Early Bird

Early Bird 30-July-2015

SHENZHEN
2015-07-30 17:07

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[Today’s Guide]
>State Council executive meeting promotes underground pipeline and tourism to establish new pillars in maintaining growth
>Electric motor industry to surge, low-altitude airspace reform scheme to implemented within year at soonest
>Comfort Science & Technology to control Korean enterprise, Zhangyuan Tungsten to acquire European enterprises to expand industrial chain
>Guangdong Chant to invest heavily in biomass, Eastern Gold Jade, etc. propose high share conversion
 
[XFA Focus]
○State Council executive meeting promotes underground pipeline and tourism to establish new pillars in maintaining growth
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Chinese Premier Li Keqiang chaired the executive meeting of the State Council on July 28, proposing to list the underground pipeline as a livelihood project with key national support and requiring municipal governments preparing special plans and giving priority arrangements. For new urban areas, the construction of new roads and the underground pipeline should be conducted at the same time. For old urban areas, it should make coordinated arrangements on the construction based on the renovation of old areas. The meeting also proposes to support the construction of tourism infrastructure in central and western regions and deregulate the market access and operation license on online holiday lease, tourism vehicles lease and other new businesses of the “Internet plus”.
 
Comment: The authorities have been concerned about the construction of urban underground pipeline since the beginning of this year. The Ministry of Housing and Urban-Rural Development set the target of 8,000 kilometers and an investment of 1 trillion yuan every year. Jilin Province and Shandong Province have introduced plans on the construction of underground pipeline recently. The underground pipeline may become another significant investment project to maintain economic growth led by the government after the railway and the affordable housing. Yonggao Co., Ltd. (002641.SZ), Xinjiang Guotong Pipeline Co., Ltd. (002205.SZ) and other pipe material enterprises are expected to benefit. In terms of the tourism industry, Huangshan Tourism Development Co., Ltd. (600054.SH) will benefit from more passengers brought by the newly-opened Hefei-Fuzhou High-speed Railway and the transformation of the ropeway. China CYTS Tours Holding Co., Ltd. (600138.SH) released an O2O platform on July 29.
 
[XFA Selection]
○AVIC Capital Co., Ltd. (600705.SH) removed general manager Yang Shengjun and indicated that it will unwaveringly maintain the stability of the capital market.
○The securities margin saw a net outflow of 121.3 billion yuan last week, indicating that the risks preference of investors is difficult to recover to the previous level in short term.
○The national fiscal work video conference was held on July 29, proposing to strengthen the promotion of significant projects and speed up in the promotion of the PPP model.
○The Ministry of Industry and Information Technology (MIIT) released the Guidance on Facilitating the Transformation and Development of the Fertilizer Industry, encouraging e-business platform and Internet plus agricultural materials activities.
○Zhangjiakou City was approved to establish a state-level recyclable energy demonstration zone, which will building five functional zones, including the low-carbon Olympic zone.
 
[Industry Information]
○New energy vehicles promotion to speed up, electric motor industry to surge
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Wanxiang Qianchao Co., Ltd. (000559.SZ) announced on July 29 noon that it proposes to acquire 10 percent equities of Tianjin Santroll Electric Automobile Technology Co., Ltd. It is estimated that the value-added ratio of its net assets is 279 percent. Santroll Electric Automobile Technology is a leader in the motor drive system for hybrid passenger vehicles in China with a market share of 25 percent, ranking second. Zhongshan Broad-Ocean Motor Co., Ltd. (002249.SZ) announced earlier that it plans to acquire 10 percent equities of Shanghai Edrive Co., Ltd., a leader in the driving motor to electric vehicles in China.
 
Comment: As the promotion of new energy vehicles speeds up, the sales of electronic vehicles increased by 300 percent in the first year on year. It is expected that 200,000 electronic vehicles will be sold this year. The upstream electric motor industry will see rapid development. The demand for the electric motor system will reach 50 billion yuan to 100 billion yuan. In terms of listed companies, Shanghai Dajun Power Controlling Technology Co., Ltd., a subsidiary of Yantai Zhenghai Magnetic Material Co., Ltd. (300224.SZ), is quite competitive in the electric motor market; Zhejiang Founder Motor Co., Ltd. (002196.SZ) recently announced that it received an order for 2,000 motors for new energy vehicles.
 
○Low-altitude airspace reform scheme submitted and to implemented within year at soonest
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XFA learns that the latest scheme of low-altitude airspace reform has been submitted to decision-making level. It will go into effect within the year at soonest if it is nodded by the State Council smoothly. The Civil Aviation Administration of China (CAAC) indicated on its portal that it jointly distributed the Management Opinions on Strengthening Guarantee Work of Airports Open to Both Military and Civil with the air force recently. The air force and CAAC will develop piloting work in Lhasa and Shuofang airports in the second half of this year.
 
