[Today’s Guide]
○ Shanghai to release mixed ownership reform details in end-June
○ Some funds favor leading growth stocks and mixed ownership system concept
○ CNNC holds global introduction meeting, nuclear power enterprises see intensive institutional investigation
○ Markor International Home Furnishings to further strengthen “Internet Plus” strategy
[Authoritative Voice]
Shanghai to release mixed ownership reform details in end-June
------
It is reported that after the releasing of the 18 opinions on the state-owned assets reform in Pudong area, the detailed rules on the state-owned assets and enterprises reform in Shanghai and following measures on supporting the construction of the Shanghai Science and Technology Innovation Center with the state-owned assets and enterprises reform are under preparation and are expected to be introduced in end-June. This will be the details and implementation of the 20 rules on the the state-owned assets and enterprises reform in Shanghai. The highlights include the introduction of strategic investors, the green land model, initiating the state-owned assets flow platform and vitalizing the stock.
In Addition, the assessment method on the operation results of state-owned enterprises will also be reformed. The input in science and technology research and development, the acquisition of innovation resources and significant items as well as the innovation and transformation of models and business types will be deemed as profits. Meanwhile, it will introduce term and equities incentives and other innovation-oriented medium and long-term incentives, explore the establishment of the strategic alliance with scientific research institutes in Shanghai and support the construction of the Shanghai Science and Technology Innovation Center through the reform of state-owned assets and enterprises.
[XFA View]
Stock index decline may bring opportunities to wise capitals
------
When the SSE Composite Index hit 2,400 points on Nov. 9 last year, the author reminded investors that A share with low valuation were attracting wise capitals and it may initiate a ‘structural bullish market’ driven by capitals. The SSE Composite Index stands at 5,000 points and it is time to review if the core drivers of the bullish market have changed. The author believes that the stock index decline may bring opportunities to wise capitals after making researches.
Looking back early-November last year, the author made field inspections at the Pearl River Delta and found that traditional industries, including property, steel, coal and foreign trade, are declining in the long-term cycle and their supporting capitals from banks, trusts and private borrowings are withdrawing to seek new appreciation means. The valuation of A shares is at the low level of all investment products. The two factors drove this round of bullish market to certain extent.
However, the core drivers of this round of bullish market, namely the dilemma of traditional industries and supporting capitals, have not improved much and they tend to become normal. The change is that the stock prices of such companies are not low and it is not that easy to make money as the fourth quarter of last year. The overall money-making effect is weakening. Under such market conditions, big capitals should target at high-quality blue chips and growth varieties in the declining bullish market to achieve appreciation and outperform others.
It is said that many OTC institutes, including industrial capitals, are seeking targets with professionalism in the short-term fluctuation and declining bullish market. As OTC industrial capitals prefer targets with relatively simple logic and are time sensitive, household appliance, water and power, liquor, finance, new energy vehicles and media industries with outstanding expectations in the half-year reports and are likely to outperform in the second half may become major targets. (Wen Dao)
[Institutions’ Movement]
Some funds favor leading growth stocks and mixed ownership system concept
------
According to the latest research on Zhongou Asset Managemeng Co., Ltd., Bosera Asset Management Co., Ltd., Guotai Fund, China International Fund Management, Dacheng Fund and other public funds by XFA, they generally believe that the surging index and stricter supporting regulation caused the rapid adjustment of the ChiNext Board recently. They remain bullish about the market in the medium and long term. It is inevitable that the performance of individual stocks will be diverged and it is advised to hold leading varieties. Besides, with the improvement of the top design on the state-owned enterprises reform, the reform of central enterprises and local state-owned enterprises will be promoted gradually. The mixed ownership system reform will be a new opportunity in the second half and it is advised to choose local state-owned enterprises reform subjects with clear reform plans.
