[Today's Guide]
○SOEs reform likely to fully implement
○State-owned assets investment and operation modes to classified into 2 types
○Flexible funds with low positions increase positions gradually
○Anhui Water Resources Development to gain huge market share
[SSN View]
SOEs reform likely to fully implement
------
The top design plan on the state-owned enterprises (SOEs) reform was officially released on Sept. 13. The plan highlights the significance of the capital market in this round of reform. Unexpectedly, the stock market shows slight response to it in short term. The A-share market is transforming from a crisis model into a restoration and reconstruction model. Besides, the actual operation of the SOEs reform experiences a process from point to surface and from partial progress to full implementation. It is believed that with the releasing of authoritative interpretations, implementation details and supporting measures by various ministries and commissions, the influence of the SOEs reform on the market will show out gradually. The merger and reorganization of central enterprises or local listed SOEs arising from it may continue to be hotspots in the market.
Firstly, the size and intensity of this round of state-owned assets reform are far beyond past reforms. Its primary objective is to stimulate the vitality and competitiveness of state-owned assets and SOEs, consolidate and strengthen their fundamental roles in the operation of the national economy and make them stronger, better and bigger to vitalize and drive the growth of the real economy. In terms of the overall sluggish economy and the low-efficient operation model of state-owned assets, this round of state-owned assets and SOEs reform is of special significance. It has to be implemented actually.
Secondly, strengthening control and leadership while providing state-owned assets and state-owned enterprises (SOEs) with policy and resources support aims to emphasize that SOEs reform must explore its own way and cannot be simplified or completely westernized. Benefit transfer, loss of state-owned assets, etc. occurred in previous reforms must be prevented. It is hoped that the Communist Party of China (CPC) cadres can finally figure out reasonable governance framework of SOEs by participating in market-oriented operation and management as well as cultivating their entrepreneur quality and ability. The enhancement of the overall achievements and governance level of listed companies controlled by state-owned assets which take up over 60 percent of market value will greatly boost the capital market.
Thirdly, after the launch of top-level design of SOEs reform, a string of detailed rules and supportive measures will be released in succession. It is learnt that the problems concerned the most by the decision makers are reorganization and the partial opening up of the market for the entrance of some non-state-owned assets. By increasing efforts in reorganization, state-owned assets will be centralized in important industries and critical areas concerning national security, the lifelines of the national economy and the national welfare and the people's livelihood, critical infrastructure, forward-looking and strategic industries, and superior enterprises with core competitiveness. In fact, the state-owned assets in Shanghai have gone ahead of the rest and have achieved relatively sound market effect recently. It might play a demonstration role nationwide. The opinions on implementing negative list on market access launched by the Central Leading Group for Deepening Overall Reform on Sept.15 suggest that the public area, which is the basis of monopoly by traditional SOEs, is gradually opening to private capital. (Zhang Ting)
[Authoritative Voice]
State-owned assets investment and operation modes to classified into 2 types
------
Reportedly, in order to improve the existing state-owned assets supervision system, the state-owned assets investment and operation enterprises might be classified into two types in the future. One type is the state-owned enterprises (SOEs) managed by the Ministry of Finance and other ministries and commissions and supervised in form of assets investment and operation companies. The other one is under the supervision and management of the State-owned Assets Supervision and Administration Commission (SASAC). Specifically, some central enterprises will be restructured to be investment and operation ones, but they are still subordinated to the SASAC. The investment and operation companies will be in charge of operation of the central enterprises equity and conduct corresponding assets supervision and administration, while those central enterprises under the SASAC will be principally engaged in production and operation rather than assets operation.
