[Today's Guide]
> State Council urges expansion of investment, infrastructure projects including underground pipelines see obvious acceleration
> Buffett takes stake in oil refining enterprises and bets recovery in oil ＆ gas industrial chains.
> White paper on civil and military integration to release, military engineering reform to speed up
> Great Southeast to invest in lithium-ion battery project through private placement, Chinafortune and Pudong Development Bank see shareholding increases
[SSN Focus]
○State Council urges expansion of investment, infrastructure projects including underground pipelines see obvious acceleration
------
Chinese Premier Li Keqiang hosted special meeting of the State Council on Aug. 28, studying the impacts brought by the new changes of international economic and financial trends on China's economy and the countermeasures, and made important speech. He emphasized that under the circumstances that traditional growth momentum weakens, more news measures concerning reform and opening up should be proposed; more public products and services should be supplied; ways of financing and investment should be innovated, local government and enterprises' investment ability should be sharpened and implementation of significant projects including construction of public facilities, etc. should be pushed forward.
Comment: According to statistics, the National Development and Reform Commission (NDRC) has approved nearly 900-billion-yuan infrastructure projects this year. Huge investment has been put into "railway, road and airport", water conservancy construction, underground pipelines, etc. projects. Especially for the construction of underground pipelines, it not only frequently attracts attentions from the executive meeting of the State Council but also sees increasing priority from local governments. For example, the first regulationof Hebei Province on urban underground pipeline, making special regulations on the construction of comprehensive pipelines, will come into force from Sep. Several other provinces also launch plans of underground pipeline construction one after another. Among listed companies, Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) is located at Shenyang City, Liaoning Province, which is among the first batch of cities piloting underground pipelines. The company takes charge of pipeline project in Hunnan New District. Yonggao Co., Ltd. (002641.SZ) and Xinjiang Guotong Pipeline Co., Ltd. (002205.SZ) also indicate that the construction of underground pipeline will benefit their pipeline business.
◆ Li also indicated on the meeting that financial stability matters to the whole economy and there is no foundation for continuous devaluation of RMB exchange rate; a fair and transparent capital market with long-term stable and healthy development should be fostered; systematic and regional financial risks should be avoided.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) indicated that it has transferred 22 typical cases of suspected market manipulation, etc. to the Ministry of Public Security and it will crack down illegal activities during abnormal fluctuation in stock market.
○ China Financial Futures Exchange (CFFEX) raised the stock index margin ration again and reduced the intraday position-opening limits from 600 lots to 100 lots to curb excessive speculations.
○ The National Development and Reform Commission (NDRC) will hold a press conference at 9:30 a.m. on Aug. 31 to introduce progress of revitalization of northeast China.
○ The State Council released the Opinions on Prompting the Modernization of Domestic Trade Circulation and Building Legalized Business Environment on Aug. 28.
○ PetroChina Company Limited (NYSE:PTR; 00857.HK; 601857.SH) will increase reform efforts in the oil and gas industry in Xinjiang and promote mixed ownership reform pilots in various upstream and downstream fields.
○ The Economic Observer reports that supporting policies for electricity reform will come soon. Grid enterprises are expected to participate in competitive sales of electricity.
[Industry Information]
○ Buffett takes stake in oil refining enterprises and bets recovery in oil ＆ gas industrial chains.
------
Foreign media reported that Warren Buffett's Berkshire Hathaway Inc. disclosed that it bought shares of oil refiner Phillips 66 (NYSE: PSX) with 4.5 billion U.S. dollars, accounting for 10 percent of the latter's total share capital. In addition, U.S. GDP data outpaced the market expectations in the second quarter. On last Thursday and Friday, international crude oil prices surged by over 15 percent in total.
Comment: Analysts believe that Buffett's move is a bet that the long-term demands in the energy industry are picking up. Pushed by demand rise, the oil and gas industrial chains are expected to recover, and the oil refining industry will likely be the first beneficiary. In terms of listedcompanies, both Sinopec Shanghai Petrochemical Company Limited (600688.SH), a subsidiary of China Petrochemical Corporation (Sinopec Group) (NYSE: SNP), and North Huajin Chemical Industries Co., Ltd. (000059.SZ), an oil refining subsidiary of China North Industries Group Corporation, turned lossinto gain in the first half of this year.
