[Today's Guide]
> Information superhighway to see policy support, industry to see over RMB 2trln yuan investment
> Shanghai issues first license for ride-hailing, intelligent transportation industry to see rapid development...
> Localization replacement in cyber security boosts performance, dyes enterprises raise prices
> Shenwu Environmental Technology receives significant orders, Wohua Phar. releases quarterly reports on Shenzhen bourse
[SSN Focus]
○ Information superhighway to see policy support, industry to see over RMB 2trln yuan investment
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SSN learns that to facilitate entrepreneurship and innovation, information superhighway, as the Internet infrastructure, is expected to see more policy supports. Media previously reported that the thirteenth five-year plan on Internet will focus more on improving the construction of information infrastructure and promoting its integration with other industries.
Comment: It is estimated that China's information infrastructure is expected to attract more than 2 trillion yuan investment during the Thirteenth Five-Year Plan period. The construction of infrastructure such as optical fiber, high-speed broadband and cloud computing center will receive key support. Jiangsu Zhongtian Technology Co., Ltd. (600522.SH) is principally engaged in optical fiber and cable and keeps more than 60 percent of market share in military communication system field. Yangtze Optical Fibre and Cable Joint Stock Limited Company (06869.HK), which Wuhan Yangtze Communication Industry Group Co., Ltd. (600345.SH) participates in, is the second largest global optical manufacturer with its sales ranking first for 20 consecutive years in China. Founder Technology Group Co., Ltd. (600601.SH) has a subsidiary Founder Broadband Network Service Co., Ltd.
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[SSN Selection]
○ The National Development and Reform Commission (NDRC) and China Insurance Regulatory Commission (CIRC) jointly released a guideline on encouraging insurance funds to investment equities of major construction projects so as to support major construction projects.
○ China's Ministry of Commerce on Oct. 8 responded to the progress of China-Thailand railway, indicating that China and Thailand have reached consensuses on railway design and financing.
○ The first phase of the Cross-border Interbank Payment System (CIPS) developed by the People's Bank of China is officially launched, marking another milestone in renminbi internationalization.
○ The guidance for the development of China's electric wire and cable industry during the Thirteenth Five-Year Plan period has been basically completed. The guidance proposes to allocate capital while centering on innovation.
○ The Export-Import Bank of China (EIBC) and Commercial Aircraft Corporation of China Ltd (COMAC) signed a framework agreement on 50 billion yuan financing to support the development of domestic aircraft.
[Industry Information]
○ Shanghai issues first license for ride-hailing, intelligent transportation industry to see rapid development
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Shanghai Municipal Transport Commission on Oct. 8 issued a business license to Didi Kuaidi, an online car-hailing platform similar to Uber, making Didi Kuaidi the first one in China to obtain business license. Head of Shanghai Municipal Transport Commission noted that traffic management in metropolis is a worldwide problem. To explore into ride-hailing service might be an updated way to ease and solve traffic jam.
Comment: Shanghai is the first one expressing its supports for ride-hailing services, which has opened a way for the legalization of ride-hailing services around China. Driven by huge user demands and policy support, the ride-hailing platform and industries related to intelligent transportation system, including mobile Internet, automotive electronics and satellite navigation, will see rapid development. Among A-share companies, QiMing Information Technology Co., Ltd. (002232.SZ) is mainly engaged in the automotive management software and automotive electronics. Navinfo Co., Ltd. (002405.SZ) occupies more than 60 percent shares in China's vehicle navigation map market. One of subsidiaries of Jiangsu Xinning Modern Logistics Co.,Ltd. (300013.SZ) owes satellite positioning monitoring platform and operation service system.
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○ Potential cyber security hazard arises, localization replacement boosts performance
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As reported by www.xinhuanet.com, European Court of Justice, the highest judicial organ in the European Union, gave a judgment believing that U.S.-EU Safe Harbor Framework is invalid and data on EU users provided by American servers is not secure. Chatham House, the Royal Institute of International Affairs, also released report that civil nuclear facilities suffer cyber attack, increasing risks of radiation leakage.
Comment: From the release of draft for cyber security act in July to Chinese President Xi Jinping's state visit to the U.S. in September, Chinese governmental senior leadership has attached increasing importance to cyber security. As a result, relevant listed companies see growing performance. According to statistics, net profits of information security and localization sectors witnessed a growth rate as high as 254 percent in the first half of 2015. Venustech Group Inc. (002439.SZ) enjoyed profits in its interim report for the first time since IPO and its performance is expected to hike by several times in the third quarter when compared with that in the second quarter. Beijing VRV Software Corporation Limited (300352.SZ) just conducted a private placement for purchasing Beijing Zhongruan Huatai Information Technology Co., Ltd., a company engaged in server security. The current stock price of Chengdu Westone Information Industry Inc. (002268.SZ) is 16 percent less than the floor price in the company's private placement proposal.
○ Hongxiang Chemical Industry explodes, causing disperse dyes prices to rise
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The dyestuff intermediate production workshop of Zhejiang Hongxiang Chemical Industry Co., Ltd. located in Hangzhou Bay Shangyu Economic and Technological Development Area, Zhejiang Province, exploded on Oct. 5. The accident injured seven workers on the spot. Zhejiang Longsheng Group Co., Ltd. (600352.SH) and Zhejiang Runtu Co., Ltd. (002440.SZ), two dyestuff giants in Shangyu, raised the prices of disperse dyes by 2,000 yuan per ton, or about 10 percent.
