[Today's Guide]
> Central leading group for deepening reform meeting promotes SOE reform, reclamation industry to see assets integration
> Xinjiang supports development of non-public sectors, New energy vehicles see new high in output and sale
> Actual controllers to fully subscribe shares of New Sea Union through private placement, Xinlong Electrical to acquire assets to develop charging piles
> Central Huijin holds shares of Qing Shui Yuan Technology, Tianhua Institute to invest in environment protection equipment manufacturing through private placement
[SSN Focus]
○ Central leading group for deepening reform meeting promotes SOE reform, reclamation industry to see assets integration
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Chinese President Xi Jinping presided over the 17th meeting of the central leading group for deepening reform on Oct. 13, which approved the Guidance on the Functions and Classification of State-Owned Enterprises and the Opinions on Further Promoting the Development of Reclamation Reform. The meeting also proposed to define state-owned enterprises (SOEs) as commercial and public interest enterprises and promote SOE reform by classification; to steadily promote reclamation reform, accelerate in transforming economic development model, promote the integration of resource assets and industry upgrading and make enterprises play leading role in the construction of modern agriculture, driven by innovation while centering on promoting the collectivization of reclamation areas and enterprise-oriented reform of farms.
Comment: Institutes suggests in a survey that the schedule of SOE reforms is in line with that the Thirteenth Five-Year Plan, and SOE reforms will be a standpoint for deepening reform in the Thirteenth Five-Year Plan period. SOE reforms will help the reclamation enterprises to revalue their rich land resources. Listed reclamation enterprises are expected integrate the resources within their reclamation areas to become international grain giants. Heilongjiang Agriculture Company Limited (600598.SH), China Hainan Rubber Industry Group Co., Ltd. (601118.SH) and Gansu Yasheng Industrial (Group) Co., Ltd.(600108.SH) are the only listed reclamation platform in Heilongjiang Province, Hainan Province and Gansu Province, respectively.
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[SSN Selection]
○ Chinese President Xi Jinping will pay a state visit to the United Kingdom from Oct 19 to 23. Officials from the Ministry of Commerce indicated that China and Britain could expand bilateral investment and cooperation through the cut-in points of high-speed railway and nuclear power.
○ The Ministry of Transport issued a circular on the transformation and upgrading of passenger transportation, urging the industry to actively carry out market oriented reform on passenger transportation price.
○ As of last weekend, the proportion of A share trading accounts with positions continued to fall, which implies that market participants are still hesitant instead of hyperactive.
○ AVIC Aviation Engine Corporation Plc.(600893.SH), Sichuan Chengfa Aero Science ＆ Technology Co., Ltd. (600391.SH) and AVIC Aero-Engine Controls Co., Ltd. (000738.SZ) announced that the Aviation Industry Corporation of China will cease to be their actual controller. Stocks of these companies will resume trading on Oct. 14.
○ Baoding Tianwei Yingli New Energy Co., Ltd. failed to pay its medium term note amounted 1 billion yuan due on Oct. 13 in full. The bonds of Shanghai Chaori Solar Energy Science ＆ Technology Co., Ltd., the first overdue debt previously occurred in domestic bond market, was settled after reorganization.
[Industry Information]
○ Xinjiang supports development of non-public sectors, focusing on mixed ownership system and oil ＆ gas reforms
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The Xinjiang Uygur Autonomous Region on Oct. 13 held a working conference on promoting the development of the non-public sectors of the economy and unveiled opinions on promoting the development of the non-public sectors. The opinions propose to launch quality cooperative projects for non-public capital in the fields of oil, gas, electric power, railway, resource development; vigorously support non-public enterprises to participate in the construction of the core zone along the Silk Road Economic Belt. The meeting is the largest and highest-level meeting on the development of the non-public sectors since the establishment of the autonomous region.
Comment: Xinjiang plays an important role in China's energy field. As a key task in the state-owned assets reform in Xinjiang, the oil and gas reform has been advancing steadily this year. Substantial private-owned oil and gas enterprises, including Xinjiang International Industry Co., Ltd. (000159.SZ) and Xinjiang Zhundong Petroleum Technology Co., Ltd.(002207.SZ), will see more opportunities for expansion with policy support.
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○ New energy vehicles see new high in output and sale in Sept., upstream lithium carbonate price continues hiking
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According to the statistics released by the China Association of Automobile Manufacturers on Oct. 13, the output and sale of new energy vehicles in September reached a new high at over 28,000, representing an increase of over 200 percent year on year. On the same day, domestic lithium carbonate enterprises continued to raise the quoted price. Sichuan Guoli Lithium Materials Co., Ltd. under Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ) and Sichuan Xingchen Lithium Industry Co., Ltd raised the price of battery grade lithium carbonate by nearly 1,000 yuan per ton. Jiangxi Ganfeng Lithium Co., Ltd. (002460.SZ) raised the price of battery grade lithium carbonate by 5,000 yuan per ton recently.
Comment: The production of new energy vehicles requires a huge consumption of lithium materials. With the increase in the sales of new energy vehicles, the price of lithium carbonate continues to hike. Besides, certain saline lake-based lithium manufacturers will suspend production as the temperature falls in autumn, which will result in seasonal shrinking in supply and the prices will further hike. Companies in the lithium industry will continue to benefit.
○ Alibaba to focus on cross-border shopping on Double Eleven, logistics industry continues to boom
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Alibaba Group Holding Limited (NYSE: BABA) initiated the Tmall Double Eleven (11.11) shopping festival in 2015 with envoys in China from 39 countries on Oct. 13. Alibaba announces that the headquarters for the Double Eleven shopping festival will achieve "global buy and global sell". Cainiao Network Technology Co., Ltd. has introduced "global worry-free" products and prepared bonded warehouses with over 300,000m2 in major cities. Imported products will be delivered on the following day at the soonest.
