[Today's Guide]
○ Executive meeting of State Council to support broadband construction in rural areas, RMB140 bln investment plan to proposed
○ Biggest wind power exhibition kicks off, installed capacity in 13th Five-year Period to increase...
○ Fastprint Circuit Tech to acquire military engineering assets, Keybridge Communications to raise fund through private placement to invest in Internet of Things
○ Sihuan Bioengineering bought by Small and Medium Enterprise Investment Group, Rike Chemical sees performance hike
[SSN Focus]
○ Executive meeting of State Council to support broadband construction in rural areas, RMB140 blninvestment plan to proposed
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Chinese Premier Li Keqiang hosted an executive meeting of the State Council on Oct. 14, which decided to reform and innovate the compensation mechanism of telecom universal service to support the broadband construction in rural and remote areas, and make people in such areas to get rid of poverty and become better off through information technology; strive to cover 98 percent of administrative villages with broadband by 2020 and gradually realize the Wi-Fi coverage. The total input is expected to exceed 140 billion yuan.
Comment: Information consumption is becoming a new breakthrough point to drive China's economic development, while broadband is just the basis for information consumption. Under the synergy of 4G network construction and lowering fees promoted by policies, three largest telecom operators are intensifying their strength to construct broadband for the mobile and fixed networks. Various communication equipment enterprises benefit from such intensified broadband construction, including Jiangsu Zhongtian Technology Co., Ltd. (600522.SH), Wuhan Yangtze Communication Industry Group Co., Ltd. (600345.SH), Accelink Technologies Co., Ltd. (002281.SZ) and etc. Small and medium operators, such as Dr.peng Telecom ＆ Media Group Co., Ltd. (600804.SH) and Founder Technology Group Co., Ltd. (600601.SH), are also likely to take up larger market share by the advantage of flexible mechanism.
◆The executive meeting of the State Council also deployed to accelerate the rural e-commerce development, and determined the measures to promote the development of express delivery industry.
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[SSN Selection]
○ Interest rate of 10-year Treasury bond slumped below 3 percent, which suggested a buoyant bond market. Capitals are expected to keep flowing into the bond market as a result of a lack of high yield portfolio.
○ The consumer price index (CPI) jumped 0.4 percentage points to 1.6 percent in September. There is still room for cutting interest rate and lowering deposit reserve rate in the fourth quarter as the upward trend of commodity price softens.
○ The Ministry of Transport formulated the framework of the 13th Five-year development plan on transportation. Investment in railway sector is expected to maintain a high level.
○ Huafa Group, Zhuhai Port Holdings Group as well as other Chinese enterprises will sign contracts on the cooperation with Gwadar, a port city in Pakistan, at the 2015 Guangdong 21st Century Maritime Silk Road International Expo at the end of this month.
○ Jack Ma gave a speech on 2015 Computing Conference, claiming that data will replace oil to become the most important resource.
[Industry Information]
○ Biggest wind power exhibition kicks off, installed capacity in 13th Five-year Period to increase
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The China Wind Power 2015 Conference ＆ Exhibition kicked off on Oct. 14. More than 600 Chinese and overseas enterprises participated in the exhibition, which is named as the biggest professional wind power exhibition this year. Officials of the National Energy Administration (NEA) participated at the exhibition indicated that the minimum target for new wind power installed capacity during the 13th Five-year Period is no less than that of the 12th Five-year Period. It will improve subsidy policies and promote the introduction of a system of guaranteeing the purchasing of renewable energy resources in full amount. If it can be given priorities in adopting into the grid, the wind power can reach 400 million kilowatt. Statistics show that the total in-grid installed capacity of wind power in end-2014 was 96 million kilowatt.
Comment: The rapid growth of the wind power industry is gradually reflected in the performance of listed companies. Titan Wind Energy (Suzhou) Co., Ltd. (002531.SZ) and Shanghai Taisheng Wind Power Equipment Co., Ltd. (300129.SZ) expected their net profits in the first three quarters to increase 50 to 80 percent and 45 to 75 percent, respectively. One of the three results in the Sino-U.S. economic cooperation during Chinese President Xi's visit to the U.S. is to jointly develop the wind power energy projects in Africa. The prospects of wind power in overseas markets are catching attention of institutes.
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[Announcement Interpretation]
○ Fastprint Circuit Tech to acquire military engineering assets
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Shenzhen Fastprint Circuit Tech Co., Ltd. (002436.SZ) proposes to acquire 70 percent equities of Hunan Runcore Innovation Technology Co., Ltd. with 60 million yuan. The latter is professionally engaged in the research of military engineering solid storage equipment. The military products of the company will be expanded from ancillary components to products and ancillary projects after the acquisition. In addition, Fastprint Hong Kong, a subsidiary of the company, plans to establish an overseas merger and acquisition fund with Baron Edmond de Rothschild to invest in the merger and consolidation of such industries as integrated circuit, printed circuit and intelligent manufacturing. Listed companies will have the right of first refusal over the projects under the M＆A fund.
Fastprint Circuit Tech also announced a repurchase plan before, proposing to repurchase no more than 34.40 million shares at no more than 12.5 yuan per share. The stock price of the company was 12.45 yuan before trading suspension.
