[Today's Guide]
> Strong governmental efforts spared in food security, supervision policies to see intensive launch
> Thirteenth five-year plan of medicine industry under formulation, sales of commercial housing pick up obviously
> State-owned assets reform in Pudong to speed up, Dirui Industrial to control Ruiyuan Biotechnology
> Tianyu Information Industry to develop online education, O-film Tech to develop intelligent vehicles
[XFA Focus]
○ Strong governmental efforts spared in food security, supervision policies to see intensive launch
------
National Video and Telephone Conference on Strengthening Food Security was convened in Beijing on June 11. Chinese Premier Li Keqiang commented to take the implementation of new food security law as an opportunity to innovate work thought and mechanism, accelerate the construction of the most strict supervision system covering production, circulation and consumption , improve supervision system, and fully perform the duties of enterprises, government and all social parts; strengthen supervision enforcement and ability construction; “zero tolerance” to the violations of laws in food security and ensure people’s food security with continuous efforts.
Comment: New-edition food security law will be officially implemented on Oct. 1 and supporting supervision measures might be launched in succession later. Food detection and food traceability, as important parts of food security, will gain key policy support and bring billions-of-yuan market. As for listed companies, Centre Testing International Group Co., Ltd. (300012.SZ) is a leading domestic third-party detector and enjoys high market share in consumption market including food; Thunisoft Credit (Beijing) Software Co., Ltd. under Beijing Thunisoft Co., Ltd. (300271.SZ) takes a leading position in domestic food security informatization market.
[XFA Selection]
○ The central bank released RMB internationalization report on June 11 and indicated that it was considering the launch of piloting overseas investment of QDII2 and Shenzhen-Hong Kong Stock Connect Program.
○ Li Xiaojia, CEO of Hong Kong Exchanges and Clearing Limited, indicated on June 11 that the limit of Shanghai-Hong Kong Stock Connect Program might be calculated flexibly in the future, helping A-share market to be incorporated into international benchmarking indexes as soon as possible.
○ The number of privately-offered funds established in recent two months sees a year-on-year growth of over 230 percent, indicating an incremental capital in the stock market of around 200-300 billion yuan.
○ The growth of investment in fixed assets in the first five months records 11.4 percent, setting a new low in more than 10 years. Institutions estimate that the central bank will increase force in targeted easing.
○ Leaders of National Government Offcices Administration indicated on June 11 that more state organs and units will be encouraged and guided to use new energy cars.
○9 banks start to sell the first batch of large-denomination certificates of deposit to the public from June 15, the highest interest rates of which are all around 1.4 times of benchmarking interest rate.
[Industry Information]
○ Thirteenth five-year plan of medicine industry under formulation, major breakthroughs to fall on biological medicine, etc.
------
XFA learns that the “Thirteenth Five-Year Development Plan of Medicine Industry” will be completed this year. According to determined thought, biological medicine and high-performance medical devices industries will be defined as areas to achieve major breakthrough.
Comment: Data shows that China’s biological medicine industry now only accounts for 11 percent of the whole medicine industry. It locates at a low level compared with that of developed countries and sees huge development space. Moreover, medical devices industry will bring the integration of multi subjects, push the development of technological innovation and manufacturing level, and be the strategic commanding point of national economic transformation and structure adjustment. As for listed companies, Guanhao Biotech Co., Ltd. (300238.SZ) is principally engaged in regenerative medical materials and regenerative medical implantable devices; the new anti-cancer drug of Shanghai Haixin Group Co., Ltd. (600851.SH) is under clinical test; Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) is one of the few companies which can achieve sustainable and rapid growth among listed medical devices companies.
○ Sales volume of commercial housing sees positive growth for the first time in 15 months, recovery of industrial chain expectable
------
The data released by the National Bureau of Statistics on June 11 shows that main indicators like the transaction, inventory, housing start, etc. of national real estate market are improving in the first five months. Especially that the sales volume of national commercial housing sees positive growth for the first time in 15 months, indicating that the real estate market is recovering from sluggishness. Market participants thus believe that the real estate market might recover in the third quarter and housing price might see gentle surging.
Comment: The real estate market recovers due to that controlling policies start to work, market expectation changes and home buyers’ confidence recovers; that real estate enterprises and intermediary agents optimize promotion and pricing strategy and take positive actions in de-stocking. The recovery of real estate market will boom decoration and household appliances industries. Among A share companies, Shenzhen Grandland Decoration Group Co., Ltd. (002482.SZ) ranks top in domestic housing decoration market and Evergrande Real Estate, its largest cooperation partner, sees an all-time high single-month sales volume in May; Hangzhou Robam Appliances Co., Ltd. (002508.SZ) is a leading enterprise in kitchen appliances market. The company indicated during investigation that its performance might obviously pick up in the third and fourth quarter.
