[Today’s Guide]
>Leading Group for Overall Reform stresses implementation of reform measures, SOEs reform to see more opportunities
>State Council issued new policy on approving new drugs, R＆D enterprises to benefit from it
>Listed companies under AVIC heavily increase capital in Shenyang Aircraft Industry and Chengdu Aircraft Industry, CSF buys equities of Hebang Biotechnology
>Baiyang Aquatic Group to resume trading, East China Engineering Science and Technology to invest in supply chain finance through private placement
[XFA Focus]
○ Leading Group for Overall Reform stresses implementation of reform measures, SOEs reform to see more opportunities
------
Chinese President Xi Jinping hosts the 15th meeting of the Leading Group for Overall Reform on Aug. 18, requiring to strengthen the reform willpower, maintain reform momentum and implement the reform measures in a down-to-earth manner. It should recognize that the reform is the only way for China and the Chinese Communist Party to energetically carry all works and it should timely study and solve new problems appeared in reform. It should intensively issue a series of reform schemes with great efforts and concrete measures in a manner in the state-owned enterprises (SOEs), finance and tax as well as financial industries.
Comment: It means that the reform and transformation, including the SOEs reform, are always processing in order. The capital market is likely to be a significant operation platform in this round of the SOEs reform so as to guarantee the openness and transparency of the procedures. The SOEs reform sector in the A-share market falls significantly on Aug. 18, mainly as the market was over optimistic at the earlier stage and some companies have already overdrawn the future reform benefits in advance. After the emergency period in which urgent measures were taken, it will take a while for the market to rebuild the confidence and gradually form the stable expectation on reform and transformation. With the continuous advancing of the reform, new leading state-owned assets companies are likely to emerge.
[XFA Selection]
○ The central bank of China conducted the largest single-day reverse repurchase operation (repo) in nearly 19 months. It is expected to unleash long-term liquidity through cutting the deposit reserve ratios.
○ The National Development and Reform Commission (NDRC) indicated that it will strive to introduce the Government Investment Ordinance by the end of the year to promote key construction projects.
○ The National Equities Exchange and Quotations (NEEQ) indicated that it is mulling the internal hierarchy plan in the New Third Board market and will solicit public opinions when it is mature.
○ The housing prices in 70 big and medium cities across China have increased for three consecutive months on monthly basis. Shenzhen City and other first-tier cities continued to lead the market.
○ Bloomberg reported that the parent company of Datang International Power Generation Co., Ltd. (00991.HK; 601991.SH) proposes to inject the power generation assets in Hebei Province into it, which will greatly improve the profits of the company once implemented.
○ Hithink RoyalFlush Information Network Co., Ltd. (300033.SH) and Hundsun Technologies Inc. (600570.SH) are under the of the investigation of the China Securities Regulatory Commission (CSRC) as being suspected in violation of laws and regulations on securities and futures.
[Industry Information]
○ State Council issued new policy on approving new drugs, R＆D enterprises to benefit from it
------
The State Council recently issued the Opinions on Drugs and Medical Equipment Appraisal and Approval System. It proposed to improve drugs and medical equipment appraisal quality and generic drugs quality, encourage the research and development of new drugs and solve accumulated registration applications. Quickening new drugs and innovative medical equipment appraisal and approval are two highlights of the Opinions.
Comment: The Opinions is expected to shorten the R＆D cycle of pharmaceutical enterprises and will benefit listed firms focused on the long-term R＆D of drugs and medical devices. Apatinib, a kind of major special drug developed by Jiangsu Hengrui Medicine Co., Ltd. (600276.SH), has been approved and become the first targeted drug used for stomach cancer treatment in the world. Shanghai Kinetic Medical Co., Ltd. (300326.SZ) has built an innovative medical devices platform in orthopaedics and cardiovascular fields and will constantly expand it through mergers and acquisitions in the future.
○ China Dairy 20 Summit focuses on industrial upgrading, leading enterprises to see larger market share
------
Vice Premier Wang Yang attended the China Dairy 20 Summit and made an address on Aug. 18, indicating that the Chinese dairy industry is at the crucial stage for transformation and upgrading. Wang required accelerating in development mode transformation and promoting the construction of the modern dairy industry. Media reported that the drafting of the development plan for the food industry in the 13th Five-Year Plan period has been completed. In the dairy products industry with severe competition, it will promote industrial merger and consolidation. The market share of leading enterprises are expected to enlarge.
Comment: Data shows that the average consumption of milk per capita in China was only 33 kilos last year, indicating an amount only one third of the average level worldwide. Along with population growth and the improvement of urbanization, the dairy industry sees huge development space. As to listed companies, Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH), a leading domestic dairy products producer, has completed its phase II staff shareholding plan of 133 million yuan. The average price of the staff shareholding plan is 18.58 yuan per share; the actual controller of Bright Dairy ＆ Food Co., Ltd. (600597.SH) is the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government. The company expects strong expectation on state-owned enterprises reform.
