[Today's Guide]
> Construction of underground pipeline accelerated, equipment to see billions-of-yuan market demand
> Securitization rate of military asset owned by central enterprises might see increasing improvement, piloting list of intelligent manufacturing released
> Jianghuai Automobile to develop new energy auto, Xinri Hengli Steel Wire Rope to introduce employee shareholding plan
> Companies made investment to resume trading, Hengtong Optic-electric and Shenghe Resources propose high share conversion and dividend
[XFA Focus]
○Construction of underground pipeline accelerated, equipment to see billions-of-yuan market demand
------
XFA learns that the construction of urban underground pipelines shows signs of acceleration recently. The Ministry of Housing and Urban-Rural Development (MOHURD) signed cooperation framework agreement of national urban comprehensive pipeline construction piloting with China Development Bank and the People’s Government of Jilin Province on July 20. In addition, MOHURD recently launched the performance assessment methods for the construction of “sponge city” and it will also join hands with five ministries and departments including the Ministry of Industry and Information Technology (MIIT) to carry out inspections over the general survey of underground pipelines nationwide in the second half of July.
Comment: The piloting developed in Jilin Province by MOHURD will provide duplicable and propagable experience for advancing the construction of urban comprehensive pipeline. Institutions expect that the construction of urban underground pipeline will bring an investment of 400~500 billion yuan and bring actual orders for industries including pipe network material, security monitoring, comprehensive pipeline engineering, etc. As for listed companies, Yonggao Co., Ltd. (002641.SZ) is principally engaged in plastic pipe material which is widely applied in municipal and real estate water supply and drainage; Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ), principally engaged in the security monitoring of coal mines, is now actively transforming towards areas including monitoring of urban pipelines, public security, etc.; Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) once signed the construction project of comprehensive pipeline system of Hunnan new district of Shenyang City, Liaoning Province.
[XFA Selection]
○East China’s Shandong Province has got the nod from the State Council, China’s cabinet, to authorize the National Council for Social Security Fund to operate its 100 billion yuan of pension funds balance in domestic stock market for investment by batches. The first batch of 10 billion yuan of the funds has already been put in place.
○China’s Ministry of Transport (MOT) published on Tuesday a draft of the revised regulation on toll road management to solicit public opinions. The draft puts forward an operational mode which sets no time limits on collecting tolls for road usage.
○Latest weekly report of China Securities Depository and Clearing Co., Ltd. shows that in last week the number of newly-added investors saw a week-on-week growth of 3.18 percent and the number of newly-opened accounts saw a week-on-week growth of 48 percent.
○XFA learns from 2015 China Internet Conference that legislation for network security is under accelerated push.
○To commemorate the 70th anniversary of the end of World War II, Shanghai and Shenzhen Stock Exchanges will suspend trading from Sep. 3-6 and the markets will reopen on Sept 7.
[Industry Information]
○Securitization rate of military asset owned by central enterprises might see increasing improvement
------
On the Military and Civil Integration Expo held on July 21, Xu Jinling, branch head of the Information Service Branch of China State Shipbuilding Corporation (CSSC), indicated that CSSC will give big push to the listing of military assets and finally achieve the sharing of economic development fruits. Xu Zhanbin, deputy head of the State Administration of Science, Technology and Industry for National Defense, recently also explicitly proposes accelerating the securitization rate of military asset and encouraging local governments to pilot and explore the development of mixed ownership reform first.
Comment: As measured by relevant institutions, the securitization rate of assets owned by top 10 military groups in China stands at only 30 percent on average. The securitization of military assets has just started and huge potential is waiting ahead. Among military central enterprises, Aviation Industry Corporation of China signed strategic cooperation agreement with Shanghai Stock Exchange this year. Both parties will develop all-round cooperation in four areas, namely, securitization of military assets, innovation of Internet finance, IPO of military enterprises, refinancing as well as reorganization and mergers & acquisitions. For companies under the corporation, AVIC Sanxin Co., Ltd. (002163.SZ) and Zhonghang Heibao Co., Ltd. (600760.SH) made announcement at the night of July 21, respectively, that their controlling shareholder or the party acting in concert increased shareholding in the companies by 5.98 million shares and 0.85 million shares, respectively.
