[Today's Guide]
> State-owned assets reform accelerated in Guizhou, only two companies left with no reform scheme
> National IC Industrial Investment Fund to invest again, expectation on following industrial integration keeps emerging
> Zhiyun Automation to acquire Xinsanli Automation Equipment, Founder Motor to acquire assets in new energy car area
>Swan Fiber to add stakes in military industry through private placement, stock price of Capchem Technology lower than offering price of private placement
[XFA Focus]
○State-owned assets reform accelerated in Guizhou, only two companies left with no reform scheme
------
Zhang Yi, director of State-owned Assets Supervision and Administration Commission (SASAC), recently attended the forum & signing ceremony for central enterprise to promote the economic development of Guizhou City and met local leaders. Guizhou SASAC pointed out on its website that enterprises under state-owned assets shall actively promote reform under the precondition of stability, not just wait and see, accelerate the pace of merger and acquisition, and actively introduce strategic investors.
Comment: According to the state-owned assets reform thought of Guizhou, enterprises experiencing difficult operation will be reorganized through transfer, etc.; enterprises without competitive edge will see orderly exit of state-owned assets. Previously, Guizhou local state-owned assets subordinate seven listed companies, except Kweichow Moutai Co., Ltd. (600519.SH), the profit and value of the other six companies are all relatively low. At present, the controlling stake of Shanghai Zhenhua Heavy Industry Co., Ltd. (600320.SH), Guizhou Jiulian Industrial Explosive Material Development Co., Ltd. (002037.SZ) and Guizhou Chitianhua Co., Ltd. (600227.SH) has been transferred to powerful central enterprises or private enterprises and their stock prices all surge largely after the change of actual controllers. Guizhou Panjiang Refined Coal Co., Ltd. (600395.SH) has suspended trading for planning major issues. Only Guizhou Tyre Co., Ltd. (000589.SZ) and Guizhou Wire Rope Co., Ltd. (600992.SH) are left without clear reform scheme. Since these two companies are all in competitive industries, integration might be achieved through introducing strategic investors, reorganization, etc. in the future.
[XFA Selection]
○Chinese Premier Li Keqiang visited China Nuclear Power Engineering Co., Ltd. and the Ministry of Industry and Information Technology on June 15, requiring building new advantages of “Made in China” through reform and innovation.
○Chinese vice-premier Wang Yang attended 2015 National Food Safety Awareness Week on June 15, emphasizing to build long-term effective mechanism for food security by strengthening legal construction.
○The General Office of the State Council released document on June 15 promoting the development of nonpublic medical agencies and proposing detailed measures including to further relax market access, etc.
○The total electricity consumption of China in May sees a year-on-year growth of 1.6 percent, continuing to pick up compared with April, and the electricity consumption of the tertiary industry grows by 9.8 percent.
○China’s first Internet medical association was established recently. The industry is optimistic about the O2O modes of online inquiry, medicine e-commerce, appointment registration, etc.
[Industry Information]
○National IC Industrial Investment Fund to invest again, expectation on industrial integration keeps emerging
------
Latest announcement of Sanan Optoelectronics Co., Ltd. (600703.SH) shows that Sanan Group, shareholder of the company, plans to transfer 9.07 percent equities of Sanan Optoelectronics held by it to National Integrated Circuit (IC) Industrial Investment Fund at 22.3 yuan per share. The company’s stock price closed at 30.08 yuan per share before trading suspension. The company will focus on III—V group elements compound semiconductor and develop IC business in the future.
Comment: At present, the National IC Industrial Investment Fund has invested in leading industrial enterprises and special chip companies like Tsinghua Unigroup, Semiconductor Manufacturing International Corporation, Jiangsu Changjiang Electronics Technology Co., Ltd., Advanced Micro-Fabrication Equipment Inc., Apex Microelectronics, GalaxyCore Inc., etc., and its next investment target might fall on IC design, packaging & testing, equipment and material areas. Among listed companies, Tongfang Guoxin Electronics Co., Ltd. (002049.SZ) is a professional enterprise in IC design and its core business covers the design of smart car chip and special IC; JiLin Sino-Microelectronics Co., Ltd. (600360.SH) mainly produces power semiconductor components and IC which are mainly applied in areas like consumer electronics, computer, automotive electronics and industrial control, etc.