○ White paper on civil and military integration to release, military engineering reform to speed up
------
The National Defense University PLA China will release the White Paper of Chinese Military and Civil Integration on the third session of China (Mianyang) Science ＆ Technology City International High-Tech Expo on Sep. 17 to 20. The market expects that policies on the military-civil integration will be deepened after the military parade. Xu Dazhe, head of State Administration of Science, Technology and Industry for National Defense, indicated in mid-July that the opening level of military industry will be expanded; quality social resources will be absorbed into the research, production and maintenance of military weapon; newly permitted list will be cut by over 60 percent compared with previous figure.
Comment: Institutes estimate that the reform in the military engineering system is expected to beat the expectation. The civil participation in military industries, the restructuring of military engineering academies and institutes and the pricing system for military products will be given priorities to make breakthroughs. With the improvement in the opening of the military engineering industry, the military and civil integration will see rapid development. Enterprises engaged in the production of spares and parts to military products will embrace policy benefits. In terms of listed companies, Xiangtan Electric Manufacturing Co., Ltd. (600416.SH) proposes to raise 2.5 billion yuan to invest in the industrialization of comprehensive power system in military fleet, which will benefit the upgrading of naval equipment. Integrated Electronic Systems Lab Co., Ltd. (002339.SZ) has established a military industry M＆A fund with 1.5 billion yuan, which will focus on the informatization of military industry.
[Announcement Interpretation]
○ Great Southeast to raise RMB2 bln through private placement for lithium-ion battery project
------
Zhejiang Great Southeast Co., Ltd. (002263.SZ) proposes to raise 2 billion yuan through private placement to invest in a project with an annual production of 750 million Ah lithium-ion battery powered by stored energy.
○ Guohua Life Insurance buys Chinafortune again
------
Based on the announcement by Shanghai Chinafortune Co., Ltd. (600621.SH), from Aug. 20 to 28, Guohua Life Insurance Co., Ltd. increased shareholding in the company by 26.2 million shares at the average price of 14.13 yuan per share, accounting for 5 percent of the total share capital of the company and enhancing its shareholding proportion to 10 percent. The latest share price of Chinafortune is 14.85 yuan per share.
○ Funde Sino Life Insurance buys shares of Pudong Development Bank
------
According to the announcement by Shanghai Pudong Development Bank Co., Ltd. (600000.SH), as of Aug. 28, Funde Sino Life Insurance Co., Ltd. has bought 934 million shares in the bank, accounting for over 5 percent of the total share capital. Funde Sino Life Insurance opened the position from May 5 this year and is rosy about the future development prospect of Pudong Development Bank. Previously, the company was well-known for purchasing the shares of such companies as Gemdale Corporation (600383.SH) and Shenzhen Agricultural Products Co., Ltd. (000061.SZ) through secondary market acquisition to the 5 percent limit.
○ Boai Nky Phar. finished assets delivery and transfer ownership and to resume trading
------
Boai Nky Pharmaceuticals Ltd. (300109.SZ) bought three pharmaceutical companies through private placement and has completed assets delivery and transfer ownership. The restructuring involves gene sequencing industry. The company also announced the termination in the matters concerning the new round of private placement.
○ Controlling shareholder of Liyuan Precision Manufacturing increased shareholding by 5 mln shares
------
Wang Min, the actual controlling shareholder of Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ), increased the shareholding in the company by 5 million shares at the average price of 10.10 yuan per share on Aug. 28, accounting for 0.53 percent of the total share capital.
[Financial Reports Express]
○ Woer Heat-Shrinkable Material net profit surge in first three quarters
------
Shenzhen Woer Heat-Shrinkable Material Co., Ltd. (002130.SZ) recorded a year-on-year growth of 821 percent in net profit in its interim report. It expects its net profit in the first three quarters to increase 440 percent to 470 percent year on year mainly thanks to the increase in investment revenue.
