[Today's Guide]
> SDIC Power suspends trading, central power enterprises to conduct assets consolidation
> Alibaba Group and Ant Financial to establish “Koubei” with RMB6 bln to provide local life services
> Jinlu to transform into real estate company, Inspur Software to expand big data application
> Huijin Electromechanical to acquire intelligent bank asset, Hikvision Digital Technology bought by four institutional seats
[XFA Focus]
○ SDIC Power suspends trading, central power enterprises to conduct assets consolidation
------
SDIC Power Holdings Co., Ltd. (600996.SH) announced trading suspension from June 24 as it is mulls significant events. Among five listed companies under SDIC Group, only SDIC Xinji Energy Co., Ltd. (601918.SH) and China National Complete Plant Import & Export Corp., Ltd. (000151.SZ) have not prepared for significant events in one year. In terms of the industry, it is another central listed power company suspended trading after Shandong Xinneng Taishan Power Generation Co., Ltd. (000720.SZ) and China Yangtze Power Co., Ltd. (600900.SH).
Comment: The ratio of asset securitization of five major power generation groups is currently between 28 percent and 58 percent, which has a huge potential. As one group generally owns various listed companies, they also face horizontal competitions. As a result of the poor profitability in previous years, the assets consolidation is difficult to implement. With the weakening of the coal price, the growth in overall power consumption increased from last year and the power industry continues to boom, which provides opportunities to improve the ratio of asset securitization. ‘Small companies under large groups’, such as Inner Mongolia MengDian HuaNeng Thermal Power Corporation Limited (600863.SH) and Guodian Changyuan Electric Power Co., Ltd. (000966.SZ), are likely to catch attention.
[XFA Selection]
○ The HSBC flash manufacturing purchasing managers’ index (PMI) recovered to 49.6 in June, showing signals of recovery. Institutes believe that the monetary policies are likely to remain loose.
○ The seventh China-US Strategic and Economic Dialogue (S&ED) will be kicked off on June 23 in Washington DC with the bilateral investment treaty (BIT) as the focus of this round of dialogue.
○ Wang Qishan, secretary of the CPC Central Commission for Discipline Inspection, plans the second round of central inspection this year with 26 central enterprises in the aerospace and military engineering industries on the list.
○ The sales areas of new commodity houses in 20 typical cities increased 62 year on year in the first half of June. The market enthusiasm in purchasing houses remains high.
○ The campaign plan on the comprehensive utilization of industrial resources in Beijing, Tianjin and Hebei Province will initiate soon, which will promote the utilization of waste electric appliances and electronic products.
[Industry Information]
○ Alibaba Group and Ant Financial to establish “Koubei” with RMB6 bln to provide local life services
------
Alibaba Group Holding Limited (BABA.NYSE) and Ant Financial jointly announced on June 23 that they will respectively invest 3 billion yuan in establishing a local life services platform company named “Koubei”. It plans to start with catering services and the supermarket, medical treatment, vending machine and other offline businesses of Ant Financial will be gradually consolidated into the platform of “Koubei”. It is said that the Alipay with more than 300 million real-name users will be the main access to the “Koubei”. Besides catering services, the merchants and teams of Ant Financial in the offline supermarket, medical treatment, vending machine and other businesses will also be gradually consolidated into the platform of “Koubei”.
Comment: According to the report of iResearch, the size of the online local life market reached 235 billion yuan in 2014. But the penetration rate was only 4.4 percent and it enjoys a huge potential. The establishment of the “Koubei” will further improve the ecological circle of Alibaba Group. Among listed companies, Guangdong Guangzhou Daily Media Co., Ltd. (002181.SZ) announced cooperation with Hangzhou Ali Venture Capital Co., Ltd. and Shanghai Wan Xiang Group Co., Ltd. (600823.SH) in March, targeting at the O2O life services market. Beijing Shiji Information Technology Co., Ltd. (002153.SZ) announced in May that it will deepen cooperation with Aliyun in basic cloud computing business, hotel and catering industries.