PICC Asset Management to invest in industries and companies with ‘positive future’
------
The chief economist at PICC Asset Management Co., Ltd. said in an interview that its proportion of stock assets may be larger than the average in the history and it favors industries and companies with a ‘positive future’. The average PE of high growth industries represented by pharmaceuticals can be controlled within 50 times while those with weak growth can be controlled within 25 times. Under the optimistic assumption that ‘bad debts of banks will be assumed by government or the central bank’, it is advised to increase the proportion of bank stocks.
[Hotspot Investigation]
Clearance of stock OTC financing waiting for clear evaluation rules
------
The securities regulatory authorities restated that securities companies shall not provide any convenience to any institutions and individuals for OTC financing and illegal securities business via online securities transaction interfaces last weekend. The Securities Association of China also distributed the Certification Standardization for the Evaluation of Securities Companies’ External Information System and XFA carried out special investigation in securities industry.
It is learnt from the inside of the securities industry that securities companies have fully stopped opening new access to third-party systems like HOMS, etc. The number of stock customers receiving initial financing and interface access service from securities companies is limited, and they are cleared gradually since April. Though the association recently distributed relevant regulations, detailed rules are not specified yet. Therefore, policies on stock accounts will maintain unchanged and the interface will not be closed for the moment.
For products of institutions like trust, asset management, publicly-offered funds, etc. which need to be connected with external systems, they might gain the certification from association, meaning that trust products can still be traded normally. But during actual operation, securities companies will require trust products to issue commitment letter of no OTC financing to meet the requirement of certification.
[XFA Viewpoint]
CNNC holds global introduction meeting, nuclear power enterprises see intensive institutional investigation
------
China National Nuclear Corporation (CNNC) carried out technical introduction meeting to introduce China’s independent third-generation nuclear power technology—“Hualong No.1” technology to more than 200 representatives from the U.S., France, UK, etc. and announced the integration scheme of nuclear power. At the same time, institutions recently carried out intensive investigation to enterprises involved in nuclear power business like Neway Valve (Suzhou) Co., Ltd. (603699.SH), CNNC SUFA Technology Industry Co., Ltd. (000777.SZ), etc. According to investigation, relevant nuclear power equipment providers are devoting every effort to nuclear power area and launching internationalization strategy while developing new technologies.
Neway Valve (Suzhou) Co., Ltd. (603699.SH) plans to devote every effort to nuclear power area and aims to grow into a leading enterprise in nuclear power area in five years. The company is inclined to develop the valve maintenance/replacement area of nuclear power and explores stock market. The company has already made arrangement in this area and might get orders. The company now owns nuclear level-2 and level-3 qualifications and is applying for nuclear level-1 qualification. Moreover, institutions predict that the company might achieve industrial integration through external expansion. Enterprises with advantages in high-end product might become targets of acquisition. Internationalization strategy is the company’s future development direction.
The AP1000 explosion valve of CNNC SUFA Technology Industry Co., Ltd. (000777.SZ) is a key target of domestic nuclear power projects. At present, the company is carrying out overall test of the product and the progress is good. The company expects to be able to supply goods by the second half of next year. According to institutional investigations, CNNC SUFA Technology Industry is also considering integration of industrial chain and it is open to overseas acquisition. Some foreign enterprises like some German companies producing nuclear-level valves are excellent in technical strength and have cooperated with the company for years, but now are faced with survival problems. The company hopes that there will be opportunity to introduce these companies’ advanced technologies into China.
[Information Radar]
Markor International Home Furnishings to further strengthen “Internet Plus” strategy
------
Markor International Home Furnishings Co., Ltd. (600337.SH) recently announces that it will increase capital by 10 million yuan in Shenzhen Xiaowo Financial Information Service Company Limited. This move further strengthens “Internet Plus” strategy. The market expects that the company will rely on its own advantages of brand channels and build general home furnishing industrial chain through expansion in the future. Xiaowo Financial Information Service, engaged in e-commerce, sales of construction and decoration materials, etc., is the first Internet platform for home decoration and consumption chain finance in China.
In addition, the private placement application of Markor International Home Furnishings has been accepted by China Securities Regulatory Commission. The raised funds will all be used to supplement its working capital.
