Early Bird

Early Bird 18-June-2015

XFA Premium News
2015-06-18 11:39

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[Today’s Guide]
> Asset integration of CEC speeds up, Tianjin holds dedicated seminar for SOEs reform
> Big data adopted to improve government service, logistics enterprises to benefit from cross-border e-commerce
> Panda Financial to develop Internet-based finance, Luoping Zinc & Electricity to acquire lead-zinc mine through private placement
> Baoding Heavy Industry to develop new materials through private placement, Hejun E-learing to control IRTOUCH Systems
 
 
[XFA Focus]
○ Both Greatwall Information Industry and Greatwall Computer announce trading suspension, asset integration of CEC speeds up
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Both Greatwall Information Industry Co., Ltd. (000748.SZ) and China Greatwall Computer Shenzhen Co., Ltd. (000066.SZ) announced trading suspension at the night of June 17 since their actual controller China Electronics Corporation (CEC) is planning significant issues for the two companies. CEC is a supersized central enterprise in domestic electronics industry and owns five business sectors and 11 companies listed in A-share market. CEC has proposed the idea of having one listed company in every sector.
Comment: CEC frequently integrates assets in recent years. The controlling stake of Shanghai Belling Corp., Ltd. (600171.SH) has been transferred to Huada Semiconductor Company, an integrated circuit (IC) business operation platform under CEC. Institutions are optimistic about that the company might further undertake IC asset; China Zhenhua (Group) Science & Technology Co., Ltd. (000733.SZ) is the only listed company involved in military electronics under CEC. CEC once indicated that the securitization of military assets is their next target; both Shenzhen Sed Industry Co., Ltd. (000032.SZ) and Shenzhen Kaifa Technology Co., Ltd. (000021.SZ) recently propose schemes for asset acquisition.
 
○ Tianjin holds dedicated seminar for SOEs reform, local state-owned asset companies concerned
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Tianjin Municipal City held a dedicated forum for the reform and securitization of state-owned enterprises (SOEs) on June 17, mainly focusing on mixed-ownership reform of SOEs, equity incentive, M&A and integration. The forum also explained the listing financing, asset securitization and market value management of SOEs. According to the implementation opinions on deepening the reform of state-owned asset and enterprises by Tianjin, by end-2017, 90 percent of state-owned assets shall be concentrated to important industries and critical areas; the number SOE groups shall be adjusted to 35; every key group shall own at least one listed company. At present, there are more than 50 enterprises under the State-owned Assets Supervision and Administration Commission of Tianjin.
Comment: Medicine and commerce circulation might be highlighted in Tianjin’s state-owned assets reform. Tianjin Lisheng Pharmaceutical Co., Ltd. (002393.SZ), Tianjin Zhongxin Pharmaceutical Group Corporation Limited (600329.SH) and Tianjin Tianyao Pharmaceuticals Co., Ltd. (600488.SH) have all been transferred to Tianjin Bohai Asset Operation Management Company Limited. “Acquisition of peer companies” might be adopted in the future to make it bigger and stronger; Tianjin Quanyechang (Group) Co., Ltd. (600821.SH) is involved in competitive industry and the shareholding proportion of state-owned asset is low.
 
 
[XFA Selection]
○ Leaders of the State Administration of Foreign Exchange indicated on June 17 that the guidance for the mutual recognition of foreign exchange management of mainland and HK’s funds will be distributed soon; no foreign exchange management problems impede Shenzhen-Hong Kong Stock Connect program.
○ He Lifeng, deputy director of National Development and Reform Commission developed investigation in Changchun City, Jilin Province from June 15-16 and hosted the economic trend forum for Heilongjiang Province, Jilin Province and Liaoning Province.
○ China-Australia Free Trade Agreement was signed officially on June 17, China-made garments, electronic gadgets, and etc. will enjoy high tariff concession.
○XFA learns that Shanghai might launch detailed operation rules for mixed-ownership reform and the promotion measures for technology innovation center in end-June.
○ Jiangsu Province unveiled implementation opinions on accelerating the development of sports industry on June 17, proposing to arrange 1000 schools featuring football.
 
 
[Industry Information]
○ Executive meeting of State Council arranges optimization of governmental service and supervision, big data to become main tool
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The executive meeting of the State Council held on June 17 resorted to big data to optimize governmental service and supervision and to improve administrative efficiency. The meeting determined to accelerate the construction of the informatization engineering of governmental affairs; push forward the opening and sharing of governmental information; introduce big data supervision in key areas like environmental protection, food & medicine security, etc.
Comment: Among listed companies, Aisino Corporation (600271.SH) undertakes key national projects like “Jinshui Project”, etc. and is a main participant in national large-scale informatization engineering and e-government areas; Beijing TRS Information Technology Co., Ltd. (300229.SZ) acquired 100 percent equities of Beijing Top Walk Information Technology Company last year and the latter focuses on the safe exchange and application of government and enterprises data.
 
