[Today’s Guide]
> NDRC to introduce of six emerging industrial project packages to promote transformation
> Ministry of Commerce deregulates non-state crude import, some enterprises to develop first
> Bright Oceans Inter-Telecom, etc. resume trading with good news, Hongrun Construction invests heavily in construction of photovoltaic power station
> Dongguang Micro-electronics to control architecture design software company, Sanxiang to acquire Wonders Arts Development with RMB1.9 bln
[XFA Focus]
○ NDRC to introduce six emerging industrial project packages to promote transformation
------
The National Development and Reform Commission (NDRC) issued a circular on the implementation of significant project packages in emerging industries on July 23, proposing that it will focus on the construction of six key projects from 2015 to 2017, including the information consumption, the new health technologies benefiting people’s life, marine engineering equipment, the development of high-tech service industries, the high-performance integrated circuit and the industrial innovation capacity. The document proposes that it will establish 30 demonstration centers for the application of gene detection technologies and facilitate the gene detection and other advanced health technologies in benefiting people’s livelihood. It will also make breakthroughs in various technologies in the design and manufacturing of maritime engineering equipment.
Comment: The six project packages all belong to emerging industries, obviously showing the NDRC’s intention in promoting economic transformation. The promotion of the gene detection technologies in benefiting people’s life enjoys priority. Institutes expect that only the NIPT products enjoy a market potential of about 16 billion yuan. Among listed companies, Shanxi C&Y Pharmaceutical Group Co., Ltd. (300254.SZ) is transforming into gene detection business. In addition, China Oilfield Services Limited (601808.SH), the only oilfield service company with deep-water oil and gas exploitation capacity, is expected to play an important role in promoting the development of China’s maritime engineering equipment industry. Jiangsu Rainbow Heavy Industries Co., Ltd. (002483.SZ) proposes to raise 646 million yuan to develop the maritime engineering equipment industry.
○ Shandong State-owned assets reform to speed up, competitive industries integration to see huge potential
------
XFA learnt that municipal state-owned assets supervision and administration commissions of Shandong Province recently held mid-year work conferences to make plans on key reform tasks in the second half. Weifang State-owned Assets Supervision and Administration Commission held a meeting for heads of municipal-level state-owned enterprises, pledging to speed up in eight tasks, including the establishment of modern enterprise systems. The State-owned Assets Supervision and Administration Commission of Jinan People’s Government specified the development strategy of municipal-level state-owned enterprises and urged to accelerate the pace of deepening reform. Heze City People’s Government the State-owned Assets Supervision and Administration Commission hold a meeting on economic operation analysis, urging to accelerate the development of mixed ownership system.
Comment: Shandong Province ranks fifth in terms of state-owned assets in China. It has established pilot companies for the investment and operation of state-owned assets. 30 percent of the provincial state-owned assets have been transferred to social security funds. These moves suggest that the province’s efforts in state-owned assets reform will beat expectations. There is still a large space for integration of competitive industries, such as chemical engineering, pharmaceutical and other competitive industries. Among listed companies, the actual controller of Luxi Chemical Group Co., Ltd. (000830.SZ) is Liaocheng State-owned Assets Supervision and Administration Commission. Shandong Lukang Pharmaceutical Co., Ltd. (600789.SH) is a company under the State-owned Assets Supervision and Administration Commission of Shandong Provincial Government.
[XFA Selection]
○ Hong Kong Exchanges and Clearing Limited (00388.HK) disclosed that China Merchants Group increased the holding of A shares in China Merchants Bank Co., Ltd. (03968.HK; 600036.SH) with 859 million yuan on July 20. Central Huijin Investment Ltd. increased the holding of H shares in China Everbright Bank Co., Ltd. (601818.SH) with 21.46 million yuan on July 21.
○ Xu Xueming, vice-president of the Postal Savings Bank of China, indicated that the bank is accelerating the process of introducing strategic investors according to relevant requirements by the State Council.
