[Today's Guide]
> Liquidity shows signs of resuming, large buying pushes reconstruction of confidence
> MIIT urges cheaper data cost again, investment in network construction to see stable growth
> Pork price hikes across China, breeding industry to boom
> Pacific Securities sees shareholding increases, Ideal Group expects performance growth
[XFA Focus]
○Liquidity shows signs of resuming, large buying pushes reconstruction of confidence
------
The A share market obviously resumed activity on July 6. The blue-chip stocks covered by SSE50 nearly all surged, while popular stocks represented by Hithink RoyalFlush Information Network Co., Ltd. (300033.SZ), Hengkang Medical Group Co., Ltd. (002219.SZ) and Shanghai Electric Power Co., Ltd. (600021.SH) also surged from plummeting by the daily 10 percent limit to rising by the daily 10 percent limit in the afternoon. The trading volume ranking list shows that Hithink RoyalFlush Information Network and Hengkang Medical Group were bought by one business department under China Securities Company with hundreds of millions of yuan, far exceeding the amount sold by selling institutional seats. The buying list even shows that one business department under CITIC Securities Company bought 102 stocks with large amount, totaling over 14.5 billion yuan. As for futures, IC1507 stubbornly closed at surging with a premium of over 200 points, setting a new high in over a month.
Comment: It means that besides blue-chip ETF, some mid- and small-cap stocks which see potential themes but suffer panic selling recently are concerned by big capital. The consecutive drop earlier in the market was mainly resulted from liquidity exhaustion and absence of confidence brought by interlocking close position. The market even began to worry about the risk of the close position of capital from margin trading and short selling which accounts for trillions of yuan. In fact, along with the implementation of a package of measures launched in the weekend, the blue-chip stocks leading the surging on July 6 are the main objects of margin trading and short selling. The worries about close position are mitigated to some extent. More investment opportunities lie in stocks seeing valuation far lower than historical average valuation, continuous improving industrial prosperity and definite performance growth bought by financial consolidation of reorganized asset.
◆XFA learnt from multi large-scale insurance companies in Beijing and Shanghai that the total net buying by them recorded billions of yuan on July 6 and the net buying might continue.
[XFA Selection]
○Multi fund companies and their senior management announced to purchase funds run by their own companies on July 6, totaling an amount of 1 billion yuan.
○People’s Daily reported on July 6 that Tongzhou Area is promoting roundly the construction of urban sub-center. Beijing will hold meeting on July 10 to review relevant topics.
○National Development and Reform Commission (NDRC) and National Energy Administration (NEA) jointly distributed guidelines on July 6, proposing to preliminarily build a safe and reliable smart power grid system by 2020.
○Poly Real Estate Group Co., Ltd. signs contract totaling 25.7 billion yuan in June, setting a new high of the year. It indicates a year-on-year growth of 55 percent, showing obvious increase compared with previous months.
○The document from Hong Kong Exchanges and Clearing Limited shows that China Huarong Asset Management Co., Ltd. has officially applied for IPO in Hong Kong, planning to raise 3 billion U.S. dollar.
[Industry Information]
○MIIT urges cheaper data cost again, investment in network construction to see stable growth
------
Zhang Feng, chief engineer of the Ministry of Industry and Information Technology (MIIT), indicated on July 6 that for faster and cheaper data traffic concerned by the whole society, MIIT will strengthen periodic follow-up/supervision mechanism; urge telecom enterprises to follow their commitment, effectively implement annual task concerning improvement of network traffic speed and achieve the goal of lowering average prices of broadband and mobile data services by 30 percent year-on-year by the end of 2015. As for investment, the investment in network construction in 2015 is expected to reach 435 billion yuan, indicating a year-on-year growth of 10 percent. Over 700 billion yuan will be invested in next two years and relevant investment in both upstream and downstream of the industry will be driven directly and indirectly.