○Piloting list of intelligent manufacturing released, information technology becomes important driver
------
The Ministry of Industry and Information Technology (MIIT) released the list of 46 intelligent manufacturing piloting projects in 2015 on July 21 on its website. MIIT points out that the reforming breakthrough and cross integration in significant areas and front-cutting directions including information technology, new energy, new materials, etc. will bring profound renovation to global manufacturing mode, organizational mode of production and industrial form. Amid above list, Neusoft Medical Systems Co., Ltd. under Neusoft Corporation (600718.SH) is listed as demonstration for the piloting of intelligent medical imaging equipment; Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH) is listed as demonstration for the piloting of intelligent manufacturing factory of Chinese medicine.
Comment: Under the government’s great attention and large push towards “Internet plus” action plan, a reform of Internet innovation and transformation is ongoing. Informatization and cloud platform have become important drivers behind the new round of social and economic transformation as well as enterprises’ overthrow and reconstitution of commercial value. For enterprises covered in the demonstration project list, it shows that their technical strength and intellectualization level lead the whole industry and might stand out from the competition in the future.
[Announcement Interpretation]
○Jianghuai Automobile to raise RMB4.5 bln to develop new energy auto
------
Anhui Jianghuai Automobile Co., Ltd. (600418.SH) proposes to raise 4.5 billion yuan by issuing 330 million shares at no less than 13.88 yuan per share through private placement. 2 billion yuan of the proceeds will be invested in the construction of a new energy passenger vehicles and core components project, 2 billion yuan will be used in the construction of a high-end and pure electric light trucks project and 500 million yuan will be used in the construction of a high-end commercial vehicle transmission project. The construction of the above three projects will be 24 months. They are expected to record a net profit of approximately 1.6 billion yuan after reaching the designed capacity. The company recorded a net profit of 530 million yuan in 2014. The stock price of the company was 10.36 yuan before trading suspension, representing a discount of over 25 percent over the issue price.
○Xinri Hengli Steel Wire Rope to introduce employee shareholding plan
------
Ningxia Xinri Hengli Steel Wire Rope Co., Ltd. (600165.SH) plans to introduce an employee shareholding plan with an upper limit of 50 million yuan. It will establish the preferred portion and the progressive portion with a proportion of no more than 2:1. It is estimated that a maximum of approximately 9.95 million shares are available for purchasing by the plan, accounting for 3.36 percent of the total shares. If the stock price is over 18 yuan, the management committee of the employee shareholding plan will convene a meeting to decide whether to continue the plan. The stock price of the company closed at 15.07 before trading suspension.
○Companies made investment to resume trading
------
Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ) intends to invest no less than 70 million yuan in the establishment of Fujian Yuanli Clean Energy Project Co., Ltd. The company will expand from products manufacturing into the activated carbon engineering application and the labor services industry. Gaotou Golden Laser, a company under Wuhan Golden Laser Co., Ltd. (300220.SZ), plans to invest 130 million yuan in Guangzhou Gleam Clever Culture Technology Co., Ltd. to buy 20 percent equities. Gleam Clever Culture Technology is principally engaged in animation design. Jiangxi Huawu Brake Co., Ltd. (300095.SZ) proposes to invest no more than 95 million yuan in Wuqiao Heavy Industry Crane Co., Ltd. It will hold no more than 49 percent equities of the company.
Apex Technology Co., Ltd. (002180.SZ) plans to invest 60 million yuan in the establishment of a wholly-owned subsidiary Zhuhai Lianxin Investment Co., Ltd. and participate in the establishment of the integrated circuit industrial fund. Do-Fluoride Chemicals Co., Ltd. (002407.SZ) will invest 160 million yuan to control Red Star Automobile through acquiring its equities and increasing investment to develop new energy automobiles. Leo Group Co., Ltd. (002131.SZ) intends to invest 15 million yuan in Tianjin Yixiang Haoju Network Technology Co., Ltd. to obtain 10 percent of its equities. The latter is an Internet-based platform providing O2O services for house renting and purchasing to overseas Chinese students. Besides, Zhejiang IDC Fluid Control Co., Ltd. (002468.SZ), Oriental Times Media Corporation (002175.SZ) and CRED Holding Co., Ltd. (600890.SH) will resume trading on July 22.