○ China’s fixed asset investment in the railway sector surged 12.7 percent year on year to 265.13 billion yuan in the first half of 2015.
○ The latest Statistical Report on Internet Development in China shows that the Internet penetration is 48.8 percent by June. Mobile and business applications saw rapid development.
○ Alibaba Group announced on July 23 that it would develop supermarkets and promote its Tmall supermarket across China in stages.
[Industry Information]
○ Ministry of Commerce deregulates non-state crude import, some enterprises to develop first
------
The Ministry of Commerce released a circular on July 23, specifying that crude oil processing enterprises can obtain the qualification for crude import and setting various preconditions. It previously set relatively high thresholds on non-state crude oil import, which actually prevent private enterprises from importing crude oil. However, many private enterprises can meet the current conditions.
Comment: Analysts believe that the move is part of the supporting policies on oil reform this year. It means that the crude oil import has been further deregulated and eligible crude oil processing enterprises will benefit first and enterprises with overseas oil and gas resources businesses will also benefit. Guanghui Energy Co., Ltd. (600256.SH) was granted an import quota of 200,000 metric tons of crude oil for 2014, becoming the first private company to obtain such a license. It acquired crude oil reserves of Zaysan oilfield and another oilfield project in Kazakhstan in 2013. Geo-jade Petroleum Corporation (600759.SH) purchased overseas oil and gas assets at low prices and successfully bought 95 percent equities of Kazakhstan’s Maten Petroleum Joint Stock Company. It acquired 100 percent equities of KoZhan Company in March.
○ Prosperity of shipping industry picks up continuously, expectation on integration of central enterprises intensified
------
Baltic Dry Index (BDI) closed at 1,118 points on July 22, indicating a surge trend for 14 consecutive trading days and a surge of 90 percent since June 1. It is noteworthy that the expectation on the integration of central enterprises in shipping industry is increasingly intensified recently. China COSCO Holdings Company Limited (601919.SH; 01919.HK) and China Shipping Development Company Limited (600026.SH; 01138.HK) announced earlier to jointly establish China Ore Transportation Company, setting off expectation on the integration of these two shipping central enterprises again in the market.
Comment: The industry expects that China Ocean Shipping (Group) Company (COSCO) and China Shipping (Group) Company are more overlapped in concentrated transportation and bulk transportation business. The two groups might carry out more integration in business and capital through the new platform of China Ore Transportation Company. Substantial progress might be achieved in the third quarter this year at the soonest. In addition, China, the U.S. and Europe might sign the largest tariff agreement in WTO in nearly 20 years this week. Prosperity of shipping industry will gain important support.
[Announcement Interpretation]
○ Bright Oceans Inter-Telecom, etc. resume trading with good news
------
Bright Oceans Inter-Telecom Corporation (600289.SH) proposes to repurchase shares with a market value of 19.57 million yuan at no more than 18.67 yuan per share. Beijing Shouhang Resources Saving Co., Ltd. (002665.SZ) plans staff shareholding plan; a fully-owned subsidiary under Kunming Sinobright (Group) Co., Ltd. (000560.SZ) increases shareholding in Shanghai Handpay Information Technology Company Limited; Ningxia Dayuan Chemical Co., Ltd. (600146.SH) revises staff shareholding plan; significant asset reorganization applications of Xi'An Catering Co., Ltd. (000721.SZ) and Zhejiang Material Industrial Zhongda Yuantong Group Co., Ltd. (600704.SH) are approved by China Securities Regulatory Commission. In addition, Newcapec Electronics Co., Ltd. (300248.SZ) also has resumed trading.
○ Hongrun Construction invests heavily in construction of photovoltaic power station
------
Hongrun Construction Group Co., Ltd. (002062.SZ) expects to totally invest 1 billion yuan in the construction of 100 MW photovoltaic grid-connected power station project to explore new energy. Meanwhile, the company also actively expands the construction of new energy EPC project, plans to invest in national new energy charging pile (station) project to extend industrial chain of new energy with a total investment of 1 billion yuan.