[Institutions' Movement]
Flexible allocated funds with low positions increase positions gradually
------
As learnt by SSN, along with the further drop in the market in the last ten days of August, flexible allocated funds with short positions or low positions earlier start to gradually increase positions, but some are quite radical. For example, Yimin Service Mixed Leading Fund (Fund code: 000410) ranking the second in the stock funds list in 2015 is almost in short positions since late May, but it began to increase positions from last week and its position has reached nearly 60 percent at present. Changsheng Electronic Information Industry Mixed Funds(Fund code: 080012) ranking the fifth closed positions in early June, but it started to increased positions from last week and its positions account to almost 100 percent now. Based on the predicted data on relevant funds positions, more than 40 percent of funds increased positions over the last week.
Funds which recently increased positions believe that forced de-leveraging caused the short-term to suffer excessive price decrease. Off-market industrial capital, regarded as "smart capital", start to actively increase shareholdings or buy shares through secondary market acquisition. Some listed companies also attempted to launch employee shareholding plans not completely for market value management. High premium of institutions was involved in the private placement of listed companies. All these signs suggest that some quality stocks see opportunities for value investment.
[Information Radar]
Project of water diversion from Yangtze to Huaihe River to commence within the year, Anhui Water Resources Development to gain huge market share
------
The project of water diversion from Yangtze to Huaihe River with a total investment of 61.6 billion yuan will start construction within the year. As the only listed company engaged in water conservancy construction in Anhui Province, Anhui Water Resources Development Co., Ltd. (600502.SH) is expected to gain huge market share. Based on the current situation, it is predicted that the project will adopt PPP (public and private partnership) mode. Anhui Construction Engineering Group (ACEG), the substantial shareholder of Anhui Water Resources Development, is now negotiating with Industrial Bank Co., Ltd. (601166.SH) and Shanghai Pudong Development Bank Co., Ltd. (600000,SH), proposing to establish a nearly 40 billion yuan PPP special industrial fund which will leverage the PPP project with 200 billion yuan capital.
It is noteworthy that Anhui Water Resources Development issued new shares at a price of 20.1 yuan per share through private placement in this June. ACEG promised that the group will list as a whole within 3 years after the private placement. The operating revenue of ACEG in 2014 is nearly 6 times of Anhui Water Resources Development.
Xinzhi Motor to quicken new-energy automobile market expansion
------
Due to rapid development of the new-energy automobile industry, Xinzhi Motor Co., Ltd. (002664.SZ) achieved a quickened expansion in the electrical machine market for its new-energy automobiles, with the possibility to obtain new orders from China's mainstream automobile manufacturers in the second half year, such as Baic Motor Corporation Ltd., SAIC General Motors Corporation Limited, Zhejiang Geely Holding Group and etc. Meanwhile, the Tesla Motors Inc. confirmed that it will officially push out its all electric SUV-X car at the end of September. Along with the production of SUV-X, the electrical machine production line jointly ventured by Xinzhi Motor and FUKUTA Elec. ＆ Mach. Co., Ltd. will also receive the orders from the Tesla Motors. FUKUTA Elec. ＆ Mach. has already obtained 60,000 car orders from the Tesla Motors since this year. In addition, Xinzhi Motor started to expand the intelligent drive field after it entered into the new-energy automobile field, possibly to enter the intelligent drive field through extension development in the future.
[Overseas Information]
Space exploration to trigger investment hotspot with private capital and VC involved
------
The SSN information shows that the private investment in space exploration has gasped an obvious growth trend. Based on the data, the National Aeronautics and Space Administration (NASA) has a budget of 17.5 billion US dollars for the space exploration in 2015, with the American space economy increasing to 200 billion US dollars in two years from the current 40 billion US dollars. Under the demonstration effect, an increasing number of private capital and venture capital (VC) institutions are entering into such field. A UK VC institution, Seraphim Capital, established the VC funds together with five European space hardware and service providers in July of this year, which are the first funds for European newly-established space companies with the start-up capital of 123 million US dollars. In addition, Space Coast in the State of Florida, USA is becoming a 'Silicon Valley' for the American aviation industry, with the founder of Amazon.com Inc. (AMZN.NASDAQ), Jeff Bezos, and his space exploration company, Blue Origin, as new members. They plan to establish the local factory and emission test center.