○ Oil products upgrading to speed up, companies in industrial chains to benefit
------
XFA learnt from ICIS, an information service provider in the petrochemical market, that Shandong Province, which owns the biggest refining capacity in China, has 10 refiners producing and selling oil products meeting the National V standard, accounting for 43 percent of the capacity in the whole province. Zibo Qixiang Tengda Chemical Co., Ltd. (002408.SZ), a manufacturer of oil additives, was inspected by institutes and indicated that its isooctane equipment is under full production with the acceleration in the upgrading of oil products. All of its isooctane products are sold out and some even exceeds the designed capacity.
Comment: The oil products upgrading is scheduled much earlier by the National Development and Reform Commission (NDRC) and the three major oil producers in China, namely PetroChina Company Limited (PTR.NYSE; 00857.HK; 601857.SH), China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) and CNOOC Limited (00883.HK), also make plans on oil products upgrading. The gasoline and diesel of PetroChina will meet the National V standard by the end of next year. Manufactures of oil additives and desulfurization and hydrogenation equipment will benefit. Besides Qixiang Tengda Chemical, the isooctane project of Dymatic Chemicals, Inc. (002054.SZ) with an annual capacity of 240,000 tons will put into production this year. Shandong Sunway Petrochemical Engineering Co., Ltd. (002469.SZ) owns various orders for petrochemical project. It is also expanding the petrochemical e-commerce platform.
[Announcement Interpretation]
○ Jinqiao Export Processing Zone Development and Waigaoqiao Free Trade Zone Development resume trading, state-owned assets reform in Pudong to speed up
------
Jinqiao Group, the controlling shareholder of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. (600639.SH), proposes to transfer 15 percent shares of the company to Shanghai Pudong Investment Holdings (Group) Co., Ltd. (under preparation) for free. Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd. (600648.SH) indicated that it plans to build the company into a public state-owned investment holding company with specific strategic goals, standard governance structure, stimulation and restriction system and outstanding competitive advantages based on the overall plan on the state-owned assets and enterprises reform in Pudong New Area. It will also be entrusted to manage the non-listed assets of the group.
Comment: Pudong New Area officially released the 18 rules on the state-owned assets and enterprises reform on June 11. The equities of enterprises facing market competition in the state-owned assets system are transferred to Shanghai Pudong Investment Holdings (Group) Co., Ltd. XFA reported that the state-owned assets reform in Pudong New Area will speed up. Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. (600663.SH), Shang Gong Group Co., Ltd. (600843.SH), Shanghai Pudong Road & Bridge Construction Co., Ltd. (600284.SH) and other companies under the Shanghai Pudong New Area State-owned Assets Supervision and Administration Commission are expected to be favored. Besides, Waigaoqiao Group has been covered by Waigaoqiao Free Trade Zone Development to achieve overall listing. Shanghai Nanhui Development (Group) Co., Ltd. has been adopted into Shanghai Pudong Development (Group) Co., Ltd. Shanghai Lingang Ocean High-tech Industrial Development Co., Ltd. and Nanhui Industrial Park Company have been merged by Harbor City Group and Jinqiao Group.
○ Dirui Industrial to control Ruiyuan Biotechnology to develop in vitro diagnostic reagent
------
Dirui Industrial Co., Ltd. (300396.SZ) intends to acquire 51 percent equities of Ningbo Ruiyuan Biotechnology Co., Ltd., an in vitro diagnostic reagent manufacturer, with 555 million yuan in cash. The subject has a value-added ratio of 751 percent. Ruiyuan Biotechnology owns medical devices and products registration certificates for 117 biochemical reagent products and a liquid biochemical reagent production line with an annual capacity of about 100 million milliliters. Another liquid biochemical reagent production line with an annual capacity of about 200 million milliliters will put into production this year. Its committed net profit from 2015 to 2017 will be no less than 42 million yuan, 66 million yuan and 93 million yuan, respectively. The listed company recorded a profit of 101 million yuan last year. During the trading suspension, the company announced the 2014 distribution plan with a 15-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares.
○ Tianyu Information Industry to develop online education with RMB1.1 bln
------
Wuhan Tianyu Information Industry Co., Ltd. (300205.SZ) plans to raise 1,136 million yuan by issuing 45 million shares at 25.25 yuan per share to Qianhai Kaiyuan Fund Management Co., Ltd. and Zeng Hongbin through private placement. The proceeds will be invested in the construction of a cloud platform for education and supplementing working capital.