○NHFPC releases diagnosis and treatment scheme of MERS, products of multi listed companies shortlisted
------
National Health and Family Planning Commission (NHFPC) recently issued “Middle East Respiratory Syndrome (MERS) Hospital Infection Prevention and Control Technical Guidance (2015)” and “Middle East Respiratory Syndrome (MERS) Case Diagnosis and Treatment Scheme (2015)”, and the main products of multi listed companies are shortlisted. Moreover, Zhong Nanshan, an academician of the Chinese Academy of Engineering, indicated during media interview that the research team of the Basic Medical College of Fudan University has cooperated with American National Institutes of Health. The neutralizing antibody M336 aiming at MERS coronavirus has been jointly developed and it proves to be quite effective in animal experiment and hope that clinical test can be conducted soon.
Comment: Traditional Chinese medicine treatment takes a large part in the guidance issued by NHFPC. For the products shortlisted, reduning injection is the main product of Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH); Shanghai Kaibao Pharmaceutical Co., Ltd. (300039.SZ) and Shijiazhuang Yiling Pharmaceutical Co., Ltd. (002603.SZ) recently announce that their products are covered in the diagnosis and treatment scheme released by NHFPC.
○MOA promotes integrated operation of dairy industry, industry concentration degree to improve
------
Han Changfu, Minister of the Ministry of Agriculture (MOA) indicated on June 15 that all parts of the country shall greatly promote integrated operation of dairy industry, foster new-type operating entity, perfect the profit connection mechanism between dairy product enterprises and dairy farmers, and continuously improve the organization degree of dairy industry. Han also pointed out that the sustainable steady development of dairy industry has impact on healthy growth of infants, physical enhancement of the whole nation and even national image, so it’s a heavy responsibility to boost China’s dairy industry.
Comment: According to the reorganization scheme of dairy industry launched in June last year, by December, 2015, around 10 large-scale infant formula milk powder enterprises with annual sales income exceeding 2.0 billion yuan shall be formed and the industry concentration degree of top 10 domestic brand enterprises shall reach 65 percent. Leading industrial enterprises like Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH), etc. might benefit; Beingmate Baby & Child Food Co., Ltd. (002570.SZ) gains strategic investment from industrial giant Fonterra Co-Operative Group. Both parties have developed cooperation in pasture and milk sources.
[Announcement Interpretation]
○Zhiyun Automation to acquire Xinsanli Automation Equipment with RMB830 mln to develop intelligent manufacturing of 3C
------
Dalian Zhiyun Automation Co., Ltd. (300097.SZ) plans to acquire 100 percent equities of Shenzhen Xinsanli Automation Equipment Co., Ltd. with 830 million yuan by issuing shares through private placement and paying in cash. Meanwhile, it plans to raise a supporting fund of 400 million yuan from Tan Yongliang, actual controller of the company, Phase I staff shareholding plan, etc. Xinsanli Automation Equipment is one of the few companies equipped with the development and manufacturing ability of automatic module equipment in domestic panel display module equipment area. Xinsanli Automation Equipment promises that its net profit from 2015 to 2017 will be no less than 60.00 million yuan, 80.00 million yuan and 100.00 million yuan, respectively. The net profit of the listed company in 2014 only recorded 22.49 million yuan.
○Founder Motor to acquire two companies in new energy car area
------
Zhejiang Founder Motor Co., Ltd. (002196.SZ) plans to acquire 100 percent equities of Shanghai High Energy Auto Electronic Co., Ltd. and Hangzhou Dewos Electric Technology Co., Ltd. with a total of 1,345 million yuan, among which, 613 million yuan will be paid in cash and the rest 732 million yuan will be raised by issuing 47.56 million shares at 15.39 yuan per share through private placement. Meanwhile, the company plans to raise a supporting fund of 630 million yuan by issuing 38.39 million shares to Zhang Min, actual controller of the company, Weng Weiwen, director of the company, etc. at 16.41 yuan per share through private placement. Upon completion of acquisition, Founder Motor will accelerate its transformation towards the supplier of energy conservation and new energy car core components and improve the company’s product structure in new energy car driving system.
