[Today’s Guide]
>State Council executive meeting supports financing guarantee, financial reform to see more policy supports
>Progressive water pricing scheme to intensively implemented, demands for intelligent water meters to see rapid growth
>Ministry of National Defense promotes military engineering system reform, institute restructuring scheme to launched earlier
>Green Pine to launch private placement, Bestsun Gas achieves backdoor listing via Winowner
[XFA Focus]
○State Council executive meeting supports financing guarantee, financial reform to see more policy supports
------
Chinese Premier Li Keqiang chaired the executive meeting of the State Council on July 31, proposing to promote the reform and development of the financing guarantee industry. It proposes to establish a partnership with the participation of the government, banks and financing guarantee agencies and establish national financing guarantee funds to diversify risks in the financing guarantee industry as well as increase fiscal supports to financing guarantee agencies. Statistics show that the “finance” has been mentioned more than others in the about 100 executive meetings convened by the new session of the government. It has been facilitating finance in serving the real economy in terms of the privately-owned banks, small loans, equities crownfunding, consumer finance as well as other aspects.
Comment: The insurance balance in the financing guarantee industry was approximately 1.9 trillion yuan last year, increasing 66 percent year on year. The executive meeting considers financing guarantee as an effective way to solve the difficulties of small and micro enterprises in financing. The government will provide fund supports, which will further promote the development of the industry. In terms of A-share companies, Zhejiang Sunny Guarantee Co., Ltd., a subsidiary controlled by Sunny Loan Top Co., Ltd. (600830.SH), is one of its four major business sectors. Xiamen ITG Group Corp., Ltd. (600755.SH) wholly owns Fujian Golden Strait Financing Guarantee Co., Ltd.
[XFA Selection]
○China’s manufacturing PMI declined by 0.2 percentage points to 50.0 percent in July and the non-manufacturing sector expanded slightly to 53.9 percent.
○The China Securities Regulatory Commission (CSRC) indicated that the suspension of IPOs and other emergency measures are only for short term and the orientation of the marketization reform will not change.
○The Shanghai and Shenzhen bourses restrict the transaction of the second batch of 10 securities accounts; China Financial Futures Exchange determines to charge application fees on trading commissions to curb excessive speculations.
○Chinese Vice-Premier Liu Yandong indicated that the hosting of the Winter Olympics will promote the development of the sports industry and the mass sports in China and facilitate the economic and social development.
○The box office across China hit a record of 5.49 billion yuan in July with domestic films contributing 95.6 percent.
[Industry Information]
○Progressive water pricing scheme to intensively implemented, demands for intelligent water meters to see rapid growth
------
Recently, Jiangsu Province and Tianjin Municipality intensively held symposiums, urging the full implementation of a progressive pricing scheme for water use by the year end. According to plan of the National Development and Reform Commission (NDRC), a progressive pricing scheme for water use shall be fully implemented in cities above county-level. Local authorities should set at least three price tiers. The first- and second-tier water consumptions shall be calculated based on the average monthly water consumption of 80 and 95 percent households respectively. The price standard at each tier shall be no less than the proportion of 1:1.5:3. The plan also requires accelerating the transformation of “one water meter for one household” in cities.
Comment: With the advance of the progressive pricing scheme for water use, the “one water meter for one household” policy and the construction of smart cities, intelligent water meters will replace traditional mechanical water meters rapidly. It is predicted that the total output of water meters in 2015 will reach 90 million with a total value of nearly 9 billion yuan. Yet the proportion of intelligent water meters is less than 30 percent. Therefore, there is still a huge potential for intelligent water meters. In terms of companies, Jiangxi Sanchuan Water Meter Co., Ltd. (300066.SZ), a leading intelligent water meter manufacturer, produced over 9 million water meters in 2014 with a market share of 11.3 percent, ranking first in the industry. Suntront Technology Co., Ltd. (300259.SZ), mainly engaged in intelligent water meters and heat waters, is also among the top intelligent water meter manufacturers in terms of market share. As its new projects are put into operation, its total productivity will double.
○Ministry of National Defense promotes military engineering system reform, institute restructuring scheme to launched earlier
------
The Ministry of National Defense held a grand reception to commemorate the 88th Anniversary of the Founding of the People’s Liberation Army (PLA) on July 31. Defense Minister Chang Wanquan pointed out that China is concertedly promoting the strategic blueprint of the “Four Comprehensives” and the building and reform of national defense and army are at a crucial stage. Chang also suggested vigorously pushing forward the national defense and army reform, accelerating to remove institutional barriers and building modern military force system.
