[Today's Guide]
>Liquidity crisis resolved, market to focus on intrinsic value again
>Demand improves and booming season comes, anti-dumping and anti-subsidy of photovoltaic industry not affecting industrial development
>VSP price hikes again, Shenzhen Real Estate & Properties and Western Securities expect half-year performance to surge
>Shares of Zhongke Huitong and Ronghua Industry bought, more companies increase shareholding
[XFA Focus]
○Liquidity crisis resolved, market to focus on intrinsic value again
------
The A share market experienced a big rally on July 9: only two ST stocks dropped; the rest 1,335 stocks without trading suspension all surged and most of them closed at a price surging to the daily 10 percent limit. The trading volume ranking list shows that two business departments in Beijing under CITIC Securities Company Limited still purchased some stocks by large amount but the total amount bought by them fell to 1.3 billion yuan. CITIC Futures Co., Ltd. closed the bull positions of the stock futures bought the day before. The balance of margin trading fell to 1.46 trillion yuan by July 8.
Comment: All stocks without trading suspension have no pressure in selling, meaning that the liquidity crisis in the past half a month is resolved. The 1.46 trillion yuan balance of margin trading equals to the level in end-March when the SSE index was around 3700 points. Except stocks not resuming trading suspension, other capital with financing loss might have been cleared. The widespread big surging of stocks on July 9 can also further mitigate the pressure of close positions for financing capital. The trading volume ranking list shows that the buying spread from CITIC business departments to various capitals, meaning that the market is resuming vitality by itself. Companies seeing real effect of leverage reduction, stock prices falling below the offering prices of their staff shareholding plan or private placement, and small market value with value of merger & acquisition might regain concern from off-market capital.
[XFA Selection]
○China Banking Regulatory Commission launches four measures to provide securities market with liquidity, largely mitigating the pressure of closing positions involved with nearly one trillion yuan stock-collateral loans and trust.
○China Insurance Regulatory Commission announces that insurance organizations recently keep purchasing stocks and stock-oriented funds with a total net buying of 112.3 billion yuan.
○The Ministry of Public Security together with China Securities Regulatory Commission carry out analysis and judge and arrange crackdowns of illegal criminal activities in securities and futures areas according to laws.
○Asset Management Association of China issues notice supporting substantial shareholders, directors, supervisors and senior management of listed companies to increase shareholding in their own companies through privately-offered funds.
○China CITIC Bank plans to carry out corporation reformation in its credit cards business, becoming another case of banking business division following China Everbright Bank.
[Industry Information]
○Demand improves and booming season comes, anti-dumping and countervailing duties of photovoltaic industry not affecting industrial development
------
United States Department of Commerce officially announced the final judgment result of Sino-U.S. anti-dumping and countervailing duties in 2012. The final judgment determined to lift the ratio of anti-dumping and countervailing duties on batteries from China. Except Yingli Solar Group, the export cost of assemblies with made-in-China batteries exporting to the U.S. will be lifted above 10 percent. Analyst believe that anti-dumping and countervailing duties might impact China’s export of photovoltaic products to the U.S. in the short term, but this situation will be improved when the overseas production bases of mainland manufacturers are completed and put into production in the second half of this year. As China’s demand on polycrystalline silicon improves and the booming season comes, the impact on China’s photovoltaic industry brought by anti-dumping and anti-subsidy might be further decreased.
Comment: At present, domestic quoted price of polycrystalline silicon might surge and the price of efficient polycrystalline battery cell will also continue the surge. It is learnt that the quoted price of silicon wafer in July surged by 0.5 percent and the price of battery soared around 1 percent. Among listed companies, thanks to great sales growth of photovoltaic products, Risen Energy Co., Ltd. (300118.SZ) forecasts a year-on-year performance sales growth of around 400 percent; CSG Holding Co., Ltd. (000012.SZ) is principally engaged in polycrystalline silicon, photovoltaic modules, etc.