Comment: The statement of MIIT this time explicitly defines the reduction range of network fees and the deadline of the task. The improvement of network data traffic speed and the reduction of fees might greatly promote consumption of data flow. Companies engaged in content distribution will embrace broad market. Among listed companies, Wangsu Science & Technology Co., Ltd. (300017.SZ), principally engaged in content distribution, is now transforming towards flow operation platform. In addition, telecom equipment providers like Fiberhome Telecommunication Technologies Co., Ltd. (600498.SH) might benefit from the growth of investment in network construction.
○Pork price hikes across China, breeding industry to boom
------
According to Xinhua News Agency, the pork price across China has been hiking recently. It has recorded an increase of over 11 percent since mid-April. Chuying Agro-Pastoral Group Co., Ltd. (002477.SZ) revised its expectation on performance on July 5 evening from a loss of 60 million yuan to 86 million yuan to a profit of 3 million yuan to 10 million yuan in the first half mainly thanks to the hike of the piglet and pork prices.
Comment: The performance recovery of Chuying Agro-Pastoral is common in the industry. Driven by a tight supply, the pork price has begun to recover. Among other companies engaged in pigs breeding, Ningbo Tech-bank Co., Ltd. (002124.SZ), principally engaged in fodder and breeding, expects significant decreases in the net profit in the first half according to its first quarterly report. Hunan Dakang Pasture Farming Co., Ltd. (002505.SZ) is engaged in the whole process of pigs breeding and it had 201,600 live pigs slaughtered in 2014.
[Announcement Interpretation]
○Pacific Securities and Kaidi Electric Power see shareholding increases
------
Another batch of listed companies saw increases in shareholding recently. The substantial shareholders of the Pacific Securities Co., Ltd. (601099.SH) increased the shareholding by 67.60 million shares, accounting for 1.91 percent of the total share capital. Creat Tian Cheng Investment Holding Co., Ltd., the controlling shareholder of Shanghai RAAS Blood Products Co., Ltd. (002252.SZ), increased the shareholding by 2.83 million shares at average price of 70.76 yuan, accounting for 0.21 percent of the total share capital. It will continue to increase by no more than 2 billion yuan in the following year. Jinshiqi International Holdings Co., Ltd., the controlling shareholder of Zhongtian Urban Development Group Company Limited (000540.SZ), increased the shareholding by 21.58 million shares. It will increase the shareholding by no less than 0.5 percent but no more than 2 percent of the total share capital in the following three months. Meanwhile, four senior management of the company increased the shareholding in the company by 140,000 shares totally. Yu Yun, a person acting in concert with the controlling shareholder of Sundy Land Investment Co., Ltd. (600077.SH), plans to increase the shareholding in the company by 10.30 million shares at an average of 6.41 yuan through the trust plan with its own capital of 16.51 million yuan and financing proceeds of 49.54 million yuan. Yu plans to increase the shareholding in the company by no more than 2 percent of the total share capital. Besides, Beijing SPC Environment Protection Tech Co., Ltd. (002573.SZ), Shanghai Tianchen Co., Ltd. (600620.SH), Zhejiang Hangmin Co., Ltd. (600987.SH), DHC Software Co., Ltd. (002065.SZ), Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ), Shenzhen Overseas Chinese Town Co., Ltd. (000069.SZ), Henan Tong-Da Cable Co., Ltd. (002560.SZ) and Zhejiang Huamei Holding Co., Ltd. (000607.SZ) all recorded huge shareholding increases by their controlling shareholders or senior management.
At the same time, many companies introduced plans on increasing shareholding. The controlling shareholder of Wuhan Kaidi Electric Power Co., Ltd. (000939.SZ) will increase the shareholding by 100 million shares at no higher than 16 yuan per share within three months after approved, accounting for nearly 11 percent of its total share capital. The actual controller of Guangdong Golden Dragon Development Inc. (000712.SZ) plans to increase the shareholding by no more than 2 percent in six months. The actual controller of GuangZhou Seagull Kitchen and Bath Products Co., Ltd. (002084.SZ) proposes to increase the shareholding by no more than 2 percent of the total share capital in one year. Guangdong Biolight Meditech Co., Ltd. (300246.SZ), Net263 Ltd. (002467.SZ), Shenzhen Neptunus Bioengineering Co., Ltd. (000078.SZ) and Beijing Beilu Pharmaceutical Co., Ltd. (300016.SZ) also promised to increase the shareholding.
