[Today's Guide]
○Deleverage to gradually end, stock prices to rationally return
○Some medium and large insurance funds turn to be optimistic from wait-and-see
○Institutions pay attention to Shengyun Environment-Protection, with performance to gradually release
○Sinkiang intensively build up economic belt core area along Silk Road
[SSN View]
○Deleverage to gradually end, stock prices to rationally return
------
The financing balance of Shanghai and Shenzhen stock exchanges this week lowered to 1 trillion yuan, down by nearly 60 percent from the peak, making it a landmark event in this round of deleveraging process. Combined with the measures including recent intensified supervision on off-market margin financing by the regulators, the deleveraging process may tend to be end, which promotes the market's rapid adjustment. The leading role of leverage in individual stock pricing has been greatly weakened, with stock prices beginning to gradually reflect the actual fundamentals.
Recently, the China Securities Regulatory Commission (CSRC) said in the interview of the Xinhua News Agency that the systems under Hundsun Technologies Inc. (600570.SH), Shanghai Mecrt Software Tech. Co., Ltd. and Hithink Royal Flush Information Network Co., Ltd. (300033.SZ) with the largest amounts of margin financing have been shut and closed down, as the three have offended against the laws and rules. The financing balance of Shanghai and Shenzhen stock exchanges has fallen back to 1 trillion yuan, which was also the level at the end of last year, from the previous peak of 2.27 trillion yuan, with a sharp drop in leveraging financing scale of the trust companies. Therefore, the CSRC believed that leveraging financing risk has been reduced to some extent.
In fact, the reducing total amount of financing only reflects one side. The market transaction proportion of leverage funds obviously drops back, directly showing the weakening influence of the leverage funds on index and individual stock pricing. Currently, the statistics show that the financing balance of Shanghai and Shenzhen stock exchanges accounts for 2.81 percent of the market value liquidity, lowered than the level when the market started to rebound from 2,500 points in the last ten days of last October, down from the peak of 4.5 percent. In addition, margin trading accounts for 10 percent of the turnover, down from the peak of nearly 20 percent.
Along with the deleveraging process gradually closing to the end, the cases that stock prices encumbered by the mandatory liquidation will reduce, but the individual stock pricing is also likely to turn back to rational positions, making it very difficult for the trends-based operational mode to widely spread again, which ignores the fundamentals and stresses on the funds. Reasonable valuation, performance growth and reform expectation will be regarded as the main consideration factors by the investors when they search for investment targets.
[Institutions' Movement]
○Some medium and large insurance funds turn to be optimistic from wait-and-see
------
The latest investigation by SSN on medium and large insurance enterprises in Beijing and Shanghai shows that some insurance funds hold a quite optimistic attitude from the previous wait-and-see emotion. Along with the pain caused by deleveraging process gradually closing to the end, the insurance funds expect that some stocks will drop back by nearly 60 percent to 70 percent from the high, or even below the net value, to the value investing ranges. The indexes are likely to rebound to a range of 3,300 points to 3,500 points, with constant support by the policies. The insurance funds are optimistic towards the leading stocks in the industries of consumption, electric power, medical treatment and etc. with clear performance growth and high dividend.
○Institutions pay attention to Shengyun Environment-Protection, with performance to gradually release
------
Institutions recently conducted the investigation and research on Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ). It is known that the company currently received a large number of orders, with a strong ability to obtain orders in the future. Due to the performance contributed by Beijing China Sciences General Energy ＆ Environment Co., Ltd., institutions believed that Shengyun Environment-Protection is likely to obtain 350 to 400 million yuan for its annual net profit, with performances from 2015 to 2017 gradually released. The company achieved nearly 126 million yuan for its net profit in the first half year, with about 10 projects under construction currently, 5 projects determined to go into operation and about 10 projects planned for next year. About 30 percent is expected in the net profit rate for a single project. In addition, the company has deep cooperation with Hua Rong Holding Group, trying to adopt the PPP mode in waste incineration field. Such mode is likely to be a highlight of the company.