○ China’s Ocean Development Report (2015) released, maritime power strategy advancement to speed up
------
China’s Ocean Development Report (2015) was released on June 23. The first symposium was held in Beijing on the same day with the participation of officials from the Ministry of Foreign Affairs, the army and the State Oceanic Administration. It is said that the report discusses the macro environment of China’s ocean development, the development of maritime economy, safeguarding the maritime interests of China and the establishment of the Maritime Silk Road in combination with significant events in the development of maritime causes and in the maritime area.
Comment: China has introduced various policies to advance the maritime power strategy and support the development of maritime economy. In addition, the promotion of the 21st Century Maritime Silk Road also needs the support of the maritime power strategy. Such subdivided industries as ships building and maritime electronic equipment will see market expansion. China CSSC Holdings Limited (600150.SH), CSSC Offshore & Marine Engineering (Group) Company Limited (00317.HK; 600685.SH) and other ships building leaders in China will benefit from the development of maritime economy.
[Announcement Interpretation]
○ Jinlu to transform into real estate company via back-door listing
------
Sichuan Jinlu Group Co., Ltd. (000510.SZ) plans to acquire 100 percent equities of Zhejiang Wansha Real Estate Development Co., Ltd. and Zhejiang Xinguang Building Material and Decoration City Development Company Limited with 11.2 billion yuan by issuing 2.06 billion shares at 5.45 yuan per share through private placement. Meanwhile, it plans to raise a supporting fund of 4.0 billion yuan at the same offering price through private placement to invest in the development and construction of projects including Yiwu World Trade Center, etc. and to supplement working capital. The operating income and net profit of the underlying company recorded 2,452 million yuan and 474 million yuan, respectively, in 2014.
The listed company will see injection of real estate development and commercial operation business with stronger profitability through this reorganization. Controlling shareholding of the company will be replaced by Neoglory Group, and Zhou Xiaoguang and Yu Yunxin, a couple, will become the company’s new actual controller.
○ Inspur Software to expand big data application with RMB1 bln
------
Inspur Software Co., Ltd. (600756.SH) plans to raise 1 billion yuan by issuing 50.28 million shares at no less than 19.89 yuan per share to invest in iGAP (a local government affairs cloud application service platform) project, GRP (industrial e-government cloud application service platform) project, iMai e-commerce platform project and Inspur big data application support platform project. The company will accelerate its strategic arrangement in areas like e-government, enterprises e-commerce platform service, big data application, etc. through this private placement.
○ Huijin Electromechanical to acquire intelligent bank asset with RMB330 mln
------
Hebei Huijin Electromechanical Co., Ltd. (300368.SZ) plans to acquire 55 percent equities of Shenzhen Beichende Technologies Co., Ltd. owned by Peng Jianwen, Shijiazhuang Taolve Investment Management Center (Limited Partnership) (an enterprise under the controlling shareholder of the company), etc. with 330 million yuan by issuing 17.85 million shares at 18.49 yuan per share. Meanwhile, it plans to raise a supporting fund of 140 million yuan at 21.45 yuan per share to invest in the underlying company’s project construction, supplement working capital, etc.
Beichende Technologies focuses on intelligent bank area and provides professional services including counsel on bank self-service system, software development and self-service terminal equipment of banking outlets, etc. The counterparty promises that the net profit of the underlying company from 2015 to 2017 will be no less than 37.50 million yuan, 49.50 million yuan and 63.00 million yuan, respectively.
○ Controlling shareholder of Xinyangfeng Fertilizer increases shareholding
------
Controlling shareholder of Hubei Xinyangfeng Fertilizer Co., Ltd. (000902.SZ) increases shareholding in the company by 1.46 million shares, accounting for 0.22 percent of its total share capital, on June 23. It plans to totally increase no more than 2 percent of the company’s total share capital in next 12 months with no less than 200 million yuan.