[Announcement Interpretation]
○Listed companies under AVIC heavily increase capital in Shenyang Aircraft Industry and Chengdu Aircraft Industry
------
Multiple listed companies under Aviation Industry Corporation of China (AVIC) resume trading together, planning to jointly increase capital in Shenyang Aircraft Industry (Group) Company Limited and Chengdu Aircraft Industry (Group) Company Limited with around 5 billion yuan. Avic Capital Co., Ltd. (600705.SH), China Avionics Systems Co., Ltd. (600372.SH), Avic Aircraft Co., Ltd. (000768.SZ) and AVIC Electromechanical Systems Co., Ltd. (002013.SZ) propose to increase capital in the two companies with 1.9 billion yuan, 539 million yuan, 441 million yuan and 196 million yuan, respectively. AvicChina Industry ＆ Technology Company Limited (02357.HK) will be responsible for the rest 1.9 billion yuan. Chengdu Aircraft Industry is 100 percent controlled by AVIC, while Shenyang Aircraft Industry is held by AVIC and China Huarong Asset Management Co., Ltd. with a shareholding proportion of 94.15 percent and 5.85 percent, respectively. The price of the capital increase is not determined yet at present. All parties involved in the capital increase will determine the amount of their capital to be respectively increased in Shenyang Aircraft Industry and Chengdu Aircraft Industry to make sure that their shareholdings in Shenyang Aircraft Industry equals to their shareholdings in Chengdu Aircraft Industry.
Comment: AVIC is the actual controller of the above-mentioned listed companies, Chengdu Aircraft Industry and Shenyang Aircraft Industry. In recent years, as China's peripheral security situation has become increasingly severe and complicated, Chengdu Aircraft Industry and Shenyang Aircraft Industry, as China's manufacturers of complete fighter, serve as a development base for major defense fighter. AVIC's capital increasing aims at enhancing China's aviation equipment capability in defense security. The introduction of its listed subsidiaries' capital into its core military industrial enterprises marks a further deepening of the securitization in the military industry. Meanwhile, the layout of equal equity ratio also leaves spaces for the integration of Chengdu Aircraft Industry and Shenyang Aircraft Industry.
○CSF buys equities of Hebang Biotechnology
------
Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) announces that as of Aug. 11, China Securities Finance Corporation Limited (CSF) holds 5.17 million shares in the company. CSF is among the top ten shareholders and is the fifth biggest tradable-share holder of the company.
○Baiyang Aquatic Group to initiate environmental protection company and resume trading
------
Baiyang Aquatic Group Inc. (002696.SZ) proposes to initiate an environmental protection company with 24.5 million yuan, accounting for 49 percent of the new company's total share capital. Baiyang Aquatic Group also announces that it terminates the plan on major assets reorganization by acquiring equities of a pharmaceutical enterprise.
○East China Engineering Science and Technology to raise RMB1 bln through private placement to invest in supply chain finance
------
East China Engineering Science and Technology Co., Ltd. (002140.SZ) proposes to raise 1 billion yuan through private placement by issuing 51.95 million shares at 19.25 yuan per share. 650 million yuan of the raised fund will be invested in commercial factoring business, which is predicted to make a profit of respectively 45.50 million yuan, 65.00 million yuan and 78.00 million yuan in the first three years after the business starts running. An additional 50 million yuan will be invested in the building of supply chain financial data and information platform, and the remaining 300 million yuan raised will serve as supplementary working capital.
Comment: The company now is mainly engaged in coal chemical engineering construction, and the strategic transition to supply chain finance will bring new profit growth points to it.
[Financial Reports Express]
○Csg Smart Science and Technology sees big increase in net profit and proposes high share conversion and dividend
------
Csg Smart Science and Technology Co., Ltd. (300222.SZ) reports a year-on-year net profit increase of 162.78 percent in its semiyearly report and proposes a 8-for-10 conversion of capital surplus into shares. Tatwah Smartec Co., Ltd. (002512.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its semiyearly report. Southwest Securities Co., Ltd. (600369.SH) proposes a 10-for-10 conversion of capital surplus into shares with 1.2 yuan dividend for every 10 shares in its semiyearly report.
○Sierte Fertilizer Industry expects 70 pct increase in net profit in Q1-Q3, Wang Yawei becomes one of its shareholders
------
The semiyearly report of Sierte Fertilizer Industry Company Limited (002538.SZ) shows that the Yunfeng Assembled Funds Trust Plan initiated by Wang Yawei, a well-known fund manager, is the seventh biggest shareholder of the company, and predicts that in the first three quarters the company will have a year-on-year net profit increase of 70-100 percent.