Comment: General aviation, as an important breakthrough of civil-military integration, might embrace a string of substantial reform policies and promote rapid industrial development. According to the goal planned for general aviation development, the total flight time of general aviation will reach 2 million hours by 2020, indicating an average annual increase of 19 percent. Among listed companies, CITIC Offshore Helicopter Co., Ltd. (000099.SZ) and Sichuan Haite High-Tech Co., Ltd. (002023.SZ)
are engaged in the operation and maintenance of general aviation; products of Wisesoft Co., Ltd. (002253.SZ) cover air traffic control automation and air traffic control analogue simulation systems.
 
[Announcement Interpretation]
○Comfort Science & Technology to control Korean enterprise REPTECH
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Subsidiary under Xiamen Comfort Science & Technology Group Co., Ltd. (002614.SZ) plans to acquire 51 percent equities of Korean enterprise REPTECH. The subject company is valued at 10 billion KRW (59 million yuan). In addition, the company also joins hands with Homeking (Xiamen) Information Technology Company Limited to build a comprehensive domestic service platform. Homeking runs “homeking365.com”, a domestic service reservation platform, and owns over 200,000 registered users. It is one of the largest domestic service providers in China.
 
○Zhangyuan Tungsten to acquire European enterprises to expand industrial chain
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Chongyi Zhangyuan Tungsten Co., Ltd. (002378.SZ) plans to invest 3.86 million Euros to acquire 80 percent equities of UF1 Company, 100 percent equities of ELBASA Company and all intellectual property under UF1 Company. UF1 now provides design service for the company’s development of coated tip products. ELBASA Company provides UF1 with production and operation land as well as work shop.
 
○Guangdong Chant to invest in biomass comprehensive utilization project with RMB260 mln
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Guangdong Chant Group Inc. (002616.SZ) reaches agreement with the government of Zhongfang County, Hunan Province in constructing biomass comprehensive utilization project with a total investment around 260 million yuan. Biomass including local agriculture and forestry wastes will be utilized comprehensively in power generation and heat supply to guarantee the heating of industrial parks.
 
○Dongbao Bio-Tech, etc. gain shareholding increase
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Wang Jun, actual controller of Baotou Dongbao Bio-Tech Co., Ltd. (300239.SZ), increased shareholding in the company by 1.97 million shares from July 24 to 29, accounting for 1 percent of the company’s total share capital; Huang Qisen, actual controller of Thaihot Group Co., Ltd. (000732.SZ), bought 5.65 million shares of the company on July 28 and 29 at an average price of 26.54 yuan per share, accounting for 0.56 percent of its total share capital. The capital invested in the shareholding increase recorded 150 million yuan and the company has completed its shareholding increase plan by then.
 
Controlling shareholder of Xinjiang Beixin Road & Bridge Group Co., Ltd. (002307.SZ) increased shareholding in the company by 5.53 million shares from July 10 to 29, accounting for 0.99 percent of its total share capital; Zhang Hailin, actual controller of Hainan RuiZe New Building Material Co., Ltd. (002596.SZ), increased shareholding in the company by 618,600 shares at an average price of 17.32 yuan per share, accounting for 0.22 percent of its total share capital; Shihezi Zhongtian Equity Investment Enterprise (Limited Partnership), substantial shareholder of Sinoma International Engineering Co., Ltd. (600970.SH), increased shareholding in the company by 4.33 million shares on July 29, accounting for 0.40 percent of the company’s total share capital.
 
[Financial Reports Express]
○Eastern Gold Jade and Shengyun Environment-Protection propose high share conversion
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Eastern Gold Jade Co., Ltd. (600086.SH) expects its performance to grow by 278 percent in its semiyearly report and proposes a 20-for-10 conversion of capital surplus into shares; Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ) proposes a 10-for-10 conversion of capital surplus into shares in its semiyearly report.
 
○China Jushi, China Life Insurance and Xuefeng Sci-Tech expect performance growth
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Thanks to increasing sales, China Jushi Co., Ltd. (600176.SH) expects its net profit to see a year-on-year growth of 250~270 percent in its semiyearly report; due to business development and large growth of investment return, China Life Insurance Company Limited (601628.SH; 02628.HK) expects its net profit to see a year-on-year growth of 70 percent in its semiyearly report; resulted from confirmation of income from relocation compensation, Xinjiang Xuefeng Sci-Tech (Group) Co., Ltd. (603227.SH) expects its net profit in the first half year to see a year-on-year growth of 178 percent.
 
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