[Today's Guide]
> Investigation by top management overlaps with concern of authoritative media, SOEs reform starts new journey
> MIIT releases action plan to push green industrial development of Beijing-Tianjin-Hebei area
> Linzhou Heavy Machinery to cooperate with CAS, Hokai Medical Instruments to resume trading with bullish news
> Wangsu Science & Technology to launch stock option incentive at market price, LEO Group and Leadman Biochemistry propose high share conversion
[XFA Focus]
○Investigation by top management overlaps with concern of authoritative media, SOEs reform starts new journey
------
The state-owned assets and state-owned enterprises (SOEs) reform attract continuous concern since Chinese President Xi Jinping invested local state-owned enterprise in Jilin Province. The State-owned Assets Supervision and Administration Commission (SASAC) of Guangdong Province on July 24 disclosed the investigation carried out by the SASAC of State Council on its website, indicating that Guangzhou takes a leading position nationwide in managing state-owned assets in a unified way, standardizing the construction of the board of directors, etc. Yang Xiong, mayor of Shanghai Municipality, recently also visited Shanghai Real Estate (Group) Co., Ltd., requiring state-owned enterprises to enhance efficiency of resource allocation with market-oriented mechanism. The CCTV News broadcasted on July 25 and the People’s Daily (Overseas Edition) and the Economic Daily issued on July 24 all reported the prospect of SOEs reform at length.
Comment: SOEs reform is not only promoted in Guangzhou, Shanghai, etc. but is also taken as a new opportunity by top management to revitalize old northeastern industrial bases in China. At present, the release of the top-level design scheme of SOEs reform is counting down. Capital market, as an important operation platform, will play a key role in the reform. Investor relations activity record shows that state-owned companies in Guangzhou including Guangzhou Grandbuy Co., Ltd. (002187.SZ), Guangzhou Lingnan Group Holdings Company Limited (000524.SZ), Guangzhou Guangri Stock Co., Ltd. (600894.SH), etc., receive intensive investigation from institutions. The asset injection and acquisition expansion prospect of these companies are concerned.
◆The trading volume ranking list shows that China National Complete Plant Import & Export Corp., Ltd. (000151.SZ) was bought by two institutional seats on July 23 with a total of 81.58 million yuan and was bought by four institutional seats on July 24 with a total of 80.81 million yuan. State Development & Investment Corporation, actual controller of the company, is among the first batch of piloting central enterprises to be reorganized into companies invested by state-owned capital.
[XFA Selection]
○Beijing-Tianjin-Hebei coordinated development work promotion meeting was held on July 24 and Chinese vice-Premier Zhang Gaoli required faster formulation of the thirteenth five-year plan for Beijing-Tianjin-Hebei area.
○China Securities Regulatory Commission on July 24 indicated to punish a batch of cases violating laws and rules recently and to publicly expose typical cases.
○Shanghai Stock Exchange reported the progress of the shareholding increase by substantial shareholders, director, supervisor and senior management of companies listed on Shanghai Stock Exchange since July. 266 listed companies gained a shareholding increase totaling 24.6 billion yuan.
○Several listed companies announced in the weekend that their controlling shareholders were investigated by China Securities Regulatory Commission due to shareholding reduction against rules earlier.
○The Interim Procedures for Regulation of Internet Insurance Business is released, indicating the implementation of the first classified regulation detailed rule for Internet finance.
○By the afternoon of July 26, the total box office of Monster Hunt exceeded 1.3 billion yuan, setting a new record of box office achieved by domestic films.
[Industry Information]
○MIIT releases action plan to push green industrial development of Beijing-Tianjin-Hebei area
------
The Ministry of Industry and Information Technology (MIIT) on July 26 released the action plan for the coordinated development of industrial resources comprehensive utilization industry of Beijing-Tianjin-Hebei area and surrounding area, proposing to focus on the recycling of bulk industrial solid wastes and renewable resources; fully enhance the green industrial development level of Beijing-Tianjin-Hebei area and its surrounding area; dispose 400 million tons of industrial solid waste annually, process and utilize 20 million tons of renewable resources, reach a total value of out-put of 22 million yuan and reduce the discharging of fine particles by 20 million tons annually by 2017. Tianjin will mainly focus on Ziya circular economy industrial park, increase efforts in importing renewable resources from overseas, improve resource aggregation ability and undertake the transfer of renewable resources processing and utilization projects from Beijing.