Comment: Driven by the objective to build a strong army and comprehensively deepening reform, the military scientific research institute restructuring scheme is expected to be launched earlier. As the high-quality assets in the military industry, the military scientific research institutes own strong profitability. The asset securitization will effectively improve performance of military industrial enterprises after the restructuring. China Avionics Systems Co., Ltd. (600372.SH) is an integration platform for avionics business of the Aviation Industry Corporation of China and five research institutions subordinated to the group’s avionics system have finished nominal restructuring. The actual controller of China Shipbuilding Industry Company Limited (601989.SH) is China Shipbuilding Industry Corporation. Institutions believe that its 28 scientific research institutes with strong profitability have basically completed classified reform and are expected to see follow-up capital injections.
○Opinions on major illness insurance unveiled, popularization rate of renal dialysis to improved
------
The General Office of the State Council on August 2 rolled out opinions on all-sided implementation of major illness insurance for urban and rural residents, proposing that by end-2015, major illness insurance should cover all subscribers to the urban area resident basic medical insurance and the new rural cooperative medical system. The burden on patients suffering major illness will be effectively reduced; at least 50 percent of the expenditure, which was previously paid by the patients, will be reimbursed by the major illness insurance in 2015 and along with the improvement of the financing and management ability of major illness insurance, the reimbursement ratio will be further lifted to effectively reduce the burden on individual’s medical expenses.
Comment: Institutions believe that all-sided implementation, specified timetable and reimbursement ratio of major illness insurance show new changes of China’s medical insurance structure and will bring profound impact to medical and medicine industrial chains. Advanced nephropathy is covered by major illness insurance, but only 20 percent of patients nationwide accept standard treatment of peritoneal dialysis or hemodialysis due to restrictions of economic factors. Once major illness insurance is implemented, it will improve the popularization of renal dialysis. Among listed companies, Huaren Pharmaceutical Co., Ltd. (300110.SZ) produces peritoneal dialysis solution; Blue Sail Medical Co., Ltd. (002382.SZ) added stakes in blood purification area for several times last year and might embrace market growth.
[Announcement Interpretation]
○Green Pine to launch private placement
------
Fujian Green Pine Co., Ltd. (300132.SZ) plans to raise 650 million yuan to pay off bank loans and supplement working capital by issuing 88.92 million shares at 7.31 yuan per share through private placement. Ke Weilong, actual controller of the company, plans to subscribe 162 million yuan of the private placement.
○Bestsun Gas achieves backdoor listing via Winowner
------
Winowner Group Co., Ltd. (600681.SH) plans to acquire 100 percent equities of Bestsun Gas Co., Ltd. with 4.09 billion yuan by exchanging asset and issuing shares through private placement. The offering price of the private placement is 6.47 yuan per share. The company also plans to raise a supporting fund of 870 million yuan from Cao Fei and Bestsun Gas Asset Management Plan by issuing shares at 8.32 yuan per share through private placement. The raised fund will be invested in the gas utilization projects in five counties of Langfang City, Hebei Province.
Upon completion of the transaction, actual controller of the company will be replaced by Wang Donghai. The net profit of Bestsun Gas from 2015 to 2017 should reach 394 million yuan, 494 million yuan and 582 million yuan, according to performance commitment. The stock price of Winowner closed at 10.01 yuan per share before trading suspension and the company’s market value recorded 2.5 billion yuan now.
○Lander Real Estate launches equity incentive plan at a premium
------
Lander Real Estate Co., Ltd. (000558.SZ) plans to grant 9 incentive targets with 12.70 million stock options. The first executive price of the stock options is 26.11 yuan per share. The performance assessment goal is that the net profit of the company from 2016 to 2018 should no less than 150 million yuan, 280 million yuan and 480 million yuan. Latest stock price of the company closes at 17.34 yuan per share.
○Shanghai Jahwa United bought by Chongyang Investment through secondary market acquisition to 5 pct limit
------
Shanghai Chongyang Investment Co., Ltd., shareholder of Shanghai Jahwa United Co., Ltd. (600315.SH), bought 2.80 million shares of the company on July 30. By then, Chongyang Investment holds 5.05 percent shares of Shanghai Jahwa United.
Comment: Accounts under Chongyang Investment has totally bought 31.16 million shares of Shanghai Jahwa United at 37-47 yuan per share from April 21 and July 29. Latest stock price of Shanghai Jahwa United records 38.62 yuan per share.