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○ Keybridge Communications to raise RMB3.65 bln for Internet of Things
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Shenzhen Keybridge Communications Co., Ltd. (002316.SZ) plans to raise 3.65 billion yuan through private placement by issuing about 400 million shares at no less than 9.18 yuan per share. The fundraising will be used for the comprehensive R＆D platform of Internet of Things and solution to Internet of Things plus, financial technology cloud service platform project, purchasing 74.64 percent equity of Yinghua Financial Leasing Co., Ltd., as well as adding investment and supplementing working capitals for the company.
Jiaxing Qiande Jingyi Investment Partnership controlled by Keybridge Communications' vice-president Liu Hui and its related parties including Jiaxing Tianshou Investment Partnership and Jiaxing Yaan Investment Partnership will purchase the shares. Liu Hui will finally become the new actual controller of the company with holding over 30 percent equities. The company's senior managers Wang Yongbin and Zhang Zhenxin and Shenzhen Guanghui Xingtong, an employee shareholding platform, also join in the stock purchase.
○ Sihuan Bioengineering bought by Small and Medium Enterprise Investment Group
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Jiangsu Sihuan Bioengineering Co., Ltd. (000518.SZ) disclosed that Small and Medium Enterprise Investment Group Co., Ltd. has held 51.39 million shares in the company as of Oct. 13, accounting for 4.99 percent of the total share capital of the company. This is close to the 5 percent limit, making it as the biggest shareholder of the company. The Group is a large investment company initiated by China Association of Small and Medium Enterprises and invested by Chinese famous enterprises. It is a new platform which sticks to the industrial structural adjustment strategy, promotes industrial integration and upgrading and conducts foreign cooperation, investment and financing.
The equity of Sihuan Bioengineering is decentralized. Kunshan Venture Capital Investment Co., Ltd. was its biggest shareholder up to Sept. 17, holding 3.95 percent equity in the company. It had promised to continue to increase shareholding in the next 12 months and not to reduce shareholding in the legal term.
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○ China Minmetals Rare Earth to reduce production for smelting separation products to secure prices
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China Minmetals Rare Earth Co., Ltd. (000831.SZ)decided to reduce production to secure price. It is predicted that it will cut the production target for the overall smelting separation production in 2015 set by the Ministry of Industry and Information Technology (MIIT) by no less than 10 percent.
[Financial Reports Express]
○ ChiNext Board companies saw performance booming
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Shandong Rike Chemical Co., Ltd. (300214.SZ) forecasts its net profit of the first three quarters grow by 100 to 130 percent year on year mainly due to surging product sales. Guangxi Bossco Environmental Protection Technology Co., Ltd. (300422.SZ) forecasts its net profit of the first three quarters grow by 670 to 700 percent year on year owing to the good performance of its main business. East Money Information Co., Ltd. (300059.SZ) forecasts its net profit of the first three quarters grow by 2,167 to 2,326 percent year on year mainly due to the rapid growth of its Internet-based finance business. Jinlong Machinery ＆ Electronic Co., Ltd. (300032.SZ) forecasts its net profit of the first three quarters increase by 1,627 to 1,682 percent year on year mainly due to increasing orders of small and special electric machine, and the integration of the financial statements of Booyi Photoelectricity Technology Co., Ltd. and Shenzhen Jiaai Motor Co., Ltd. Bluedon Information Security Technologies Co., Ltd. (300297.SZ) forecasts its net profit of the first three quarters increase by 460 to 490 percent year on year mainly due to the integration of the financial statement of Guangzhou Hopewell Technology Co., Ltd.
As to the year-on-year growth of net profit in the first three quarters, Beijing IRTOUCH Systems Co.,Ltd. (300282.SZ) predicts a growth of 665-695 percent due to the consolidated financial statements of Shenzhen Wangxin Precision Industry Co., Ltd.; Beijing Hualu Baina Film＆TV Inc. (300291.SZ)expects a surge of 205-235 percent resulted from the large growth of film and television, variety show and sports business; Wangsu Science ＆ Technology Co., Ltd. (300017.SZ) is expected to record a growth of 70-90 percent due to that it benefits from the growth dividend of Internet industry and the CDN industry maintains sound development momentum; Songcheng Performance Development Co., Ltd. (300144.SZ) is estimated to record a growth of 60-90 percent due to the consolidated financial statements of6.cn Inc.; Jiangsu WELLE Environmental Co.,Ltd. (300190.SZ) predicts a growth of 70-90 percent due to the consolidated financial statements of Hangzhou Energy ＆ Environmental Engineering Co., Ltd.
[Trading Trends]
○ Listed companies engaged in new energy vehicle intensively investigated by institutions
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According to statistics collected by SSN, several hundreds of institutions intensively investigated dozens of listed companies engaged in the industrial chain of new energy vehicle. All these investigated companies are optimistic about the industrial prosperity and development space. Beijing Easpring Material Technology Co., Ltd. (300073.SZ) and Jiangxi Ganfeng Lithium Co., Ltd. (002460.SZ) indicated that their product supply falls short of demand and they will actively expand production to alleviate capacity bottleneck.A senior director of a private fund in Shenzhen indicated that some non-listed companies engaged in new energy vehicle being investigated this time reach a growth rate of over 50 percent despite sluggish macro economy. Another manager of private fund in Shanghai expressed his optimism towards upstream lithium mine enterprises definitely benefiting from the development of new energy vehicle industry.
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