[Hotspot Investigation]
○ Sinkiang intensively build up economic belt core area along Silk Road
------
Before the 60th anniversary since the establishment of Sinkiang Autonomous Region, the SSN has organized front-line reporters to carry out site visit in Sinkiang Autonomous Region, which is regarded as the core area of economic belt along the Silk Road. Their investigation focuses on Alataw Pass, Helgas port, Khunjerab along the boundary between China and Pakistan, and Karassu along the boundary between China and Tajikistan. The detailed situation from the front-line investigation is now revealed to the investors for reference.
◆Ports along the "Belt and Road" actively apply for third batch of FTZs
It is learnt that all ports of entry along the "Belt and Road" are making active preparations in applying for the third batch of free trade zones (FTZs). Alataw Port and Kashgar replicated the successful experiences of Shanghai FTZ within their comprehensive bonded zones. The overall application plan has not finalized yet. It is possible that Urumchi, Alataw Port, Khorgos and Kashgar will jointly set up a new Xinjiang-Central Asia FTZ.
◆Interconnectivity infrastructure projects accelerate
The renovation and extension project of National Road 314 (G314) connecting China and Pakistan is under construction. The project is jointly undertaken by Xinjiang Beixin Road ＆ Bridge Group Co., Ltd. (002307.SZ), China Railway 15th Bureau Group Co., Ltd. and other companies. The G314 will be extended to four passageways for road, railway, energy and information. It will become an important strategic passageway connecting China with Central Asia and Europe. In addition, the construction of China-Kyrgyzstan-Uzbekistan railway, Karamay-Bakhty port railway, and Urumchi International Airport which will serve as a gateway on the air is also accelerating.
◆Listed companies vigorously carry out "Belt and Road" initiatives
Local listed companies in Xinjiang Uygur Autonomous Region are also vigorously carrying out the "One Belt and One Road" initiatives in hope that they will expand the international market and seek for wider development space.
Xinjiang Goldwind Science and Technology Co., Ltd. (002202.SZ) is the world's largest manufacturer of direct-drive permanent magnet wind power generator. The company is actively implementing the internationalization strategy. Its international sales revenue in the first half year surged by over 80 percent year on year, accounting for 12 percent of its total operating revenue. Goldwind Science and Technology has made smooth progress in developing the market in Thailand, Pakistan and South Africa. As of the first half year, its international wind power projects have completed a 246MW installed capacity of wind power plant, or a 121.74MW installed capacity calculated on equities.
Xinjiang Machinery Research Institute Co., Ltd. (300159.SZ) is a leading agricultural machinery company in Xinjiang. The company's maize harvesting machine series and silage machine series have about 20 percent and 60 percent market share in China. Institutions believe that located in a core hub along the "One Belt and One Road" and under the background where the Central Asia and its surrounding areas has massive agricultural land and lower degree of agricultural mechanization, Xinjiang Machinery Research Institute enjoys remarkable advantages in opening the export market in the future. Currently, the company has set up an international business department, hoping to further launch its agricultural machinery export business in the five countries in Central Asia through financing leasing.
[Data Reference]
○Diving medium ＆ small-cap companies with stable fundamentals to favored
------
China's A-share market plunged since mid-June. The ChiNext Board Index shrank 50 percent. Some medium and small-cap individual stocks fall to 20 to 30 percent of their highest prices. According to the forecast for the third quarter, there are 13 listed companies with a market value of less than 5 million who fell by over 20 percentage points than the CSI 500 Index, yet forecast a growth or turning losses to profits in the third quarter, including Shanghai Tongda Venture Capital Co., Ltd. (600647.SH), Jiangsu Xinning Modern Logistics Co., Ltd. (300013.SZ), Lida Optical ＆ Electronic Co., Ltd. (002189.SZ), Shanghai Hi-tech Control System Co., Ltd. (002189.SZ), Shanghai Morn Electric Equipment Co., Ltd. (002451.SZ), Shenzhen H＆T Intelligent Control Co., Ltd. (002402.SZ), Huizhou China Eagle Electronic Technology Co., Ltd. (002579.SZ), Zhejiang Unifull Industrial Fiber Co., Ltd. (002427.SZ), Sunwave Communications Co., Ltd. (002115.SZ), GuangZhou Seagull Kitchen and Bath Products Co., Ltd. (002084.SZ), Gifore Agricultural Machinery Chain Co., Ltd. (300022.SZ), Hunan New Wellful Co., Ltd. (600975.SH) and United Science＆technology Co., Ltd. (000925.SZ).