Comment: The above action plan is a supporting document for the Guideline of Beijing-Tianjin-Hebei Coordinated Development Plan. Bases, parks, enterprises and projects covered in the action plan will gain capital support from the central government in the future. Tianjin Ziya circular economy industrial park mentioned in the action plan is a project undertaken by GEM Co., Ltd. (002340.SZ). GEM might take this project as an opportunity to further expand its business in Beijing-Tianjin-Hebei area; Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ), an environment monitoring enterprise in Hebei Province, might benefit first from the green industrial development of Beijing-Tianjin-Hebei area.
○China launches two Beidou satellites, industry to see rapid development
------
China successfully launched two satellites for the Beidou Navigation Satellite System into orbit on July 25 by an Expedition-1. It is the first time that the Expedition-1 sends two satellites, marking a solid step in the global coverage of the System and speeding up in the construction of the global network. According to the plan, China will build a Beidou Navigation Satellite System with 35 satellites covering the whole globe. 19 satellites have been launched.
Comment: With the acceleration in the network construction, the satellite navigation industry will see a market of over 400 billion yuan in 2020 and the market share of Beidou products is expected to reach over 60 percent compared with the current 10 percent. Among listed companies, Hwa Create Co., Ltd. (300045.SZ) is quite competitive in Beidou products for military and civil uses. Sichuan Jiuzhou Electronic Co., Ltd. (000801.SZ) recently announced that it plans to acquire a satellite navigation company under its controlling shareholder to develop Beidou business. China Spacesat Co., Ltd. (600118.SH) enjoys competitiveness in the Beidou terminal products market. Institutes expect that the company will see big satellite assets injection.
[Announcement Interpretation]
○Linzhou Heavy Machinery to cooperate with CAS, controlling shareholder to increase shareholding
------
Linzhou Heavy Machinery Group Co., Ltd. (002535.SZ) will cooperate with the Technology and Engineering Center for Space Utilization of the Chinese Academy of Sciences in such fields as information cooperation, resources sharing, technology research and development and project operation, so as to complement each other's advantages. Besides, the controlling shareholder of the company will increase the shareholding in the company with 1 million to 6 million shares in the following month.
○Hokai Medical Instruments to resume trading with bullish news
------
Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) proposes to raise 1 billion yuan by issuing 44.13 million shares at 22.66 yuan per share through private placement. The proceeds will be invested in hospital expansion. Zhongzhi Enterprise Group will also participate in. Tianguang Fire-Fighting Co., Ltd. (002509.SZ) and the Industrial Bank Quanzhou Branch intend to jointly invest no more than 500 million yuan to establish Tianguang-Xingye fire-fighting industrial investment fund with a proportion of no less than 1:2. The fund will be mainly used in acquiring quality enterprises in the fire-fighting industry. Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ) plans to invest 10 million yuan in Suzhou Gongxun Science and Technology Co., Ltd. to acquire 60 percent equities of the company.
In addition, Shenzhen Universe (Group) Co., Ltd. (000023.SZ) will terminate the equity incentive program to resume trading. Juli Sling Co., Ltd. (002342.SZ) will terminate the reorganization to resume trading.
○Wangsu Science & Technology to launch stock option incentive at market price
------
Wangsu Science & Technology Co., Ltd. (300017.SZ) plans to grant 14.59 million stock options to 445 incentive objects, taking up 2.08 percent of total equity. The exercise price is 57.9 yuan per share, which is the same with its latest closing price. Net profit of the company in the first half year grows by 66.69 percent from a year earlier.