Comment: The company solely undertakes the construction of a cloud platform for national education. The implementation of the project will help the company structurally transform from an intelligent card manufacturer into an Internet-based services provider. The project is expected to bring an annual net profit of 80.93 million yuan after completion. The company recorded a profit of 58.62 million yuan last year.
○ O-film Tech to develop intelligent vehicles with RMB2 bln
------
Shenzhen O-film Tech Co., Ltd. (002456.SZ) proposes to establish a wholly-owned subsidiary O-film Intelligent Vehicles Internet Co., Ltd. with a registered capital of 2 billion yuan. The move will facilitate the company in planning automotive electronics, intelligent driving, the Internet of Vehicles and other industries. The company also plans to acquire 16.67 percent equities of Auto-Linked Information Technology Co., Ltd. with 50 million yuan. The company is a basic data and services company based on the Internet of Vehicles with bus design and analysis ability. Meanwhile, the company intends to acquire 20 percent equities of Shenzhen Zhuoying Technology Co., Ltd. with 15 million yuan. The latter is principally engaged in high-end image products and automobile digital active systems (ADAS).
Besides, O-film Tech plans to make a capital increase of 250 million yuan in Nanchang O-film Bio-Identification Technology Co., Ltd. The registered capital of O-film Bio-Identification Technology will be increased from 300 million yuan to 550 million yuan.
○ Aerospace Automobile Electromechanical to raise RMB2.7 bln through private placement to construct photovoltaic power station
------
Shanghai Aerospace Automobile Electromechanical Co., Ltd. (600151.SH) intends to raise 2.7 billion yuan by issuing shares at no less than 13.75 yuan per share to Shanghai Aviation Industrial (Group) Co., Ltd., the controlling shareholder, China Aerospace Investment Holdings Ltd. and other participants through private placement. The proceeds will be used in the construction of a 320MW photovoltaic power station and repaying borrowings. The controlling shareholders originally planned to inject capitals into the 52.19 percent equities of Aerospace Energy, the clean energy asset of the company, but it will not inject temporarily as a result of disagreement of certain shareholders.
> Strong governmental efforts spared in food security, supervision policies to see intensive launch
> Thirteenth five-year plan of medicine industry under formulation, sales of commercial housing pick up obviously
> State-owned assets reform in Pudong to speed up, Dirui Industrial to control Ruiyuan Biotechnology
> Tianyu Information Industry to develop online education, O-film Tech to develop intelligent vehicles
[XFA Focus]
○ Strong governmental efforts spared in food security, supervision policies to see intensive launch
------
National Video and Telephone Conference on Strengthening Food Security was convened in Beijing on June 11. Chinese Premier Li Keqiang commented to take the implementation of new food security law as an opportunity to innovate work thought and mechanism, accelerate the construction of the most strict supervision system covering production, circulation and consumption , improve supervision system, and fully perform the duties of enterprises, government and all social parts; strengthen supervision enforcement and ability construction; “zero tolerance” to the violations of laws in food security and ensure people’s food security with continuous efforts.
Comment: New-edition food security law will be officially implemented on Oct. 1 and supporting supervision measures might be launched in succession later. Food detection and food traceability, as important parts of food security, will gain key policy support and bring billions-of-yuan market. As for listed companies, Centre Testing International Group Co., Ltd. (300012.SZ) is a leading domestic third-party detector and enjoys high market share in consumption market including food; Thunisoft Credit (Beijing) Software Co., Ltd. under Beijing Thunisoft Co., Ltd. (300271.SZ) takes a leading position in domestic food security informatization market.
[XFA Selection]
○ The central bank released RMB internationalization report on June 11 and indicated that it was considering the launch of piloting overseas investment of QDII2 and Shenzhen-Hong Kong Stock Connect Program.
○ Li Xiaojia, CEO of Hong Kong Exchanges and Clearing Limited, indicated on June 11 that the limit of Shanghai-Hong Kong Stock Connect Program might be calculated flexibly in the future, helping A-share market to be incorporated into international benchmarking indexes as soon as possible.
○ The number of privately-offered funds established in recent two months sees a year-on-year growth of over 230 percent, indicating an incremental capital in the stock market of around 200-300 billion yuan.
○ The growth of investment in fixed assets in the first five months records 11.4 percent, setting a new low in more than 10 years. Institutions estimate that the central bank will increase force in targeted easing.
