[Today's Guide]
> Central bank to rectify RMB exchange rate, export enterprises to benefit
> AVIC subsidiaries to suspend trading, military industry to see various favorable factors
> Lithium battery investment to boost demand for upstream materials, intelligent parking supported
> Citychamp Dartong and Meihua Holdings bought by CSF, Gcl System Integration Technology to resume trading
[XFA Focus]
○Central bank to rectify RMB exchange rate, export enterprises to benefit
------
The central bank of China announced the improvement to the central parity quotes on the RMB exchange rate on Aug. 11, which emphasizes the closing rate of the foreign exchange rate market on the previous day. The central parity rate of the RMB against the U.S. dollar was down nearly 2 percent, hitting a new low in recent years. The central bank indicated at a press conference that the U.S. dollar has been strong recently. The RMB real effective exchange rate has been strong compared with other currencies. The adjustment is to rectify the too high RMB exchange rate.
Comment: Despite the sharp decline of the RMB exchange rate on the same day, it is an active measure of the central bank other than a passive devaluation. It is expected that the central bank will maintain a relatively stable exchange rate under management in pace. Targeted liquidity injection and other subsequent policies are also expected. Based on its effects, the textile, apparel and other labor intensive industries, which are relatively highly sensitive to the exchange rate, will see improvement in exports.
◆ Home appliances enterprises generally adopt the U.S. dollar in exchange settlement on the sale of products. The depreciation of RMB will also increase their exchange gains. XFA learnt that the discussion draft of the Instructions on the Development of the Home Appliances Industry in China during the 13th Five-year Period is under preparation, which will facilitate the intelligence and network upgrading of home appliances manufacturing. Sichuan Changhong Electric Co., Ltd. (600839.SH), TCL Corporation (000100.SZ), Skyworth Digital Co., Ltd. (000810.SZ), Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) and other leading home appliances enterprises are actively integrating with the information industry. The communication products of TCL saw a year-on-year growth of 56 percent in July. Skyworth Digital recently announced that it received an overseas order for 9 million units.
○ AVIC subsidiaries to suspend trading, military industry to see various favorable factors
------
Listed companies under the Aviation Industry Corporation of China (AVIC), including China Avionics Systems Co., Ltd. (600372.SH), AVIC Electromechanical Systems Co., Ltd. (002013.SZ) and AVIC Aircraft Co., Ltd. (000768.SZ), announced trading suspension from Aug. 12 owing to preparation for significant matters on Aug. 11 evening. AVIC Capital Co., Ltd. (6000705.SH), another listed company of the AVIC, has suspended trading from Aug. 7.
Comment: Statistics show that the asset securitization ratio of the top ten military engineering groups in China is only around 30 percent on average. Besides the military parade in the upcoming September, the military engineering industry will enjoy many favorable factors such as the central enterprises integration, the acceleration of research institution restructuring, the "Thirteenth Five-Year-Plan" for the aerospace industry and major special projects, which draws continuous attention from institutions.
[XFA Selection]
○The General Office of the State Council issued a document on Aug.11 encouraging flexible working time and taking vacations during non-peak seasons so as to release the potential of tourism consumption.
○ Preferential value-added taxes on the chemical fertilizer industry will be cancelled from Sep. 1, which may result in significant increase in the cost of imported potash fertilizers.
○ According to the data of China Association of Automobile Manufacturers (CAAM), ,China's vehicle sales in July suffered a year-on-year decline of 16.1 percent, but sales of passage vehicles of Chinese brands increased 5.1 percent from a year earlier.
○ Industrial Securities Co., Ltd. (601377.SH) conducted a block transaction at 12 yuan per share, representing a premium of 11 percent compared with its closing price on the same day.
○ Reuters reported that the consolidation of China Ocean Shipping (Group) Company (COSCO) and China Shipping (Group) Company is under discussion. The two groups will draft the preliminary plan on consolidation within three months.
[Industry Information]
○ Lithium battery investment to increase, demand for upstream materials to soar
------
Sichuan Chengfei Integration Technology Corp. Ltd. (002190.SZ) announced a few days ago that it would seek cooperation for the joint investment in a lithium battery project with nearly 14 billion yuan, which sets a new high in the investment scale in the industry this year. Many enterprises, including BYD Co. Ltd. (01211.HK; 002594.SZ) and FDG Electric Vehicles Ltd. (02929.HK) have increased the investment in the lithium battery one after another since this year. The total investment in the industry is expected to reach 100 billion yuan in 2015. Only taking the demand for the power and customer batteries into account, the lithium battery demand is expected to reach 54GWh in 2018, and possibly 72GWh in 2020. The power battery industry will see the fastest growth with a multiplicative uptrend.