[Financial Reports Express]
○Hengtong Optic-electric and Shenghe Resources propose high share conversion and dividend
------
The actual controller of Hengtong Optic-electric Co., Ltd. (600487.SH) proposes a 20-for-10 conversion of capital surplus into shares according to its interim report. Shenghe Resources Holding Co., Ltd. (600392.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 to 2 yuan dividend for every 10 shares according to its half-year report.
○Soochow Securities and Guotai Junan Securities see performance surge
------
Soochow Securities Co., Ltd. (601555.SH) expects its net profit to hike 426 percent year on year in its interim report. Guotai Junan Securities Co., Ltd. (601211.SH) recorded an increase of 348 percent in net profit year on year in its half-year report.
[Trading Trends]
○Four institutes buy Yuan Longping High-tech Agriculture
------
The trading volume ranking list on July 21 shows that four institutes bought Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ) with 186 million yuan. One institutional seat sold 16.96 million yuan. The net buy amount reached 170 million yuan, accounting for 17.5 percent of its intraday turnover.
Comment: The company expects its performance to increase 30 percent to 60 percent in the first half. Institutes believe that after the private placement of the company is approved, it will receive the support of strategic shareholders in capital and will conduct more denotative expansions, which will greatly improve its performance.
[Data Speaks]
○Certain new heavyweight stocks of funds fall significantly in July
------
The second quarterly reports of funds recently disclosed show that among the ten heavyweight stocks newly bought by funds in the second quarter accounting a relatively high proportion of tradable stocks held by funds totally recorded slight growth. Individual stocks saw great declines in July include: Rising Nonferrous Metals Share Co., Ltd. (600259.SH), Shandong Shanda Wit Science and Technology Co., Ltd. (000915.SZ), SJEC Corporation (601313.SH), Lingyun Industrial Corporation Limited (600480.SH), Anhui Yingliu Electromechanical Co., Ltd. (603308.SH), Xilinmen Furniture Co., Ltd. (603008.SH), Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH) and Guangdong East Power Co., Ltd. (300376.SZ).
> Construction of underground pipeline accelerated, equipment to see billions-of-yuan market demand
> Securitization rate of military asset owned by central enterprises might see increasing improvement, piloting list of intelligent manufacturing released
> Jianghuai Automobile to develop new energy auto, Xinri Hengli Steel Wire Rope to introduce employee shareholding plan
> Companies made investment to resume trading, Hengtong Optic-electric and Shenghe Resources propose high share conversion and dividend
[XFA Focus]
○Construction of underground pipeline accelerated, equipment to see billions-of-yuan market demand
------
XFA learns that the construction of urban underground pipelines shows signs of acceleration recently. The Ministry of Housing and Urban-Rural Development (MOHURD) signed cooperation framework agreement of national urban comprehensive pipeline construction piloting with China Development Bank and the People’s Government of Jilin Province on July 20. In addition, MOHURD recently launched the performance assessment methods for the construction of “sponge city” and it will also join hands with five ministries and departments including the Ministry of Industry and Information Technology (MIIT) to carry out inspections over the general survey of underground pipelines nationwide in the second half of July.
Comment: The piloting developed in Jilin Province by MOHURD will provide duplicable and propagable experience for advancing the construction of urban comprehensive pipeline. Institutions expect that the construction of urban underground pipeline will bring an investment of 400~500 billion yuan and bring actual orders for industries including pipe network material, security monitoring, comprehensive pipeline engineering, etc. As for listed companies, Yonggao Co., Ltd. (002641.SZ) is principally engaged in plastic pipe material which is widely applied in municipal and real estate water supply and drainage; Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ), principally engaged in the security monitoring of coal mines, is now actively transforming towards areas including monitoring of urban pipelines, public security, etc.; Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) once signed the construction project of comprehensive pipeline system of Hunnan new district of Shenyang City, Liaoning Province.
[XFA Selection]
○East China’s Shandong Province has got the nod from the State Council, China’s cabinet, to authorize the National Council for Social Security Fund to operate its 100 billion yuan of pension funds balance in domestic stock market for investment by batches. The first batch of 10 billion yuan of the funds has already been put in place.