>Leading Group for Overall Reform stresses implementation of reform measures, SOEs reform to see more opportunities
>State Council issued new policy on approving new drugs, R＆D enterprises to benefit from it
>Listed companies under AVIC heavily increase capital in Shenyang Aircraft Industry and Chengdu Aircraft Industry, CSF buys equities of Hebang Biotechnology
>Baiyang Aquatic Group to resume trading, East China Engineering Science and Technology to invest in supply chain finance through private placement
[XFA Focus]
○ Leading Group for Overall Reform stresses implementation of reform measures, SOEs reform to see more opportunities
------
Chinese President Xi Jinping hosts the 15th meeting of the Leading Group for Overall Reform on Aug. 18, requiring to strengthen the reform willpower, maintain reform momentum and implement the reform measures in a down-to-earth manner. It should recognize that the reform is the only way for China and the Chinese Communist Party to energetically carry all works and it should timely study and solve new problems appeared in reform. It should intensively issue a series of reform schemes with great efforts and concrete measures in a manner in the state-owned enterprises (SOEs), finance and tax as well as financial industries.
Comment: It means that the reform and transformation, including the SOEs reform, are always processing in order. The capital market is likely to be a significant operation platform in this round of the SOEs reform so as to guarantee the openness and transparency of the procedures. The SOEs reform sector in the A-share market falls significantly on Aug. 18, mainly as the market was over optimistic at the earlier stage and some companies have already overdrawn the future reform benefits in advance. After the emergency period in which urgent measures were taken, it will take a while for the market to rebuild the confidence and gradually form the stable expectation on reform and transformation. With the continuous advancing of the reform, new leading state-owned assets companies are likely to emerge.
[XFA Selection]
○ The central bank of China conducted the largest single-day reverse repurchase operation (repo) in nearly 19 months. It is expected to unleash long-term liquidity through cutting the deposit reserve ratios.
○ The National Development and Reform Commission (NDRC) indicated that it will strive to introduce the Government Investment Ordinance by the end of the year to promote key construction projects.
○ The National Equities Exchange and Quotations (NEEQ) indicated that it is mulling the internal hierarchy plan in the New Third Board market and will solicit public opinions when it is mature.
○ The housing prices in 70 big and medium cities across China have increased for three consecutive months on monthly basis. Shenzhen City and other first-tier cities continued to lead the market.
○ Bloomberg reported that the parent company of Datang International Power Generation Co., Ltd. (00991.HK; 601991.SH) proposes to inject the power generation assets in Hebei Province into it, which will greatly improve the profits of the company once implemented.
○ Hithink RoyalFlush Information Network Co., Ltd. (300033.SH) and Hundsun Technologies Inc. (600570.SH) are under the of the investigation of the China Securities Regulatory Commission (CSRC) as being suspected in violation of laws and regulations on securities and futures.
[Industry Information]
○ State Council issued new policy on approving new drugs, R＆D enterprises to benefit from it
------
The State Council recently issued the Opinions on Drugs and Medical Equipment Appraisal and Approval System. It proposed to improve drugs and medical equipment appraisal quality and generic drugs quality, encourage the research and development of new drugs and solve accumulated registration applications. Quickening new drugs and innovative medical equipment appraisal and approval are two highlights of the Opinions.
Comment: The Opinions is expected to shorten the R＆D cycle of pharmaceutical enterprises and will benefit listed firms focused on the long-term R＆D of drugs and medical devices. Apatinib, a kind of major special drug developed by Jiangsu Hengrui Medicine Co., Ltd. (600276.SH), has been approved and become the first targeted drug used for stomach cancer treatment in the world. Shanghai Kinetic Medical Co., Ltd. (300326.SZ) has built an innovative medical devices platform in orthopaedics and cardiovascular fields and will constantly expand it through mergers and acquisitions in the future.
○ China Dairy 20 Summit focuses on industrial upgrading, leading enterprises to see larger market share
------
Vice Premier Wang Yang attended the China Dairy 20 Summit and made an address on Aug. 18, indicating that the Chinese dairy industry is at the crucial stage for transformation and upgrading. Wang required accelerating in development mode transformation and promoting the construction of the modern dairy industry. Media reported that the drafting of the development plan for the food industry in the 13th Five-Year Plan period has been completed. In the dairy products industry with severe competition, it will promote industrial merger and consolidation. The market share of leading enterprises are expected to enlarge.
Comment: Data shows that the average consumption of milk per capita in China was only 33 kilos last year, indicating an amount only one third of the average level worldwide. Along with population growth and the improvement of urbanization, the dairy industry sees huge development space. As to listed companies, Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH), a leading domestic dairy products producer, has completed its phase II staff shareholding plan of 133 million yuan. The average price of the staff shareholding plan is 18.58 yuan per share; the actual controller of Bright Dairy ＆ Food Co., Ltd. (600597.SH) is the State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government. The company expects strong expectation on state-owned enterprises reform.