○Swan Fiber to raise RMB2.3 bln through private placement to add stakes in military communications
------
Swan Fiber Co., Ltd. (000687.SZ) plans to raise 2.3 billion yuan from targeted investors including Qianhai China Communication Technology Company by issuing 242 million shares at 9.50 yuan per share through private placement to invest in the R&D and industrialization of new-type ultra wide band (UWB) phased-array antenna, the R&D and industrialization of full-color permeable head display device, the construction of electromagnetic information series products and the R&D platform of electromagnetic information, and to supplement working capital, etc.
Upon completion of previous reorganization, the company’s main business becomes military communications and supporting business. The private placement this time aims at developing bigger and stronger military communications and supporting business rapidly. Among subscribers of the private placement, many of the institutional investors own the background of Shanghai state-owned assets, Ministry of Finance, State-owned Assets Supervision and Administration Commission, etc. Upon completion of above projects, a net profit of around 409 million yuan will be newly added annually. The net profit of the listed company in 2014 recorded 14.39 million yuan.
○Capchem Technology completes fundraising for reorganization through private placement, stock price lower than offering price
------
Shenzhen Capchem Technology Co., Ltd. (300037.SZ) completes the fundraising of 171 million yuan by issuing shares at 50.38 yuan per share through private placement to pay the cash needed by the reorganization. Caitong Fund Management Co., Ltd. subscribes 3.37 million shares and BOSC Asset Management Co., Ltd. subscribes 19,900 shares. Capchem Technology acquires 100 percent equities of Sanming Haisifu Chemical Company Limited by issuing shares through private placement and paying in cash. Meanwhile, it plans to raise a supporting fund of 171 million yuan through private placement. The stock price of Capchem Technology closed at 50.20 yuan per share before trading suspension.
○Hailide New Material to raise RMB650 mln to invest in intelligent testing factory
------
Zhejiang Hailide New Material Co., Ltd. (002206.SZ) plans to raise 650 million yuan by issuing 39.03 million shares at no less than 16.65 yuan per share to invest in intelligent testing factory and a technical modification project, and to supplement working capital. The company indicates that it will integrate resources in car safety, advertising material and new material areas, build intelligent factory and improve overall operation status and performance in the future.
○Liuguo Chemical and Annada Titanium Industry resume trading, mixed-ownership reform of Anhui Tonghua Group speeds up
------
Anhui Liuguo Chemical Co., Ltd. (600470.SH) and Anhui Annada Titanium Industry Co., Ltd. (002136.SZ) announce that Tongling Huasheng Chemical Investment Company Limited, actual controller of these two companies, is authorized by the Government of Tongling City to establish Ruida Group by separating the equities of some subsidiaries under Tonghua Group, its controlling shareholder, and reorganizing them with relevant asset under Huasheng Chemical. Zhejiang Guomao Oriental Investment Company, strategic investor, will purchase 35~40 percent equities of Tonghua Group and Ruida Group, respectively, with fair price. The actual controller of these two groups is still Huasheng Chemical.
Comment: This integration marks the official opening of the state-owned enterprises reform under Tongling City. Liuguo Chemical and Annada Titanium Industry, as the capital platform under the group, might play important role in mixed-owner ship reform.
[Trading Trends]
○Zhongtong Bus bought by four institutions, prospect of state-owned assets reform concerned
------
The trading volume ranking list on June 15 shows that Zhongtong Bus Holding Co., Ltd. (000957.SZ) was bought by four institutions with a total of 133 million yuan, accounting for 23 percent of its intraday turnover. The actual controller of the company is the State-owned Assets Supervision and Administration Commission of Shandong Province.
Comment: As learnt by XFA, the state-owned enterprises reform in Shandong Province has entered a fully deepening new stage. The state-owned asset investment operation company, aiming to sort out the relationship between listed companies and state-owned shareholders, is established. The equity incentive scheme of state-owned asset system will see accelerated launch. Zhongtong Bus plans to increase the shareholding proportion of state-owned assets through private placement. Institutions are optimistic about its following reform.
