[Today's Guide]
○CPC Central Committee set timetable and roadmap for pricing reform, investment market to see new hotspots
○Academicians of CAE release article on Qiushi magazine, trusted computing to become breakthrough of cyber security
○RMB130-bln-yuan pipeline project of Sinopec nodded by NDRC, Chinese brain project to initiate
○Golden Dragon Development to heavily invest in Zhongshan Securities, Xingfa Chemicals bought by CSF and Central Huijin Investment
[SSN Focus]
○CPC Central Committee set timetable and roadmap for pricing reform, investment market to see new hotspots
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The Certain Opinions on Advancing Pricing System Reform of the Central Committee of Communist Party of China and the State Council was released on Oct. 15. It proposes to the pricing in competitive industries and processes will be deregulated in 2017 and the market-based pricing system will be generally improved in 2020. The Opinions also set the orientation of the pricing reform in six major industries, including agricultural products, energy, environmental protection, medical treatment, transportation and public utilities. In terms of energy, it will deregulate the pricing of refined oil products , speed up in the deregulation of the natural gas and selling prices, orderly deregulate the in-grid power pricing and fully implement the tiered pricing for household water, electricity and gas consumption. The National Development and Reform Commission (NDRC) announced that the plan on the natural gas pricing reform will be released soon on the same day.
Comment: The pricing system is the most sensitive and effective regulatory mechanism in market mechanism. The releasing of various reform plans shows that the reform on fully deepening economic systems is under progress and reform benefits will release gradually. Institutes believe that resources products, products with high energy consumption and pollution as well as highly subsidized urban transportation will see prices hike. Petrochina Jinhong Energy Investment Co., Ltd. (000669.SZ) and other urban gas companies will benefit from the expanded gap between the purchase and selling prices. Shaanxi Provincial Natural Gas Co., Ltd. (002267.SZ) and other natural gas piped transportation companies will benefit from the increase in gas for industrial uses. Chengdu Xingrong Environment Co., Ltd. (000598.SZ) and other water companies will benefit from the tiered water pricing and the construction of PPP projects in environmental protection.
◆ Besides the pricing reform, other various key reforms will be initiated soon. It is reported that the Opinions on the Implementation of the Negative List System in Market Accesses and the Opinions on Certain Policy Measures on Supporting the Development and Opening of Border and Key Areas will be issued soon. The Opinions on Fully Deepening the Reform on Investment and Financing Systems is under preparation. The Rules for the Implementation of the Temporary Ordinances on Real Estate Registration is generally qualified for implementation. The market-based reform on the full oil and gas industrial chains will introduce mixed ownership reform plan in the year.
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[SSN Selection]
○Chinese President Xi Jinping met the overseas representatives participated at the Asian Political Parties' Special Conference on the Silk Road on Oct. 15. The English translation of One Belt and One Road is determined to be "the Belt and Road Initiatives".
○September sees new RMB loans of 1.05 trillion yuan, a new high in September in past years. The recovery of the real estate industry and the effects of maintaining economic growth become increasingly obvious.
○The National Development and Reform Commission (NDRC) approved eight transportation projects with a total investment of 95.3 billion yuan. A total of 1.81 trillion yuan in fixed assets investment has been approved in the first three quarters.
○The central bank will strengthen its support in the construction of Shanghai Science and Technology Innovation Center in six aspects. Shanghai will release technology and finance policies on three asects within the year.
○China and Thailand are expected to sign the framework agreement on railway cooperation between the two governments by the end of this month and strive to initiate the construction of the China-Thailand Railway within the year.
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[Industry Information]
○Academicians of CAE release article on Qiushi magazine, trusted computing to become breakthrough of cyber security
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Three academicians of the Chinese Academy of Engineering (CAE) released a signed article on the latest Qiushi magazine, pointing out that there is no national security without cyber security and proposing to realize independent control of core information technology, innovatively develop trusted computing technology and facilitate industrialization. Compared with traditional passive detection and killing technologies, trusted computing technology can achieve active defense against various insecurity factors.