○China’s Ministry of Transport (MOT) published on Tuesday a draft of the revised regulation on toll road management to solicit public opinions. The draft puts forward an operational mode which sets no time limits on collecting tolls for road usage.
○Latest weekly report of China Securities Depository and Clearing Co., Ltd. shows that in last week the number of newly-added investors saw a week-on-week growth of 3.18 percent and the number of newly-opened accounts saw a week-on-week growth of 48 percent.
○XFA learns from 2015 China Internet Conference that legislation for network security is under accelerated push.
○To commemorate the 70th anniversary of the end of World War II, Shanghai and Shenzhen Stock Exchanges will suspend trading from Sep. 3-6 and the markets will reopen on Sept 7.
[Industry Information]
○Securitization rate of military asset owned by central enterprises might see increasing improvement
------
On the Military and Civil Integration Expo held on July 21, Xu Jinling, branch head of the Information Service Branch of China State Shipbuilding Corporation (CSSC), indicated that CSSC will give big push to the listing of military assets and finally achieve the sharing of economic development fruits. Xu Zhanbin, deputy head of the State Administration of Science, Technology and Industry for National Defense, recently also explicitly proposes accelerating the securitization rate of military asset and encouraging local governments to pilot and explore the development of mixed ownership reform first.
Comment: As measured by relevant institutions, the securitization rate of assets owned by top 10 military groups in China stands at only 30 percent on average. The securitization of military assets has just started and huge potential is waiting ahead. Among military central enterprises, Aviation Industry Corporation of China signed strategic cooperation agreement with Shanghai Stock Exchange this year. Both parties will develop all-round cooperation in four areas, namely, securitization of military assets, innovation of Internet finance, IPO of military enterprises, refinancing as well as reorganization and mergers & acquisitions. For companies under the corporation, AVIC Sanxin Co., Ltd. (002163.SZ) and Zhonghang Heibao Co., Ltd. (600760.SH) made announcement at the night of July 21, respectively, that their controlling shareholder or the party acting in concert increased shareholding in the companies by 5.98 million shares and 0.85 million shares, respectively.
○Piloting list of intelligent manufacturing released, information technology becomes important driver
------
The Ministry of Industry and Information Technology (MIIT) released the list of 46 intelligent manufacturing piloting projects in 2015 on July 21 on its website. MIIT points out that the reforming breakthrough and cross integration in significant areas and front-cutting directions including information technology, new energy, new materials, etc. will bring profound renovation to global manufacturing mode, organizational mode of production and industrial form. Amid above list, Neusoft Medical Systems Co., Ltd. under Neusoft Corporation (600718.SH) is listed as demonstration for the piloting of intelligent medical imaging equipment; Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH) is listed as demonstration for the piloting of intelligent manufacturing factory of Chinese medicine.
Comment: Under the government’s great attention and large push towards “Internet plus” action plan, a reform of Internet innovation and transformation is ongoing. Informatization and cloud platform have become important drivers behind the new round of social and economic transformation as well as enterprises’ overthrow and reconstitution of commercial value. For enterprises covered in the demonstration project list, it shows that their technical strength and intellectualization level lead the whole industry and might stand out from the competition in the future.
[Announcement Interpretation]
○Jianghuai Automobile to raise RMB4.5 bln to develop new energy auto
------
Anhui Jianghuai Automobile Co., Ltd. (600418.SH) proposes to raise 4.5 billion yuan by issuing 330 million shares at no less than 13.88 yuan per share through private placement. 2 billion yuan of the proceeds will be invested in the construction of a new energy passenger vehicles and core components project, 2 billion yuan will be used in the construction of a high-end and pure electric light trucks project and 500 million yuan will be used in the construction of a high-end commercial vehicle transmission project. The construction of the above three projects will be 24 months. They are expected to record a net profit of approximately 1.6 billion yuan after reaching the designed capacity. The company recorded a net profit of 530 million yuan in 2014. The stock price of the company was 10.36 yuan before trading suspension, representing a discount of over 25 percent over the issue price.
