[Today's Guide]
>ChemChina develops equity cooperation with Rosneft Oil, prospect of central enterprises reform concerned
>Valuation of Lakala Financial Service Group to exceed over 10 bln, Internet finance plus e-commerce favored
>General Office of State Council distributes document to support cross-border e-commerce, Japan household robots sold out in 1min
>Zoje Resources to develop forestry and animal husbandry processing, Dingli Machinery proposes high share conversion and dividend in interim report
[XFA Focus]
○ChemChina develops equity cooperation with Rosneft Oil, prospect of central enterprises reform concerned
------
On local time June 20, China National Chemical Corporation (ChemChina) signed Memorandum of Understanding (MOU) with Rosneft Oil in St. Petersburg, Russia. Rosneft Oil will provide ChemChina with long-term supply of crude oil and subscribe 30 percent equities of an oil and gas company under ChemChina. ChemChina, as the largest domestic basic chemical manufacturing enterprise, now owns six business sectors and nine A-share companies.
Comment: The cooperation with Rosneft Oil means that the equity diversification of ChemChina is further pushed and ChemChina might gain stable and low-cost oil supply. Since the specific implementation scheme of the “four reforms” of central enterprises will be announced in no time, ChemChina, owning several business sectors and listed companies, might develop asset integration in larger scale. Aeolus Tire Co., Ltd. (600469.SH) is the only listed platform under ChemChina in tire rubber business and its PE ratio is lower than other tire-related stocks in A-share market; Guangxi Hechi Chemical Co., Ltd. (000953.SZ), principally engaged in urea, sees poor performance in years and its market value is the smallest among listed companies under ChemChina.
[XFA Selection]
○The State Council Information Office will hold press conference on June 23 to introduce the arrangement of the 70th anniversary of the end of World War II.
○China Securities Regulatory Commission responded on June 19 about the adjustment of the statistical caliber for trading volume of the Compositional Index of Shenzhen Stock Market and indicated that it saw a net buying by institutions after adjustment.
○Hang Seng China Enterprises Index closed at a surging of 1.5 percent on June 22. The H share of China Southern Airlines Company Limited (600029.SH; 01055.HK) closed at an all-time high price since it was listed.
○China Nuclear Engineering Construction Limited will be reviewed by China Securities Regulatory Commission on June 24. Continuous acceleration of nuclear power construction pushes nuclear power industry into peak period of listing.
○Fitbit Inc. (NYSE:FIT), a wearable equipment company, was listed in the U.S. on June 18. Its stock price closed at 32.5 U.S. dollar per share on June 19, surging 62.5 percent compared with its offering price.
○CCTV News reported on June 21 that the scientific research team of Nankai University has developed the world first photic driving new material 3D grapheme.
[Industry Information]
○Valuation of Lakala Financial Service Group to exceed over 10 bln, Internet finance plus e-commerce favored
------
According to the report by Tencent Technology, Sun Taoran, founder of Lakala Payment Co., Ltd., recently disclosed in internal email that the capital increase agreement of Lakala Financial Service Group is signed officially. China Taiping Life Insurance Co., Ltd., China Reinsurance (Group) Corporation, China Continent Property & Casualty Insurance Company Ltd., Civil Aviation Development Fund, etc. together injected 1.5 billion yuan into the company; 51job, Glodon Software Company Limited (002410.SZ), etc. become founding shareholders of Koala Credit. The company’s valuation might exceed 10 billion yuan upon completion of the investment.
Comment: Lakala provides merchants and other users with Internet financial service and e-commerce service including payment, living, e-commerce and credit. The immense amount of financing this time shows that its commercial mode is agreed. According to the estimation of Sun Taoran, the credit scale of Lakala Financial Service Group might exceed 30 billion yuan this year and its scale of financing products might exceed 10 billion yuan. Among listed companies, Bluefocus Communication Group Co., Ltd. (300058.SZ) and Beijing Watertek Information Technology Co., Ltd. (300324.SZ) have developed equity cooperation with Lakala.
○General Office of State Council distributes guidance for cross-border e-commerce, comprehensive piloting areas to expanded
------
The General Office of the State Council on June 20 distributed guidance to promote rapid and healthy development of cross-border e-commerce and proposed 12 development measures. The guidance requires use of “Internet plus foreign trade”, improvement of clearance process, standardization of import-export tax policy and improvement in the management of e-commerce payment & settlement, etc., and encourages powerful enterprises to grow bigger and larger. Meanwhile, mid- and long-term overall development plan for cross-border e-commerce shall be planned; the construction of China (Hangzhou) cross-border e-commerce comprehensive piloting area and the e-commerce economic cooperation piloting area between both sides of the Taiwan Straits shall be pushed forward and expanded at proper time.