○Low inventory and shrinking capacity drive VSP price high
------
XFA learnt that the price of the viscose staple fiber (VSP) was raised by 100 yuan per ton on the whole on July 8. It has recorded a growth of nearly 10 percent this year and set a new high since 2014, beating the market expectation. It is learnt that the VSP capacity has significantly reduced since 2014 and further shrank in 2015. The supply and demand has been further improved. The industry is currently above the breakeven point. According to the statistics of the National Bureau of Statistics, the total profit of the chemical fiber industry in the first five months is 11.47 billion yuan, representing a growth of 56.7 percent year on year. The industry is recovering on the whole.
Comment: Insiders expect that the profitability of the VSP industry will continue to improve as a result of the shrinking supply under heavy environment pressure and the steady demand in the downstream. In terms of listed companies, Xinxiang Chemical Fiber Co., Ltd. (000949.SZ) is principally engaged in the production of VSP and filament yarns, which accounts for nearly 70 percent of its revenue. Nanjing Chemical Fibre Co., Ltd. (600889.SH) owns a proportional capacity of 80,000 tons. The price of viscose filament yarn, another dominant product of the company, also hiked recently.
[Financial Reports Express]
○Shenzhen Real Estate & Properties revises profit expectation
------
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (000029.SZ) expects its net profit in the first half to increase 404 percent to 441 percent year on year, compared with the formerly expected 23.8 percent to 49.7 percent thanks to the higher sale of property projects than expected.
○Western Securities expects half-year performance to surge
------
Western Securities Co., Ltd. (002673.SZ) expects its net profit in the first half to hike 897 percent year on year mainly attribute to the surging turnover in the securities market. As the investment revenue boosts the performance, Chongqing Sanxia Paints Co., Ltd. (000565.SZ) forecasts that its net profit in the first half will increase 382 percent to 409 percent year on year. Zhuzhou Times New Material Technology Co., Ltd. (600458.SH) expects its net profit in the first half to see a year-on-year growth of 200 percent to 250 percent thanks to the hike of the rail transportation and wind power industry.
[Announcement Interpretation]
○Zhongke Huitong buys shares of BGRIMM Magnetic Materials
------
BGRIMM Magnetic Materials & Technology Co., Ltd. (600980.SH) announced that Zhongke Huitong (Shenzhen) Equities Investment Fund Co., Ltd. bought 6.51 million shares of the company at an average price of 13.81 yuan per share in July 9, which accounts for 5.01 percent of the total share capital of the company and reaches the 5 percent limit. Zhongke Huitong is rosy bout the business development model and development prospectus of BGRIMM Magnetic Materials and expects to obtain revenue from the appreciation of equities through log-term holding. Zhongke Huitong has bought the shares of many listed companies with a low price through secondary market acquisition to the 5 percent limit
○Shareholder Zhang Zhengwei buys shares of Ronghua Industry
------
Zhang Zhengwei, a shareholder of Gansu Ronghua Industry Group Co., Ltd. (600311.SH), increased the shareholding in the company by 1.89 million shares on July 9, accounting for 0.28 percent of the total share capital of the company. Zhang will hold 5.04 percent of the shares of the company after that.
○More companies increase shareholding
------
More listed companies joined the efforts in increasing the shareholding, leading by central enterprises. China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) increased the shareholding by another 26 million shares. Baoshan Iron & Steel Co., Ltd. (600019.SH) increased the shareholding by 1.44 million shares. China Railway Group Limited (00390.HK; 601390.SH) increased the shareholding by 1.50 million shares and Power Construction Corporation of China, Ltd. (601669.SH) increased the shareholding by 1.49 million shares. In addition, Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) increased the shareholding by 6.86 million shares in two days, accounting for 2 percent of the total share capital. The persons acting in concert with the controlling shareholder of Dongxing Securities Co., Ltd. (601198.SH) increased the shareholding by 1 million shares.
