------
Beijing Jiaxun Feihong Electrical Co., Ltd. (300213.SZ) plans to raise 874 million yuan by issuing 32.37 million shares at 27 yuan per share through private placement to Lin Jing, the controlling shareholder, and other participants. The proceeds will be invested in the LTE-based broadband wireless command and control system, increasing the shareholding of PowerVision Technology by 10.42 percent and supplementing the working capital. The 100 percent equities of PowerVision Technology are valued at 1.2 billion yuan with a value-added ratio of 52 times.
PowerVision Technology is a professional provider of unmanned aerial vehicles (UAVs) systems production and services. The company will hold 22.19 percent equities of PowerVision Technology after the transaction.
○ Hongqi Chain to raise RMB1 bln to develop main business
------
Chengdu Hongqi Chain Co., Ltd. (002697.SZ) intends to raise 1 billion yuan by issuing 84.75 million shares at no less than 11.80 yuan per share through private placement. The proceeds will be invested in the construction of new supermarket stores, the upgrading and improvement of supermarket stores, the construction and marketing of the community O2O service platform and its operation and the upgrading and construction of logistics distribution centers. The construction of new supermarket will achieve an annual net profit of 68.69 million yuan.
○ Dongxing Securities to raise RMB15 bln to increase capitals
------
Dongxing Securities Co., Ltd. (601198.SH) proposes to raise 15 billion yuan by issuing 400 million shares at no less than 33.22 yuan per share through private placement. The proceeds will increase the capitals of the company and supplement the working capital as well as expand the business scale of the company, facilitate the development of innovation businesses and optimize the business structure to improve the competitiveness and risk resistance capacity of the company.
○ Liyuan Precision Manufacturing raises bottom price for private placement by over 80 pct
------
Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ) plans to raise the proceeds from 3 billion yuan to 4 billion yuan and the bottom price for private placement from the original 9.57 yuan per share to 17.65 yuan per share, increasing over 80 percent. After the completion of the project, Liyuan Precision Manufacturing will have an annual production capacity of 1,000 railway passenger cars (including 400 bullet trains, 400 aluminum alloy urban rail metros and 200 stainless steel urban rail metros), 1,000 aluminum alloy trucks and 60,000 tons of highly processed aluminum profile products. The company will transform from a supplier of aluminum profile materials into a high-end equipment manufacturer.
○ Tongda Power Technology to develop 3D printing and military engineering
------
Jiangsu Tongda Power Technology Co., Ltd. (002576.SZ), Tianjin Xinqingyan Investment Management Co., Ltd., the technology team of Lin Feng and Tianjin High-end Equipment Research Institute of Tsinghua University entered into a letter of intent on the industrialization of the electron beam selective 3D printing technology. The first three intend to establish a joint venture as the subject of the cooperation. The technology team of Lin Feng is the first research institute conducting the electron beam 3D printing technology. Its printing technology and equipment are general mature and have achieved sale. It has initiated the application technical research in the aerospace and medical treatment industries.
Comment: The electron beam selective 3D printing is a high-end 3D printing technology for titanium alloy and other metal materials with high melting points and hard to take shape. The technology is applied in the manufacturing of aero engine blades, missile engine impellers and other components with complicated shapes and high performance requirements in the aerospace industry and the production of individualized medical implants. The cooperation will facilitate the company in transforming into the military engineering industry.
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