Comment: According to the estimation by the Ministry of Commerce, the import-export volume of China’s cross-border e-commerce will grow to 6.5 trillion yuan by 2016, indicating an annual growth rate of over 30 percent. As for listed companies, the e-commerce platform under Zhejiang China Commodities City Group Co., Ltd. (600415.SH) develops rapidly and now owns 22 overseas substations which will become an important carrier of cross-border e-commerce; the g.yunhou.com built by Better Life Commercial Chain Share Co., Ltd. (002251.SZ) might edge itself into the first echelon of cross-border e-commerce by end-2015.
○Pepper sold out in just 1min, household robots to see promising future
------
According to media report, Japan Soft Bank announced on June 20 that the 1000 humanoid robots named as Pepper prepared for June were all sold out in just one minute. The specific date for next sales will be announced at proper time. The design idea of Pepper is to keep company with humans. Pepper can communicate with human, recognize human emotions and continuously learn human’s habits, likes, etc. and then adjust and improve its functional performance.
Comment: According to the estimation by United Nations Economic Commission for Europe (UNECE), household robot will grow the fastest in the future in robot area and it will be more diversified in varieties. The global aging of population is also worsening the deficiency of work force in accompanying. It is predictable that household robot will become a new family member in the future to complete most of the accompanying work. Among A-share companies, the robot subsidiary of Qingdao Haier Co., Ltd. (600690.SH) launches household robot named as ECAN; Iflytek Co., Ltd. (002230.SZ) has developed artificial intelligence robots named as “Xiaozhi” and “Xiaorou”.
[Announcement Interpretation]
○Zoje Resources to raise RMB8.2 bln to develop forestry and animal husbandry processing
------
Zoje Resources Investment Co., Ltd. (002021.SZ) proposes to raise 8.19 billion yuan by issuing 130 million shares at 6.3 yuan per share to Yuhuan Jierui Taifeng Investment Co., Ltd., a company controlled by Wan Gang, the actual controller of the company, and other participants through private placement. Yuhuan Jierui will subscribe with 2.75 billion yuan. A total of 4.3 billion yuan will be invested in a forest-pulp-paper integration project and an organic husbandry project in Russia. 1,941 million yuan will be used in acquiring 95.8 percent equities of Jingxi Jinyuan Agricultural Development Co., Ltd. and 60 percent equities of Heilongjiang Xingbang International Resources Investment Co., Ltd. The remaining proceeds will be used in the organic processing of wild collection in Tonggu Town, Jiangxi Province and other two projects.
Comment: Zoje Resources was transferred as a result of the bankruptcy of Zoje Group, the former controller, during trading suspension. The private placement will consolidate the position of the new controller Wang Gang. The company will also transform from the sluggish industrial sewing machine industry to the resources industry focusing on the production and deep processing of organic agricultural products, wood processing and pulp manufacturing.
○Golden Dragon Development’s IPO application for holding Dongguan Securities accepted
------
Guangdong Golden Dragon Development Inc. (000712.SZ) submitted the IPO application to the China Securities Regulatory Commission (CSRC) on holding 40 percent equities of Dongguan Securities and received the notice of acceptance on June 19.
○Huangshan Novel acquired by 15 pct through secondary market acquisition
------
Huangshan Novel Co., Ltd. (002014.SZ) disclosed that ORG and its subsidiary ORG Packaging Co., Ltd. (002701.SZ), Wudaokou Innovation Equities Investment Fund, Jiahua Yuanlong Equities Investment Fund, Weiran Equities Investment Fund and Jiahua Chengmei Equities Investment Fund made strategic investments into Huangshan Novel as concerted parties. They totally hold over 15 percent equities of Huangshan Novel on June 19.
Huangshan Novel is principally engaged in the manufacturing and sale of plastic color printing composite soft packaging materials. Wudaokou Innovation Equities Investment Fund and Jiahua Yuanlong Equities Investment Fund managed by Song Xiangqian acquired the equities of the company through secondary market acquisition to the 5 percent limit many times.
[Financial Reports Express]
○Dingli Machinery proposes high share conversion and dividend in interim report
------
The substantial shareholder of Zhejiang Dingli Machinery Co., Ltd. (603338.SH) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its interim report.