Performance evaluation conditions: Compared with 2014, its net profit growth from 2015 to 2018 shall not be lower than 40 percent, 70 percent, 100 percent and 130 percent, respectively.
○China Securities Finance appears in shareholders list of Changbao Steeltube
------
According to the latest shareholders list of Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ), up to July 21, China Securities Finance Corporation Limited holds 17.5 million shares in the company, accounting for 4.38 percent of its total share capital. In addition, Baosteel Group Corporation also holds 5 million shares in Changbao Steeltube, taking up 1.25 percent of its total share capital.
[Financial Reports Express]
○LEO Group and Leadman Biochemistry propose high share conversion
------
LEO Group Co., Ltd. (002131.SZ) proposes a 20-for-10 conversion of capital surplus into shares according to its interim report. Beijing Leadman Biochemistry Co., Ltd. (300289.SZ) proposes a 15-for-10 conversion of capital surplus into shares according to its half-year report.
[Weekly Review]
○Reform benefits
------
The reform theme stood out again. The military engineering reform, the state-owned enterprises (SOEs) reform and even oil and power reform themes surged in the recovery of the stock market.
There are still controversies over whether there is a reform-based bull run, but there are reform-based bullish stocks. In the past week, most military engineering stocks and SOEs reform concept stocks recognized in the market have become the pioneers in the market. XFA mentioned the military-civil integration, the securitization of military engineering assets and the SOEs reform many times, which have been highly recognized. It fully shows that the reform theme is highly favored by investors. It has been proved by the market for many times and will continue to be proved in the future.
There are a huge amount of reform benefits and the SOEs reform plays an important part. The authorities have indicated to “make SOEs bigger, stronger and better”, which brings higher expectation on the SOEs reform. The exploration on the first batch of central enterprises for pilot reform, the expectation on the second batch as well as the guesses on the consolidation of central enterprises and local SOEs have formed the SOEs reform in the A-share market. Any moves in the reform in the future will stimulate the market.
It is difficult to expect the short-term market fluctuation, but the orientation of reform is certain. The reform benefits are highly expected.
> Investigation by top management overlaps with concern of authoritative media, SOEs reform starts new journey
> MIIT releases action plan to push green industrial development of Beijing-Tianjin-Hebei area
> Linzhou Heavy Machinery to cooperate with CAS, Hokai Medical Instruments to resume trading with bullish news
> Wangsu Science & Technology to launch stock option incentive at market price, LEO Group and Leadman Biochemistry propose high share conversion
[XFA Focus]
○Investigation by top management overlaps with concern of authoritative media, SOEs reform starts new journey
------
The state-owned assets and state-owned enterprises (SOEs) reform attract continuous concern since Chinese President Xi Jinping invested local state-owned enterprise in Jilin Province. The State-owned Assets Supervision and Administration Commission (SASAC) of Guangdong Province on July 24 disclosed the investigation carried out by the SASAC of State Council on its website, indicating that Guangzhou takes a leading position nationwide in managing state-owned assets in a unified way, standardizing the construction of the board of directors, etc. Yang Xiong, mayor of Shanghai Municipality, recently also visited Shanghai Real Estate (Group) Co., Ltd., requiring state-owned enterprises to enhance efficiency of resource allocation with market-oriented mechanism. The CCTV News broadcasted on July 25 and the People’s Daily (Overseas Edition) and the Economic Daily issued on July 24 all reported the prospect of SOEs reform at length.
Comment: SOEs reform is not only promoted in Guangzhou, Shanghai, etc. but is also taken as a new opportunity by top management to revitalize old northeastern industrial bases in China. At present, the release of the top-level design scheme of SOEs reform is counting down. Capital market, as an important operation platform, will play a key role in the reform. Investor relations activity record shows that state-owned companies in Guangzhou including Guangzhou Grandbuy Co., Ltd. (002187.SZ), Guangzhou Lingnan Group Holdings Company Limited (000524.SZ), Guangzhou Guangri Stock Co., Ltd. (600894.SH), etc., receive intensive investigation from institutions. The asset injection and acquisition expansion prospect of these companies are concerned.