Comment: The shopping turnover on the Double Eleven has been huge in recent years, which is a miniature of the rapid development of the e-business market in China and has greatly boosted the demand in the logistics industry. Driven by the Internet plus strategy, the intelligent express delivery may see more policy supports in the future. In terms of listed companies, Sinotrans Air Transportation Development Co., Ltd. (600270.SH) owns the biggest share in the international air freight agency industry and conducts cooperation with various overseas shopping websites. Wutong Holding Group Co., Ltd. (300292.SZ) plans to issue shares through private placement and the proceeds will be invested in intelligent express delivery cabinets, which is expected to see huge opportunities in the community O2O business. It recently announced that it plans to change its name into "Wutong Holding Group Co., Ltd."
[Announcement Interpretation]
○ New Sea Union to raise RMB1 bln to develop cloud data, actual controllers to fully subscribe
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Suzhou New Sea Union Telecom Technology Co., Ltd. (002089.SZ) intends to issue 90 million shares to Zhang Yibin and Ma Lingzhi, the actual controllers of the company, through private placement at 11.13 yuan per share. The proceeds of 1 billion yuan will be invested in the expansion of the cloud data center, the research and development of special network communication and industrialization project, the construction of outsourcing services platform 3.0, the repayment of debts as well as supplementing working capital. It will further improve the development in the "big communication" industry.
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○ Xinlong Electrical to acquire assets with RMB294 mln to develop charging piles
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Anhui Xinlong Electrical Co., Ltd. (002298.SZ) proposes to acquire 70 percent equities of Suzhou No. 2 Switch Factory with 294 million yuan in cash. The latter is engaged in the production of complete electric equipment. It promised that its net profit from 2015 to 2017 will be no less than 40 million yuan, 46 million yuan and 52.9 million yuan, respectively. The acquisition P/E ratio is 10 times. The company indicated that the acquisition is part of the consolidation of the power transmission and distribution industrial chains. It will benefit the development of the high-speed rail, charging piles for new energy vehicles as well as urban rail transit. The company also revised the net profit growth in the first three quarters to a year-on-year growth of 60 percent to 100 percent.
○ Central Huijin becomes biggest tradable shareholder of Qing Shui Yuan Technology
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The third quarterly report of Henan Qing Shui Yuan Technology Co., Ltd. (300437.SZ) shows that Central Huijin Investment Ltd. holds 308,200 shares of the company as the biggest holder of tradable shares of the company.
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○ Tianhua Institute to raise RMB700 mln through private placement for environment protection equipment manufacturing
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Qingdao Tianhua Institute of Chemistry Engineering Company Limited (600579.SH) proposes to raise 700 million yuan through private placement for repayment of Nanjing Tianhua Project II, with 9.35 yuan per share as the base price. The project belongs to manufacturing field for energy conservation and environment protection equipment, with annual after-tax profit likely to record 134 million yuan after the project is constructed and reaches the designed capacity.
○ Near space airship 'Yuan Meng' of Deluxe Family made successful trial flight
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Beijing Nanjiang Space Technology Col., Ltd., a subsidiary of Deluxe Family Co., Ltd. (600503.SH), researched and manufactured the first new military and civilian near space platform 'Yuan Meng' for China, which made a successful trial flight in Xilinhot City of Inner Mongolia on Oct. 13. As the connecting space between aviation and aerospace, near space is a significant running space for long-endurance air and aero crafts, with the obviously-strategic value.
[Financial Reports Express]
○ Annual net profit of Zhengbang Technology likely to triple
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Jiangxi Zhengbang Technology Co., Ltd. (002157.SZ) enjoys a year-on-year growth of 347 percent in its net profit in the first three quarters, expecting the annual year-on-year growth of 215 percent to 265 percent, mainly thanks to the rebound of breeding industry and increased live pig price.
○ Risen Energy and others to see surge in performance
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Risen Energy Co., Ltd. (300118.SZ) is expected to enjoy a year-on-year growth of 475 percent to 536 percent in its net profit in the first three quarters, mainly thanks to soared sales in PV products. Chongqing Fuling Electric Power Industrial Co., Ltd. (600452.SH) is expected to enjoy a year-on-year growth of 218 percent in its net profit in the first three quarters, mainly thanks to increased returns on investment.
Yunnan Salt ＆ Salt Chemical Industry Co., Ltd. (002053.SZ) increased its year-on-year net profit growth forecast to 480 percent to 519 percent, mainly as its various salts sales exceeded the expectation. Beijing Jetsen Technology Co., Ltd. (300182.SZ) is expected to enjoy a year-on-year growth of 190 percent to 210 percent in its net profit in the first three quarters, mainly as Beijing CCTV Splendid Film and TV Corp. Ltd. and Dongyang Jiruixiang Film and TV Media Co., Ltd. have been covered in the consolidated statement to enhance the stable growth in original audio and video business.
[Trading Trends]
○ China High Speed Railway Technology bought through four institutional seats
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The trading volume ranking list on Oct. 13 shows that China High Speed Railway Technology Co., Ltd. (000008.SZ) was bought through four institutional seats with a total of 174 million yuan, accounting for 38.5 percent of its intraday turnover. One institutional seat sold it with 21.20 million yuan.
Comment: Positive news in high speed railway field successively come out in recent days. Indonesia tends to adopt China's high speed railway scheme. CRRC Corporation Limited's high speed railway project in UK is likely to make progress. National Development and Reform Commission of PRC has given official and written replies to various interurban railway projects. In terms of China High Speed Railway Technology, consolidated rail transit business statement greatly promotes its profitability, with implementation of high share conversion and dividend scheme also enhancing its stock price in short period.
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