> State-owned assets reform accelerated in Guizhou, only two companies left with no reform scheme
> National IC Industrial Investment Fund to invest again, expectation on following industrial integration keeps emerging
> Zhiyun Automation to acquire Xinsanli Automation Equipment, Founder Motor to acquire assets in new energy car area
>Swan Fiber to add stakes in military industry through private placement, stock price of Capchem Technology lower than offering price of private placement
[XFA Focus]
○State-owned assets reform accelerated in Guizhou, only two companies left with no reform scheme
------
Zhang Yi, director of State-owned Assets Supervision and Administration Commission (SASAC), recently attended the forum & signing ceremony for central enterprise to promote the economic development of Guizhou City and met local leaders. Guizhou SASAC pointed out on its website that enterprises under state-owned assets shall actively promote reform under the precondition of stability, not just wait and see, accelerate the pace of merger and acquisition, and actively introduce strategic investors.
Comment: According to the state-owned assets reform thought of Guizhou, enterprises experiencing difficult operation will be reorganized through transfer, etc.; enterprises without competitive edge will see orderly exit of state-owned assets. Previously, Guizhou local state-owned assets subordinate seven listed companies, except Kweichow Moutai Co., Ltd. (600519.SH), the profit and value of the other six companies are all relatively low. At present, the controlling stake of Shanghai Zhenhua Heavy Industry Co., Ltd. (600320.SH), Guizhou Jiulian Industrial Explosive Material Development Co., Ltd. (002037.SZ) and Guizhou Chitianhua Co., Ltd. (600227.SH) has been transferred to powerful central enterprises or private enterprises and their stock prices all surge largely after the change of actual controllers. Guizhou Panjiang Refined Coal Co., Ltd. (600395.SH) has suspended trading for planning major issues. Only Guizhou Tyre Co., Ltd. (000589.SZ) and Guizhou Wire Rope Co., Ltd. (600992.SH) are left without clear reform scheme. Since these two companies are all in competitive industries, integration might be achieved through introducing strategic investors, reorganization, etc. in the future.
[XFA Selection]
○Chinese Premier Li Keqiang visited China Nuclear Power Engineering Co., Ltd. and the Ministry of Industry and Information Technology on June 15, requiring building new advantages of “Made in China” through reform and innovation.
○Chinese vice-premier Wang Yang attended 2015 National Food Safety Awareness Week on June 15, emphasizing to build long-term effective mechanism for food security by strengthening legal construction.
○The General Office of the State Council released document on June 15 promoting the development of nonpublic medical agencies and proposing detailed measures including to further relax market access, etc.
○The total electricity consumption of China in May sees a year-on-year growth of 1.6 percent, continuing to pick up compared with April, and the electricity consumption of the tertiary industry grows by 9.8 percent.
○China’s first Internet medical association was established recently. The industry is optimistic about the O2O modes of online inquiry, medicine e-commerce, appointment registration, etc.
[Industry Information]
○National IC Industrial Investment Fund to invest again, expectation on industrial integration keeps emerging
------
Latest announcement of Sanan Optoelectronics Co., Ltd. (600703.SH) shows that Sanan Group, shareholder of the company, plans to transfer 9.07 percent equities of Sanan Optoelectronics held by it to National Integrated Circuit (IC) Industrial Investment Fund at 22.3 yuan per share. The company’s stock price closed at 30.08 yuan per share before trading suspension. The company will focus on III—V group elements compound semiconductor and develop IC business in the future.
Comment: At present, the National IC Industrial Investment Fund has invested in leading industrial enterprises and special chip companies like Tsinghua Unigroup, Semiconductor Manufacturing International Corporation, Jiangsu Changjiang Electronics Technology Co., Ltd., Advanced Micro-Fabrication Equipment Inc., Apex Microelectronics, GalaxyCore Inc., etc., and its next investment target might fall on IC design, packaging & testing, equipment and material areas. Among listed companies, Tongfang Guoxin Electronics Co., Ltd. (002049.SZ) is a professional enterprise in IC design and its core business covers the design of smart car chip and special IC; JiLin Sino-Microelectronics Co., Ltd. (600360.SH) mainly produces power semiconductor components and IC which are mainly applied in areas like consumer electronics, computer, automotive electronics and industrial control, etc.