[Information Radar]
○Chemiluminescence apparatus of Leadman Biochemistry receives support from MOST
------
Beijing Leadman Biochemistry Co., Ltd. (300289.SZ) disclosed at the strategy meeting of securities companies today that the company is developing chemiluminescence apparatus, a new blockbuster received supports from the Ministry of Science and Technology (MOST). The product has become a key project with national supports. In addition, the Chinese Center for Disease Control and Prevention also sets great store on the product. It is likely to be promoted in the disease control and prevention centers across the country. The product is featured with high output efficiency. The annual output of a machine is 600,000 to 700,000 yuan. It is expected to be favored by the hospital terminal market. In terms of the new products for in vitro diagnosis (IVD), the company is promoting to enter into the green channel for approval and speeding up in introducing them into the market.
Besides independent development, Leadman Biochemistry is also accelerating cooperation with foreign partners. The company has co-founded a joint-venture enterprise with Enigma Diagnostics Ltd., a U.K. tycoon in the IVD, and will conduct substantial cooperation soon. They will cooperate in IVD products in China to gain more voices in the market.
[Overseas Information]
○Various institutions bullish about LBS market
------
The popularization of sensors and mobile tracking technology and the lower cost and difficulty of mapping have posted opportunities for global location based service (LBS). Recently, various research institutions released a report, suggesting that they are bullish about the prospects of the LBS market.
Technavio, a research company, points out that it is estimated that the LBS will expand with a compound annual growth rate of nearly 38 percent from 2015 to 2019. Berg Insight, an analysis company, forecasts that the scale of the global LBS market will expand from 10.3 billion euro in 2014 to 34.8 billion euro in 2020, with a compound annual growth rate as high as 22.5 percent. Research and Markets also indicates in a report released in end-August that more and more players are joining in the indoor LBS market, and there are now over 40,000 startups in the field. In the future, venture capital (VC) will provide more capital. It is estimated that total amount of VC will register a year-on-year growth of 200 percent from 2015 to 2016.
○Deleverage to gradually end, stock prices to rationally return
○Some medium and large insurance funds turn to be optimistic from wait-and-see
○Institutions pay attention to Shengyun Environment-Protection, with performance to gradually release
○Sinkiang intensively build up economic belt core area along Silk Road
[SSN View]
○Deleverage to gradually end, stock prices to rationally return
------
The financing balance of Shanghai and Shenzhen stock exchanges this week lowered to 1 trillion yuan, down by nearly 60 percent from the peak, making it a landmark event in this round of deleveraging process. Combined with the measures including recent intensified supervision on off-market margin financing by the regulators, the deleveraging process may tend to be end, which promotes the market's rapid adjustment. The leading role of leverage in individual stock pricing has been greatly weakened, with stock prices beginning to gradually reflect the actual fundamentals.
Recently, the China Securities Regulatory Commission (CSRC) said in the interview of the Xinhua News Agency that the systems under Hundsun Technologies Inc. (600570.SH), Shanghai Mecrt Software Tech. Co., Ltd. and Hithink Royal Flush Information Network Co., Ltd. (300033.SZ) with the largest amounts of margin financing have been shut and closed down, as the three have offended against the laws and rules. The financing balance of Shanghai and Shenzhen stock exchanges has fallen back to 1 trillion yuan, which was also the level at the end of last year, from the previous peak of 2.27 trillion yuan, with a sharp drop in leveraging financing scale of the trust companies. Therefore, the CSRC believed that leveraging financing risk has been reduced to some extent.
In fact, the reducing total amount of financing only reflects one side. The market transaction proportion of leverage funds obviously drops back, directly showing the weakening influence of the leverage funds on index and individual stock pricing. Currently, the statistics show that the financing balance of Shanghai and Shenzhen stock exchanges accounts for 2.81 percent of the market value liquidity, lowered than the level when the market started to rebound from 2,500 points in the last ten days of last October, down from the peak of 4.5 percent. In addition, margin trading accounts for 10 percent of the turnover, down from the peak of nearly 20 percent.