○ H&T Intelligent Control gains orders from BSH
------
Shenzhen H&T Intelligent Control Co., Ltd. (002402.SZ) wins the bid of the “power unit and motor unit” (PUMU) project of BSH Home Appliances Sales Co., Ltd. with a contract amount of 189 million Euros (around 1,318 million yuan), accounting for 152 percent of its operating income in 2014. BSH is a joint venture producing white household appliances established by Siemens AG and Robert Bosch GmbH. It is also one of the leading enterprises in global household appliance industry.
[Financial Reports Express]
○ Ken Tools, Yinbang Clad Material and Leejun Industrial propose high share conversion
------
Semiyearly report of Shanghai Ken Tools Co., Ltd. (300126.SZ) proposes a 15-for-10 conversion of capital surplus into shares; controlling shareholder of Yinbang Clad Material Co., Ltd. (300337.SZ) proposes a 12-for-10 conversion of capital surplus into shares in the semiyearly distribution plan; actual controller of Chengdu Leejun Industrial Co., Ltd. (002651.SZ) proposes a 15-for-10 conversion of capital surplus into shares in the semiyearly distribution plan.
○ Guiguan Electric Power forecasts performance growth in semiyearly report
------
Thanks to the large year-on-year growth of electric energy production of hydraulic power plants under Guangxi Guiguan Electric Power Co., Ltd. (600236.SH), the company estimates that its net profit in the first half year will see a year-on-year growth of 180 percent.
[Trading Trends]
○ Hikvision Digital Technology bought by four institutional seats, prospect of EZVIZ plus Internet concerned
------
The trading volume ranking list on June 23 shows that Hangzhou Hikvision Digital Technology Co., Ltd. (002415.SZ) was bought by four institutional seats with a total of 718 million yuan, accounting for 24 percent of its intraday turnover.
Comment: Research reports believe that the company’s EZVIZ business (a secure life business brand under Hikvision) will contribute to its Internet transformation. The number of users of EZVIZ might grow from 1 million at the beginning of the year to 10 million by year end. The company might connect its EZVIZ cloud service with the O2O, mobile payment, etc. of Alibaba Group and Tencent Inc. through cooperation with them to explore the billions-of-yuan market of store users.
> SDIC Power suspends trading, central power enterprises to conduct assets consolidation
> Alibaba Group and Ant Financial to establish “Koubei” with RMB6 bln to provide local life services
> Jinlu to transform into real estate company, Inspur Software to expand big data application
> Huijin Electromechanical to acquire intelligent bank asset, Hikvision Digital Technology bought by four institutional seats
[XFA Focus]
○ SDIC Power suspends trading, central power enterprises to conduct assets consolidation
------
SDIC Power Holdings Co., Ltd. (600996.SH) announced trading suspension from June 24 as it is mulls significant events. Among five listed companies under SDIC Group, only SDIC Xinji Energy Co., Ltd. (601918.SH) and China National Complete Plant Import & Export Corp., Ltd. (000151.SZ) have not prepared for significant events in one year. In terms of the industry, it is another central listed power company suspended trading after Shandong Xinneng Taishan Power Generation Co., Ltd. (000720.SZ) and China Yangtze Power Co., Ltd. (600900.SH).
Comment: The ratio of asset securitization of five major power generation groups is currently between 28 percent and 58 percent, which has a huge potential. As one group generally owns various listed companies, they also face horizontal competitions. As a result of the poor profitability in previous years, the assets consolidation is difficult to implement. With the weakening of the coal price, the growth in overall power consumption increased from last year and the power industry continues to boom, which provides opportunities to improve the ratio of asset securitization. ‘Small companies under large groups’, such as Inner Mongolia MengDian HuaNeng Thermal Power Corporation Limited (600863.SH) and Guodian Changyuan Electric Power Co., Ltd. (000966.SZ), are likely to catch attention.
[XFA Selection]
○ The HSBC flash manufacturing purchasing managers’ index (PMI) recovered to 49.6 in June, showing signals of recovery. Institutes believe that the monetary policies are likely to remain loose.
○ The seventh China-US Strategic and Economic Dialogue (S&ED) will be kicked off on June 23 in Washington DC with the bilateral investment treaty (BIT) as the focus of this round of dialogue.