Various companies had introduced plans on increasing the shareholding. The substantial shareholder of Jilin Aodong Pharmaceutical Group Co., Ltd. (000623.SZ) plans to increase the shareholding with 50 million yuan from its own capital in one month after it completed the shareholding increasing plan with 100 million yuan within one day. Hualian Group, the shareholder of Shenzhen Tempus Global Business Service Holding Ltd. (300178.SZ) plans in increase the shareholding by no less than 21 million yuan. The controlling shareholders of Suzhou New District Hi-Tech Industrial Co., Ltd. (600736.SH), China Gezhouba Group Company Limited (600068.SH) and Chongqing Sanxia Paints Co., Ltd. (000565.SZ) plan to buy the shares with no more than 2 percent of the total share capital. The controlling shareholder and two senior management of Anhui Honglu Steel Construction (Group) Co., Ltd. (002541.SZ) plan to increase the shareholding with 38 million yuan. The actual controller and certain directors, supervisors and senior management of Hebei Jianxin Chemical Co., Ltd. (300107.SZ) propose to increase the shareholding of the shares by no less than 25 million yuan. The controlling shareholder of Jizhong Energy Resources Co., Ltd. (000937.SZ) intends to increase the shareholding by no less than 47.10 million yuan. The shareholders of Luxiang Co., Ltd. (002192.SZ) plan to increase the shareholding by no less than 15.50 million yuan in 12 months. Ningbo Thermal Power Co., Ltd. (600982.SH) and Jiangxi Hongdu Aviation Industry Co., Ltd. (600316.SH) plan to increase the holding of shares by no more than 2 percent of the total share capital. Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ), Jiangsu Yinhe Electronics Co., Ltd. (002519.SZ), Hailun Piano Co., Ltd. (300329.SZ) and Wuxi Xuelang Environmental Technology Co., Ltd. (300385.SZ) also introduced plans on increasing the shareholding.
In addition, Hubei Feilihua Quartz Glass Co., Ltd. (300395.SZ) will repurchase no more than 2 million shares when the stock price is below 18.26 yuan, accounting for 1.55 percent of its total share capital.
>Liquidity crisis resolved, market to focus on intrinsic value again
>Demand improves and booming season comes, anti-dumping and anti-subsidy of photovoltaic industry not affecting industrial development
>VSP price hikes again, Shenzhen Real Estate & Properties and Western Securities expect half-year performance to surge
>Shares of Zhongke Huitong and Ronghua Industry bought, more companies increase shareholding
[XFA Focus]
○Liquidity crisis resolved, market to focus on intrinsic value again
------
The A share market experienced a big rally on July 9: only two ST stocks dropped; the rest 1,335 stocks without trading suspension all surged and most of them closed at a price surging to the daily 10 percent limit. The trading volume ranking list shows that two business departments in Beijing under CITIC Securities Company Limited still purchased some stocks by large amount but the total amount bought by them fell to 1.3 billion yuan. CITIC Futures Co., Ltd. closed the bull positions of the stock futures bought the day before. The balance of margin trading fell to 1.46 trillion yuan by July 8.
Comment: All stocks without trading suspension have no pressure in selling, meaning that the liquidity crisis in the past half a month is resolved. The 1.46 trillion yuan balance of margin trading equals to the level in end-March when the SSE index was around 3700 points. Except stocks not resuming trading suspension, other capital with financing loss might have been cleared. The widespread big surging of stocks on July 9 can also further mitigate the pressure of close positions for financing capital. The trading volume ranking list shows that the buying spread from CITIC business departments to various capitals, meaning that the market is resuming vitality by itself. Companies seeing real effect of leverage reduction, stock prices falling below the offering prices of their staff shareholding plan or private placement, and small market value with value of merger & acquisition might regain concern from off-market capital.
[XFA Selection]
○China Banking Regulatory Commission launches four measures to provide securities market with liquidity, largely mitigating the pressure of closing positions involved with nearly one trillion yuan stock-collateral loans and trust.
○China Insurance Regulatory Commission announces that insurance organizations recently keep purchasing stocks and stock-oriented funds with a total net buying of 112.3 billion yuan.