◆The trading volume ranking list shows that China National Complete Plant Import & Export Corp., Ltd. (000151.SZ) was bought by two institutional seats on July 23 with a total of 81.58 million yuan and was bought by four institutional seats on July 24 with a total of 80.81 million yuan. State Development & Investment Corporation, actual controller of the company, is among the first batch of piloting central enterprises to be reorganized into companies invested by state-owned capital.
[XFA Selection]
○Beijing-Tianjin-Hebei coordinated development work promotion meeting was held on July 24 and Chinese vice-Premier Zhang Gaoli required faster formulation of the thirteenth five-year plan for Beijing-Tianjin-Hebei area.
○China Securities Regulatory Commission on July 24 indicated to punish a batch of cases violating laws and rules recently and to publicly expose typical cases.
○Shanghai Stock Exchange reported the progress of the shareholding increase by substantial shareholders, director, supervisor and senior management of companies listed on Shanghai Stock Exchange since July. 266 listed companies gained a shareholding increase totaling 24.6 billion yuan.
○Several listed companies announced in the weekend that their controlling shareholders were investigated by China Securities Regulatory Commission due to shareholding reduction against rules earlier.
○The Interim Procedures for Regulation of Internet Insurance Business is released, indicating the implementation of the first classified regulation detailed rule for Internet finance.
○By the afternoon of July 26, the total box office of Monster Hunt exceeded 1.3 billion yuan, setting a new record of box office achieved by domestic films.
[Industry Information]
○MIIT releases action plan to push green industrial development of Beijing-Tianjin-Hebei area
------
The Ministry of Industry and Information Technology (MIIT) on July 26 released the action plan for the coordinated development of industrial resources comprehensive utilization industry of Beijing-Tianjin-Hebei area and surrounding area, proposing to focus on the recycling of bulk industrial solid wastes and renewable resources; fully enhance the green industrial development level of Beijing-Tianjin-Hebei area and its surrounding area; dispose 400 million tons of industrial solid waste annually, process and utilize 20 million tons of renewable resources, reach a total value of out-put of 22 million yuan and reduce the discharging of fine particles by 20 million tons annually by 2017. Tianjin will mainly focus on Ziya circular economy industrial park, increase efforts in importing renewable resources from overseas, improve resource aggregation ability and undertake the transfer of renewable resources processing and utilization projects from Beijing.
Comment: The above action plan is a supporting document for the Guideline of Beijing-Tianjin-Hebei Coordinated Development Plan. Bases, parks, enterprises and projects covered in the action plan will gain capital support from the central government in the future. Tianjin Ziya circular economy industrial park mentioned in the action plan is a project undertaken by GEM Co., Ltd. (002340.SZ). GEM might take this project as an opportunity to further expand its business in Beijing-Tianjin-Hebei area; Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ), an environment monitoring enterprise in Hebei Province, might benefit first from the green industrial development of Beijing-Tianjin-Hebei area.
○China launches two Beidou satellites, industry to see rapid development
------
China successfully launched two satellites for the Beidou Navigation Satellite System into orbit on July 25 by an Expedition-1. It is the first time that the Expedition-1 sends two satellites, marking a solid step in the global coverage of the System and speeding up in the construction of the global network. According to the plan, China will build a Beidou Navigation Satellite System with 35 satellites covering the whole globe. 19 satellites have been launched.
Comment: With the acceleration in the network construction, the satellite navigation industry will see a market of over 400 billion yuan in 2020 and the market share of Beidou products is expected to reach over 60 percent compared with the current 10 percent. Among listed companies, Hwa Create Co., Ltd. (300045.SZ) is quite competitive in Beidou products for military and civil uses. Sichuan Jiuzhou Electronic Co., Ltd. (000801.SZ) recently announced that it plans to acquire a satellite navigation company under its controlling shareholder to develop Beidou business. China Spacesat Co., Ltd. (600118.SH) enjoys competitiveness in the Beidou terminal products market. Institutes expect that the company will see big satellite assets injection.