○NHFPC releases diagnosis and treatment scheme of MERS, products of multi listed companies shortlisted
------
National Health and Family Planning Commission (NHFPC) recently issued “Middle East Respiratory Syndrome (MERS) Hospital Infection Prevention and Control Technical Guidance (2015)” and “Middle East Respiratory Syndrome (MERS) Case Diagnosis and Treatment Scheme (2015)”, and the main products of multi listed companies are shortlisted. Moreover, Zhong Nanshan, an academician of the Chinese Academy of Engineering, indicated during media interview that the research team of the Basic Medical College of Fudan University has cooperated with American National Institutes of Health. The neutralizing antibody M336 aiming at MERS coronavirus has been jointly developed and it proves to be quite effective in animal experiment and hope that clinical test can be conducted soon.
Comment: Traditional Chinese medicine treatment takes a large part in the guidance issued by NHFPC. For the products shortlisted, reduning injection is the main product of Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH); Shanghai Kaibao Pharmaceutical Co., Ltd. (300039.SZ) and Shijiazhuang Yiling Pharmaceutical Co., Ltd. (002603.SZ) recently announce that their products are covered in the diagnosis and treatment scheme released by NHFPC.
○MOA promotes integrated operation of dairy industry, industry concentration degree to improve
------
Han Changfu, Minister of the Ministry of Agriculture (MOA) indicated on June 15 that all parts of the country shall greatly promote integrated operation of dairy industry, foster new-type operating entity, perfect the profit connection mechanism between dairy product enterprises and dairy farmers, and continuously improve the organization degree of dairy industry. Han also pointed out that the sustainable steady development of dairy industry has impact on healthy growth of infants, physical enhancement of the whole nation and even national image, so it’s a heavy responsibility to boost China’s dairy industry.
Comment: According to the reorganization scheme of dairy industry launched in June last year, by December, 2015, around 10 large-scale infant formula milk powder enterprises with annual sales income exceeding 2.0 billion yuan shall be formed and the industry concentration degree of top 10 domestic brand enterprises shall reach 65 percent. Leading industrial enterprises like Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH), etc. might benefit; Beingmate Baby & Child Food Co., Ltd. (002570.SZ) gains strategic investment from industrial giant Fonterra Co-Operative Group. Both parties have developed cooperation in pasture and milk sources.
[Announcement Interpretation]
○Zhiyun Automation to acquire Xinsanli Automation Equipment with RMB830 mln to develop intelligent manufacturing of 3C
------
Dalian Zhiyun Automation Co., Ltd. (300097.SZ) plans to acquire 100 percent equities of Shenzhen Xinsanli Automation Equipment Co., Ltd. with 830 million yuan by issuing shares through private placement and paying in cash. Meanwhile, it plans to raise a supporting fund of 400 million yuan from Tan Yongliang, actual controller of the company, Phase I staff shareholding plan, etc. Xinsanli Automation Equipment is one of the few companies equipped with the development and manufacturing ability of automatic module equipment in domestic panel display module equipment area. Xinsanli Automation Equipment promises that its net profit from 2015 to 2017 will be no less than 60.00 million yuan, 80.00 million yuan and 100.00 million yuan, respectively. The net profit of the listed company in 2014 only recorded 22.49 million yuan.
○Founder Motor to acquire two companies in new energy car area
------
Zhejiang Founder Motor Co., Ltd. (002196.SZ) plans to acquire 100 percent equities of Shanghai High Energy Auto Electronic Co., Ltd. and Hangzhou Dewos Electric Technology Co., Ltd. with a total of 1,345 million yuan, among which, 613 million yuan will be paid in cash and the rest 732 million yuan will be raised by issuing 47.56 million shares at 15.39 yuan per share through private placement. Meanwhile, the company plans to raise a supporting fund of 630 million yuan by issuing 38.39 million shares to Zhang Min, actual controller of the company, Weng Weiwen, director of the company, etc. at 16.41 yuan per share through private placement. Upon completion of acquisition, Founder Motor will accelerate its transformation towards the supplier of energy conservation and new energy car core components and improve the company’s product structure in new energy car driving system.
