[Today's Guide]
>Policies on rural industrial integrated development to issued, state-owned agricultural materials reform expected
>Timetable for constructing sponge cities determined, industry to see trillion-yuan investment space
>Positive results pour in lithium battery sector, industry prosperity expected to optimize
>"Huludao Zinc" trademarks transferred Huludao Zinc Industry, Sotech Smarter Equipment and Toyou Feiji Electronics to see surge in net profit
[SSN Focus]
○Policies on rural industrial integrated development to issued, state-owned agricultural materials reform expected
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SSN learnt that as a key work determined at the central rural industry conference of the is year, relevant authorities will draft guidance on the integrated development of the primary, secondary and tertiary industries in rural areas. Based on past practice, the central economic conference will be held in late December. The guidance is expected to be finalized before the conference.
Comment: Since the proposing of the integrated development of the primary, secondary and tertiary industries in rural areas in the No. 1 Central Document of this year, various supporting policies from the National Development and Reform Commission (NDRC), the Ministry of Agriculture and the Ministry of Commerce have been released. As the "national teams" in the agricultural materials processing and circulation industry, the reform of China State Farms Agribusiness (Group) Corporation, China Co-Op Group and COFCO Group saw significant progress this year, which catches much attention from institutes. Gansu Yasheng Industrial (Group) Co., Ltd. (600108.SH), a company under Gansu State Farms Agribusiness, has established a whole industrial chain for the processing of hops and potatoes. Anhui Huilong Agricultural Means Of Production Co., Ltd. (002556.SZ), a company under Anhui Co-Op, introduced an e-business platform. COFCO Tunhe Co., Ltd. (600737.SH) will be the biggest sugar company in China through the consolidation of the assets of the company and will benefit from the rise of sugar price.
◆The summit of the cooperatives of countries along the One Belt and One Road hosted by the All China Federation of Supply and Marketing Cooperatives will be convened soon. It announces that the "Supply and Marketing e home", a national e-business platform, will be introduced for operation soon.
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[SSN Selection]
○Shanghai and Shenzhen stock exchanges solicit opinions on the new regulations on program trading, proposing to implement differentiated charging and prohibit seven behaviors.
○The State Council on Oct. 10 held a national video and telephone work conference on rebuilding shanty towns, proposing to meet the deadlines of the work.
○Senior CPC official Liu Yunshan transferred a message from Chinese President Xi Jinping to DPRK top leader Kim Jong-un on Oct. 9. A Korean delegation of over 400 people will attend the China-Korea Expo which will be opened on Oct. 15 in Dandong City, Liaoning Province.
○The power grid in the western area of Inner Mongolia is nodded by the National Development and Reform Commission (NDRC) to become China's first provincial power grid to pilot power transmission and distribution price reform, creating necessary conditions for the marketization of power prices.
○Shanghai Party Chief Han Zheng indicated to deepen state-owned assets and state-owned enterprises reform on Oct. 9. Shanghai Huayi (Group) Company expressed that the listing of its core assets will greatly benefit it.
[Industry Information]
○Timetable for constructing sponge cities determined, industry to see trillion-yuan investment space
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Lu Kehua, vice-minister of Housing and Urban-Rural Development, indicated on the regular briefing for policies of the State Council held on Oct. 9 that a total investment of 86.5 billion yuan will be rolled out over the next three years. The government has selected 16 cities nationwide as a testing ground involving more than 450 square kilometers. A batch of experiences and modes that can be duplicated and promoted will be released. The sponge city campaign, which aims to turn urban areas into "sponges" to absorb and recycle 70 percent of rainwater, will cover 20 percent of China's urban areas by 2020 and 80 percent by 2030.
Comment: China's cities frequently suffer waterlog in case of heavy rains in recent years. Since sponge cities can protect environment, benefit people's livelihood and stabilize economic growth, governments of all levels are paying increasing attentions to it. Calculated on an investment density of over 100 million yuan per square kilometer, the total investment in next five years will surpass one trillion yuan. As to listed companies, Hongrun Construction Group Co., Ltd. (002062.SZ), principally engaged in construction, sees rapid growth of underground pipeline business; Goody Science ＆ Technology Co., Ltd. (002694.SZ) and Fujian Newchoice Pipe Technology Co., Ltd. (300198.SZ) are engaged in the manufacturing of pipe network materials.
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○Positive results pour in lithium battery sector, industry prosperity expected to optimize
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The latest announcement of Sunwoda Electronic Co., Ltd. (300207.SZ) forecasts the company's results for the first three quarters will increase by 130 to 160 percent and its net profit has exceeded the total of last year. Do-Fluoride Chemicals Co., Ltd. (002407.SZ) recently raised its estimated net profit for the first three quarters by 50 percent, in light of the market condition that power lithium battery and lithium hexafluorophosphate products are short of supply. Marketing newsletter of Anhui Jianghuai Automobile Co., Ltd. (600418.SH) shows that in Sept., sales of the company's electric car increased by 33 percent quarter-on-quarter.