◆ The meeting also determined that investment will be input to the upgrading and modification of rural power grid, grain storage facilities, urban sewage treatment facilities, modification and relocation of urban old industrial parks and independent industrial and mining areas, etc. by adjusting structures, vitalizing stocks and arranging investment from central government so as to drive more local and social investment.
 
○ Cross-border e-commerce develops rapidly, logistics enterprises to see accelerated development
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Du Peng, head of the Current Account Management Department of State Administration of Foreign Exchange, indicated on June 17 that since the piloting foreign-currency payment business of cross-border e-commerce was launched in 2013, the cross-border e-commerce processed through third-party payment organization has reached 1,329,000 transactions, indicating an amount of 3.32 billion U.S dollars. And the turnover between Jan. to May this year nearly approaches the total amount in last year. Active research on whether the payment limit can be further expanded or not will be made on the basis of controllable risks.
Comment: As the trading scale of cross-border e-commerce expands gradually, relevant logistics enterprises might see rapid development. Among listed companies, Sinotrans Air Transportation Development Co., Ltd. (600270.SH) has become the only logistics company nationwide to gain the customs clearance qualification of six cities piloting cross-border e-commerce. “Sunnytao”, an overseas shopping website run by itself, has been launched in end-2014; CTS International Logistics Corporation Limited (603128.SH) is leading domestic cross-border comprehensive logistics service provider.
 
 
[Announcement Interpretation]
○ Panda Financial to develop Internet-based finance with RMB3 bln
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Panda Financial Holding Corp., Ltd. (600599.SH) proposes to raise 3 billion yuan by issuing 110 million shares at 27.25 yuan per share through private placement. 1.66 billion yuan will be used in the construction of yinhu.com, an online loan platform, and an Internet-based big financial data center and 1.35 billion yaun will be used in the construction of a financial information and services platform. Two companies controlled by Zhao Qianxuan, daughter of Zhao Weiping, the actual controller of the company, will subscribe with 1.59 billion yuan. Dongying International Financial Trade Co., a shareholder of the company, will subscribe with 820 million yuan. In addition, Hangzhou Licheng Equities Investment Partnership will subscribe with nearly 300 million yuan. The three partners of the PE institute is Xie Shihuang, a partner of Ma Yun, Zhang Te, vice chairman and board secretary of Leshi Internet Information & Technology Corp., Beijing (300104.SZ) and Kuang Lan from Beijing Tianyi Huirong Investment Management Co., Ltd.
Comment: With the declining of the firework industry, the company edged into the Internet-based financial area through the establishment of yinhu.com in 2014. The company will build it into a leading Internet-based financial services platform with accesses to communities through the private placement.
 
○ Luoping Zinc & Electricity to acquire lead-zinc mine with RMB900 mln
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Yunnan Luoping Zinc & Electricity Co., Ltd. (002114.SZ) plans to raise 895 million yuan by issuing 57 million shares at 15.74 yuan per share through private placement. The proceeds will be used in acquiring 100 percent equities of Hongtai Mining, the technological transformation of the comprehensive recovery system with cadmia as well as supplementing the working capital. The major asset of Hongtai Mining is a sandstone lead-zinc mine with an expected annual output of about 450,000 tons and the transaction price is about 450 million yuan. The project is expected to improve the self sufficiency of raw materials and the profitability of the company.
 
○ Baoding Heavy Industry to develop new materials with RMB1 bln through private placement
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Baoding Heavy Industry Co., Ltd. (002552.SZ) intends to raise 1 billion yuan by issuing 78.55 million shares at 12.73 yuan per share through private placement. The proceeds will be invested in Fuyu New Materials Technologies Co., Ltd. with an annual capacity of 5,000 tons of catalysts and supplementing the working capital. Most of the participants of the private placement are connected parties of the company. Baoding Wanqi Group Co. Ltd. is a shareholder of the company. The client of the Baoding Growth No. 1 is the first employee shareholding plan of the company. Some clients of the Baoding Growth No. 2 are the management and core technical staff of the company. Jiang Yimin is the chairman of a subsidiary of the company.
 
○ Actual controller of IRTOUCH Systems to change, Hejun E-learing to control
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27.87 million shares (or 22 percent) of Beijing IRTOUCH Systems Co., Ltd. (300282.SZ) held by Tibet Danbei Investment Co., Ltd., the biggest shareholder of the company, were transferred to Beijing Hejun E-learing Co., Ltd. (831930.SO), a company listed on the National Equities Exchange and Quotations (NEEAQ). The total price is expected to be 1.4 billion yuan with over 50 yuan per share. The stock of the company closed at 40.6 yuan before trading suspension.
Hejun E-learing will become the biggest shareholder of IRTOUCH Systems and Wang Mingfu will be the actual controller of the company after the transaction. Hejun E-learing is an online education company principally engaged in O2O business education and management training, vocational education and Internet-based education. It was listed on the NEEAQ in February, 2015.
 