Comment: The rapid expansion in the lithium battery capacity will bring about order opportunities for the core materials in the upstream of the industry such as lithium carbonate, positive electrode and lithium battery septum. In terms of listed companies, Cangzhou Mingzhu Plastic Co., Ltd. (002108.SZ) is a leading company in China's power lithium battery septum and a key supplier for BYD; Beijing Easpring Material Technology Co., Ltd. (300073.SZ) is principally engaged in the positive electrode materials for lithium battery Samsung SDI Co., Ltd. and BYD as its clients. The company is actively developing the positive electrode materials business for lithium battery, including NCA.
○NDRC encourages construction of stereo garage, intelligent parking supported
------
The Guidelines on Strengthening City Parking Facility Construction, released by National Development and Reform Commission (NDRC) on Aug.11, proposes to encourage the deployment of concentrative parking facilities including parking lot, underground parking, mechanical stereo garage, etc. As to intelligent parking, the guidelines make it clear to support the development and promotion of Internet-based parking apps; encourage parking inquiry and reserve of carport before travelling as well as functions including automatic charging and payment; enhance utilization efficiency of parking resources.
Comment: As the number of vehicles being held in cities increases sharply, parking difficulties become a problem bothering urban management. Stereo garage and intelligent parking are regarded as sound solutions. Among listed companies, Shenyang Brilliant Elevator Co., Ltd. (002689.SZ) is principally engaged in stereo garage and accessories, etc.; Guangdong Anjubao Digital Technology Co., Ltd. (300155.SZ) plans to raise fund through private placement to invest in urban cloud parking networking system project; China TransInfo Technology Co., Ltd. (002373.SZ) is also involved in intelligent parking information service and operation.
[Announcement Interpretation]
○Citychamp Dartong and Meihua Holdings bought by CSF
------
Citychamp Dartong Co., Ltd. (600067.SH) announces that by July 31, China Securities Finance Corporation Limited (CSF) directly held 50.44 million shares of the company, accounting for 3.4 percent of its total share capital and becoming its second largest shareholder; meanwhile, 10 funds totally held 53.17 million shares of the company via CSF asset management plans, accounting for 3.59 percent of its total share capital. The company also announces that it invested 64.66 million yuan in acquiring 53 percent equities of Fujian Chuangxin Science and Develops Co., Ltd. on Aug. 10 to add stakes in the development of the electrolyte additives for new energy lithium batteries.
Meihua Holdings Group Co., Ltd. (600873.SH) releases its 2015 interim report. During the report period, the company saw its net profit surging by 155 percent year on year. The company also discloses its top five substantial shareholders as of July 31. Among them, CSF holds 89.97 million shares in the company, accounting for 2.89 percent of its total share capital and becoming the third largest shareholder of the company.
○Gcl System Integration Technology to resume trading, no limits set for soar and plummet of stock price on first day
------
Gcl System Integration Technology Co., Ltd. (002506.SZ) will resume trading from Aug. 12 and withdraw warnings on the risk of delisting. Its stock code changes to XXJC from CRTY. The company's stock price closed at 1.91 yuan per share the day before it suspended trading. Since the reorganization plan involves matters concerning the conversion of capital reserves into equity capital, the total share capital of the company increases from 840 million shares to 2.52 billion shares, with a reference price of 1.22 yuan per share after ex-right.
○E-Hualu Info Technology signs memorandum on RMB3 bln-project through PPP mode
------
Beijing E-Hualu Info Technology Co., Ltd. (300212.SZ) signs an agreement on investment promotion projects with Xiangtan Municipal Bureau of Commerce and a memorandum on the construction of Smart Xiangtan project with the Economic and Information Commission of Xiangtan City, Hunan Province. The cooperation in the Smart Xiangtan project, with a total scale of about 3 billion yuan, will adopt PPP (public-private-partnership) mode. Besides, Zoje Resources Investment Co., Ltd. (002021.SZ) terminates its plan on major events and resumes trading.
○Humanwell Healthcare acquires Sanxia Pharmaceutical with RMB4.5 bln to expand industry chain
------
Humanwell Healthcare (Group) Co., Ltd. (600079.SH) will acquire 75 percent equities of Yichang Sanxia Pharmaceutical Co., Ltd. with 450 million yuan. Sanxia Pharmaceutical is a biotechnology-based enterprise that is engaged in the development and operation of drugs, veterinary drugs and amino acid, etc. Neomycin sulfate, one of the main products of the company, takes a leading position in the segment market and gains high market shares in international market.