○ Leaders of National Government Offcices Administration indicated on June 11 that more state organs and units will be encouraged and guided to use new energy cars.
○9 banks start to sell the first batch of large-denomination certificates of deposit to the public from June 15, the highest interest rates of which are all around 1.4 times of benchmarking interest rate.
[Industry Information]
○ Thirteenth five-year plan of medicine industry under formulation, major breakthroughs to fall on biological medicine, etc.
------
XFA learns that the “Thirteenth Five-Year Development Plan of Medicine Industry” will be completed this year. According to determined thought, biological medicine and high-performance medical devices industries will be defined as areas to achieve major breakthrough.
Comment: Data shows that China’s biological medicine industry now only accounts for 11 percent of the whole medicine industry. It locates at a low level compared with that of developed countries and sees huge development space. Moreover, medical devices industry will bring the integration of multi subjects, push the development of technological innovation and manufacturing level, and be the strategic commanding point of national economic transformation and structure adjustment. As for listed companies, Guanhao Biotech Co., Ltd. (300238.SZ) is principally engaged in regenerative medical materials and regenerative medical implantable devices; the new anti-cancer drug of Shanghai Haixin Group Co., Ltd. (600851.SH) is under clinical test; Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) is one of the few companies which can achieve sustainable and rapid growth among listed medical devices companies.
○ Sales volume of commercial housing sees positive growth for the first time in 15 months, recovery of industrial chain expectable
------
The data released by the National Bureau of Statistics on June 11 shows that main indicators like the transaction, inventory, housing start, etc. of national real estate market are improving in the first five months. Especially that the sales volume of national commercial housing sees positive growth for the first time in 15 months, indicating that the real estate market is recovering from sluggishness. Market participants thus believe that the real estate market might recover in the third quarter and housing price might see gentle surging.
Comment: The real estate market recovers due to that controlling policies start to work, market expectation changes and home buyers’ confidence recovers; that real estate enterprises and intermediary agents optimize promotion and pricing strategy and take positive actions in de-stocking. The recovery of real estate market will boom decoration and household appliances industries. Among A share companies, Shenzhen Grandland Decoration Group Co., Ltd. (002482.SZ) ranks top in domestic housing decoration market and Evergrande Real Estate, its largest cooperation partner, sees an all-time high single-month sales volume in May; Hangzhou Robam Appliances Co., Ltd. (002508.SZ) is a leading enterprise in kitchen appliances market. The company indicated during investigation that its performance might obviously pick up in the third and fourth quarter.
○ Oil products upgrading to speed up, companies in industrial chains to benefit
------
XFA learnt from ICIS, an information service provider in the petrochemical market, that Shandong Province, which owns the biggest refining capacity in China, has 10 refiners producing and selling oil products meeting the National V standard, accounting for 43 percent of the capacity in the whole province. Zibo Qixiang Tengda Chemical Co., Ltd. (002408.SZ), a manufacturer of oil additives, was inspected by institutes and indicated that its isooctane equipment is under full production with the acceleration in the upgrading of oil products. All of its isooctane products are sold out and some even exceeds the designed capacity.
Comment: The oil products upgrading is scheduled much earlier by the National Development and Reform Commission (NDRC) and the three major oil producers in China, namely PetroChina Company Limited (PTR.NYSE; 00857.HK; 601857.SH), China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) and CNOOC Limited (00883.HK), also make plans on oil products upgrading. The gasoline and diesel of PetroChina will meet the National V standard by the end of next year. Manufactures of oil additives and desulfurization and hydrogenation equipment will benefit. Besides Qixiang Tengda Chemical, the isooctane project of Dymatic Chemicals, Inc. (002054.SZ) with an annual capacity of 240,000 tons will put into production this year. Shandong Sunway Petrochemical Engineering Co., Ltd. (002469.SZ) owns various orders for petrochemical project. It is also expanding the petrochemical e-commerce platform.
[Announcement Interpretation]
○ Jinqiao Export Processing Zone Development and Waigaoqiao Free Trade Zone Development resume trading, state-owned assets reform in Pudong to speed up
------
Jinqiao Group, the controlling shareholder of Shanghai Jinqiao Export Processing Zone Development Co., Ltd. (600639.SH), proposes to transfer 15 percent shares of the company to Shanghai Pudong Investment Holdings (Group) Co., Ltd. (under preparation) for free. Shanghai Waigaoqiao Free Trade Zone Development Co., Ltd. (600648.SH) indicated that it plans to build the company into a public state-owned investment holding company with specific strategic goals, standard governance structure, stimulation and restriction system and outstanding competitive advantages based on the overall plan on the state-owned assets and enterprises reform in Pudong New Area. It will also be entrusted to manage the non-listed assets of the group.