Comment: As a national strategy, cyber security has gained a string of policy support. Trusted computing also embraces opportunity of rapid development. The Zhongguancun Trusted Computing Industry Alliance (Z-TCIA) has been officially established last year. Institutions believe that smart-phone, tablet PC, PC and all other smart equipment using passwords should adopt domestic cryptographic algorithms that meet the standard of domestic cryptogram, indicating that domestic market will expect a scale of billions of yuan. As to listed companies, the trusted chip clients of Sinosun Technology Co., Ltd. (300333.SZ) fully cover main trusted computer manufacturers; Nationz Technologies Inc. (300077.SZ) has launched TPM2.0 security module products applicable to China's cryptographic algorithms.
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○RMB130-bln-yuan pipeline project of Sinopec nodded by NDRC, pipeline equipment to see orders
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The National Development and Reform Commission (NDRC) recently approved the coal gas outer transportation pipeline project of China Petroleum ＆ Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) in Xinjiang, marking the project qualified for construction. The investment amount of this project, including one main line and six branch lines, totals over 130 billion yuan and a length of about 8,400km.
Comment: Driven by policies for stabilizing growth, the major projects of oil and gas pipeline network will see rapid development. Institutes predict that the project will demand for more than 4.2 million tons trunk pipelines and the demand for branch pipelines and city pipelines will be more than four to seven times of that of trunk pipelines. The potential demands are huge. In terms of companies, Sinopec Oilfield Equipment Corporation (000852.SZ) and Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ) are important suppliers of Sinopec.
○Shanghai to develop "brain plan", Chinese brain project to initiate
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The Shanghai Municipal Science and Technology Commission (SMSTC) recently announced that it is actively advancing the research on the "artificial intelligence based on brain science". The brain plan will be a focus of the scientific research and development in Shanghai during the Thirteenth Five-Year Plan period. The official website of the EU human project shows that the human brain project research has made significant breakthroughs recently. The research team has completed the first computer structure imitating cerebral cortex and the research and development of the interactive super computer designed for the research on the brain is under the final stage.
Comment: The human brain project research has become an important topic concerned by scientists globally. After the European Union (EU) and the U.S. invested 1 billion U.S. dollars and 3 billion U.S. dollars in the "Human Brain Plan" and the "Brain Fund Plan", respectively, the Chinese version of the human project plan is expected to initiate. Shanghai plays a leading role in the research of brain science. Dozens of universities led by the Fudan University established a coordinated innovation center on brain science. Fudan Forward Pharm. Company Limited organized public benefit activities on brain health.
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[Announcement Interpretation]
○Golden Dragon Development to raise RMB7 bln through private placement to invest in Zhongshan Securities
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Guangdong Golden Dragon Development Inc. (000712.SZ) plans to raise 7 billion yuan through private placement, of which 6.46 billion yuan for investing in Zhongshan Securities and the remaining for debt payment. The company's controlling shareholder Dongguan New Century Science and Education Co., Ltd. will purchase 2 billion yuan of the private placement.
○Das Intellitech to expand smart campus with Alipay
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Shenzhen Das Information Technology Co., Ltd, a wholly-owned subsidiary of Shenzhen Das Intellitech Co., Ltd. (002421.SZ), signed the Cooperation Agreement on Alipay Campus Card with Alipay, a payment solution provider in China. The two parties will jointly promote the Alipay campus card project among the higher-education schools which cooperate with Das Information Technology. At the same time, the company will also seek for application of the campus card in campus, hospitals, parks, office buildings and other different fields.
○Guozhen Environment Protection Tech. and Xintai Electric buy overseas assets
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Anhui Guozhen Environment Protection Technology Joint Stock Co., Ltd. (300388.SZ) plans to receive a transfer of 100 percent equities of Goodtech Environment AS (GEAS) with 44.37 million Norwegian krone (about 34.73 million yuan). The GEAS is principally engaged in sewage and ash-sluicing water treatment system and drinking water treatment system. It is of good reputation in North Europe. It saw 2.53 million Norwegian krone in net profits in the first half of the year.