○Canature Environmental Products, et. gain shareholding increase
------
Actual controller, director, supervisor and senior management of Shanghai Canature Environmental Products Co., Ltd. (300272.SZ) totally bought 6.78 million shares of the company, accounting for 2.04 percent of its total share capital, on July 30 and 31; Xian Yan, actual controller of P2P Financial Information Service Co., Ltd. (600696.SH), totally increased shareholding in the company by 10 million shares, accounting for 2.93 percent of its total share capital from June 26 to now; Wang Yan’an, actual controller of Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ), increased shareholding in the company by 0.83 million shares, accounting for 0.61 percent of its total share capital on July 30 and 31; Lin Changhao, actual controller of Guangdong Jialong Food Co., Ltd. (002495.SZ), increased shareholding in the company by 3.89 million shares at an average price of 7.72 yuan per share, accounting for 0.58 percent of its total share capital.
[Weekly Review]
○Believe tomorrow
------
The record-breaking falling of market value upsets market emotions to the extremist, while the great upsurge in opening new accounts is not far away yet. Though we have suffered the single-day drop over 8 percent of Shanghai composite index and unexpected rapid plummet of indexes at almost closure of trading hours, please always believe tomorrow.
Stock prices will judge company values at the most fair way sooner or later. Looking back to Beijing Leshi Internet Information & Technology Corp. (300104.SZ), China Fortune Land Co., Ltd. (600340.SH) and Shenzhen Kingdom Technology Co., Ltd. (600446.SH) which saw stock price growth of 1000 percent in past five years, they all actively explore new areas in the general trend of Internet and urbanization. These companies see high profit growth every year and their stock prices also have very good performance. It’s better for us to start a new round of down-to-earth investigation than to complain about the incompetence of government bailout now.
There is always causality behind complicated news events. Last week was the final sprint of the bid for the Olympic Winter Games. XFA recognized the promotion role of Olympic Winter Games on winter sports. Changbai Mountain Tourism Co., Ltd. (603099.SH) and Toread Holdings Group Co., Ltd. (300005.SZ) reported by XFA saw continuous surge. The pioneering reform by Chinese Academy of Sciences was concerned by state leaders. The robot industry sees rapid growth under joint promotion of policy support and market pressure. It is verified by XFA’s repeated reports. Stock prices of CASTECH Inc. (002222.SZ), Changchun Up Optotech Co., Ltd. (002338.SZ), Jiangsu Yawei Machine Tool Co., Ltd. (002559.SZ), Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ) etc. all surge to some extent.
>State Council executive meeting supports financing guarantee, financial reform to see more policy supports
>Progressive water pricing scheme to intensively implemented, demands for intelligent water meters to see rapid growth
>Ministry of National Defense promotes military engineering system reform, institute restructuring scheme to launched earlier
>Green Pine to launch private placement, Bestsun Gas achieves backdoor listing via Winowner
[XFA Focus]
○State Council executive meeting supports financing guarantee, financial reform to see more policy supports
------
Chinese Premier Li Keqiang chaired the executive meeting of the State Council on July 31, proposing to promote the reform and development of the financing guarantee industry. It proposes to establish a partnership with the participation of the government, banks and financing guarantee agencies and establish national financing guarantee funds to diversify risks in the financing guarantee industry as well as increase fiscal supports to financing guarantee agencies. Statistics show that the “finance” has been mentioned more than others in the about 100 executive meetings convened by the new session of the government. It has been facilitating finance in serving the real economy in terms of the privately-owned banks, small loans, equities crownfunding, consumer finance as well as other aspects.
Comment: The insurance balance in the financing guarantee industry was approximately 1.9 trillion yuan last year, increasing 66 percent year on year. The executive meeting considers financing guarantee as an effective way to solve the difficulties of small and micro enterprises in financing. The government will provide fund supports, which will further promote the development of the industry. In terms of A-share companies, Zhejiang Sunny Guarantee Co., Ltd., a subsidiary controlled by Sunny Loan Top Co., Ltd. (600830.SH), is one of its four major business sectors. Xiamen ITG Group Corp., Ltd. (600755.SH) wholly owns Fujian Golden Strait Financing Guarantee Co., Ltd.
[XFA Selection]
○China’s manufacturing PMI declined by 0.2 percentage points to 50.0 percent in July and the non-manufacturing sector expanded slightly to 53.9 percent.
○The China Securities Regulatory Commission (CSRC) indicated that the suspension of IPOs and other emergency measures are only for short term and the orientation of the marketization reform will not change.
○The Shanghai and Shenzhen bourses restrict the transaction of the second batch of 10 securities accounts; China Financial Futures Exchange determines to charge application fees on trading commissions to curb excessive speculations.
○Chinese Vice-Premier Liu Yandong indicated that the hosting of the Winter Olympics will promote the development of the sports industry and the mass sports in China and facilitate the economic and social development.