[Announcement Interpretation]
○Listed companies under AVIC heavily increase capital in Shenyang Aircraft Industry and Chengdu Aircraft Industry
------
Multiple listed companies under Aviation Industry Corporation of China (AVIC) resume trading together, planning to jointly increase capital in Shenyang Aircraft Industry (Group) Company Limited and Chengdu Aircraft Industry (Group) Company Limited with around 5 billion yuan. Avic Capital Co., Ltd. (600705.SH), China Avionics Systems Co., Ltd. (600372.SH), Avic Aircraft Co., Ltd. (000768.SZ) and AVIC Electromechanical Systems Co., Ltd. (002013.SZ) propose to increase capital in the two companies with 1.9 billion yuan, 539 million yuan, 441 million yuan and 196 million yuan, respectively. AvicChina Industry ＆ Technology Company Limited (02357.HK) will be responsible for the rest 1.9 billion yuan. Chengdu Aircraft Industry is 100 percent controlled by AVIC, while Shenyang Aircraft Industry is held by AVIC and China Huarong Asset Management Co., Ltd. with a shareholding proportion of 94.15 percent and 5.85 percent, respectively. The price of the capital increase is not determined yet at present. All parties involved in the capital increase will determine the amount of their capital to be respectively increased in Shenyang Aircraft Industry and Chengdu Aircraft Industry to make sure that their shareholdings in Shenyang Aircraft Industry equals to their shareholdings in Chengdu Aircraft Industry.
Comment: AVIC is the actual controller of the above-mentioned listed companies, Chengdu Aircraft Industry and Shenyang Aircraft Industry. In recent years, as China's peripheral security situation has become increasingly severe and complicated, Chengdu Aircraft Industry and Shenyang Aircraft Industry, as China's manufacturers of complete fighter, serve as a development base for major defense fighter. AVIC's capital increasing aims at enhancing China's aviation equipment capability in defense security. The introduction of its listed subsidiaries' capital into its core military industrial enterprises marks a further deepening of the securitization in the military industry. Meanwhile, the layout of equal equity ratio also leaves spaces for the integration of Chengdu Aircraft Industry and Shenyang Aircraft Industry.
○CSF buys equities of Hebang Biotechnology
------
Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) announces that as of Aug. 11, China Securities Finance Corporation Limited (CSF) holds 5.17 million shares in the company. CSF is among the top ten shareholders and is the fifth biggest tradable-share holder of the company.
○Baiyang Aquatic Group to initiate environmental protection company and resume trading
------
Baiyang Aquatic Group Inc. (002696.SZ) proposes to initiate an environmental protection company with 24.5 million yuan, accounting for 49 percent of the new company's total share capital. Baiyang Aquatic Group also announces that it terminates the plan on major assets reorganization by acquiring equities of a pharmaceutical enterprise.
○East China Engineering Science and Technology to raise RMB1 bln through private placement to invest in supply chain finance
------
East China Engineering Science and Technology Co., Ltd. (002140.SZ) proposes to raise 1 billion yuan through private placement by issuing 51.95 million shares at 19.25 yuan per share. 650 million yuan of the raised fund will be invested in commercial factoring business, which is predicted to make a profit of respectively 45.50 million yuan, 65.00 million yuan and 78.00 million yuan in the first three years after the business starts running. An additional 50 million yuan will be invested in the building of supply chain financial data and information platform, and the remaining 300 million yuan raised will serve as supplementary working capital.
Comment: The company now is mainly engaged in coal chemical engineering construction, and the strategic transition to supply chain finance will bring new profit growth points to it.
[Financial Reports Express]
○Csg Smart Science and Technology sees big increase in net profit and proposes high share conversion and dividend
------
Csg Smart Science and Technology Co., Ltd. (300222.SZ) reports a year-on-year net profit increase of 162.78 percent in its semiyearly report and proposes a 8-for-10 conversion of capital surplus into shares. Tatwah Smartec Co., Ltd. (002512.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its semiyearly report. Southwest Securities Co., Ltd. (600369.SH) proposes a 10-for-10 conversion of capital surplus into shares with 1.2 yuan dividend for every 10 shares in its semiyearly report.
○Sierte Fertilizer Industry expects 70 pct increase in net profit in Q1-Q3, Wang Yawei becomes one of its shareholders
------
The semiyearly report of Sierte Fertilizer Industry Company Limited (002538.SZ) shows that the Yunfeng Assembled Funds Trust Plan initiated by Wang Yawei, a well-known fund manager, is the seventh biggest shareholder of the company, and predicts that in the first three quarters the company will have a year-on-year net profit increase of 70-100 percent.
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