[Weekly Review]
○ Three-dimensional narration in A Dream in Red Mansions and three-dimensional thinking in investment
------
Many people say that A Dream in Red Mansions is difficult to understand and cannot read it. It is true. In this novel, legends and realistic officialdom developed together and the highbrow art and household affairs are parallel with each other. With many narrative clues interwoven, it is far more complicated than other novels. However, if readers are lost in it, they will marvel at the extremely true and beautiful art world.
Like reading novels, people are used to linear thinking in making investment judgments and hope that they can follow one logic from beginning to the end. As a matter of fact, the amount of information on the stock market is far more than that in A Dream in Red Mansions and there are countless factors affecting the surge and slump of the market. Some stock prices have excessive response on some factors while some have insufficient response. As time goes by, the bullish and bearish properties of such factors will change. Only with a three- dimensional thinking can prevent investors from losing direction in the flood of information.
For example, the state-owned enterprises (SOEs) reform is a significant event in the political and economic circles. However, the SOEs stocks cannot always hike without decreasing. When the stock price of CRRC Corporation Limited (01766.HK; 601766.SH) suffered great losses and the SSE Composite Index fell below 3,000 points, the market even lost confidence in SOEs stocks. But driven by the trading suspension of central shipping enterprises, the top reshuffle in the telecommunication industry and the soliciting of opinions on oil reform plan, the confidence in it was strengthened again. The SSN made repeated report and interpretation on it, which help you have an objective and overall view on the reform prospects.
The narration in A Dream in Red Mansions emphasizes foreshadowing with minor characters reappearing and assuming important responsibilities in the later part. We should be good at looking for hints in the information about the stock market. Why does the State Council hold a seminar on 3D printing? Will the plan on the Beijing-Tianjin-Hebei coordinated development be released soon? Shenzhen Sunshine Laser ＆ Electronics Technology Co., Ltd. (300227.SZ) and Langfang Development Co., Ltd. (600149.SH) recovered before the stock indexes and rebounded significantly last week. Some wise capitals may have grasped opportunities in them.
> State Council urges expansion of investment, infrastructure projects including underground pipelines see obvious acceleration
> Buffett takes stake in oil refining enterprises and bets recovery in oil ＆ gas industrial chains.
> White paper on civil and military integration to release, military engineering reform to speed up
> Great Southeast to invest in lithium-ion battery project through private placement, Chinafortune and Pudong Development Bank see shareholding increases
[SSN Focus]
○State Council urges expansion of investment, infrastructure projects including underground pipelines see obvious acceleration
------
Chinese Premier Li Keqiang hosted special meeting of the State Council on Aug. 28, studying the impacts brought by the new changes of international economic and financial trends on China's economy and the countermeasures, and made important speech. He emphasized that under the circumstances that traditional growth momentum weakens, more news measures concerning reform and opening up should be proposed; more public products and services should be supplied; ways of financing and investment should be innovated, local government and enterprises' investment ability should be sharpened and implementation of significant projects including construction of public facilities, etc. should be pushed forward.
Comment: According to statistics, the National Development and Reform Commission (NDRC) has approved nearly 900-billion-yuan infrastructure projects this year. Huge investment has been put into "railway, road and airport", water conservancy construction, underground pipelines, etc. projects. Especially for the construction of underground pipelines, it not only frequently attracts attentions from the executive meeting of the State Council but also sees increasing priority from local governments. For example, the first regulationof Hebei Province on urban underground pipeline, making special regulations on the construction of comprehensive pipelines, will come into force from Sep. Several other provinces also launch plans of underground pipeline construction one after another. Among listed companies, Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) is located at Shenyang City, Liaoning Province, which is among the first batch of cities piloting underground pipelines. The company takes charge of pipeline project in Hunnan New District. Yonggao Co., Ltd. (002641.SZ) and Xinjiang Guotong Pipeline Co., Ltd. (002205.SZ) also indicate that the construction of underground pipeline will benefit their pipeline business.