○The Ministry of Public Security together with China Securities Regulatory Commission carry out analysis and judge and arrange crackdowns of illegal criminal activities in securities and futures areas according to laws.
○Asset Management Association of China issues notice supporting substantial shareholders, directors, supervisors and senior management of listed companies to increase shareholding in their own companies through privately-offered funds.
○China CITIC Bank plans to carry out corporation reformation in its credit cards business, becoming another case of banking business division following China Everbright Bank.
[Industry Information]
○Demand improves and booming season comes, anti-dumping and countervailing duties of photovoltaic industry not affecting industrial development
------
United States Department of Commerce officially announced the final judgment result of Sino-U.S. anti-dumping and countervailing duties in 2012. The final judgment determined to lift the ratio of anti-dumping and countervailing duties on batteries from China. Except Yingli Solar Group, the export cost of assemblies with made-in-China batteries exporting to the U.S. will be lifted above 10 percent. Analyst believe that anti-dumping and countervailing duties might impact China’s export of photovoltaic products to the U.S. in the short term, but this situation will be improved when the overseas production bases of mainland manufacturers are completed and put into production in the second half of this year. As China’s demand on polycrystalline silicon improves and the booming season comes, the impact on China’s photovoltaic industry brought by anti-dumping and anti-subsidy might be further decreased.
Comment: At present, domestic quoted price of polycrystalline silicon might surge and the price of efficient polycrystalline battery cell will also continue the surge. It is learnt that the quoted price of silicon wafer in July surged by 0.5 percent and the price of battery soared around 1 percent. Among listed companies, thanks to great sales growth of photovoltaic products, Risen Energy Co., Ltd. (300118.SZ) forecasts a year-on-year performance sales growth of around 400 percent; CSG Holding Co., Ltd. (000012.SZ) is principally engaged in polycrystalline silicon, photovoltaic modules, etc.
○Low inventory and shrinking capacity drive VSP price high
------
XFA learnt that the price of the viscose staple fiber (VSP) was raised by 100 yuan per ton on the whole on July 8. It has recorded a growth of nearly 10 percent this year and set a new high since 2014, beating the market expectation. It is learnt that the VSP capacity has significantly reduced since 2014 and further shrank in 2015. The supply and demand has been further improved. The industry is currently above the breakeven point. According to the statistics of the National Bureau of Statistics, the total profit of the chemical fiber industry in the first five months is 11.47 billion yuan, representing a growth of 56.7 percent year on year. The industry is recovering on the whole.
Comment: Insiders expect that the profitability of the VSP industry will continue to improve as a result of the shrinking supply under heavy environment pressure and the steady demand in the downstream. In terms of listed companies, Xinxiang Chemical Fiber Co., Ltd. (000949.SZ) is principally engaged in the production of VSP and filament yarns, which accounts for nearly 70 percent of its revenue. Nanjing Chemical Fibre Co., Ltd. (600889.SH) owns a proportional capacity of 80,000 tons. The price of viscose filament yarn, another dominant product of the company, also hiked recently.
[Financial Reports Express]
○Shenzhen Real Estate & Properties revises profit expectation
------
Shenzhen Special Economic Zone Real Estate & Properties (Group) Co., Ltd. (000029.SZ) expects its net profit in the first half to increase 404 percent to 441 percent year on year, compared with the formerly expected 23.8 percent to 49.7 percent thanks to the higher sale of property projects than expected.
○Western Securities expects half-year performance to surge
------
Western Securities Co., Ltd. (002673.SZ) expects its net profit in the first half to hike 897 percent year on year mainly attribute to the surging turnover in the securities market. As the investment revenue boosts the performance, Chongqing Sanxia Paints Co., Ltd. (000565.SZ) forecasts that its net profit in the first half will increase 382 percent to 409 percent year on year. Zhuzhou Times New Material Technology Co., Ltd. (600458.SH) expects its net profit in the first half to see a year-on-year growth of 200 percent to 250 percent thanks to the hike of the rail transportation and wind power industry.