Comment: Pudong New Area officially released the 18 rules on the state-owned assets and enterprises reform on June 11. The equities of enterprises facing market competition in the state-owned assets system are transferred to Shanghai Pudong Investment Holdings (Group) Co., Ltd. XFA reported that the state-owned assets reform in Pudong New Area will speed up. Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. (600663.SH), Shang Gong Group Co., Ltd. (600843.SH), Shanghai Pudong Road & Bridge Construction Co., Ltd. (600284.SH) and other companies under the Shanghai Pudong New Area State-owned Assets Supervision and Administration Commission are expected to be favored. Besides, Waigaoqiao Group has been covered by Waigaoqiao Free Trade Zone Development to achieve overall listing. Shanghai Nanhui Development (Group) Co., Ltd. has been adopted into Shanghai Pudong Development (Group) Co., Ltd. Shanghai Lingang Ocean High-tech Industrial Development Co., Ltd. and Nanhui Industrial Park Company have been merged by Harbor City Group and Jinqiao Group.
○ Dirui Industrial to control Ruiyuan Biotechnology to develop in vitro diagnostic reagent
------
Dirui Industrial Co., Ltd. (300396.SZ) intends to acquire 51 percent equities of Ningbo Ruiyuan Biotechnology Co., Ltd., an in vitro diagnostic reagent manufacturer, with 555 million yuan in cash. The subject has a value-added ratio of 751 percent. Ruiyuan Biotechnology owns medical devices and products registration certificates for 117 biochemical reagent products and a liquid biochemical reagent production line with an annual capacity of about 100 million milliliters. Another liquid biochemical reagent production line with an annual capacity of about 200 million milliliters will put into production this year. Its committed net profit from 2015 to 2017 will be no less than 42 million yuan, 66 million yuan and 93 million yuan, respectively. The listed company recorded a profit of 101 million yuan last year. During the trading suspension, the company announced the 2014 distribution plan with a 15-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares.
○ Tianyu Information Industry to develop online education with RMB1.1 bln
------
Wuhan Tianyu Information Industry Co., Ltd. (300205.SZ) plans to raise 1,136 million yuan by issuing 45 million shares at 25.25 yuan per share to Qianhai Kaiyuan Fund Management Co., Ltd. and Zeng Hongbin through private placement. The proceeds will be invested in the construction of a cloud platform for education and supplementing working capital.
Comment: The company solely undertakes the construction of a cloud platform for national education. The implementation of the project will help the company structurally transform from an intelligent card manufacturer into an Internet-based services provider. The project is expected to bring an annual net profit of 80.93 million yuan after completion. The company recorded a profit of 58.62 million yuan last year.
○ O-film Tech to develop intelligent vehicles with RMB2 bln
------
Shenzhen O-film Tech Co., Ltd. (002456.SZ) proposes to establish a wholly-owned subsidiary O-film Intelligent Vehicles Internet Co., Ltd. with a registered capital of 2 billion yuan. The move will facilitate the company in planning automotive electronics, intelligent driving, the Internet of Vehicles and other industries. The company also plans to acquire 16.67 percent equities of Auto-Linked Information Technology Co., Ltd. with 50 million yuan. The company is a basic data and services company based on the Internet of Vehicles with bus design and analysis ability. Meanwhile, the company intends to acquire 20 percent equities of Shenzhen Zhuoying Technology Co., Ltd. with 15 million yuan. The latter is principally engaged in high-end image products and automobile digital active systems (ADAS).
Besides, O-film Tech plans to make a capital increase of 250 million yuan in Nanchang O-film Bio-Identification Technology Co., Ltd. The registered capital of O-film Bio-Identification Technology will be increased from 300 million yuan to 550 million yuan.
○ Aerospace Automobile Electromechanical to raise RMB2.7 bln through private placement to construct photovoltaic power station
------
Shanghai Aerospace Automobile Electromechanical Co., Ltd. (600151.SH) intends to raise 2.7 billion yuan by issuing shares at no less than 13.75 yuan per share to Shanghai Aviation Industrial (Group) Co., Ltd., the controlling shareholder, China Aerospace Investment Holdings Ltd. and other participants through private placement. The proceeds will be used in the construction of a 320MW photovoltaic power station and repaying borrowings. The controlling shareholders originally planned to inject capitals into the 52.19 percent equities of Aerospace Energy, the clean energy asset of the company, but it will not inject temporarily as a result of disagreement of certain shareholders.
Latest comments