○SOEs reform likely to fully implement
○State-owned assets investment and operation modes to classified into 2 types
○Flexible funds with low positions increase positions gradually
○Anhui Water Resources Development to gain huge market share
[SSN View]
SOEs reform likely to fully implement
------
The top design plan on the state-owned enterprises (SOEs) reform was officially released on Sept. 13. The plan highlights the significance of the capital market in this round of reform. Unexpectedly, the stock market shows slight response to it in short term. The A-share market is transforming from a crisis model into a restoration and reconstruction model. Besides, the actual operation of the SOEs reform experiences a process from point to surface and from partial progress to full implementation. It is believed that with the releasing of authoritative interpretations, implementation details and supporting measures by various ministries and commissions, the influence of the SOEs reform on the market will show out gradually. The merger and reorganization of central enterprises or local listed SOEs arising from it may continue to be hotspots in the market.
Firstly, the size and intensity of this round of state-owned assets reform are far beyond past reforms. Its primary objective is to stimulate the vitality and competitiveness of state-owned assets and SOEs, consolidate and strengthen their fundamental roles in the operation of the national economy and make them stronger, better and bigger to vitalize and drive the growth of the real economy. In terms of the overall sluggish economy and the low-efficient operation model of state-owned assets, this round of state-owned assets and SOEs reform is of special significance. It has to be implemented actually.
Secondly, strengthening control and leadership while providing state-owned assets and state-owned enterprises (SOEs) with policy and resources support aims to emphasize that SOEs reform must explore its own way and cannot be simplified or completely westernized. Benefit transfer, loss of state-owned assets, etc. occurred in previous reforms must be prevented. It is hoped that the Communist Party of China (CPC) cadres can finally figure out reasonable governance framework of SOEs by participating in market-oriented operation and management as well as cultivating their entrepreneur quality and ability. The enhancement of the overall achievements and governance level of listed companies controlled by state-owned assets which take up over 60 percent of market value will greatly boost the capital market.
Thirdly, after the launch of top-level design of SOEs reform, a string of detailed rules and supportive measures will be released in succession. It is learnt that the problems concerned the most by the decision makers are reorganization and the partial opening up of the market for the entrance of some non-state-owned assets. By increasing efforts in reorganization, state-owned assets will be centralized in important industries and critical areas concerning national security, the lifelines of the national economy and the national welfare and the people's livelihood, critical infrastructure, forward-looking and strategic industries, and superior enterprises with core competitiveness. In fact, the state-owned assets in Shanghai have gone ahead of the rest and have achieved relatively sound market effect recently. It might play a demonstration role nationwide. The opinions on implementing negative list on market access launched by the Central Leading Group for Deepening Overall Reform on Sept.15 suggest that the public area, which is the basis of monopoly by traditional SOEs, is gradually opening to private capital. (Zhang Ting)
[Authoritative Voice]
State-owned assets investment and operation modes to classified into 2 types
------
Reportedly, in order to improve the existing state-owned assets supervision system, the state-owned assets investment and operation enterprises might be classified into two types in the future. One type is the state-owned enterprises (SOEs) managed by the Ministry of Finance and other ministries and commissions and supervised in form of assets investment and operation companies. The other one is under the supervision and management of the State-owned Assets Supervision and Administration Commission (SASAC). Specifically, some central enterprises will be restructured to be investment and operation ones, but they are still subordinated to the SASAC. The investment and operation companies will be in charge of operation of the central enterprises equity and conduct corresponding assets supervision and administration, while those central enterprises under the SASAC will be principally engaged in production and operation rather than assets operation.