○ Wang Qishan, secretary of the CPC Central Commission for Discipline Inspection, plans the second round of central inspection this year with 26 central enterprises in the aerospace and military engineering industries on the list.
○ The sales areas of new commodity houses in 20 typical cities increased 62 year on year in the first half of June. The market enthusiasm in purchasing houses remains high.
○ The campaign plan on the comprehensive utilization of industrial resources in Beijing, Tianjin and Hebei Province will initiate soon, which will promote the utilization of waste electric appliances and electronic products.
[Industry Information]
○ Alibaba Group and Ant Financial to establish “Koubei” with RMB6 bln to provide local life services
------
Alibaba Group Holding Limited (BABA.NYSE) and Ant Financial jointly announced on June 23 that they will respectively invest 3 billion yuan in establishing a local life services platform company named “Koubei”. It plans to start with catering services and the supermarket, medical treatment, vending machine and other offline businesses of Ant Financial will be gradually consolidated into the platform of “Koubei”. It is said that the Alipay with more than 300 million real-name users will be the main access to the “Koubei”. Besides catering services, the merchants and teams of Ant Financial in the offline supermarket, medical treatment, vending machine and other businesses will also be gradually consolidated into the platform of “Koubei”.
Comment: According to the report of iResearch, the size of the online local life market reached 235 billion yuan in 2014. But the penetration rate was only 4.4 percent and it enjoys a huge potential. The establishment of the “Koubei” will further improve the ecological circle of Alibaba Group. Among listed companies, Guangdong Guangzhou Daily Media Co., Ltd. (002181.SZ) announced cooperation with Hangzhou Ali Venture Capital Co., Ltd. and Shanghai Wan Xiang Group Co., Ltd. (600823.SH) in March, targeting at the O2O life services market. Beijing Shiji Information Technology Co., Ltd. (002153.SZ) announced in May that it will deepen cooperation with Aliyun in basic cloud computing business, hotel and catering industries.
○ China’s Ocean Development Report (2015) released, maritime power strategy advancement to speed up
------
China’s Ocean Development Report (2015) was released on June 23. The first symposium was held in Beijing on the same day with the participation of officials from the Ministry of Foreign Affairs, the army and the State Oceanic Administration. It is said that the report discusses the macro environment of China’s ocean development, the development of maritime economy, safeguarding the maritime interests of China and the establishment of the Maritime Silk Road in combination with significant events in the development of maritime causes and in the maritime area.
Comment: China has introduced various policies to advance the maritime power strategy and support the development of maritime economy. In addition, the promotion of the 21st Century Maritime Silk Road also needs the support of the maritime power strategy. Such subdivided industries as ships building and maritime electronic equipment will see market expansion. China CSSC Holdings Limited (600150.SH), CSSC Offshore & Marine Engineering (Group) Company Limited (00317.HK; 600685.SH) and other ships building leaders in China will benefit from the development of maritime economy.
[Announcement Interpretation]
○ Jinlu to transform into real estate company via back-door listing
------
Sichuan Jinlu Group Co., Ltd. (000510.SZ) plans to acquire 100 percent equities of Zhejiang Wansha Real Estate Development Co., Ltd. and Zhejiang Xinguang Building Material and Decoration City Development Company Limited with 11.2 billion yuan by issuing 2.06 billion shares at 5.45 yuan per share through private placement. Meanwhile, it plans to raise a supporting fund of 4.0 billion yuan at the same offering price through private placement to invest in the development and construction of projects including Yiwu World Trade Center, etc. and to supplement working capital. The operating income and net profit of the underlying company recorded 2,452 million yuan and 474 million yuan, respectively, in 2014.
The listed company will see injection of real estate development and commercial operation business with stronger profitability through this reorganization. Controlling shareholding of the company will be replaced by Neoglory Group, and Zhou Xiaoguang and Yu Yunxin, a couple, will become the company’s new actual controller.