Comment: Sales data on the nation's new energy vehicle in Sept. will soon be released. Such companies all realized positive results, which indicated that growth in the new energy vehicle industry is estimated to exceed expectation; thereby the whole lithium battery industry will be boosted. It is learnt that price of Lithium hexafluorophosphate goes up over 20 percent during the year, significantly boosting the electrolyte market which adopt the product as a core material. Electrolyte enterprises, such as Shenzhen Capchem Technology Co., Ltd. (300037.SZ) and Guangzhou Tinci Materials Technology Co., Ltd. (002709.SZ) are favored by institutions.
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[Announcement Interpretation]
○ "Huludao Zinc" trademarks transferred Huludao Zinc Industry
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Huludao Zinc Industry Co., Ltd. (000751.SZ) announces that its controlling shareholder China Nonferrous Metal Mining (Group) Co., Ltd. (CNMC) has transferred six "Huludao Zinc" trademarks to the company out of the seven trademarks as the latter had promised.
Comment: Previously the company suspended trading as it has suffered losses for three consecutive years. Its controlling shareholder CNMC and Metallurgical Corporation of China Ltd. (MCC), CNMC's controlling shareholder made commitment on guaranteeing the independence of Huludao Zinc Industry, avoiding horizontal competition and normalizing related-party transactions, as well as commitment on CNMC's transfer of "Huludao Zinc" trademarks. It is noteworthy that the LME zinc futures surged 10 percent on Oct. 9, the biggest intra-day gain since more than two decades, as the mining giant Glencore announced a cut in zinc production by 500,000 tons which equals to 4 percent of the world's total zinc production.
○E-food Group changes name
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E-food Group Co., Ltd. (000796.SZ) changed its name into HNA-Caissa Travel Group Co. Ltd., Caissa Travel for short. Previously Caissa Tongsun (Beijing) Investment Co. Ltd. went back-door listing with 2.4 billion yuan.
○Changshan Biochemical Phar. expands heparin products via private placement
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Hebei Changshan Biochemical Pharmaceutical Co., Ltd. (300255.SZ) proposes to raise 800 million yuan by issuing 64.26 million shares through private placement at a price of 12.45 yuan per share for the industrialization project of polysaccharide and protein polypeptide. The project will annually produce 80 million doses of low molecular heparin and 5,000 kilogram raw materials for low molecular heparin after reaching the designed capacity. Gao Shuhua, the actual controller of the company will subscribe 600 million yuan; while Golden Eagle Fund Management Co., Ltd. will subscribe 200 million yuan.
○Phoenix Publishing ＆ Media to introduce strategic investor Xueersi, transform to be educational operator
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Beijing Phoenix Science and Technology Co., Ltd., a sub-subsidiary of Jiangsu Phoenix Publishing ＆ Media Corporation Limited (601928.SH), plans to introduce Xueersi as a strategic investor. Xueersi will hold 32 percent equity in Phoenix Science and Technology by investing 30 million U.S. dollars and Phoenix Publishing ＆ Media will hold 35.22 percent equity in the company. Xueersi is the domestic operational entity of TAL Education Group (NYSE: XRS), which is listed on the New York Stock Exchange and is the first U.S.-listed K-12 after-school tutoring services provider in China.
Comment: Attracting Xueersi as investor will accelerate the establishment of smart education platform of Phoenix Science and Technology and drive Phoenix Publishing ＆ Media to transform from educational publisher to educational operator. SSN reported on Oct. 8 that Phoenix Publishing ＆ Media intended to introduce strategic investor so as to better online education.
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[Financial Express]
○Sotech Smarter Equipment and Toyou Feiji Electronics to see surge in net profit
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Sotech Smarter Equipment Co., Ltd. (300173.SZ) is predicted to see a year-on-year growth of 1,160 percent to 1,190 percent in net profit in the first three quarters of this year, which is mainly contributed by the consolidated statements with Dayu CNC Technology Company that it had purchased. The net profit of Toyou Feiji Electronics Co., Ltd. (300302.SZ) will grow by 180 percent to 200 percent year on year in the first three quarters of 2015. This is mainly caused by the increasing growth in its sales revenue, which significantly improves the profitability.
[Weekly Review]
○Seeking for "common divisor" of economic transformation and policy
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In mathematics, the common divisor of two or more integers, when at least one of them is not zero, is the positive integer that divides the numbers without a remainder. In stock market, there are also sectors and topics, which are similar to common divisor, catering to the economic transformation and receiving vigorous policy support. The editor believes that the sectors meeting the requirements of economic transformation and policy support in the current stock market will be favored by more capitals.
Firstly, transformation demand should be met, which determines the industrial uptrend for long-run development. Frequently-issued policies guarantee the market attention. Bullish market triggered by leverage has already been pushed down, with no certainty whether to start again or not. It still requires more time to rebuild the market confidence. As a powerful weapon to concentrate market moods and rebuild confidence in short time, policies have already been the key point in SSN's recent reports.
Before the vacation, we reminded that institutions held an optimistic attitude towards family planning policy, which is likely to further ease, with explosive power in 'two-child' concept stocks latter. During the first two trading days in October, it was reported that agricultural reclamation reform scheme is likely to be issued, and information highway is likely to obtain policy support, with nice performances in related individual stocks. We pointed out in a weekly review not long ago that there are no macro worries but medium and micro opportunities, which has been proved by recent market performance. In terms of market trend in October, sectors with various good events are still likely to be the ones both related to transformation and policies. And SSN will continue to find such sectors for investors.
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