○The box office across China hit a record of 5.49 billion yuan in July with domestic films contributing 95.6 percent.
[Industry Information]
○Progressive water pricing scheme to intensively implemented, demands for intelligent water meters to see rapid growth
------
Recently, Jiangsu Province and Tianjin Municipality intensively held symposiums, urging the full implementation of a progressive pricing scheme for water use by the year end. According to plan of the National Development and Reform Commission (NDRC), a progressive pricing scheme for water use shall be fully implemented in cities above county-level. Local authorities should set at least three price tiers. The first- and second-tier water consumptions shall be calculated based on the average monthly water consumption of 80 and 95 percent households respectively. The price standard at each tier shall be no less than the proportion of 1:1.5:3. The plan also requires accelerating the transformation of “one water meter for one household” in cities.
Comment: With the advance of the progressive pricing scheme for water use, the “one water meter for one household” policy and the construction of smart cities, intelligent water meters will replace traditional mechanical water meters rapidly. It is predicted that the total output of water meters in 2015 will reach 90 million with a total value of nearly 9 billion yuan. Yet the proportion of intelligent water meters is less than 30 percent. Therefore, there is still a huge potential for intelligent water meters. In terms of companies, Jiangxi Sanchuan Water Meter Co., Ltd. (300066.SZ), a leading intelligent water meter manufacturer, produced over 9 million water meters in 2014 with a market share of 11.3 percent, ranking first in the industry. Suntront Technology Co., Ltd. (300259.SZ), mainly engaged in intelligent water meters and heat waters, is also among the top intelligent water meter manufacturers in terms of market share. As its new projects are put into operation, its total productivity will double.
○Ministry of National Defense promotes military engineering system reform, institute restructuring scheme to launched earlier
------
The Ministry of National Defense held a grand reception to commemorate the 88th Anniversary of the Founding of the People’s Liberation Army (PLA) on July 31. Defense Minister Chang Wanquan pointed out that China is concertedly promoting the strategic blueprint of the “Four Comprehensives” and the building and reform of national defense and army are at a crucial stage. Chang also suggested vigorously pushing forward the national defense and army reform, accelerating to remove institutional barriers and building modern military force system.
Comment: Driven by the objective to build a strong army and comprehensively deepening reform, the military scientific research institute restructuring scheme is expected to be launched earlier. As the high-quality assets in the military industry, the military scientific research institutes own strong profitability. The asset securitization will effectively improve performance of military industrial enterprises after the restructuring. China Avionics Systems Co., Ltd. (600372.SH) is an integration platform for avionics business of the Aviation Industry Corporation of China and five research institutions subordinated to the group’s avionics system have finished nominal restructuring. The actual controller of China Shipbuilding Industry Company Limited (601989.SH) is China Shipbuilding Industry Corporation. Institutions believe that its 28 scientific research institutes with strong profitability have basically completed classified reform and are expected to see follow-up capital injections.
○Opinions on major illness insurance unveiled, popularization rate of renal dialysis to improved
------
The General Office of the State Council on August 2 rolled out opinions on all-sided implementation of major illness insurance for urban and rural residents, proposing that by end-2015, major illness insurance should cover all subscribers to the urban area resident basic medical insurance and the new rural cooperative medical system. The burden on patients suffering major illness will be effectively reduced; at least 50 percent of the expenditure, which was previously paid by the patients, will be reimbursed by the major illness insurance in 2015 and along with the improvement of the financing and management ability of major illness insurance, the reimbursement ratio will be further lifted to effectively reduce the burden on individual’s medical expenses.
Comment: Institutions believe that all-sided implementation, specified timetable and reimbursement ratio of major illness insurance show new changes of China’s medical insurance structure and will bring profound impact to medical and medicine industrial chains. Advanced nephropathy is covered by major illness insurance, but only 20 percent of patients nationwide accept standard treatment of peritoneal dialysis or hemodialysis due to restrictions of economic factors. Once major illness insurance is implemented, it will improve the popularization of renal dialysis. Among listed companies, Huaren Pharmaceutical Co., Ltd. (300110.SZ) produces peritoneal dialysis solution; Blue Sail Medical Co., Ltd. (002382.SZ) added stakes in blood purification area for several times last year and might embrace market growth.
[Announcement Interpretation]
○Green Pine to launch private placement
------
Fujian Green Pine Co., Ltd. (300132.SZ) plans to raise 650 million yuan to pay off bank loans and supplement working capital by issuing 88.92 million shares at 7.31 yuan per share through private placement. Ke Weilong, actual controller of the company, plans to subscribe 162 million yuan of the private placement.
