Early Bird

Early Bird 26-June-2015

2015-06-26 14:04

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[Today's Guide]
> Youngsun Investment to absorbed and merged by SMI Holding, pure B shares see opportunities changing into A shares
> Big plane C919 to have trial flight next year, aviation supporting materials to see opportunity of expansion
> China-Hemp Industrial Investment expects performance surge in interim report, CORPRO Technology and Aier Eye Hospital expect growth in interim reports
> Management increases shareholding in Suning Universal, Jiaxun Feihong Electrical to acquire equities of military engineering enterprise
 [XFA Focus]
○Youngsun Investment to absorbed and merged by SMI Holding, pure B shares see opportunities changing into A shares
Shanghai SMI Holding Co., Ltd. (600649.SH) announces resumption of trading and plans to issue A shares to all shareholders of Shanghai Youngsun Investment Co., Ltd. (900935.SH) to change their stocks at the ratio of 1:1. After merger, the company will split off its wholly-owned subsidiary Shanghai Environment Group Company Limited into SMI Environment Co., Ltd. and list it on Shanghai Stock Exchange. SMI Holding promises that environmental-protection-related assets including sewage treatment, solid waste treatment, etc. will be injected into SMI Environment within three years after it is listed.
Comment: This is another case of changing pure B shares into A shares following Zhejiang Southeast Electric Power Company Limited (900949.SH) and Jiangsu Future Land Co., Ltd. (900950.SH). At present, the B share market lacks of financing function, while above companies are located in asset-heavy industries including real estate, infrastructure, public utility, etc. and they have urgent financing demand and strong desire of changing into A shares. If shareholders intend to integrate resources, it will be more likely for them to change into A shares. For other companies, the actual controllers of Huangshi Dongbei Electrical Appliance Co., Ltd. (900956.SH) and Wafangdian Bearing Company Limited (200706.SH) are China Orient Asset Management Corporation and the State-owned Assets Supervision and Administration Commission of Dalian City, respectively, and both of them are principally engaged in mechanical products. Their prospect of changing into A shares is concerned by multi institutions.
[XFA Selection]
○The agreement signing ceremony of Asian Infrastructure Investment Bank (AIIB) will be held on June 29. Chinese Premier Xi Jinping will meet the head of delegations from intentional member countries attending the signing ceremony.
○The seventh round of China-US Strategic and Economic Dialogue makes significant breakthrough in establishing bilateral investment cooperation relationship. The plan for RMB to be covered by SDR is put on the agenda.
○The central bank re-launched reverse repo two months later; central-bank-run Financial News issues article saying that the monetary policy is waiting and seeing.
○Two ministries distribute key products list of emergency rescue industry. Information security, fire-fighting equipment and emergency communication might become new economic growth points.
○The Ministry of Commerce launched a WeChat official account named as “E tracing” on June 25. It will build a national commodity trading platform for the next move.
[Industry Information]
○Big plane C919 to have trial flight next year, industrial chain to see opportunity of expansion
As reported by foreign media, Commercial Aircraft Corporation of China, Ltd. (COMAC) indicates that C919 will have trial test sometime next year. It is expected that Civil Aviation Administration of China might issue certificate of quality to C919 around 2018.
Comment: As C919 sees mass production gradually, aviation supporting materials including high-temperature alloy, braking system, etc. will see opportunity of market expansion. Institutions predict that calculated on the basis of a total order of 500 planes and 50,000,000 U.S. dollar for each, potential market size might exceed hundreds of billions of yuan. As for listed companies, Hunan Boyun New Materials Co., Ltd. (002297.SZ), principally engaged in powder metallurgy composite material which is mainly applied in areas like civil & military braking materials, provides COMAC’s C919 project with wheel braking system; Beijing Cisri-gaona Materials & Technology Co., Ltd. (300034.SZ) is a leading enterprise in domestic high-temperature alloy area and its products meet the demand of C919.