[Companies Hotspot]
○Private placement of Anhui Water Resources Development to complete soon, institutes actively participate
------
The private placement of Anhui Water Resources Development Co., Ltd. (600502.SH) has been approved by the CSRC on June 4. As the full initiation of the water diversion from the Yangtze River to Huaihe River and the strong expectation on the state-owned enterprises (SOEs) reform of the substantial shareholder of the company, institutes are actively participating in the private placement. The market expects that the company will complete the placement soon and the issue price may be higher than the bottom price of 6.86 yuan per share.
[Trading Alarms]
○Two new shares for subscription on June 23, including Gl Tech
------
Zhengzhou Gl Tech Co., Ltd. (300480.SZ) issues shares at 7.28 yuan per share with an upper subscription limit of 9,000 shares for each account. Est Tools Co., Ltd. (300488.SZ) issues shares at 20.11 yuan per share with an upper subscription limit of 6,000 shares for each account. Full subscription of these shares needs 190,000 yuan in total.
[Weekly Review]
○Good information strengthens belief
------
Is it still a bull market? A majority of investors will say yes if the question was raised months ago. However, there may be huge divergence on the question nowadays. It is generally known that a universal expectation may result in significant growth and decline, which truly reflected the A-share market recently. The increasing divergence means it is not easy to make money as before and a slow bull market expected by the authorities may come.
As a matter of fact, it is hardly realistic to expect a long-term slow growth in a market with a high participation of individual investors and a strong atmosphere of speculation. As a result, it may be realistic to suppress the secondary industry and develop the tertiary industry in the model of significant surge and plunge. Currently, we are undoubtedly under the process of suppressing the secondary industry.
Leveraged speculators have left, but market believers will continue to forge ahead. XFA is undoubtedly the most loyal partner of believers. In the past gloomy week, our reports focused on the SOEs reform. The acceleration in the state-owned assets reform in Guizhou Province reported on June 15, the exploration of “small companies under large groups” on June 16 and the focus on acceleration in electronic assets consolidation in China on June 17 all received positive market feedback in short term.
A shot arrow will never come back. The increase in the proportion of direct financing has to continue. The trend of mass entrepreneurship and innovation is irreversible and the SOEs reform cannot give up halfway. The capital market still has a long way to go and there will be more opportunities in the future market.
>ChemChina develops equity cooperation with Rosneft Oil, prospect of central enterprises reform concerned
>Valuation of Lakala Financial Service Group to exceed over 10 bln, Internet finance plus e-commerce favored
>General Office of State Council distributes document to support cross-border e-commerce, Japan household robots sold out in 1min
>Zoje Resources to develop forestry and animal husbandry processing, Dingli Machinery proposes high share conversion and dividend in interim report
[XFA Focus]
○ChemChina develops equity cooperation with Rosneft Oil, prospect of central enterprises reform concerned
------
On local time June 20, China National Chemical Corporation (ChemChina) signed Memorandum of Understanding (MOU) with Rosneft Oil in St. Petersburg, Russia. Rosneft Oil will provide ChemChina with long-term supply of crude oil and subscribe 30 percent equities of an oil and gas company under ChemChina. ChemChina, as the largest domestic basic chemical manufacturing enterprise, now owns six business sectors and nine A-share companies.
Comment: The cooperation with Rosneft Oil means that the equity diversification of ChemChina is further pushed and ChemChina might gain stable and low-cost oil supply. Since the specific implementation scheme of the “four reforms” of central enterprises will be announced in no time, ChemChina, owning several business sectors and listed companies, might develop asset integration in larger scale. Aeolus Tire Co., Ltd. (600469.SH) is the only listed platform under ChemChina in tire rubber business and its PE ratio is lower than other tire-related stocks in A-share market; Guangxi Hechi Chemical Co., Ltd. (000953.SZ), principally engaged in urea, sees poor performance in years and its market value is the smallest among listed companies under ChemChina.
[XFA Selection]
○The State Council Information Office will hold press conference on June 23 to introduce the arrangement of the 70th anniversary of the end of World War II.
○China Securities Regulatory Commission responded on June 19 about the adjustment of the statistical caliber for trading volume of the Compositional Index of Shenzhen Stock Market and indicated that it saw a net buying by institutions after adjustment.
○Hang Seng China Enterprises Index closed at a surging of 1.5 percent on June 22. The H share of China Southern Airlines Company Limited (600029.SH; 01055.HK) closed at an all-time high price since it was listed.