○ Dongguang Micro-electronics to control architecture design software company
------
Beijing Honggao Construction and Decoration Engineering & Design Company Limited, a fully-owned subsidiary under Jiangsu Dongguang Micro-electronics Co., Ltd. (002504.SZ), plans to invest in no more than 200 million yuan in Gaide Software Technology Group Company Limited to acquire 51 percent of its equities. Gaide Software is the general agency of Autodesk Software Company’s Architecture Engineering and Construction (AEC) in China and the power of attorney is managed by Gaide Software for 15 consecutive years. Dongguang Micro-electronics will take this opportunity to make planning in AEC software industry to achieve synergistic effect.
○ Sanxiang to acquire Wonders Arts Development with RMB1.9 bln
------
Sanxiang Co., Ltd. (000863.SZ) plans to acquire 100 percent equities of Wonders Arts Development Co., Ltd. with 1.9 billion yuan by issuing shares and paying cash. The company also plans to raise a supporting fund of 1.9 billion yuan through private placement at an offering price of 6.5 yuan per share. Wonders Arts Development is principally engaged in the planning, originality and production of tourism performing arts and its core team gathers three famous directors in China which are Zhang Yimou, Wang Chaoge and Fan Yue.
Sanxiang is principally engaged in real estate. Upon completion of transaction, the company will explore tourism performing arts business and actively expand to the originality and service areas of culture, tourism, etc. industries. The counterparty promises that the net profit of Wonders Arts Development from 2015 to 2017 will be no less than 100 million yuan, 130 million yuan and 160 million yuan, respectively.
○ CSF become stockholder of Nanjing Gaoke
------
The top ten tradable-share holders list of Nanjing Gaoke Company Limited (600064.SH) shows that as of July 10, China Securities Finance Co., Ltd. (CSF) holds 37. 94 million shares, accounting for 4.9 percent of the company’s total share capital. Other 10 financial asset management programs’ accounts run by CFS, such as that of Harvest China Securities Financial Asset Management Program, hold 4.12 million shares of Nanjing Gaoke each, which is 0.53 percent of the company’s total share capital. By July 22, the shares held by CSF increases slightly to 37.94 million shares and the above-said 10 asset management accounts respectively increase their holdings to 4.25 million shares which also bring the percentage to 0.55 percent.
○ Lushang Property, etc. see shareholding increase
------
Shandong Commercial Group Co., Ltd., controlling shareholder of Lushang Property Co., Ltd. (600223.SH), increases shareholding in the company by 3.99 million shares on July 23, accounting for 0.4 percent of its total share capital. It plans to continue to increase shareholding in the company by no more than 2 percent of the company’s total share capital in next six months. Jincheng Group, controlling shareholder of Zhonghang Heibao Co., Ltd. (600760.SH), increases shareholding in the company by 4.07 million shares on July 22 and 23, accounting for 1.18 percent of the company’s total share capital. It plans to continue the shareholding increase as planned in the future. In addition, three of the directors and senior management of Shenzhen Infinova d (002528.SZ) increase their shareholdings in the company by 616,000 shares, accounting for 0.1 percent of the company’s total share capital on July 23. Controlling shareholder of Liaoning Shidai Wanheng Co., Ltd. (600241.SH) on July 22 bought 500,000 more shares of the company.
[Financial Reports Express]
○ Performance of Ye Chiu Metal Recycling (China) boosts sharply
------
Net profit of Ye Chiu Metal Recycling (China), Ltd. (601388.SH) is forecasted to see a year-on-year growth of 570-620 percent in its semi-yearly report. The main reason goes to lower cost, expansion of market and increase of investment return. New China Life Insurance Company (601336.SH) is predicted to have a year-on-year increase of 80 percent in net profit in its semiyearly report, the main reason for which is that the investment return has surged.