○Linyang Electronics to raise RMB2.8 bln through private placement to expand photovoltaic power generation business
------
Jiangsu Linyang Electronics Co., Ltd. (601222.SH) proposes to raise 2.8 billion yuan by issuing 90 million shares at no less than 31.16 yuan per share through private placement. 2.53 billion yuan of the raised fund would be invested in the 300MW distributed photovoltaic power generation project and 270 million yuan would be invested in the core technology development for smart distributive energy management.
[Financial Reports Express]
○Kunming Sinobright and Bluedon Information Securities Technologies propose high share conversion and dividend
------
Kunming Sinobright (Group) Co., Ltd. (000560.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its semiyearly report. Bluedon Information Securities Technologies Co., Ltd. (300297.SZ) proposes a 9-for-10 conversion of capital surplus into shares with another 1 share and 0.25 yuan for every 10 shares as dividend.
○Baling Technology expected to have performance increase in first three quarters
------
Nanning Baling Technology Co., Ltd. (002592.SZ) is forecasted to have 40~ 60 percent increase in the net profit year on year in the first three quarters and the main reason is that Guangxi Huana New Material Technology Co., Ltd., invested by the company, has seen robust growth in performance.
[Data Speaks]
○Some listed companies expected to step up implementation of their shareholding increase plans
------
With the market gradually getting stable, listed companies are expected to step up the implementation of their shareholding increase plans put forward in the previous stock slump. As sorted out by XFA, there are nearly 30 companies that have stated the lower limit of the amount of shareholding increase in the plans but have not revealed further information up to now. Among the companies, Bengang Steel Plates Co., Ltd. (000761.SZ), Gree Electric Appliances Inc. of Zhuhai (000651.SZ), Bluedon Information Securities Technologies Co., Ltd. (300297.SZ), Shanghai Dingli Technology Development (Group) Co., Ltd. (600614.SH) and Ningbo Joyson Electronic Corp. (600699.SH), etc. see relatively low increase of stock price since their shareholding increase announcements were made. Joyson Electronic plans to increase shareholding in the company with no less than 450 million yuan through private placement and Gree Electric Appliances promises that it will increase shareholdings in the company within three months with no less than 460 million yuan.
> Central bank to rectify RMB exchange rate, export enterprises to benefit
> AVIC subsidiaries to suspend trading, military industry to see various favorable factors
> Lithium battery investment to boost demand for upstream materials, intelligent parking supported
> Citychamp Dartong and Meihua Holdings bought by CSF, Gcl System Integration Technology to resume trading
[XFA Focus]
○Central bank to rectify RMB exchange rate, export enterprises to benefit
------
The central bank of China announced the improvement to the central parity quotes on the RMB exchange rate on Aug. 11, which emphasizes the closing rate of the foreign exchange rate market on the previous day. The central parity rate of the RMB against the U.S. dollar was down nearly 2 percent, hitting a new low in recent years. The central bank indicated at a press conference that the U.S. dollar has been strong recently. The RMB real effective exchange rate has been strong compared with other currencies. The adjustment is to rectify the too high RMB exchange rate.
Comment: Despite the sharp decline of the RMB exchange rate on the same day, it is an active measure of the central bank other than a passive devaluation. It is expected that the central bank will maintain a relatively stable exchange rate under management in pace. Targeted liquidity injection and other subsequent policies are also expected. Based on its effects, the textile, apparel and other labor intensive industries, which are relatively highly sensitive to the exchange rate, will see improvement in exports.
◆ Home appliances enterprises generally adopt the U.S. dollar in exchange settlement on the sale of products. The depreciation of RMB will also increase their exchange gains. XFA learnt that the discussion draft of the Instructions on the Development of the Home Appliances Industry in China during the 13th Five-year Period is under preparation, which will facilitate the intelligence and network upgrading of home appliances manufacturing. Sichuan Changhong Electric Co., Ltd. (600839.SH), TCL Corporation (000100.SZ), Skyworth Digital Co., Ltd. (000810.SZ), Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) and other leading home appliances enterprises are actively integrating with the information industry. The communication products of TCL saw a year-on-year growth of 56 percent in July. Skyworth Digital recently announced that it received an overseas order for 9 million units.