○ Xinyangfeng Fertilizer joins Alibaba Group in exploring Taobao villages
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Hubei Xinyangfeng Fertilizer Co., Ltd. (000902.SZ) plans to open a flagship store on the ‘Taobao villages’ under Alibaba Group to sell special products from villages and provide online agrochemical technologies and services. Alibaba will set stations in various areas to market and collect orders for the products of Xinyangfeng Fertilizer. It will place orders on the online flagship store and notify the current distributors of Xinyangfeng Fertilizer to provide the products distribution and agrochemical services as well as other offline services.
 
○ Foci Phar. raises prices for certain medicines
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The average factory prices of 15 key condensed pills of Lanzhou Foci Pharmaceutical Co., Ltd. (002644.SZ) were raised by 12 percent and the factory price of donkey-hide gelatin was raised by 34 percent. The retail prices of the above products will also be adjusted accordingly.
Comment: The company is a representative of medicines with low prices. As a result of the policies on deregulating pharmaceutical prices and its location in Gansu Province with pure medicinal materials and well-known brand, it will continue to raise the prices.
 
○ Changjiang Runfa Machinery to develop futures with RMB250 mln
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Changjiang Runfa Machinery Co., Ltd. (002435.SZ) proposes to be transferred 51 percent equities of Shenzhen Macroland Equities Investment Fund Management Co., Ltd. with no more than 250 million yuan. The latter holds 50 percent equities of J.P. Morgan Futures Co., Ltd.
 
 
[Financial Reports Express]
○ Sumavision Technologies proposes high share conversion in half-year report
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Sumavision Technologies Co., Ltd. (300079.SZ) proposes a 10-for-10 conversion of capital surplus into according to its 2015 half-year profit distribution plan.
 
 
[Data Speaks]
○ PTA and wind power to boom, performance in H1 highly expected
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The statistics of XFA show that among A-share companies forecasted the performance in the first half, about 20 attributed their performance growth to the industrial recovery. The PTA and wind power industries improved significantly. Hengyi Petrochemical Co., Ltd. (000703.SZ) and Rongsheng Petro Chemical Co., Ltd. (002493.SZ) expect to turn losses into profits. The two companies indicated that with the recovery of the crude price and the improvement of the PTA demand and supply, the polyester fiber products will maintain the recovery trend in the second half of 2014, which improved the gross profit rate of polyester and polyester fiber products. Xinjiang Goldwind Science and Technology Co., Ltd. (02208.HK; 002202.SZ) and Sinoma Science & Technology Co., Ltd. (002080.SZ) expect an increase of over 200 percent thanks to the increasing demand in the wind power market.
 
 
[Trading Alarms]
○ 11 new shares for subscription on June 18, including Guotai Junan Securities
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Guotai Junan Securities Co., Ltd. (780211.SH) issues shares at 19.71 yuan per share with an upper subscription limit of 457,000 shares for each account. Zhejiang Red Dragonfly Footwear Co., Ltd. (732116.SH) issues shares at 17.7 yuan per share with an upper subscription limit of 17,000 shares for each account. Shanghai Worth Garden Co., Ltd. (300483.SZ) issues shares at 11.39 yuan per share with an upper subscription limit of 6,000 shares for each account. Qingdao GON Technology Co., Ltd. (002768.SZ) issues shares at 17.47 yuan per share with an upper subscription limit of 8,000 shares for each account. Shenzhen Prolto Supply Chain Management Co., Ltd. (002769.SZ) issues shares at 28.49 yuan per share with an upper subscription limit of 7,000 shares for each account. Guangdong Bobaolon Co., Ltd. (002776.SZ) issues shares at 23.29 yuan per share with an upper subscription limit of 10,000 shares for each account. Shenzhen Wenke Landscape Co., Ltd. (002775.SZ) issues shares at 16.93 yuan per share with an upper subscription limit of 12,000 shares for each account. Guangdong Sitong Group Co., Ltd. (732838.SH) issues shares at 7.73 yuan per share with an upper subscription limit of 13,000 shares for each account. Beijing Transtrue Technology Inc. (002771.SZ) issues shares at 12.78 yuan per share with an upper subscription limit of 8,000 shares for each account. Jiangsu Wanlin Modern Logistics Co., Ltd. (732117.SH) issues shares at 5.93 yuan per share with an upper subscription limit of 18,000 shares for each account. Anhui Kouzi Distillery Co., Ltd. (732589.SH) issues shares at 16 yuan per share with an upper subscription limit of 18,000 shares for each account.
Full subscription of such shares needs 10.75 million yuna in total. Institutes advise to actively subscribe Guotai Junan Securities, which is expected to have the highest lot winning rate. Transtrue Technology, a provider of multimedia video comprehensive solutions, is also favored by institutes.
 
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