> NDRC to introduce of six emerging industrial project packages to promote transformation
> Ministry of Commerce deregulates non-state crude import, some enterprises to develop first
> Bright Oceans Inter-Telecom, etc. resume trading with good news, Hongrun Construction invests heavily in construction of photovoltaic power station
> Dongguang Micro-electronics to control architecture design software company, Sanxiang to acquire Wonders Arts Development with RMB1.9 bln
[XFA Focus]
○ NDRC to introduce six emerging industrial project packages to promote transformation
------
The National Development and Reform Commission (NDRC) issued a circular on the implementation of significant project packages in emerging industries on July 23, proposing that it will focus on the construction of six key projects from 2015 to 2017, including the information consumption, the new health technologies benefiting people’s life, marine engineering equipment, the development of high-tech service industries, the high-performance integrated circuit and the industrial innovation capacity. The document proposes that it will establish 30 demonstration centers for the application of gene detection technologies and facilitate the gene detection and other advanced health technologies in benefiting people’s livelihood. It will also make breakthroughs in various technologies in the design and manufacturing of maritime engineering equipment.
Comment: The six project packages all belong to emerging industries, obviously showing the NDRC’s intention in promoting economic transformation. The promotion of the gene detection technologies in benefiting people’s life enjoys priority. Institutes expect that only the NIPT products enjoy a market potential of about 16 billion yuan. Among listed companies, Shanxi C&Y Pharmaceutical Group Co., Ltd. (300254.SZ) is transforming into gene detection business. In addition, China Oilfield Services Limited (601808.SH), the only oilfield service company with deep-water oil and gas exploitation capacity, is expected to play an important role in promoting the development of China’s maritime engineering equipment industry. Jiangsu Rainbow Heavy Industries Co., Ltd. (002483.SZ) proposes to raise 646 million yuan to develop the maritime engineering equipment industry.
○ Shandong State-owned assets reform to speed up, competitive industries integration to see huge potential
------
XFA learnt that municipal state-owned assets supervision and administration commissions of Shandong Province recently held mid-year work conferences to make plans on key reform tasks in the second half. Weifang State-owned Assets Supervision and Administration Commission held a meeting for heads of municipal-level state-owned enterprises, pledging to speed up in eight tasks, including the establishment of modern enterprise systems. The State-owned Assets Supervision and Administration Commission of Jinan People’s Government specified the development strategy of municipal-level state-owned enterprises and urged to accelerate the pace of deepening reform. Heze City People’s Government the State-owned Assets Supervision and Administration Commission hold a meeting on economic operation analysis, urging to accelerate the development of mixed ownership system.
Comment: Shandong Province ranks fifth in terms of state-owned assets in China. It has established pilot companies for the investment and operation of state-owned assets. 30 percent of the provincial state-owned assets have been transferred to social security funds. These moves suggest that the province’s efforts in state-owned assets reform will beat expectations. There is still a large space for integration of competitive industries, such as chemical engineering, pharmaceutical and other competitive industries. Among listed companies, the actual controller of Luxi Chemical Group Co., Ltd. (000830.SZ) is Liaocheng State-owned Assets Supervision and Administration Commission. Shandong Lukang Pharmaceutical Co., Ltd. (600789.SH) is a company under the State-owned Assets Supervision and Administration Commission of Shandong Provincial Government.
[XFA Selection]
○ Hong Kong Exchanges and Clearing Limited (00388.HK) disclosed that China Merchants Group increased the holding of A shares in China Merchants Bank Co., Ltd. (03968.HK; 600036.SH) with 859 million yuan on July 20. Central Huijin Investment Ltd. increased the holding of H shares in China Everbright Bank Co., Ltd. (601818.SH) with 21.46 million yuan on July 21.
○ Xu Xueming, vice-president of the Postal Savings Bank of China, indicated that the bank is accelerating the process of introducing strategic investors according to relevant requirements by the State Council.