○China Nuclear Engineering Construction Limited will be reviewed by China Securities Regulatory Commission on June 24. Continuous acceleration of nuclear power construction pushes nuclear power industry into peak period of listing.
○Fitbit Inc. (NYSE:FIT), a wearable equipment company, was listed in the U.S. on June 18. Its stock price closed at 32.5 U.S. dollar per share on June 19, surging 62.5 percent compared with its offering price.
○CCTV News reported on June 21 that the scientific research team of Nankai University has developed the world first photic driving new material 3D grapheme.
[Industry Information]
○Valuation of Lakala Financial Service Group to exceed over 10 bln, Internet finance plus e-commerce favored
------
According to the report by Tencent Technology, Sun Taoran, founder of Lakala Payment Co., Ltd., recently disclosed in internal email that the capital increase agreement of Lakala Financial Service Group is signed officially. China Taiping Life Insurance Co., Ltd., China Reinsurance (Group) Corporation, China Continent Property & Casualty Insurance Company Ltd., Civil Aviation Development Fund, etc. together injected 1.5 billion yuan into the company; 51job, Glodon Software Company Limited (002410.SZ), etc. become founding shareholders of Koala Credit. The company’s valuation might exceed 10 billion yuan upon completion of the investment.
Comment: Lakala provides merchants and other users with Internet financial service and e-commerce service including payment, living, e-commerce and credit. The immense amount of financing this time shows that its commercial mode is agreed. According to the estimation of Sun Taoran, the credit scale of Lakala Financial Service Group might exceed 30 billion yuan this year and its scale of financing products might exceed 10 billion yuan. Among listed companies, Bluefocus Communication Group Co., Ltd. (300058.SZ) and Beijing Watertek Information Technology Co., Ltd. (300324.SZ) have developed equity cooperation with Lakala.
○General Office of State Council distributes guidance for cross-border e-commerce, comprehensive piloting areas to expanded
------
The General Office of the State Council on June 20 distributed guidance to promote rapid and healthy development of cross-border e-commerce and proposed 12 development measures. The guidance requires use of “Internet plus foreign trade”, improvement of clearance process, standardization of import-export tax policy and improvement in the management of e-commerce payment & settlement, etc., and encourages powerful enterprises to grow bigger and larger. Meanwhile, mid- and long-term overall development plan for cross-border e-commerce shall be planned; the construction of China (Hangzhou) cross-border e-commerce comprehensive piloting area and the e-commerce economic cooperation piloting area between both sides of the Taiwan Straits shall be pushed forward and expanded at proper time.
Comment: According to the estimation by the Ministry of Commerce, the import-export volume of China’s cross-border e-commerce will grow to 6.5 trillion yuan by 2016, indicating an annual growth rate of over 30 percent. As for listed companies, the e-commerce platform under Zhejiang China Commodities City Group Co., Ltd. (600415.SH) develops rapidly and now owns 22 overseas substations which will become an important carrier of cross-border e-commerce; the g.yunhou.com built by Better Life Commercial Chain Share Co., Ltd. (002251.SZ) might edge itself into the first echelon of cross-border e-commerce by end-2015.
○Pepper sold out in just 1min, household robots to see promising future
------
According to media report, Japan Soft Bank announced on June 20 that the 1000 humanoid robots named as Pepper prepared for June were all sold out in just one minute. The specific date for next sales will be announced at proper time. The design idea of Pepper is to keep company with humans. Pepper can communicate with human, recognize human emotions and continuously learn human’s habits, likes, etc. and then adjust and improve its functional performance.
Comment: According to the estimation by United Nations Economic Commission for Europe (UNECE), household robot will grow the fastest in the future in robot area and it will be more diversified in varieties. The global aging of population is also worsening the deficiency of work force in accompanying. It is predictable that household robot will become a new family member in the future to complete most of the accompanying work. Among A-share companies, the robot subsidiary of Qingdao Haier Co., Ltd. (600690.SH) launches household robot named as ECAN; Iflytek Co., Ltd. (002230.SZ) has developed artificial intelligence robots named as “Xiaozhi” and “Xiaorou”.