◆ Li also indicated on the meeting that financial stability matters to the whole economy and there is no foundation for continuous devaluation of RMB exchange rate; a fair and transparent capital market with long-term stable and healthy development should be fostered; systematic and regional financial risks should be avoided.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) indicated that it has transferred 22 typical cases of suspected market manipulation, etc. to the Ministry of Public Security and it will crack down illegal activities during abnormal fluctuation in stock market.
○ China Financial Futures Exchange (CFFEX) raised the stock index margin ration again and reduced the intraday position-opening limits from 600 lots to 100 lots to curb excessive speculations.
○ The National Development and Reform Commission (NDRC) will hold a press conference at 9:30 a.m. on Aug. 31 to introduce progress of revitalization of northeast China.
○ The State Council released the Opinions on Prompting the Modernization of Domestic Trade Circulation and Building Legalized Business Environment on Aug. 28.
○ PetroChina Company Limited (NYSE:PTR; 00857.HK; 601857.SH) will increase reform efforts in the oil and gas industry in Xinjiang and promote mixed ownership reform pilots in various upstream and downstream fields.
○ The Economic Observer reports that supporting policies for electricity reform will come soon. Grid enterprises are expected to participate in competitive sales of electricity.
[Industry Information]
○ Buffett takes stake in oil refining enterprises and bets recovery in oil ＆ gas industrial chains.
------
Foreign media reported that Warren Buffett's Berkshire Hathaway Inc. disclosed that it bought shares of oil refiner Phillips 66 (NYSE: PSX) with 4.5 billion U.S. dollars, accounting for 10 percent of the latter's total share capital. In addition, U.S. GDP data outpaced the market expectations in the second quarter. On last Thursday and Friday, international crude oil prices surged by over 15 percent in total.
Comment: Analysts believe that Buffett's move is a bet that the long-term demands in the energy industry are picking up. Pushed by demand rise, the oil and gas industrial chains are expected to recover, and the oil refining industry will likely be the first beneficiary. In terms of listedcompanies, both Sinopec Shanghai Petrochemical Company Limited (600688.SH), a subsidiary of China Petrochemical Corporation (Sinopec Group) (NYSE: SNP), and North Huajin Chemical Industries Co., Ltd. (000059.SZ), an oil refining subsidiary of China North Industries Group Corporation, turned lossinto gain in the first half of this year.
○ White paper on civil and military integration to release, military engineering reform to speed up
------
The National Defense University PLA China will release the White Paper of Chinese Military and Civil Integration on the third session of China (Mianyang) Science ＆ Technology City International High-Tech Expo on Sep. 17 to 20. The market expects that policies on the military-civil integration will be deepened after the military parade. Xu Dazhe, head of State Administration of Science, Technology and Industry for National Defense, indicated in mid-July that the opening level of military industry will be expanded; quality social resources will be absorbed into the research, production and maintenance of military weapon; newly permitted list will be cut by over 60 percent compared with previous figure.
Comment: Institutes estimate that the reform in the military engineering system is expected to beat the expectation. The civil participation in military industries, the restructuring of military engineering academies and institutes and the pricing system for military products will be given priorities to make breakthroughs. With the improvement in the opening of the military engineering industry, the military and civil integration will see rapid development. Enterprises engaged in the production of spares and parts to military products will embrace policy benefits. In terms of listed companies, Xiangtan Electric Manufacturing Co., Ltd. (600416.SH) proposes to raise 2.5 billion yuan to invest in the industrialization of comprehensive power system in military fleet, which will benefit the upgrading of naval equipment. Integrated Electronic Systems Lab Co., Ltd. (002339.SZ) has established a military industry M＆A fund with 1.5 billion yuan, which will focus on the informatization of military industry.
[Announcement Interpretation]
○ Great Southeast to raise RMB2 bln through private placement for lithium-ion battery project
------
Zhejiang Great Southeast Co., Ltd. (002263.SZ) proposes to raise 2 billion yuan through private placement to invest in a project with an annual production of 750 million Ah lithium-ion battery powered by stored energy.