○Bestsun Gas achieves backdoor listing via Winowner
------
Winowner Group Co., Ltd. (600681.SH) plans to acquire 100 percent equities of Bestsun Gas Co., Ltd. with 4.09 billion yuan by exchanging asset and issuing shares through private placement. The offering price of the private placement is 6.47 yuan per share. The company also plans to raise a supporting fund of 870 million yuan from Cao Fei and Bestsun Gas Asset Management Plan by issuing shares at 8.32 yuan per share through private placement. The raised fund will be invested in the gas utilization projects in five counties of Langfang City, Hebei Province.
Upon completion of the transaction, actual controller of the company will be replaced by Wang Donghai. The net profit of Bestsun Gas from 2015 to 2017 should reach 394 million yuan, 494 million yuan and 582 million yuan, according to performance commitment. The stock price of Winowner closed at 10.01 yuan per share before trading suspension and the company’s market value recorded 2.5 billion yuan now.
○Lander Real Estate launches equity incentive plan at a premium
------
Lander Real Estate Co., Ltd. (000558.SZ) plans to grant 9 incentive targets with 12.70 million stock options. The first executive price of the stock options is 26.11 yuan per share. The performance assessment goal is that the net profit of the company from 2016 to 2018 should no less than 150 million yuan, 280 million yuan and 480 million yuan. Latest stock price of the company closes at 17.34 yuan per share.
○Shanghai Jahwa United bought by Chongyang Investment through secondary market acquisition to 5 pct limit
------
Shanghai Chongyang Investment Co., Ltd., shareholder of Shanghai Jahwa United Co., Ltd. (600315.SH), bought 2.80 million shares of the company on July 30. By then, Chongyang Investment holds 5.05 percent shares of Shanghai Jahwa United.
Comment: Accounts under Chongyang Investment has totally bought 31.16 million shares of Shanghai Jahwa United at 37-47 yuan per share from April 21 and July 29. Latest stock price of Shanghai Jahwa United records 38.62 yuan per share.
○Canature Environmental Products, et. gain shareholding increase
------
Actual controller, director, supervisor and senior management of Shanghai Canature Environmental Products Co., Ltd. (300272.SZ) totally bought 6.78 million shares of the company, accounting for 2.04 percent of its total share capital, on July 30 and 31; Xian Yan, actual controller of P2P Financial Information Service Co., Ltd. (600696.SH), totally increased shareholding in the company by 10 million shares, accounting for 2.93 percent of its total share capital from June 26 to now; Wang Yan’an, actual controller of Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ), increased shareholding in the company by 0.83 million shares, accounting for 0.61 percent of its total share capital on July 30 and 31; Lin Changhao, actual controller of Guangdong Jialong Food Co., Ltd. (002495.SZ), increased shareholding in the company by 3.89 million shares at an average price of 7.72 yuan per share, accounting for 0.58 percent of its total share capital.
[Weekly Review]
○Believe tomorrow
------
The record-breaking falling of market value upsets market emotions to the extremist, while the great upsurge in opening new accounts is not far away yet. Though we have suffered the single-day drop over 8 percent of Shanghai composite index and unexpected rapid plummet of indexes at almost closure of trading hours, please always believe tomorrow.
Stock prices will judge company values at the most fair way sooner or later. Looking back to Beijing Leshi Internet Information & Technology Corp. (300104.SZ), China Fortune Land Co., Ltd. (600340.SH) and Shenzhen Kingdom Technology Co., Ltd. (600446.SH) which saw stock price growth of 1000 percent in past five years, they all actively explore new areas in the general trend of Internet and urbanization. These companies see high profit growth every year and their stock prices also have very good performance. It’s better for us to start a new round of down-to-earth investigation than to complain about the incompetence of government bailout now.
There is always causality behind complicated news events. Last week was the final sprint of the bid for the Olympic Winter Games. XFA recognized the promotion role of Olympic Winter Games on winter sports. Changbai Mountain Tourism Co., Ltd. (603099.SH) and Toread Holdings Group Co., Ltd. (300005.SZ) reported by XFA saw continuous surge. The pioneering reform by Chinese Academy of Sciences was concerned by state leaders. The robot industry sees rapid growth under joint promotion of policy support and market pressure. It is verified by XFA’s repeated reports. Stock prices of CASTECH Inc. (002222.SZ), Changchun Up Optotech Co., Ltd. (002338.SZ), Jiangsu Yawei Machine Tool Co., Ltd. (002559.SZ), Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ) etc. all surge to some extent.
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