○State Council General Office to support textile development in Xinjiang
www.gov.cn showed on June 25 that the General Office of the State Council issued the Instructions on Supporting the Development of Textile and Clothing Industry to Promote Employment in Xinjiang recently, proposing to bring the scale and technology of the cotton spinning industry in Xinjiang to the leading level, promote the apparel, home textile and knitting industries to take shape, improve the overall industrial strength and development level and greatly expand the employment in 2020. Xinjiang will be basically established into a key cotton spinning industrial base, an apparel production base in northwestern China and the core area of the Silk Road Economic Belt and a distribution center for exports to western countries and regions.
Comment: The instructions also proposed six policy measures, including fiscal and financial supports, to greatly support its development. Among listed companies in Xinjiang, Xinjiang Sayram Modern Agriculture Co., Ltd. (600540.SH) is engaged in cotton cultivation and the production and sale of relevant byproducts. Xinjiang Talimu Agriculture Development Co., Ltd. (600359.SH) is a commodity cotton production base at the state level.
[Financial Reports Express]
○China-Hemp Industrial Investment expects performance surge in interim report
China-Hemp Industrial Investment Co., Ltd. (002036.SZ) raised the estimation on the net profit from a ‘year-on-year decline of 20 percent to 70 percent’ to a ‘year-on-year surge of 1,400 percent to 1,450 percent’ in its interim report. It mainly attributes to the recovery of the right to use two state-owned construction lands by the company. The company received a requisition and compensation fee of 150 million yuan.
○CORPRO Technology and Aier Eye Hospital expect growth in interim reports
Chengdu CORPRO Technology Co., Ltd. (300101.SZ) expects its net profit to hike 251 percent to 280 percent year on year in the interim report mainly attribute to the sale growth of its satellite navigation terminal products. Aier Eye Hospital Group Co., Ltd. (300015.SZ) estimates that its net profit will increase 35 percent to 45 percent year on year in the interim report thanks to the growing demand in the eye-care market and the expansion of the company.
○Shenzhen Jasic Technology proposes high share conversion
The substantial shareholder of Shenzhen Jasic Technology Co., Ltd. (300193.SZ) proposes a 12-for-10 conversion of capital surplus into shares according to its interim report.
[Announcement Interpretation]
○Management increases shareholding in Suning Universal
The core management team of Suning Universal Co., Ltd. (000718.SZ), including Li Wei, director and vice-chairman of the company, Guo Rujin, director and vice-chairman, Jia Sen, vice-chairman, Liu Denghua, board secretary, Wang Yonggang, financial controller and another two persons, bought 580,000 stocks of the company on June 25 with their own capitals.
○Jiaxun Feihong Electrical to acquire equities of military engineering enterprise to develop command and control system
Beijing Jiaxun Feihong Electrical Co., Ltd. (300213.SZ) proposes to invest 48 million yuan in Beijng Weibiao Zhiyuan Technology Development Co., Ltd. to obtain its 16.67 percent equities. Weibiao Zhiyuan Technology Development is professionally engaged in the research and sale of military flight simulators. Its products are listed on the category for arms purchase of relevant agencies and applied in the live-fire drills of certain domestic made advanced antiaircraft weapons system. It has passed the GJB9001B-2009 weapons and equipment quality management system, the Grade II confidential qualification for the research and production of weapons and equipment and other national qualification certifications.
○RAAS Blood Products joins Tsinghua University School of Medicine in establishing blood research center
Shanghai RAAS Blood Products Co., Ltd. (002252.SZ) and the School of Medicine of Tsinghua University jointly established the Joint Research Center for Tsinghua-RAAS Blood Products High-Tech Innovation. According to the cooperation agreement, RAAS Blood Products will invest 20 million yuan every year into the joint research center in the following decade. The center will be a supporting platform for training research and development talents in basic medicine, life science, blood, protein and other relevant industries.
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