○Dabeinong Technology to invest RMB100 bln in agricultural Internet-based financial platform
------
Beijing Nongxin Interconnection Technology Co., Ltd., a wholly-owned subsidiary of Beijing Dabeinong Technology Group Co., Ltd. (002385.SZ), plans to invest 100 million yuan in solely establishing Beijing Zhinong Payment Technology Co., Ltd. The new company will conduct the development and application of technologies in Internet-based payment, mobile payment and the payment settlement and liquidation system. It also plans to apply for the license for payment business to the People’s Bank of China.
[Financial Reports Express]
○Ideal Group and Huaxicun expect performance growth
------
Lianyungang Ideal Group Co., Ltd. (000626.SZ) expects its performance to increase 410 percent to 460 percent year on year according to its interim report. It is mainly attribute to the accurate estimation on the price trend and the establishment of positions on commodity futures and spot goods. Jiangsu Huaxicun Co., Ltd. (000936.SZ) expects its performance to increase 258 percent to 307 percent year on year according to its interim report thanks to the recovery of the polyester staple fiber operation and hike in investment revenue.
Eastern Gold Jade Co., Ltd. (600086.SH) expects its performance to increase 280 percent to 330 percent year on year according to its interim report mainly due to the sales growth in jade stones. Zhejiang Talent Television & Film Co., Ltd. (300426.SZ) expects its performance to increase 115 percent to 136 percent year on year according to its interim report thanks to the high audience rating on the Saga of Wu Zetian. Beijing Sanju Environmental Protection & New Materials Co., Ltd. (300072.SZ) expects its performance to increase 114 percent to 125 percent year on year according to its interim report thanks to the rapid growth in the revenue from the comprehensive services on energy purification.
○Youngsun Intelligent Equipment proposes high share conversion
------
The substantial shareholder of Hangzhou Youngsun Intelligent Equipment Co., Ltd. (603901.SH) proposes a 10-for-10 conversion of capital surplus into shares according to its interim report.
> Liquidity shows signs of resuming, large buying pushes reconstruction of confidence
> MIIT urges cheaper data cost again, investment in network construction to see stable growth
> Pork price hikes across China, breeding industry to boom
> Pacific Securities sees shareholding increases, Ideal Group expects performance growth
[XFA Focus]
○Liquidity shows signs of resuming, large buying pushes reconstruction of confidence
------
The A share market obviously resumed activity on July 6. The blue-chip stocks covered by SSE50 nearly all surged, while popular stocks represented by Hithink RoyalFlush Information Network Co., Ltd. (300033.SZ), Hengkang Medical Group Co., Ltd. (002219.SZ) and Shanghai Electric Power Co., Ltd. (600021.SH) also surged from plummeting by the daily 10 percent limit to rising by the daily 10 percent limit in the afternoon. The trading volume ranking list shows that Hithink RoyalFlush Information Network and Hengkang Medical Group were bought by one business department under China Securities Company with hundreds of millions of yuan, far exceeding the amount sold by selling institutional seats. The buying list even shows that one business department under CITIC Securities Company bought 102 stocks with large amount, totaling over 14.5 billion yuan. As for futures, IC1507 stubbornly closed at surging with a premium of over 200 points, setting a new high in over a month.
Comment: It means that besides blue-chip ETF, some mid- and small-cap stocks which see potential themes but suffer panic selling recently are concerned by big capital. The consecutive drop earlier in the market was mainly resulted from liquidity exhaustion and absence of confidence brought by interlocking close position. The market even began to worry about the risk of the close position of capital from margin trading and short selling which accounts for trillions of yuan. In fact, along with the implementation of a package of measures launched in the weekend, the blue-chip stocks leading the surging on July 6 are the main objects of margin trading and short selling. The worries about close position are mitigated to some extent. More investment opportunities lie in stocks seeing valuation far lower than historical average valuation, continuous improving industrial prosperity and definite performance growth bought by financial consolidation of reorganized asset.
