[Today's Guide]
○Internet-based health industry becomes consensus, first-movers to gain opportunities
○13th five-year plan for robot to complete in Oct., intelligent manufacturing industry to see bright future
○Unisplendour to acquire equities of Western Digital, Lecron Energy Saving Materials to explore digital marketing
○Xinxiang Chemical Fiber to expand spandex business, non-institutional investor buys Wanfu Biotechnology shares to 5 pct limit
[SSN Focus]
○Internet-based health industry becomes consensus, first-movers to gain opportunities
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New Strategic Alliance on Big Data of Health Industrial Technology Innovation has been jointly proposed by over 20 academicians, initiated and established in Beijing on Oct. 25. The Alliance aims to make overall plan based on national strategic planning, scientific and technological innovation, industrial development, national industrial governance and etc. to promote the strategic action of "Internet Health". On the same day, Zhang Yaqin, president of Baidu, Inc. (BIDU.NASDAQ), announced to initiate the "Medical Treatment Internet Ecological Alliance", and will provide online flow distribution and undertaking, internet instruments, technical support, collection, analysis and share of big data.
Comments: Health industry connecting with the internet becomes a consensus for the society. On one side, internet-based tele-medicine can lower medical cost and realize wider coverage of medical resource; on the other side, big data analysis through the internet can improve efficiency and quality of medical services. Enterprises firstly engaged in related fields are likely to take first-mover advantages, seeking for more breakthroughs in profit patterns. In terms of listed companies, By-health Co., Ltd. (300146.SZ) has invested Zhending.com Inc., mainly engaged in information construction for the fields of clinical nutrition, chronic diseases and women and children health management; Searainbow Holding Corp. (000503.SZ) gets involved in hierarchical fees of health insurance. Institutions are optimistic towards Searainbow Holding's copies of Zhanjiang pattern.
[TOP]
○Interest rates and RRR cut by PBOC, market risk preference likely to enhance
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The People's Bank of China (PBOC), the central bank, announced to cut the benchmark deposit and loan interest rates by 0.25 percentage point, with the reserve requirement ratio (RRR) also cut by 0.5 percentage point. Meanwhile, the central bank will not set floating upper limits on deposit interest rates of commercial banks, rural cooperative financial institutions and etc. In addition, positive incentives will be intensified to support the finance related to "issues of farmer, agriculture and rural areas" and small ＆ micro enterprises; RRR of qualified financial institutions will be additionally lowered by 0.5 percentage point.
Comments: According to institutions, the market previously expected that the central bank will cut the interest rates or RRR for once in recent period, however, it cut both of them, and RRR of financial institutions related to "issues of farmer, agriculture and rural areas" and etc. was additionally lowered by 0.5 percentage point, which exceeds the market expectation and is likely to further enhance market risk preference. Moreover, no floating upper limits have been set for the deposit interest rates, showing a crucial step of interest rates marketization reform. But there is no condition for the interest rates to rapidly soar. The central bank's adjustment and control on the interest rates will mainly rely on market-oriented monetary policy tools and transmission mechanism.
[SSN Selection]
○Chinese President Xi Jinping visited National Graphene Institute at The University of Manchester and Manchester City Football Academy on Oct. 23 of local time.
○Vice premier of The State Council Wang Yang indicated on Oct. 23 that tourism should be developed as a strategic pillar industry to support the national economy and also as a modern service industry to satisfy the public.
○Ma Junsheng, director of State Post Bureau of the PRC, recently proposed to develop the express delivery industry as a demonstration project for "Internet ". And the bureau officers expected that volume of express delivery industry for "11.11" will reach 760 million units this year, up by 40 percent year on year.
○According to officers of State Administration for Industry ＆ Commerce, China's internet advertisement turnover recorded at 150 billion yuan last year, which is likely to exceed the total turnover of TV, advertisement and newspaper in two years.
○China Securities Regulatory Commission announced on Oct. 23 to carry out administrative penalty to 12 cases of securities market manipulation, with the fines of 1.3 billion yuan to suspects who had manipulated the stock prices of Shenzhen Tellus Holding Co., Ltd. (000025.SZ) and etc.
[Industry Information]
○13th five-year plan for robot to complete in Oct., intelligent manufacturing industry to see bright future
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The Ministry of Foreign Affairs indicated on Oct. 23 that German Chancellor Angela Merkel will make an official visit to China from Oct 29 to 30. The Industry 4.0 project, first proposed by Germany, is quite similar with "Made in China 2025" in background, measures and development direction and attaches great importance to intelligent manufacturing technologies including robots. Mao Weiming, vice-minister of the Ministry of Industry and Information Technology (MIIT), also claimed recently that the thirteenth five-year plan for the robot industry will be completed by end-Oct.
Comment: Driven by increasing labor cost and policy support, the huge potential of China's intelligent manufacturing industry is releasing rapidly and China became the world's largest consumer of industrial robot in 2014. It is expected that by 2020, China's robot industry and system might reach an output of 100 billion yuan and activate 300-billion-yuan components market. The import substitution of components including reducer and servo motor sees bright future. As to listed companies, the reducer project for robot joint of Qinchuan Machine Tool ＆ Tool Group Share Co., Ltd. (000837.SZ) is able to produce 1000 units per month now; Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ) plans to add stakes in the integration and software development of industrial robot through private placement.
[TOP]
○China attaches great importance to construction of ecological civilization, MEP investigates air pollution
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Chinese vice-premier Wang Yang on Oct. 25 meets representatives of international organizations attending the First World Forum on Ecosystem Governance. Wang indicates that Chinese government has always attached great importance to the construction of ecological civilization and is willing to intensify efforts in international cooperation including the treatment of global ecological system. As reported by the Xinhua Daily, Chen Jining, head of the Ministry of Environmental Protection (MEP), conducted investigation in Nanjing City, Jiangsu Province on Oct. 24, proposing to carry out strict treatment of dusts in construction sites and improve forecast on air quality.