Along with the deleveraging process gradually closing to the end, the cases that stock prices encumbered by the mandatory liquidation will reduce, but the individual stock pricing is also likely to turn back to rational positions, making it very difficult for the trends-based operational mode to widely spread again, which ignores the fundamentals and stresses on the funds. Reasonable valuation, performance growth and reform expectation will be regarded as the main consideration factors by the investors when they search for investment targets.
[Institutions' Movement]
○Some medium and large insurance funds turn to be optimistic from wait-and-see
------
The latest investigation by SSN on medium and large insurance enterprises in Beijing and Shanghai shows that some insurance funds hold a quite optimistic attitude from the previous wait-and-see emotion. Along with the pain caused by deleveraging process gradually closing to the end, the insurance funds expect that some stocks will drop back by nearly 60 percent to 70 percent from the high, or even below the net value, to the value investing ranges. The indexes are likely to rebound to a range of 3,300 points to 3,500 points, with constant support by the policies. The insurance funds are optimistic towards the leading stocks in the industries of consumption, electric power, medical treatment and etc. with clear performance growth and high dividend.
○Institutions pay attention to Shengyun Environment-Protection, with performance to gradually release
------
Institutions recently conducted the investigation and research on Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ). It is known that the company currently received a large number of orders, with a strong ability to obtain orders in the future. Due to the performance contributed by Beijing China Sciences General Energy ＆ Environment Co., Ltd., institutions believed that Shengyun Environment-Protection is likely to obtain 350 to 400 million yuan for its annual net profit, with performances from 2015 to 2017 gradually released. The company achieved nearly 126 million yuan for its net profit in the first half year, with about 10 projects under construction currently, 5 projects determined to go into operation and about 10 projects planned for next year. About 30 percent is expected in the net profit rate for a single project. In addition, the company has deep cooperation with Hua Rong Holding Group, trying to adopt the PPP mode in waste incineration field. Such mode is likely to be a highlight of the company.
[Hotspot Investigation]
○ Sinkiang intensively build up economic belt core area along Silk Road
------
Before the 60th anniversary since the establishment of Sinkiang Autonomous Region, the SSN has organized front-line reporters to carry out site visit in Sinkiang Autonomous Region, which is regarded as the core area of economic belt along the Silk Road. Their investigation focuses on Alataw Pass, Helgas port, Khunjerab along the boundary between China and Pakistan, and Karassu along the boundary between China and Tajikistan. The detailed situation from the front-line investigation is now revealed to the investors for reference.
◆Ports along the "Belt and Road" actively apply for third batch of FTZs
It is learnt that all ports of entry along the "Belt and Road" are making active preparations in applying for the third batch of free trade zones (FTZs). Alataw Port and Kashgar replicated the successful experiences of Shanghai FTZ within their comprehensive bonded zones. The overall application plan has not finalized yet. It is possible that Urumchi, Alataw Port, Khorgos and Kashgar will jointly set up a new Xinjiang-Central Asia FTZ.
◆Interconnectivity infrastructure projects accelerate
The renovation and extension project of National Road 314 (G314) connecting China and Pakistan is under construction. The project is jointly undertaken by Xinjiang Beixin Road ＆ Bridge Group Co., Ltd. (002307.SZ), China Railway 15th Bureau Group Co., Ltd. and other companies. The G314 will be extended to four passageways for road, railway, energy and information. It will become an important strategic passageway connecting China with Central Asia and Europe. In addition, the construction of China-Kyrgyzstan-Uzbekistan railway, Karamay-Bakhty port railway, and Urumchi International Airport which will serve as a gateway on the air is also accelerating.
◆Listed companies vigorously carry out "Belt and Road" initiatives
Local listed companies in Xinjiang Uygur Autonomous Region are also vigorously carrying out the "One Belt and One Road" initiatives in hope that they will expand the international market and seek for wider development space.
Xinjiang Goldwind Science and Technology Co., Ltd. (002202.SZ) is the world's largest manufacturer of direct-drive permanent magnet wind power generator. The company is actively implementing the internationalization strategy. Its international sales revenue in the first half year surged by over 80 percent year on year, accounting for 12 percent of its total operating revenue. Goldwind Science and Technology has made smooth progress in developing the market in Thailand, Pakistan and South Africa. As of the first half year, its international wind power projects have completed a 246MW installed capacity of wind power plant, or a 121.74MW installed capacity calculated on equities.