Comment: About 90 percent production of Chinese disperse dyes industry lies in Zhejiang. The leading enterprises' consensus on disperse dyes prices has made it easy for prices to jump but difficult to fall in recent years. Industry prosperity is expected to grow.
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[Announcement Interpretation]
○ Shenwu Environmental Technology received significant contracts
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Beijing Huafu Shenwu Industrial Furnace Co., Ltd. and Shenwu Environmental Technology Xinjiang Co., Ltd., two wholly-owned subsidiaries of Shenwu Environmental Technology Co., Ltd. (300156.SZ), received general contract and PC contract on technical innovation for calcium carbide furnace from Inner Mongolia Gangyuan Chemical Co., Ltd. The total contract amount is valued at 550 million yuan, accounting for about 183 percent of the company's audited operating revenues in 2014.
○ Rongji Software to establish Internet of Things platform to resume trading
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Fujian Rongji Software Co., Ltd. (002474.SZ) proposes to establish Fujian Xingrongji Information Technology Co., Ltd. with 35.50 million yuan and hold 71 percent equities of Xingrongji Information Technology. Xingrongji Information Technology will obtain the only franchise right for the public services platform for the Internet of Things in Fujian Province. It will conduct the public services platform businesses for the Internet of Things (including wearable equipment, the Internet of Vehicles, intelligent education, intelligent medical treatment and intelligent manufacturing) and will be listed on the New Third Board.
○ Hualan Biological Engineering's station for blood plasma collection put into operation
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Hualan Biological Engineering, Inc. (002007.SZ) has received the License for Collection of Blood Plasma issued by the Health and Family Planning Commission of Chongqing Municipality. The company's station for the collection of blood plasma at Nanmen Town, Kaixian County started to collect blood plasma.
Comment: As at the beginning of this year, Hualan Biological Engineering has 15 stations for the collection of blood plasma and one under construction. The company was approved to establish stations for the collection of blood plasma in Kaixian County in April. The collection of blood plasma at the station in Kaixian County shows that the new stations have put into operation. In the blood product industry heavily relying on the source of blood plasma, the company has made breakthroughs in the bottleneck on the raw materials of the company. Blood products account for over 94 percent of business revenue of Hualan Biological Engineering in 2014.
○ Reorganization of Ledman Optoelectronic approved
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The acquisition of 100 percent equities of Shenzhen Torshare Technology Co., Ltd. by Ledman Optoelectronic Co., Ltd. (300162.SZ) through private placement, the acquisition of 49 percent equities of Nantong Blue Island Offshore Co., Ltd. by Shanghai Taisheng Wind Power Equipment Co., Ltd. (300129.SZ) through private placement, the acquisition of 100 percent equities of Jinshan Environmental Protection Science and Technology Co., Ltd. by Nanfang Pump Industry Co., Ltd. (300145.SZ) through private placement and the acquisition of 100 percent equities of Shenzhen Cultraview Digital Technology Co., Ltd. by Tatwah Smartech Co., Ltd. (002512.SZ) through private placement have been unconditionally approved by the China Securities Regulatory Commission (CSRC).
The acquisition of 100 percent equities of Movie Media Cultural Transmission (Beijing) Co., Ltd. and 15 companies, including Chongqing Shimao Cinema Management Company, by Wanda Cinema Line Co., Ltd. (002739.SZ) has been conditionally approved.
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[Financial Reports Express]
○ First third quarterly report on Shenzhen bourse released, biopharmaceutical and new energy industries see growth
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As at Oct. 8, nearly 1,050 companies on the Shanghai and Shenzhen bourses made forecasts on the performance in the third quarter, of which nearly 60 percent expect increase, slight increase, continuous profits or turned losses into profits. Biopharmaceutical, new energy vehicles, photovoltaic (PV), cultivation and other industries show signs of "certain growth".
Shandong Wohua Pharmaceutical Co., Ltd. (002107.SZ), the first company released the third quarterly report on the Shenzhen bourse, expects its net profit in the first three quarter to increase 252 percent year on year with a basic earning per share of 0.17 yuan. The third quarter saw a year-on-year increase of 71 percent in net profit thanks to the continuous growth in the sales of Xinkeshu tablets, its flagship product. Changchun High and New Technology Industries (Group) Inc. (000661.SZ) expects its profit in the first three quarters to increase 65 percent to 80 percent. Aier Eye Hospital Group Co., Ltd. (300015.SZ) expects its profit in the first three quarters to increase 35 percent to 45 percent.
Various companies disclosed the forecast or correction on the performance in the third quarter. Do-Fluoride Chemicals Co., Ltd. (002407.SZ) raised the formerly estimated 18 to 22 million yuan to 28 to 32 million yuan as a result of the short supply of its power lithium battery and lithium hexafluorophosphate products. China Merchants Energy Shipping Co., Ltd. (601872.SH) expects its net profit in the first three quarters to hike 400 top 430 percent year on year as a result of the continuous booming oil tanker transportation market in 2015. The company received special subsidizes on the scrap and updating of ships.
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