○ Shanghai to release mixed ownership reform details in end-June
○ Some funds favor leading growth stocks and mixed ownership system concept
○ CNNC holds global introduction meeting, nuclear power enterprises see intensive institutional investigation
○ Markor International Home Furnishings to further strengthen “Internet Plus” strategy
[Authoritative Voice]
Shanghai to release mixed ownership reform details in end-June
------
It is reported that after the releasing of the 18 opinions on the state-owned assets reform in Pudong area, the detailed rules on the state-owned assets and enterprises reform in Shanghai and following measures on supporting the construction of the Shanghai Science and Technology Innovation Center with the state-owned assets and enterprises reform are under preparation and are expected to be introduced in end-June. This will be the details and implementation of the 20 rules on the the state-owned assets and enterprises reform in Shanghai. The highlights include the introduction of strategic investors, the green land model, initiating the state-owned assets flow platform and vitalizing the stock.
In Addition, the assessment method on the operation results of state-owned enterprises will also be reformed. The input in science and technology research and development, the acquisition of innovation resources and significant items as well as the innovation and transformation of models and business types will be deemed as profits. Meanwhile, it will introduce term and equities incentives and other innovation-oriented medium and long-term incentives, explore the establishment of the strategic alliance with scientific research institutes in Shanghai and support the construction of the Shanghai Science and Technology Innovation Center through the reform of state-owned assets and enterprises.
[XFA View]
Stock index decline may bring opportunities to wise capitals
------
When the SSE Composite Index hit 2,400 points on Nov. 9 last year, the author reminded investors that A share with low valuation were attracting wise capitals and it may initiate a ‘structural bullish market’ driven by capitals. The SSE Composite Index stands at 5,000 points and it is time to review if the core drivers of the bullish market have changed. The author believes that the stock index decline may bring opportunities to wise capitals after making researches.
Looking back early-November last year, the author made field inspections at the Pearl River Delta and found that traditional industries, including property, steel, coal and foreign trade, are declining in the long-term cycle and their supporting capitals from banks, trusts and private borrowings are withdrawing to seek new appreciation means. The valuation of A shares is at the low level of all investment products. The two factors drove this round of bullish market to certain extent.
However, the core drivers of this round of bullish market, namely the dilemma of traditional industries and supporting capitals, have not improved much and they tend to become normal. The change is that the stock prices of such companies are not low and it is not that easy to make money as the fourth quarter of last year. The overall money-making effect is weakening. Under such market conditions, big capitals should target at high-quality blue chips and growth varieties in the declining bullish market to achieve appreciation and outperform others.
It is said that many OTC institutes, including industrial capitals, are seeking targets with professionalism in the short-term fluctuation and declining bullish market. As OTC industrial capitals prefer targets with relatively simple logic and are time sensitive, household appliance, water and power, liquor, finance, new energy vehicles and media industries with outstanding expectations in the half-year reports and are likely to outperform in the second half may become major targets. (Wen Dao)
[Institutions’ Movement]
Some funds favor leading growth stocks and mixed ownership system concept
------
According to the latest research on Zhongou Asset Managemeng Co., Ltd., Bosera Asset Management Co., Ltd., Guotai Fund, China International Fund Management, Dacheng Fund and other public funds by XFA, they generally believe that the surging index and stricter supporting regulation caused the rapid adjustment of the ChiNext Board recently. They remain bullish about the market in the medium and long term. It is inevitable that the performance of individual stocks will be diverged and it is advised to hold leading varieties. Besides, with the improvement of the top design on the state-owned enterprises reform, the reform of central enterprises and local state-owned enterprises will be promoted gradually. The mixed ownership system reform will be a new opportunity in the second half and it is advised to choose local state-owned enterprises reform subjects with clear reform plans.