[Announcement Interpretation]
○Zhongke Huitong buys shares of BGRIMM Magnetic Materials
------
BGRIMM Magnetic Materials & Technology Co., Ltd. (600980.SH) announced that Zhongke Huitong (Shenzhen) Equities Investment Fund Co., Ltd. bought 6.51 million shares of the company at an average price of 13.81 yuan per share in July 9, which accounts for 5.01 percent of the total share capital of the company and reaches the 5 percent limit. Zhongke Huitong is rosy bout the business development model and development prospectus of BGRIMM Magnetic Materials and expects to obtain revenue from the appreciation of equities through log-term holding. Zhongke Huitong has bought the shares of many listed companies with a low price through secondary market acquisition to the 5 percent limit
○Shareholder Zhang Zhengwei buys shares of Ronghua Industry
------
Zhang Zhengwei, a shareholder of Gansu Ronghua Industry Group Co., Ltd. (600311.SH), increased the shareholding in the company by 1.89 million shares on July 9, accounting for 0.28 percent of the total share capital of the company. Zhang will hold 5.04 percent of the shares of the company after that.
○More companies increase shareholding
------
More listed companies joined the efforts in increasing the shareholding, leading by central enterprises. China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) increased the shareholding by another 26 million shares. Baoshan Iron & Steel Co., Ltd. (600019.SH) increased the shareholding by 1.44 million shares. China Railway Group Limited (00390.HK; 601390.SH) increased the shareholding by 1.50 million shares and Power Construction Corporation of China, Ltd. (601669.SH) increased the shareholding by 1.49 million shares. In addition, Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) increased the shareholding by 6.86 million shares in two days, accounting for 2 percent of the total share capital. The persons acting in concert with the controlling shareholder of Dongxing Securities Co., Ltd. (601198.SH) increased the shareholding by 1 million shares.
Various companies had introduced plans on increasing the shareholding. The substantial shareholder of Jilin Aodong Pharmaceutical Group Co., Ltd. (000623.SZ) plans to increase the shareholding with 50 million yuan from its own capital in one month after it completed the shareholding increasing plan with 100 million yuan within one day. Hualian Group, the shareholder of Shenzhen Tempus Global Business Service Holding Ltd. (300178.SZ) plans in increase the shareholding by no less than 21 million yuan. The controlling shareholders of Suzhou New District Hi-Tech Industrial Co., Ltd. (600736.SH), China Gezhouba Group Company Limited (600068.SH) and Chongqing Sanxia Paints Co., Ltd. (000565.SZ) plan to buy the shares with no more than 2 percent of the total share capital. The controlling shareholder and two senior management of Anhui Honglu Steel Construction (Group) Co., Ltd. (002541.SZ) plan to increase the shareholding with 38 million yuan. The actual controller and certain directors, supervisors and senior management of Hebei Jianxin Chemical Co., Ltd. (300107.SZ) propose to increase the shareholding of the shares by no less than 25 million yuan. The controlling shareholder of Jizhong Energy Resources Co., Ltd. (000937.SZ) intends to increase the shareholding by no less than 47.10 million yuan. The shareholders of Luxiang Co., Ltd. (002192.SZ) plan to increase the shareholding by no less than 15.50 million yuan in 12 months. Ningbo Thermal Power Co., Ltd. (600982.SH) and Jiangxi Hongdu Aviation Industry Co., Ltd. (600316.SH) plan to increase the holding of shares by no more than 2 percent of the total share capital. Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ), Jiangsu Yinhe Electronics Co., Ltd. (002519.SZ), Hailun Piano Co., Ltd. (300329.SZ) and Wuxi Xuelang Environmental Technology Co., Ltd. (300385.SZ) also introduced plans on increasing the shareholding.
In addition, Hubei Feilihua Quartz Glass Co., Ltd. (300395.SZ) will repurchase no more than 2 million shares when the stock price is below 18.26 yuan, accounting for 1.55 percent of its total share capital.
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