[Announcement Interpretation]
○Linzhou Heavy Machinery to cooperate with CAS, controlling shareholder to increase shareholding
------
Linzhou Heavy Machinery Group Co., Ltd. (002535.SZ) will cooperate with the Technology and Engineering Center for Space Utilization of the Chinese Academy of Sciences in such fields as information cooperation, resources sharing, technology research and development and project operation, so as to complement each other's advantages. Besides, the controlling shareholder of the company will increase the shareholding in the company with 1 million to 6 million shares in the following month.
○Hokai Medical Instruments to resume trading with bullish news
------
Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) proposes to raise 1 billion yuan by issuing 44.13 million shares at 22.66 yuan per share through private placement. The proceeds will be invested in hospital expansion. Zhongzhi Enterprise Group will also participate in. Tianguang Fire-Fighting Co., Ltd. (002509.SZ) and the Industrial Bank Quanzhou Branch intend to jointly invest no more than 500 million yuan to establish Tianguang-Xingye fire-fighting industrial investment fund with a proportion of no less than 1:2. The fund will be mainly used in acquiring quality enterprises in the fire-fighting industry. Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ) plans to invest 10 million yuan in Suzhou Gongxun Science and Technology Co., Ltd. to acquire 60 percent equities of the company.
In addition, Shenzhen Universe (Group) Co., Ltd. (000023.SZ) will terminate the equity incentive program to resume trading. Juli Sling Co., Ltd. (002342.SZ) will terminate the reorganization to resume trading.
○Wangsu Science & Technology to launch stock option incentive at market price
------
Wangsu Science & Technology Co., Ltd. (300017.SZ) plans to grant 14.59 million stock options to 445 incentive objects, taking up 2.08 percent of total equity. The exercise price is 57.9 yuan per share, which is the same with its latest closing price. Net profit of the company in the first half year grows by 66.69 percent from a year earlier.
Performance evaluation conditions: Compared with 2014, its net profit growth from 2015 to 2018 shall not be lower than 40 percent, 70 percent, 100 percent and 130 percent, respectively.
○China Securities Finance appears in shareholders list of Changbao Steeltube
------
According to the latest shareholders list of Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ), up to July 21, China Securities Finance Corporation Limited holds 17.5 million shares in the company, accounting for 4.38 percent of its total share capital. In addition, Baosteel Group Corporation also holds 5 million shares in Changbao Steeltube, taking up 1.25 percent of its total share capital.
[Financial Reports Express]
○LEO Group and Leadman Biochemistry propose high share conversion
------
LEO Group Co., Ltd. (002131.SZ) proposes a 20-for-10 conversion of capital surplus into shares according to its interim report. Beijing Leadman Biochemistry Co., Ltd. (300289.SZ) proposes a 15-for-10 conversion of capital surplus into shares according to its half-year report.
[Weekly Review]
○Reform benefits
------
The reform theme stood out again. The military engineering reform, the state-owned enterprises (SOEs) reform and even oil and power reform themes surged in the recovery of the stock market.
There are still controversies over whether there is a reform-based bull run, but there are reform-based bullish stocks. In the past week, most military engineering stocks and SOEs reform concept stocks recognized in the market have become the pioneers in the market. XFA mentioned the military-civil integration, the securitization of military engineering assets and the SOEs reform many times, which have been highly recognized. It fully shows that the reform theme is highly favored by investors. It has been proved by the market for many times and will continue to be proved in the future.
There are a huge amount of reform benefits and the SOEs reform plays an important part. The authorities have indicated to “make SOEs bigger, stronger and better”, which brings higher expectation on the SOEs reform. The exploration on the first batch of central enterprises for pilot reform, the expectation on the second batch as well as the guesses on the consolidation of central enterprises and local SOEs have formed the SOEs reform in the A-share market. Any moves in the reform in the future will stimulate the market.
It is difficult to expect the short-term market fluctuation, but the orientation of reform is certain. The reform benefits are highly expected.
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