○ China’s fixed asset investment in the railway sector surged 12.7 percent year on year to 265.13 billion yuan in the first half of 2015.
○ The latest Statistical Report on Internet Development in China shows that the Internet penetration is 48.8 percent by June. Mobile and business applications saw rapid development.
○ Alibaba Group announced on July 23 that it would develop supermarkets and promote its Tmall supermarket across China in stages.
[Industry Information]
○ Ministry of Commerce deregulates non-state crude import, some enterprises to develop first
------
The Ministry of Commerce released a circular on July 23, specifying that crude oil processing enterprises can obtain the qualification for crude import and setting various preconditions. It previously set relatively high thresholds on non-state crude oil import, which actually prevent private enterprises from importing crude oil. However, many private enterprises can meet the current conditions.
Comment: Analysts believe that the move is part of the supporting policies on oil reform this year. It means that the crude oil import has been further deregulated and eligible crude oil processing enterprises will benefit first and enterprises with overseas oil and gas resources businesses will also benefit. Guanghui Energy Co., Ltd. (600256.SH) was granted an import quota of 200,000 metric tons of crude oil for 2014, becoming the first private company to obtain such a license. It acquired crude oil reserves of Zaysan oilfield and another oilfield project in Kazakhstan in 2013. Geo-jade Petroleum Corporation (600759.SH) purchased overseas oil and gas assets at low prices and successfully bought 95 percent equities of Kazakhstan’s Maten Petroleum Joint Stock Company. It acquired 100 percent equities of KoZhan Company in March.
○ Prosperity of shipping industry picks up continuously, expectation on integration of central enterprises intensified
------
Baltic Dry Index (BDI) closed at 1,118 points on July 22, indicating a surge trend for 14 consecutive trading days and a surge of 90 percent since June 1. It is noteworthy that the expectation on the integration of central enterprises in shipping industry is increasingly intensified recently. China COSCO Holdings Company Limited (601919.SH; 01919.HK) and China Shipping Development Company Limited (600026.SH; 01138.HK) announced earlier to jointly establish China Ore Transportation Company, setting off expectation on the integration of these two shipping central enterprises again in the market.
Comment: The industry expects that China Ocean Shipping (Group) Company (COSCO) and China Shipping (Group) Company are more overlapped in concentrated transportation and bulk transportation business. The two groups might carry out more integration in business and capital through the new platform of China Ore Transportation Company. Substantial progress might be achieved in the third quarter this year at the soonest. In addition, China, the U.S. and Europe might sign the largest tariff agreement in WTO in nearly 20 years this week. Prosperity of shipping industry will gain important support.
[Announcement Interpretation]
○ Bright Oceans Inter-Telecom, etc. resume trading with good news
------
Bright Oceans Inter-Telecom Corporation (600289.SH) proposes to repurchase shares with a market value of 19.57 million yuan at no more than 18.67 yuan per share. Beijing Shouhang Resources Saving Co., Ltd. (002665.SZ) plans staff shareholding plan; a fully-owned subsidiary under Kunming Sinobright (Group) Co., Ltd. (000560.SZ) increases shareholding in Shanghai Handpay Information Technology Company Limited; Ningxia Dayuan Chemical Co., Ltd. (600146.SH) revises staff shareholding plan; significant asset reorganization applications of Xi'An Catering Co., Ltd. (000721.SZ) and Zhejiang Material Industrial Zhongda Yuantong Group Co., Ltd. (600704.SH) are approved by China Securities Regulatory Commission. In addition, Newcapec Electronics Co., Ltd. (300248.SZ) also has resumed trading.
○ Hongrun Construction invests heavily in construction of photovoltaic power station
------
Hongrun Construction Group Co., Ltd. (002062.SZ) expects to totally invest 1 billion yuan in the construction of 100 MW photovoltaic grid-connected power station project to explore new energy. Meanwhile, the company also actively expands the construction of new energy EPC project, plans to invest in national new energy charging pile (station) project to extend industrial chain of new energy with a total investment of 1 billion yuan.