○ Inspur Software to expand big data application with RMB1 bln
------
Inspur Software Co., Ltd. (600756.SH) plans to raise 1 billion yuan by issuing 50.28 million shares at no less than 19.89 yuan per share to invest in iGAP (a local government affairs cloud application service platform) project, GRP (industrial e-government cloud application service platform) project, iMai e-commerce platform project and Inspur big data application support platform project. The company will accelerate its strategic arrangement in areas like e-government, enterprises e-commerce platform service, big data application, etc. through this private placement.
○ Huijin Electromechanical to acquire intelligent bank asset with RMB330 mln
------
Hebei Huijin Electromechanical Co., Ltd. (300368.SZ) plans to acquire 55 percent equities of Shenzhen Beichende Technologies Co., Ltd. owned by Peng Jianwen, Shijiazhuang Taolve Investment Management Center (Limited Partnership) (an enterprise under the controlling shareholder of the company), etc. with 330 million yuan by issuing 17.85 million shares at 18.49 yuan per share. Meanwhile, it plans to raise a supporting fund of 140 million yuan at 21.45 yuan per share to invest in the underlying company’s project construction, supplement working capital, etc.
Beichende Technologies focuses on intelligent bank area and provides professional services including counsel on bank self-service system, software development and self-service terminal equipment of banking outlets, etc. The counterparty promises that the net profit of the underlying company from 2015 to 2017 will be no less than 37.50 million yuan, 49.50 million yuan and 63.00 million yuan, respectively.
○ Controlling shareholder of Xinyangfeng Fertilizer increases shareholding
------
Controlling shareholder of Hubei Xinyangfeng Fertilizer Co., Ltd. (000902.SZ) increases shareholding in the company by 1.46 million shares, accounting for 0.22 percent of its total share capital, on June 23. It plans to totally increase no more than 2 percent of the company’s total share capital in next 12 months with no less than 200 million yuan.
○ H&T Intelligent Control gains orders from BSH
------
Shenzhen H&T Intelligent Control Co., Ltd. (002402.SZ) wins the bid of the “power unit and motor unit” (PUMU) project of BSH Home Appliances Sales Co., Ltd. with a contract amount of 189 million Euros (around 1,318 million yuan), accounting for 152 percent of its operating income in 2014. BSH is a joint venture producing white household appliances established by Siemens AG and Robert Bosch GmbH. It is also one of the leading enterprises in global household appliance industry.
[Financial Reports Express]
○ Ken Tools, Yinbang Clad Material and Leejun Industrial propose high share conversion
------
Semiyearly report of Shanghai Ken Tools Co., Ltd. (300126.SZ) proposes a 15-for-10 conversion of capital surplus into shares; controlling shareholder of Yinbang Clad Material Co., Ltd. (300337.SZ) proposes a 12-for-10 conversion of capital surplus into shares in the semiyearly distribution plan; actual controller of Chengdu Leejun Industrial Co., Ltd. (002651.SZ) proposes a 15-for-10 conversion of capital surplus into shares in the semiyearly distribution plan.
○ Guiguan Electric Power forecasts performance growth in semiyearly report
------
Thanks to the large year-on-year growth of electric energy production of hydraulic power plants under Guangxi Guiguan Electric Power Co., Ltd. (600236.SH), the company estimates that its net profit in the first half year will see a year-on-year growth of 180 percent.
[Trading Trends]
○ Hikvision Digital Technology bought by four institutional seats, prospect of EZVIZ plus Internet concerned
------
The trading volume ranking list on June 23 shows that Hangzhou Hikvision Digital Technology Co., Ltd. (002415.SZ) was bought by four institutional seats with a total of 718 million yuan, accounting for 24 percent of its intraday turnover.
Comment: Research reports believe that the company’s EZVIZ business (a secure life business brand under Hikvision) will contribute to its Internet transformation. The number of users of EZVIZ might grow from 1 million at the beginning of the year to 10 million by year end. The company might connect its EZVIZ cloud service with the O2O, mobile payment, etc. of Alibaba Group and Tencent Inc. through cooperation with them to explore the billions-of-yuan market of store users.
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