PICC Asset Management to invest in industries and companies with ‘positive future’
------
The chief economist at PICC Asset Management Co., Ltd. said in an interview that its proportion of stock assets may be larger than the average in the history and it favors industries and companies with a ‘positive future’. The average PE of high growth industries represented by pharmaceuticals can be controlled within 50 times while those with weak growth can be controlled within 25 times. Under the optimistic assumption that ‘bad debts of banks will be assumed by government or the central bank’, it is advised to increase the proportion of bank stocks.
[Hotspot Investigation]
Clearance of stock OTC financing waiting for clear evaluation rules
------
The securities regulatory authorities restated that securities companies shall not provide any convenience to any institutions and individuals for OTC financing and illegal securities business via online securities transaction interfaces last weekend. The Securities Association of China also distributed the Certification Standardization for the Evaluation of Securities Companies’ External Information System and XFA carried out special investigation in securities industry.
It is learnt from the inside of the securities industry that securities companies have fully stopped opening new access to third-party systems like HOMS, etc. The number of stock customers receiving initial financing and interface access service from securities companies is limited, and they are cleared gradually since April. Though the association recently distributed relevant regulations, detailed rules are not specified yet. Therefore, policies on stock accounts will maintain unchanged and the interface will not be closed for the moment.
For products of institutions like trust, asset management, publicly-offered funds, etc. which need to be connected with external systems, they might gain the certification from association, meaning that trust products can still be traded normally. But during actual operation, securities companies will require trust products to issue commitment letter of no OTC financing to meet the requirement of certification.
[XFA Viewpoint]
CNNC holds global introduction meeting, nuclear power enterprises see intensive institutional investigation
------
China National Nuclear Corporation (CNNC) carried out technical introduction meeting to introduce China’s independent third-generation nuclear power technology—“Hualong No.1” technology to more than 200 representatives from the U.S., France, UK, etc. and announced the integration scheme of nuclear power. At the same time, institutions recently carried out intensive investigation to enterprises involved in nuclear power business like Neway Valve (Suzhou) Co., Ltd. (603699.SH), CNNC SUFA Technology Industry Co., Ltd. (000777.SZ), etc. According to investigation, relevant nuclear power equipment providers are devoting every effort to nuclear power area and launching internationalization strategy while developing new technologies.
Neway Valve (Suzhou) Co., Ltd. (603699.SH) plans to devote every effort to nuclear power area and aims to grow into a leading enterprise in nuclear power area in five years. The company is inclined to develop the valve maintenance/replacement area of nuclear power and explores stock market. The company has already made arrangement in this area and might get orders. The company now owns nuclear level-2 and level-3 qualifications and is applying for nuclear level-1 qualification. Moreover, institutions predict that the company might achieve industrial integration through external expansion. Enterprises with advantages in high-end product might become targets of acquisition. Internationalization strategy is the company’s future development direction.
The AP1000 explosion valve of CNNC SUFA Technology Industry Co., Ltd. (000777.SZ) is a key target of domestic nuclear power projects. At present, the company is carrying out overall test of the product and the progress is good. The company expects to be able to supply goods by the second half of next year. According to institutional investigations, CNNC SUFA Technology Industry is also considering integration of industrial chain and it is open to overseas acquisition. Some foreign enterprises like some German companies producing nuclear-level valves are excellent in technical strength and have cooperated with the company for years, but now are faced with survival problems. The company hopes that there will be opportunity to introduce these companies’ advanced technologies into China.
[Information Radar]
Markor International Home Furnishings to further strengthen “Internet Plus” strategy
------
Markor International Home Furnishings Co., Ltd. (600337.SH) recently announces that it will increase capital by 10 million yuan in Shenzhen Xiaowo Financial Information Service Company Limited. This move further strengthens “Internet Plus” strategy. The market expects that the company will rely on its own advantages of brand channels and build general home furnishing industrial chain through expansion in the future. Xiaowo Financial Information Service, engaged in e-commerce, sales of construction and decoration materials, etc., is the first Internet platform for home decoration and consumption chain finance in China.
In addition, the private placement application of Markor International Home Furnishings has been accepted by China Securities Regulatory Commission. The raised funds will all be used to supplement its working capital.
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