○Xinri Hengli Steel Wire Rope to introduce employee shareholding plan
------
Ningxia Xinri Hengli Steel Wire Rope Co., Ltd. (600165.SH) plans to introduce an employee shareholding plan with an upper limit of 50 million yuan. It will establish the preferred portion and the progressive portion with a proportion of no more than 2:1. It is estimated that a maximum of approximately 9.95 million shares are available for purchasing by the plan, accounting for 3.36 percent of the total shares. If the stock price is over 18 yuan, the management committee of the employee shareholding plan will convene a meeting to decide whether to continue the plan. The stock price of the company closed at 15.07 before trading suspension.
○Companies made investment to resume trading
------
Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ) intends to invest no less than 70 million yuan in the establishment of Fujian Yuanli Clean Energy Project Co., Ltd. The company will expand from products manufacturing into the activated carbon engineering application and the labor services industry. Gaotou Golden Laser, a company under Wuhan Golden Laser Co., Ltd. (300220.SZ), plans to invest 130 million yuan in Guangzhou Gleam Clever Culture Technology Co., Ltd. to buy 20 percent equities. Gleam Clever Culture Technology is principally engaged in animation design. Jiangxi Huawu Brake Co., Ltd. (300095.SZ) proposes to invest no more than 95 million yuan in Wuqiao Heavy Industry Crane Co., Ltd. It will hold no more than 49 percent equities of the company.
Apex Technology Co., Ltd. (002180.SZ) plans to invest 60 million yuan in the establishment of a wholly-owned subsidiary Zhuhai Lianxin Investment Co., Ltd. and participate in the establishment of the integrated circuit industrial fund. Do-Fluoride Chemicals Co., Ltd. (002407.SZ) will invest 160 million yuan to control Red Star Automobile through acquiring its equities and increasing investment to develop new energy automobiles. Leo Group Co., Ltd. (002131.SZ) intends to invest 15 million yuan in Tianjin Yixiang Haoju Network Technology Co., Ltd. to obtain 10 percent of its equities. The latter is an Internet-based platform providing O2O services for house renting and purchasing to overseas Chinese students. Besides, Zhejiang IDC Fluid Control Co., Ltd. (002468.SZ), Oriental Times Media Corporation (002175.SZ) and CRED Holding Co., Ltd. (600890.SH) will resume trading on July 22.
[Financial Reports Express]
○Hengtong Optic-electric and Shenghe Resources propose high share conversion and dividend
------
The actual controller of Hengtong Optic-electric Co., Ltd. (600487.SH) proposes a 20-for-10 conversion of capital surplus into shares according to its interim report. Shenghe Resources Holding Co., Ltd. (600392.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 to 2 yuan dividend for every 10 shares according to its half-year report.
○Soochow Securities and Guotai Junan Securities see performance surge
------
Soochow Securities Co., Ltd. (601555.SH) expects its net profit to hike 426 percent year on year in its interim report. Guotai Junan Securities Co., Ltd. (601211.SH) recorded an increase of 348 percent in net profit year on year in its half-year report.
[Trading Trends]
○Four institutes buy Yuan Longping High-tech Agriculture
------
The trading volume ranking list on July 21 shows that four institutes bought Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ) with 186 million yuan. One institutional seat sold 16.96 million yuan. The net buy amount reached 170 million yuan, accounting for 17.5 percent of its intraday turnover.
Comment: The company expects its performance to increase 30 percent to 60 percent in the first half. Institutes believe that after the private placement of the company is approved, it will receive the support of strategic shareholders in capital and will conduct more denotative expansions, which will greatly improve its performance.
[Data Speaks]
○Certain new heavyweight stocks of funds fall significantly in July
------
The second quarterly reports of funds recently disclosed show that among the ten heavyweight stocks newly bought by funds in the second quarter accounting a relatively high proportion of tradable stocks held by funds totally recorded slight growth. Individual stocks saw great declines in July include: Rising Nonferrous Metals Share Co., Ltd. (600259.SH), Shandong Shanda Wit Science and Technology Co., Ltd. (000915.SZ), SJEC Corporation (601313.SH), Lingyun Industrial Corporation Limited (600480.SH), Anhui Yingliu Electromechanical Co., Ltd. (603308.SH), Xilinmen Furniture Co., Ltd. (603008.SH), Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH) and Guangdong East Power Co., Ltd. (300376.SZ).
Latest comments