[Announcement Interpretation]
○Zoje Resources to raise RMB8.2 bln to develop forestry and animal husbandry processing
------
Zoje Resources Investment Co., Ltd. (002021.SZ) proposes to raise 8.19 billion yuan by issuing 130 million shares at 6.3 yuan per share to Yuhuan Jierui Taifeng Investment Co., Ltd., a company controlled by Wan Gang, the actual controller of the company, and other participants through private placement. Yuhuan Jierui will subscribe with 2.75 billion yuan. A total of 4.3 billion yuan will be invested in a forest-pulp-paper integration project and an organic husbandry project in Russia. 1,941 million yuan will be used in acquiring 95.8 percent equities of Jingxi Jinyuan Agricultural Development Co., Ltd. and 60 percent equities of Heilongjiang Xingbang International Resources Investment Co., Ltd. The remaining proceeds will be used in the organic processing of wild collection in Tonggu Town, Jiangxi Province and other two projects.
Comment: Zoje Resources was transferred as a result of the bankruptcy of Zoje Group, the former controller, during trading suspension. The private placement will consolidate the position of the new controller Wang Gang. The company will also transform from the sluggish industrial sewing machine industry to the resources industry focusing on the production and deep processing of organic agricultural products, wood processing and pulp manufacturing.
○Golden Dragon Development’s IPO application for holding Dongguan Securities accepted
------
Guangdong Golden Dragon Development Inc. (000712.SZ) submitted the IPO application to the China Securities Regulatory Commission (CSRC) on holding 40 percent equities of Dongguan Securities and received the notice of acceptance on June 19.
○Huangshan Novel acquired by 15 pct through secondary market acquisition
------
Huangshan Novel Co., Ltd. (002014.SZ) disclosed that ORG and its subsidiary ORG Packaging Co., Ltd. (002701.SZ), Wudaokou Innovation Equities Investment Fund, Jiahua Yuanlong Equities Investment Fund, Weiran Equities Investment Fund and Jiahua Chengmei Equities Investment Fund made strategic investments into Huangshan Novel as concerted parties. They totally hold over 15 percent equities of Huangshan Novel on June 19.
Huangshan Novel is principally engaged in the manufacturing and sale of plastic color printing composite soft packaging materials. Wudaokou Innovation Equities Investment Fund and Jiahua Yuanlong Equities Investment Fund managed by Song Xiangqian acquired the equities of the company through secondary market acquisition to the 5 percent limit many times.
[Financial Reports Express]
○Dingli Machinery proposes high share conversion and dividend in interim report
------
The substantial shareholder of Zhejiang Dingli Machinery Co., Ltd. (603338.SH) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its interim report.
[Companies Hotspot]
○Private placement of Anhui Water Resources Development to complete soon, institutes actively participate
------
The private placement of Anhui Water Resources Development Co., Ltd. (600502.SH) has been approved by the CSRC on June 4. As the full initiation of the water diversion from the Yangtze River to Huaihe River and the strong expectation on the state-owned enterprises (SOEs) reform of the substantial shareholder of the company, institutes are actively participating in the private placement. The market expects that the company will complete the placement soon and the issue price may be higher than the bottom price of 6.86 yuan per share.
[Trading Alarms]
○Two new shares for subscription on June 23, including Gl Tech
------
Zhengzhou Gl Tech Co., Ltd. (300480.SZ) issues shares at 7.28 yuan per share with an upper subscription limit of 9,000 shares for each account. Est Tools Co., Ltd. (300488.SZ) issues shares at 20.11 yuan per share with an upper subscription limit of 6,000 shares for each account. Full subscription of these shares needs 190,000 yuan in total.
[Weekly Review]
○Good information strengthens belief
------
Is it still a bull market? A majority of investors will say yes if the question was raised months ago. However, there may be huge divergence on the question nowadays. It is generally known that a universal expectation may result in significant growth and decline, which truly reflected the A-share market recently. The increasing divergence means it is not easy to make money as before and a slow bull market expected by the authorities may come.
As a matter of fact, it is hardly realistic to expect a long-term slow growth in a market with a high participation of individual investors and a strong atmosphere of speculation. As a result, it may be realistic to suppress the secondary industry and develop the tertiary industry in the model of significant surge and plunge. Currently, we are undoubtedly under the process of suppressing the secondary industry.
Leveraged speculators have left, but market believers will continue to forge ahead. XFA is undoubtedly the most loyal partner of believers. In the past gloomy week, our reports focused on the SOEs reform. The acceleration in the state-owned assets reform in Guizhou Province reported on June 15, the exploration of “small companies under large groups” on June 16 and the focus on acceleration in electronic assets consolidation in China on June 17 all received positive market feedback in short term.
A shot arrow will never come back. The increase in the proportion of direct financing has to continue. The trend of mass entrepreneurship and innovation is irreversible and the SOEs reform cannot give up halfway. The capital market still has a long way to go and there will be more opportunities in the future market.
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