○ AVIC subsidiaries to suspend trading, military industry to see various favorable factors
------
Listed companies under the Aviation Industry Corporation of China (AVIC), including China Avionics Systems Co., Ltd. (600372.SH), AVIC Electromechanical Systems Co., Ltd. (002013.SZ) and AVIC Aircraft Co., Ltd. (000768.SZ), announced trading suspension from Aug. 12 owing to preparation for significant matters on Aug. 11 evening. AVIC Capital Co., Ltd. (6000705.SH), another listed company of the AVIC, has suspended trading from Aug. 7.
Comment: Statistics show that the asset securitization ratio of the top ten military engineering groups in China is only around 30 percent on average. Besides the military parade in the upcoming September, the military engineering industry will enjoy many favorable factors such as the central enterprises integration, the acceleration of research institution restructuring, the "Thirteenth Five-Year-Plan" for the aerospace industry and major special projects, which draws continuous attention from institutions.
[XFA Selection]
○The General Office of the State Council issued a document on Aug.11 encouraging flexible working time and taking vacations during non-peak seasons so as to release the potential of tourism consumption.
○ Preferential value-added taxes on the chemical fertilizer industry will be cancelled from Sep. 1, which may result in significant increase in the cost of imported potash fertilizers.
○ According to the data of China Association of Automobile Manufacturers (CAAM), ,China's vehicle sales in July suffered a year-on-year decline of 16.1 percent, but sales of passage vehicles of Chinese brands increased 5.1 percent from a year earlier.
○ Industrial Securities Co., Ltd. (601377.SH) conducted a block transaction at 12 yuan per share, representing a premium of 11 percent compared with its closing price on the same day.
○ Reuters reported that the consolidation of China Ocean Shipping (Group) Company (COSCO) and China Shipping (Group) Company is under discussion. The two groups will draft the preliminary plan on consolidation within three months.
[Industry Information]
○ Lithium battery investment to increase, demand for upstream materials to soar
------
Sichuan Chengfei Integration Technology Corp. Ltd. (002190.SZ) announced a few days ago that it would seek cooperation for the joint investment in a lithium battery project with nearly 14 billion yuan, which sets a new high in the investment scale in the industry this year. Many enterprises, including BYD Co. Ltd. (01211.HK; 002594.SZ) and FDG Electric Vehicles Ltd. (02929.HK) have increased the investment in the lithium battery one after another since this year. The total investment in the industry is expected to reach 100 billion yuan in 2015. Only taking the demand for the power and customer batteries into account, the lithium battery demand is expected to reach 54GWh in 2018, and possibly 72GWh in 2020. The power battery industry will see the fastest growth with a multiplicative uptrend.
Comment: The rapid expansion in the lithium battery capacity will bring about order opportunities for the core materials in the upstream of the industry such as lithium carbonate, positive electrode and lithium battery septum. In terms of listed companies, Cangzhou Mingzhu Plastic Co., Ltd. (002108.SZ) is a leading company in China's power lithium battery septum and a key supplier for BYD; Beijing Easpring Material Technology Co., Ltd. (300073.SZ) is principally engaged in the positive electrode materials for lithium battery Samsung SDI Co., Ltd. and BYD as its clients. The company is actively developing the positive electrode materials business for lithium battery, including NCA.
○NDRC encourages construction of stereo garage, intelligent parking supported
------
The Guidelines on Strengthening City Parking Facility Construction, released by National Development and Reform Commission (NDRC) on Aug.11, proposes to encourage the deployment of concentrative parking facilities including parking lot, underground parking, mechanical stereo garage, etc. As to intelligent parking, the guidelines make it clear to support the development and promotion of Internet-based parking apps; encourage parking inquiry and reserve of carport before travelling as well as functions including automatic charging and payment; enhance utilization efficiency of parking resources.
Comment: As the number of vehicles being held in cities increases sharply, parking difficulties become a problem bothering urban management. Stereo garage and intelligent parking are regarded as sound solutions. Among listed companies, Shenyang Brilliant Elevator Co., Ltd. (002689.SZ) is principally engaged in stereo garage and accessories, etc.; Guangdong Anjubao Digital Technology Co., Ltd. (300155.SZ) plans to raise fund through private placement to invest in urban cloud parking networking system project; China TransInfo Technology Co., Ltd. (002373.SZ) is also involved in intelligent parking information service and operation.
[Announcement Interpretation]
○Citychamp Dartong and Meihua Holdings bought by CSF
------
Citychamp Dartong Co., Ltd. (600067.SH) announces that by July 31, China Securities Finance Corporation Limited (CSF) directly held 50.44 million shares of the company, accounting for 3.4 percent of its total share capital and becoming its second largest shareholder; meanwhile, 10 funds totally held 53.17 million shares of the company via CSF asset management plans, accounting for 3.59 percent of its total share capital. The company also announces that it invested 64.66 million yuan in acquiring 53 percent equities of Fujian Chuangxin Science and Develops Co., Ltd. on Aug. 10 to add stakes in the development of the electrolyte additives for new energy lithium batteries.