Dandong Xintai Electric Co., Ltd. (300372.SZ) plans to purchase manufacturing and office equipment from an Italian company TMC Italia S.p.A. (TMC) at 6 million euros and shoulder the mortgage debt of TMC at no more than 10 million euros. The company will obtain the TMC's technology, trademark, intellectual property and sales network permit free of charge in China in the future. TMC will become a dealer of the company's electric oil-immersed transformer in the countries it covers. Headquartered in Italy, TMC is a leading resin transformer manufacturer in Europe and its sales revenue reached 29.4 million euros in 2014.
○Dr. peng Telecom ＆ Media Group receives significant increase in shareholding
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Shenzhen Dr. peng Industrial Group Co., Ltd., the substantial shareholder of Dr.peng Telecom ＆ Media Group Co., Ltd. (600804.SH), increased the shareholding by 9.79 million shares in the company at an average price of 22.91 yuan per share from Aug. 24 to Oct. 15. As of Oct. 15, Dr. peng Industrial Group has totally increased the shareholding by 14.03 million shares in the company, costing more than 300 million yuan. It has completed the plan for shareholding increase.
[Financial Reports Express]
○Xingfa Chemicals and etc. bought by CSF and Central Huijin Investment
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Among the latest quarterly reports of the listed companies, Central Huijin Investment Ltd. (Central Huijin) and China Securities Finance Corporation Limited (CSF) rank the second and the fourth biggest shareholder of Shenzhen Overseas Chinese Town Co., Ltd. (000069.SZ) respectively, with the shareholding ratio of 4.04 percent in total. Central Huijin is the fourth biggest shareholder of Befar Group Co., Ltd. (601678.SH) with 2.61 percent equity in the company. Central Huijin is the third biggest shareholder of Liao Ning Oxiranchem, Inc. (300082.SZ), and three accounts of CSF are included in the shareholder list, totally holding 1.71 percent equity in the company. In addition, the shareholder lists in the Q3 reports of Anhui Jiuhuashan Tourism Development Co., Ltd. (603199.SH), Lanzhou Foci Pharmaceutical Co., Ltd. (002264.SZ), China Shipping Network Technology Co., Ltd. (002462.SZ), Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH) and other companies also covers accounts of Central Huijin and CSF.
Specifically, there are 10 fund accounts in the shareholder list of Xingfa Chemicals Group, holding 4.66 million shares respectively, or account for 0.88 percent of the total share capital. Moreover, Central Huijin became the third largest shareholder of the group with holding 15.66 million shares in Q3, accounting for 2.96 percent of the total share capital. The special accounts of Central Huijin and CSF totally possessed 11.76 percent equity in the group.
○Kangde Xin Composite Material and Luxshare Precision Industry forecast annual growth in net profit
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Speaking to net profit, Jiangsu Kangde Xin Composite Material Co., Ltd. (002450.SZ) records a year-on-year growth of 46 percent in the first three quarters due to expanded application area of products, expecting a year-on-year growth of 40-45 percent in the whole year. Its third quarterly report shows that Central Huijin Investment Ltd. holds 1.43 percent equities of the company, ranking as its sixth substantial shareholder.
In terms of net profit, Luxshare Precision Industry Co., Ltd. (002475.SZ) records a year-on-year growth of 52 percent in the first three quarters due to massive production, expecting a year-on-year growth of 60-70 percent in the whole year. Its third quarterly report shows that Central Huijin Investment holds 1.57 percent equities of the company, ranking as its fourth substantial shareholder. Five asset management plans held by China Securities Finance Corporation Limited (CSF) rank as the company's sixth to tenth substantial shareholders of tradable shares.
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