Xinjiang Machinery Research Institute Co., Ltd. (300159.SZ) is a leading agricultural machinery company in Xinjiang. The company's maize harvesting machine series and silage machine series have about 20 percent and 60 percent market share in China. Institutions believe that located in a core hub along the "One Belt and One Road" and under the background where the Central Asia and its surrounding areas has massive agricultural land and lower degree of agricultural mechanization, Xinjiang Machinery Research Institute enjoys remarkable advantages in opening the export market in the future. Currently, the company has set up an international business department, hoping to further launch its agricultural machinery export business in the five countries in Central Asia through financing leasing.
[Data Reference]
○Diving medium ＆ small-cap companies with stable fundamentals to favored
------
China's A-share market plunged since mid-June. The ChiNext Board Index shrank 50 percent. Some medium and small-cap individual stocks fall to 20 to 30 percent of their highest prices. According to the forecast for the third quarter, there are 13 listed companies with a market value of less than 5 million who fell by over 20 percentage points than the CSI 500 Index, yet forecast a growth or turning losses to profits in the third quarter, including Shanghai Tongda Venture Capital Co., Ltd. (600647.SH), Jiangsu Xinning Modern Logistics Co., Ltd. (300013.SZ), Lida Optical ＆ Electronic Co., Ltd. (002189.SZ), Shanghai Hi-tech Control System Co., Ltd. (002189.SZ), Shanghai Morn Electric Equipment Co., Ltd. (002451.SZ), Shenzhen H＆T Intelligent Control Co., Ltd. (002402.SZ), Huizhou China Eagle Electronic Technology Co., Ltd. (002579.SZ), Zhejiang Unifull Industrial Fiber Co., Ltd. (002427.SZ), Sunwave Communications Co., Ltd. (002115.SZ), GuangZhou Seagull Kitchen and Bath Products Co., Ltd. (002084.SZ), Gifore Agricultural Machinery Chain Co., Ltd. (300022.SZ), Hunan New Wellful Co., Ltd. (600975.SH) and United Science＆technology Co., Ltd. (000925.SZ).
[Information Radar]
○Chemiluminescence apparatus of Leadman Biochemistry receives support from MOST
------
Beijing Leadman Biochemistry Co., Ltd. (300289.SZ) disclosed at the strategy meeting of securities companies today that the company is developing chemiluminescence apparatus, a new blockbuster received supports from the Ministry of Science and Technology (MOST). The product has become a key project with national supports. In addition, the Chinese Center for Disease Control and Prevention also sets great store on the product. It is likely to be promoted in the disease control and prevention centers across the country. The product is featured with high output efficiency. The annual output of a machine is 600,000 to 700,000 yuan. It is expected to be favored by the hospital terminal market. In terms of the new products for in vitro diagnosis (IVD), the company is promoting to enter into the green channel for approval and speeding up in introducing them into the market.
Besides independent development, Leadman Biochemistry is also accelerating cooperation with foreign partners. The company has co-founded a joint-venture enterprise with Enigma Diagnostics Ltd., a U.K. tycoon in the IVD, and will conduct substantial cooperation soon. They will cooperate in IVD products in China to gain more voices in the market.
[Overseas Information]
○Various institutions bullish about LBS market
------
The popularization of sensors and mobile tracking technology and the lower cost and difficulty of mapping have posted opportunities for global location based service (LBS). Recently, various research institutions released a report, suggesting that they are bullish about the prospects of the LBS market.
Technavio, a research company, points out that it is estimated that the LBS will expand with a compound annual growth rate of nearly 38 percent from 2015 to 2019. Berg Insight, an analysis company, forecasts that the scale of the global LBS market will expand from 10.3 billion euro in 2014 to 34.8 billion euro in 2020, with a compound annual growth rate as high as 22.5 percent. Research and Markets also indicates in a report released in end-August that more and more players are joining in the indoor LBS market, and there are now over 40,000 startups in the field. In the future, venture capital (VC) will provide more capital. It is estimated that total amount of VC will register a year-on-year growth of 200 percent from 2015 to 2016.
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