[Institutions' Movement]
Flexible allocated funds with low positions increase positions gradually
------
As learnt by SSN, along with the further drop in the market in the last ten days of August, flexible allocated funds with short positions or low positions earlier start to gradually increase positions, but some are quite radical. For example, Yimin Service Mixed Leading Fund (Fund code: 000410) ranking the second in the stock funds list in 2015 is almost in short positions since late May, but it began to increase positions from last week and its position has reached nearly 60 percent at present. Changsheng Electronic Information Industry Mixed Funds(Fund code: 080012) ranking the fifth closed positions in early June, but it started to increased positions from last week and its positions account to almost 100 percent now. Based on the predicted data on relevant funds positions, more than 40 percent of funds increased positions over the last week.
Funds which recently increased positions believe that forced de-leveraging caused the short-term to suffer excessive price decrease. Off-market industrial capital, regarded as "smart capital", start to actively increase shareholdings or buy shares through secondary market acquisition. Some listed companies also attempted to launch employee shareholding plans not completely for market value management. High premium of institutions was involved in the private placement of listed companies. All these signs suggest that some quality stocks see opportunities for value investment.
[Information Radar]
Project of water diversion from Yangtze to Huaihe River to commence within the year, Anhui Water Resources Development to gain huge market share
------
The project of water diversion from Yangtze to Huaihe River with a total investment of 61.6 billion yuan will start construction within the year. As the only listed company engaged in water conservancy construction in Anhui Province, Anhui Water Resources Development Co., Ltd. (600502.SH) is expected to gain huge market share. Based on the current situation, it is predicted that the project will adopt PPP (public and private partnership) mode. Anhui Construction Engineering Group (ACEG), the substantial shareholder of Anhui Water Resources Development, is now negotiating with Industrial Bank Co., Ltd. (601166.SH) and Shanghai Pudong Development Bank Co., Ltd. (600000,SH), proposing to establish a nearly 40 billion yuan PPP special industrial fund which will leverage the PPP project with 200 billion yuan capital.
It is noteworthy that Anhui Water Resources Development issued new shares at a price of 20.1 yuan per share through private placement in this June. ACEG promised that the group will list as a whole within 3 years after the private placement. The operating revenue of ACEG in 2014 is nearly 6 times of Anhui Water Resources Development.
Xinzhi Motor to quicken new-energy automobile market expansion
------
Due to rapid development of the new-energy automobile industry, Xinzhi Motor Co., Ltd. (002664.SZ) achieved a quickened expansion in the electrical machine market for its new-energy automobiles, with the possibility to obtain new orders from China's mainstream automobile manufacturers in the second half year, such as Baic Motor Corporation Ltd., SAIC General Motors Corporation Limited, Zhejiang Geely Holding Group and etc. Meanwhile, the Tesla Motors Inc. confirmed that it will officially push out its all electric SUV-X car at the end of September. Along with the production of SUV-X, the electrical machine production line jointly ventured by Xinzhi Motor and FUKUTA Elec. ＆ Mach. Co., Ltd. will also receive the orders from the Tesla Motors. FUKUTA Elec. ＆ Mach. has already obtained 60,000 car orders from the Tesla Motors since this year. In addition, Xinzhi Motor started to expand the intelligent drive field after it entered into the new-energy automobile field, possibly to enter the intelligent drive field through extension development in the future.
[Overseas Information]
Space exploration to trigger investment hotspot with private capital and VC involved
------
The SSN information shows that the private investment in space exploration has gasped an obvious growth trend. Based on the data, the National Aeronautics and Space Administration (NASA) has a budget of 17.5 billion US dollars for the space exploration in 2015, with the American space economy increasing to 200 billion US dollars in two years from the current 40 billion US dollars. Under the demonstration effect, an increasing number of private capital and venture capital (VC) institutions are entering into such field. A UK VC institution, Seraphim Capital, established the VC funds together with five European space hardware and service providers in July of this year, which are the first funds for European newly-established space companies with the start-up capital of 123 million US dollars. In addition, Space Coast in the State of Florida, USA is becoming a 'Silicon Valley' for the American aviation industry, with the founder of Amazon.com Inc. (AMZN.NASDAQ), Jeff Bezos, and his space exploration company, Blue Origin, as new members. They plan to establish the local factory and emission test center.
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