Meihua Holdings Group Co., Ltd. (600873.SH) releases its 2015 interim report. During the report period, the company saw its net profit surging by 155 percent year on year. The company also discloses its top five substantial shareholders as of July 31. Among them, CSF holds 89.97 million shares in the company, accounting for 2.89 percent of its total share capital and becoming the third largest shareholder of the company.
○Gcl System Integration Technology to resume trading, no limits set for soar and plummet of stock price on first day
------
Gcl System Integration Technology Co., Ltd. (002506.SZ) will resume trading from Aug. 12 and withdraw warnings on the risk of delisting. Its stock code changes to XXJC from CRTY. The company's stock price closed at 1.91 yuan per share the day before it suspended trading. Since the reorganization plan involves matters concerning the conversion of capital reserves into equity capital, the total share capital of the company increases from 840 million shares to 2.52 billion shares, with a reference price of 1.22 yuan per share after ex-right.
○E-Hualu Info Technology signs memorandum on RMB3 bln-project through PPP mode
------
Beijing E-Hualu Info Technology Co., Ltd. (300212.SZ) signs an agreement on investment promotion projects with Xiangtan Municipal Bureau of Commerce and a memorandum on the construction of Smart Xiangtan project with the Economic and Information Commission of Xiangtan City, Hunan Province. The cooperation in the Smart Xiangtan project, with a total scale of about 3 billion yuan, will adopt PPP (public-private-partnership) mode. Besides, Zoje Resources Investment Co., Ltd. (002021.SZ) terminates its plan on major events and resumes trading.
○Humanwell Healthcare acquires Sanxia Pharmaceutical with RMB4.5 bln to expand industry chain
------
Humanwell Healthcare (Group) Co., Ltd. (600079.SH) will acquire 75 percent equities of Yichang Sanxia Pharmaceutical Co., Ltd. with 450 million yuan. Sanxia Pharmaceutical is a biotechnology-based enterprise that is engaged in the development and operation of drugs, veterinary drugs and amino acid, etc. Neomycin sulfate, one of the main products of the company, takes a leading position in the segment market and gains high market shares in international market.
○Linyang Electronics to raise RMB2.8 bln through private placement to expand photovoltaic power generation business
------
Jiangsu Linyang Electronics Co., Ltd. (601222.SH) proposes to raise 2.8 billion yuan by issuing 90 million shares at no less than 31.16 yuan per share through private placement. 2.53 billion yuan of the raised fund would be invested in the 300MW distributed photovoltaic power generation project and 270 million yuan would be invested in the core technology development for smart distributive energy management.
[Financial Reports Express]
○Kunming Sinobright and Bluedon Information Securities Technologies propose high share conversion and dividend
------
Kunming Sinobright (Group) Co., Ltd. (000560.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its semiyearly report. Bluedon Information Securities Technologies Co., Ltd. (300297.SZ) proposes a 9-for-10 conversion of capital surplus into shares with another 1 share and 0.25 yuan for every 10 shares as dividend.
○Baling Technology expected to have performance increase in first three quarters
------
Nanning Baling Technology Co., Ltd. (002592.SZ) is forecasted to have 40~ 60 percent increase in the net profit year on year in the first three quarters and the main reason is that Guangxi Huana New Material Technology Co., Ltd., invested by the company, has seen robust growth in performance.
[Data Speaks]
○Some listed companies expected to step up implementation of their shareholding increase plans
------
With the market gradually getting stable, listed companies are expected to step up the implementation of their shareholding increase plans put forward in the previous stock slump. As sorted out by XFA, there are nearly 30 companies that have stated the lower limit of the amount of shareholding increase in the plans but have not revealed further information up to now. Among the companies, Bengang Steel Plates Co., Ltd. (000761.SZ), Gree Electric Appliances Inc. of Zhuhai (000651.SZ), Bluedon Information Securities Technologies Co., Ltd. (300297.SZ), Shanghai Dingli Technology Development (Group) Co., Ltd. (600614.SH) and Ningbo Joyson Electronic Corp. (600699.SH), etc. see relatively low increase of stock price since their shareholding increase announcements were made. Joyson Electronic plans to increase shareholding in the company with no less than 450 million yuan through private placement and Gree Electric Appliances promises that it will increase shareholdings in the company within three months with no less than 460 million yuan.
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