○Swan Fiber to raise RMB2.3 bln through private placement to add stakes in military communications
------
Swan Fiber Co., Ltd. (000687.SZ) plans to raise 2.3 billion yuan from targeted investors including Qianhai China Communication Technology Company by issuing 242 million shares at 9.50 yuan per share through private placement to invest in the R&D and industrialization of new-type ultra wide band (UWB) phased-array antenna, the R&D and industrialization of full-color permeable head display device, the construction of electromagnetic information series products and the R&D platform of electromagnetic information, and to supplement working capital, etc.
Upon completion of previous reorganization, the company’s main business becomes military communications and supporting business. The private placement this time aims at developing bigger and stronger military communications and supporting business rapidly. Among subscribers of the private placement, many of the institutional investors own the background of Shanghai state-owned assets, Ministry of Finance, State-owned Assets Supervision and Administration Commission, etc. Upon completion of above projects, a net profit of around 409 million yuan will be newly added annually. The net profit of the listed company in 2014 recorded 14.39 million yuan.
○Capchem Technology completes fundraising for reorganization through private placement, stock price lower than offering price
------
Shenzhen Capchem Technology Co., Ltd. (300037.SZ) completes the fundraising of 171 million yuan by issuing shares at 50.38 yuan per share through private placement to pay the cash needed by the reorganization. Caitong Fund Management Co., Ltd. subscribes 3.37 million shares and BOSC Asset Management Co., Ltd. subscribes 19,900 shares. Capchem Technology acquires 100 percent equities of Sanming Haisifu Chemical Company Limited by issuing shares through private placement and paying in cash. Meanwhile, it plans to raise a supporting fund of 171 million yuan through private placement. The stock price of Capchem Technology closed at 50.20 yuan per share before trading suspension.
○Hailide New Material to raise RMB650 mln to invest in intelligent testing factory
------
Zhejiang Hailide New Material Co., Ltd. (002206.SZ) plans to raise 650 million yuan by issuing 39.03 million shares at no less than 16.65 yuan per share to invest in intelligent testing factory and a technical modification project, and to supplement working capital. The company indicates that it will integrate resources in car safety, advertising material and new material areas, build intelligent factory and improve overall operation status and performance in the future.
○Liuguo Chemical and Annada Titanium Industry resume trading, mixed-ownership reform of Anhui Tonghua Group speeds up
------
Anhui Liuguo Chemical Co., Ltd. (600470.SH) and Anhui Annada Titanium Industry Co., Ltd. (002136.SZ) announce that Tongling Huasheng Chemical Investment Company Limited, actual controller of these two companies, is authorized by the Government of Tongling City to establish Ruida Group by separating the equities of some subsidiaries under Tonghua Group, its controlling shareholder, and reorganizing them with relevant asset under Huasheng Chemical. Zhejiang Guomao Oriental Investment Company, strategic investor, will purchase 35~40 percent equities of Tonghua Group and Ruida Group, respectively, with fair price. The actual controller of these two groups is still Huasheng Chemical.
Comment: This integration marks the official opening of the state-owned enterprises reform under Tongling City. Liuguo Chemical and Annada Titanium Industry, as the capital platform under the group, might play important role in mixed-owner ship reform.
[Trading Trends]
○Zhongtong Bus bought by four institutions, prospect of state-owned assets reform concerned
------
The trading volume ranking list on June 15 shows that Zhongtong Bus Holding Co., Ltd. (000957.SZ) was bought by four institutions with a total of 133 million yuan, accounting for 23 percent of its intraday turnover. The actual controller of the company is the State-owned Assets Supervision and Administration Commission of Shandong Province.
Comment: As learnt by XFA, the state-owned enterprises reform in Shandong Province has entered a fully deepening new stage. The state-owned asset investment operation company, aiming to sort out the relationship between listed companies and state-owned shareholders, is established. The equity incentive scheme of state-owned asset system will see accelerated launch. Zhongtong Bus plans to increase the shareholding proportion of state-owned assets through private placement. Institutions are optimistic about its following reform.
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