○ Dongguang Micro-electronics to control architecture design software company
------
Beijing Honggao Construction and Decoration Engineering & Design Company Limited, a fully-owned subsidiary under Jiangsu Dongguang Micro-electronics Co., Ltd. (002504.SZ), plans to invest in no more than 200 million yuan in Gaide Software Technology Group Company Limited to acquire 51 percent of its equities. Gaide Software is the general agency of Autodesk Software Company’s Architecture Engineering and Construction (AEC) in China and the power of attorney is managed by Gaide Software for 15 consecutive years. Dongguang Micro-electronics will take this opportunity to make planning in AEC software industry to achieve synergistic effect.
○ Sanxiang to acquire Wonders Arts Development with RMB1.9 bln
------
Sanxiang Co., Ltd. (000863.SZ) plans to acquire 100 percent equities of Wonders Arts Development Co., Ltd. with 1.9 billion yuan by issuing shares and paying cash. The company also plans to raise a supporting fund of 1.9 billion yuan through private placement at an offering price of 6.5 yuan per share. Wonders Arts Development is principally engaged in the planning, originality and production of tourism performing arts and its core team gathers three famous directors in China which are Zhang Yimou, Wang Chaoge and Fan Yue.
Sanxiang is principally engaged in real estate. Upon completion of transaction, the company will explore tourism performing arts business and actively expand to the originality and service areas of culture, tourism, etc. industries. The counterparty promises that the net profit of Wonders Arts Development from 2015 to 2017 will be no less than 100 million yuan, 130 million yuan and 160 million yuan, respectively.
○ CSF become stockholder of Nanjing Gaoke
------
The top ten tradable-share holders list of Nanjing Gaoke Company Limited (600064.SH) shows that as of July 10, China Securities Finance Co., Ltd. (CSF) holds 37. 94 million shares, accounting for 4.9 percent of the company’s total share capital. Other 10 financial asset management programs’ accounts run by CFS, such as that of Harvest China Securities Financial Asset Management Program, hold 4.12 million shares of Nanjing Gaoke each, which is 0.53 percent of the company’s total share capital. By July 22, the shares held by CSF increases slightly to 37.94 million shares and the above-said 10 asset management accounts respectively increase their holdings to 4.25 million shares which also bring the percentage to 0.55 percent.
○ Lushang Property, etc. see shareholding increase
------
Shandong Commercial Group Co., Ltd., controlling shareholder of Lushang Property Co., Ltd. (600223.SH), increases shareholding in the company by 3.99 million shares on July 23, accounting for 0.4 percent of its total share capital. It plans to continue to increase shareholding in the company by no more than 2 percent of the company’s total share capital in next six months. Jincheng Group, controlling shareholder of Zhonghang Heibao Co., Ltd. (600760.SH), increases shareholding in the company by 4.07 million shares on July 22 and 23, accounting for 1.18 percent of the company’s total share capital. It plans to continue the shareholding increase as planned in the future. In addition, three of the directors and senior management of Shenzhen Infinova d (002528.SZ) increase their shareholdings in the company by 616,000 shares, accounting for 0.1 percent of the company’s total share capital on July 23. Controlling shareholder of Liaoning Shidai Wanheng Co., Ltd. (600241.SH) on July 22 bought 500,000 more shares of the company.
[Financial Reports Express]
○ Performance of Ye Chiu Metal Recycling (China) boosts sharply
------
Net profit of Ye Chiu Metal Recycling (China), Ltd. (601388.SH) is forecasted to see a year-on-year growth of 570-620 percent in its semi-yearly report. The main reason goes to lower cost, expansion of market and increase of investment return. New China Life Insurance Company (601336.SH) is predicted to have a year-on-year increase of 80 percent in net profit in its semiyearly report, the main reason for which is that the investment return has surged.
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