◆XFA learnt from multi large-scale insurance companies in Beijing and Shanghai that the total net buying by them recorded billions of yuan on July 6 and the net buying might continue.
[XFA Selection]
○Multi fund companies and their senior management announced to purchase funds run by their own companies on July 6, totaling an amount of 1 billion yuan.
○People’s Daily reported on July 6 that Tongzhou Area is promoting roundly the construction of urban sub-center. Beijing will hold meeting on July 10 to review relevant topics.
○National Development and Reform Commission (NDRC) and National Energy Administration (NEA) jointly distributed guidelines on July 6, proposing to preliminarily build a safe and reliable smart power grid system by 2020.
○Poly Real Estate Group Co., Ltd. signs contract totaling 25.7 billion yuan in June, setting a new high of the year. It indicates a year-on-year growth of 55 percent, showing obvious increase compared with previous months.
○The document from Hong Kong Exchanges and Clearing Limited shows that China Huarong Asset Management Co., Ltd. has officially applied for IPO in Hong Kong, planning to raise 3 billion U.S. dollar.
[Industry Information]
○MIIT urges cheaper data cost again, investment in network construction to see stable growth
------
Zhang Feng, chief engineer of the Ministry of Industry and Information Technology (MIIT), indicated on July 6 that for faster and cheaper data traffic concerned by the whole society, MIIT will strengthen periodic follow-up/supervision mechanism; urge telecom enterprises to follow their commitment, effectively implement annual task concerning improvement of network traffic speed and achieve the goal of lowering average prices of broadband and mobile data services by 30 percent year-on-year by the end of 2015. As for investment, the investment in network construction in 2015 is expected to reach 435 billion yuan, indicating a year-on-year growth of 10 percent. Over 700 billion yuan will be invested in next two years and relevant investment in both upstream and downstream of the industry will be driven directly and indirectly.
Comment: The statement of MIIT this time explicitly defines the reduction range of network fees and the deadline of the task. The improvement of network data traffic speed and the reduction of fees might greatly promote consumption of data flow. Companies engaged in content distribution will embrace broad market. Among listed companies, Wangsu Science & Technology Co., Ltd. (300017.SZ), principally engaged in content distribution, is now transforming towards flow operation platform. In addition, telecom equipment providers like Fiberhome Telecommunication Technologies Co., Ltd. (600498.SH) might benefit from the growth of investment in network construction.
○Pork price hikes across China, breeding industry to boom
------
According to Xinhua News Agency, the pork price across China has been hiking recently. It has recorded an increase of over 11 percent since mid-April. Chuying Agro-Pastoral Group Co., Ltd. (002477.SZ) revised its expectation on performance on July 5 evening from a loss of 60 million yuan to 86 million yuan to a profit of 3 million yuan to 10 million yuan in the first half mainly thanks to the hike of the piglet and pork prices.
Comment: The performance recovery of Chuying Agro-Pastoral is common in the industry. Driven by a tight supply, the pork price has begun to recover. Among other companies engaged in pigs breeding, Ningbo Tech-bank Co., Ltd. (002124.SZ), principally engaged in fodder and breeding, expects significant decreases in the net profit in the first half according to its first quarterly report. Hunan Dakang Pasture Farming Co., Ltd. (002505.SZ) is engaged in the whole process of pigs breeding and it had 201,600 live pigs slaughtered in 2014.