○ Guohua Life Insurance buys Chinafortune again
------
Based on the announcement by Shanghai Chinafortune Co., Ltd. (600621.SH), from Aug. 20 to 28, Guohua Life Insurance Co., Ltd. increased shareholding in the company by 26.2 million shares at the average price of 14.13 yuan per share, accounting for 5 percent of the total share capital of the company and enhancing its shareholding proportion to 10 percent. The latest share price of Chinafortune is 14.85 yuan per share.
○ Funde Sino Life Insurance buys shares of Pudong Development Bank
------
According to the announcement by Shanghai Pudong Development Bank Co., Ltd. (600000.SH), as of Aug. 28, Funde Sino Life Insurance Co., Ltd. has bought 934 million shares in the bank, accounting for over 5 percent of the total share capital. Funde Sino Life Insurance opened the position from May 5 this year and is rosy about the future development prospect of Pudong Development Bank. Previously, the company was well-known for purchasing the shares of such companies as Gemdale Corporation (600383.SH) and Shenzhen Agricultural Products Co., Ltd. (000061.SZ) through secondary market acquisition to the 5 percent limit.
○ Boai Nky Phar. finished assets delivery and transfer ownership and to resume trading
------
Boai Nky Pharmaceuticals Ltd. (300109.SZ) bought three pharmaceutical companies through private placement and has completed assets delivery and transfer ownership. The restructuring involves gene sequencing industry. The company also announced the termination in the matters concerning the new round of private placement.
○ Controlling shareholder of Liyuan Precision Manufacturing increased shareholding by 5 mln shares
------
Wang Min, the actual controlling shareholder of Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ), increased the shareholding in the company by 5 million shares at the average price of 10.10 yuan per share on Aug. 28, accounting for 0.53 percent of the total share capital.
[Financial Reports Express]
○ Woer Heat-Shrinkable Material net profit surge in first three quarters
------
Shenzhen Woer Heat-Shrinkable Material Co., Ltd. (002130.SZ) recorded a year-on-year growth of 821 percent in net profit in its interim report. It expects its net profit in the first three quarters to increase 440 percent to 470 percent year on year mainly thanks to the increase in investment revenue.
[Weekly Review]
○ Three-dimensional narration in A Dream in Red Mansions and three-dimensional thinking in investment
------
Many people say that A Dream in Red Mansions is difficult to understand and cannot read it. It is true. In this novel, legends and realistic officialdom developed together and the highbrow art and household affairs are parallel with each other. With many narrative clues interwoven, it is far more complicated than other novels. However, if readers are lost in it, they will marvel at the extremely true and beautiful art world.
Like reading novels, people are used to linear thinking in making investment judgments and hope that they can follow one logic from beginning to the end. As a matter of fact, the amount of information on the stock market is far more than that in A Dream in Red Mansions and there are countless factors affecting the surge and slump of the market. Some stock prices have excessive response on some factors while some have insufficient response. As time goes by, the bullish and bearish properties of such factors will change. Only with a three- dimensional thinking can prevent investors from losing direction in the flood of information.
For example, the state-owned enterprises (SOEs) reform is a significant event in the political and economic circles. However, the SOEs stocks cannot always hike without decreasing. When the stock price of CRRC Corporation Limited (01766.HK; 601766.SH) suffered great losses and the SSE Composite Index fell below 3,000 points, the market even lost confidence in SOEs stocks. But driven by the trading suspension of central shipping enterprises, the top reshuffle in the telecommunication industry and the soliciting of opinions on oil reform plan, the confidence in it was strengthened again. The SSN made repeated report and interpretation on it, which help you have an objective and overall view on the reform prospects.
The narration in A Dream in Red Mansions emphasizes foreshadowing with minor characters reappearing and assuming important responsibilities in the later part. We should be good at looking for hints in the information about the stock market. Why does the State Council hold a seminar on 3D printing? Will the plan on the Beijing-Tianjin-Hebei coordinated development be released soon? Shenzhen Sunshine Laser ＆ Electronics Technology Co., Ltd. (300227.SZ) and Langfang Development Co., Ltd. (600149.SH) recovered before the stock indexes and rebounded significantly last week. Some wise capitals may have grasped opportunities in them.
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