[Announcement Interpretation]
○Pacific Securities and Kaidi Electric Power see shareholding increases
------
Another batch of listed companies saw increases in shareholding recently. The substantial shareholders of the Pacific Securities Co., Ltd. (601099.SH) increased the shareholding by 67.60 million shares, accounting for 1.91 percent of the total share capital. Creat Tian Cheng Investment Holding Co., Ltd., the controlling shareholder of Shanghai RAAS Blood Products Co., Ltd. (002252.SZ), increased the shareholding by 2.83 million shares at average price of 70.76 yuan, accounting for 0.21 percent of the total share capital. It will continue to increase by no more than 2 billion yuan in the following year. Jinshiqi International Holdings Co., Ltd., the controlling shareholder of Zhongtian Urban Development Group Company Limited (000540.SZ), increased the shareholding by 21.58 million shares. It will increase the shareholding by no less than 0.5 percent but no more than 2 percent of the total share capital in the following three months. Meanwhile, four senior management of the company increased the shareholding in the company by 140,000 shares totally. Yu Yun, a person acting in concert with the controlling shareholder of Sundy Land Investment Co., Ltd. (600077.SH), plans to increase the shareholding in the company by 10.30 million shares at an average of 6.41 yuan through the trust plan with its own capital of 16.51 million yuan and financing proceeds of 49.54 million yuan. Yu plans to increase the shareholding in the company by no more than 2 percent of the total share capital. Besides, Beijing SPC Environment Protection Tech Co., Ltd. (002573.SZ), Shanghai Tianchen Co., Ltd. (600620.SH), Zhejiang Hangmin Co., Ltd. (600987.SH), DHC Software Co., Ltd. (002065.SZ), Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ), Shenzhen Overseas Chinese Town Co., Ltd. (000069.SZ), Henan Tong-Da Cable Co., Ltd. (002560.SZ) and Zhejiang Huamei Holding Co., Ltd. (000607.SZ) all recorded huge shareholding increases by their controlling shareholders or senior management.
At the same time, many companies introduced plans on increasing shareholding. The controlling shareholder of Wuhan Kaidi Electric Power Co., Ltd. (000939.SZ) will increase the shareholding by 100 million shares at no higher than 16 yuan per share within three months after approved, accounting for nearly 11 percent of its total share capital. The actual controller of Guangdong Golden Dragon Development Inc. (000712.SZ) plans to increase the shareholding by no more than 2 percent in six months. The actual controller of GuangZhou Seagull Kitchen and Bath Products Co., Ltd. (002084.SZ) proposes to increase the shareholding by no more than 2 percent of the total share capital in one year. Guangdong Biolight Meditech Co., Ltd. (300246.SZ), Net263 Ltd. (002467.SZ), Shenzhen Neptunus Bioengineering Co., Ltd. (000078.SZ) and Beijing Beilu Pharmaceutical Co., Ltd. (300016.SZ) also promised to increase the shareholding.
○Dabeinong Technology to invest RMB100 bln in agricultural Internet-based financial platform
------
Beijing Nongxin Interconnection Technology Co., Ltd., a wholly-owned subsidiary of Beijing Dabeinong Technology Group Co., Ltd. (002385.SZ), plans to invest 100 million yuan in solely establishing Beijing Zhinong Payment Technology Co., Ltd. The new company will conduct the development and application of technologies in Internet-based payment, mobile payment and the payment settlement and liquidation system. It also plans to apply for the license for payment business to the People’s Bank of China.
[Financial Reports Express]
○Ideal Group and Huaxicun expect performance growth
------
Lianyungang Ideal Group Co., Ltd. (000626.SZ) expects its performance to increase 410 percent to 460 percent year on year according to its interim report. It is mainly attribute to the accurate estimation on the price trend and the establishment of positions on commodity futures and spot goods. Jiangsu Huaxicun Co., Ltd. (000936.SZ) expects its performance to increase 258 percent to 307 percent year on year according to its interim report thanks to the recovery of the polyester staple fiber operation and hike in investment revenue.
Eastern Gold Jade Co., Ltd. (600086.SH) expects its performance to increase 280 percent to 330 percent year on year according to its interim report mainly due to the sales growth in jade stones. Zhejiang Talent Television & Film Co., Ltd. (300426.SZ) expects its performance to increase 115 percent to 136 percent year on year according to its interim report thanks to the high audience rating on the Saga of Wu Zetian. Beijing Sanju Environmental Protection & New Materials Co., Ltd. (300072.SZ) expects its performance to increase 114 percent to 125 percent year on year according to its interim report thanks to the rapid growth in the revenue from the comprehensive services on energy purification.
○Youngsun Intelligent Equipment proposes high share conversion
------
The substantial shareholder of Hangzhou Youngsun Intelligent Equipment Co., Ltd. (603901.SH) proposes a 10-for-10 conversion of capital surplus into shares according to its interim report.
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