Comment: Considering that the new version of the Law on the Prevention and Control of Atmospheric Pollution will take effect next year, deadline will be set for local governments to strictly control air pollution. Institutions are optimistic that the prevention and control of air pollution, as an important part of the construction of ecological civilization, will gain continuous policy support. As to listed companies, Beijing Sanju Environmental Protection ＆ New Materials Co., Ltd. (300072.SZ) is principally engaged in petrochemical desulfurization; Guangzhou Devotion Thermal Technology Co., Ltd. (300335.SZ) is a leading company in biomass heating industry; Xi'an Qiyuan Mechanical and Electrical Equipment Co., Ltd. (300140.SZ) gains flue gas desulfurization and denitrification asset from China Energy Conservation and Environmental Protection Group, a central enterprise, through acquisition.
○Governmental departments promote pension service using traditional Chinese medicine, industry to embrace new opportunity
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The Office of the National Working Commission on Aging recently signed a cooperation agreement with the State Administration of Traditional Chinese Medicine to push forward the development of pension service using traditional Chinese medicine. The agreement proposes to carry out activities concerning traditional Chinese medicine together and develop packages of pension service using traditional Chinese medicine. The State Administration of Traditional Chinese Medicine also includes the pension service using traditional Chinese medicine into the thirteenth five-year development plan for the traditional Chinese medicine industry.
Comment: SSN learns from the National Health and Family Planning Commission that the "Health China" concept will be upgraded as a national strategy. The idea of "health" will be implemented throughout government's administrative idea and become one part of "China Dream". Pension service using traditional Chinese medicine, as an important part of China, will usher in rapid development. According to incomplete statistics, enterprises engaged in traditional Chinese medicine including Chongqing Taiji Industry (Group) Co., Ltd. (600129.SH) and Henan Lingrui Pharmaceutical Co., Ltd. (600285.SH) are actively making arrangement in general health business.
[Announcement Interpretation]
○Unisplendour to acquire equities of Western Digital with RMB24 bln
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UNIS Union Information System Limited, a fully-owned subsidiary of Unisplendour Corporation Limited (000938.SZ), plans to acquire around 15 percent equities of Western Digital Corporation (NASDAQ:WDC) by acquiring 40,814,800 shares of the company at 92.5 U.S. dollar per share with 24 billion yuan and thus become its largest substantial shareholder. The products of Western Digital cover hard disk drive (HDD), solid-state disk (SSD), storage solutions for public and private cloud data centers and etc. Its market share of HDD ranks top globally.
Tsinghua Tongfang Co., Ltd. (600100.SH) also announces that to implement the decision of the State Council in deepening the State-owned assets (SOEs) reform, Tsinghua Holdings Co., Ltd., controlling shareholder of the company, plans to sell part of the equities of Tongfang Guoxin Electronics Co., Ltd. (002049.SZ) held by Tsinghua Tongfang to Tsinghua Unigroup, a subsidiary under Tsinghua Holdings.
[TOP]
○Lecron Energy Saving Materials acquires two light assets through private placement to explore digital marketing
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Lecron Energy Saving Materials Co., Ltd. (300343.SZ) plans to raise 1,229 million yuan through private placement by issuing shares at 58.37 yuan per share to its counterparties to acquire 100 percent equities of Shanghai Pro-Trend Advertisment Co., Ltd. and Shanghai Lindong Marketing and Planning Co., Ltd., respectively. The predicted value and of appreciation rate of Shanghai Pro-Trend Advertisment reach 1,015 million yuan and 1,355 percent, while Shanghai Lindong Marketing and Planning reaches 716 million yuan and 3,493 percent. Shanghai Pro-Trend Advertisment and Shanghai Lindong Marketing and Planning are principally engaged in Internet-based marketing and public relation business under digital situation, respectively.
According to performance commitment, the net profit of Shanghai Pro-Trend Advertisment from 2015-2017 will be no less than 70 million yuan, 87.50 million yuan and 110 million yuan; the net profit of Shanghai Lindong Marketing and Planning from 2015-2018 will be no less than 34 million yuan, 50 million yuan, 62.50 million yuan and 78.20 million yuan. Upon completion of private placement, Lecron Energy Saving Materials will be principally engaged in both polyurethane industry and Internet-based marketing service. The company's latest stock price closed at 58.37 yuan per share.
○Xinxiang Chemical Fiber to expand spandex business through private placement
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Xinxiang Chemical Fiber Co., Ltd. (000949.SZ) plans to raise 1 billion yuan through private placement by issuing 237 million shares at 4.21 yuan per share to its controlling shareholder Xinxiang Bailu Chemical Fiber Group Company Limited and etc. The raised fund will be used to invest in the Phase II project of super soft spandex fiber plan and to supplement working capital. It is expected that a net profit of 104 million yuan will be newly added annually once the project reaches designed capacity.
[TOP]
○Non-institutional investor buys Wanfu Biotechnology shares to 5 pct limit
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Wanfu Biotechnology (Hunan) Agricultural Development Co., Ltd. (300268.SZ) announced that a non-institutional investor Zhou Lingsong bought 6.8 million shares of the company through secondary market acquisition during Oct. 15 and 22, accounting for 5.08 percent of the total share capital. Zhou has ranked in the shareholder lists in the small and medium board and ChiNext Board in recent years and held three stocks in the two boards as of late June. Recently, Wanfu Biotechnology has seen resignation of director and supervisor, assets stripping and shareholders agreement transfer, which was one of the reasons attracting the non-institutional investors bought its shares through secondary market acquisition to the 5 percent limit.
○Leyard acquires Planar at RMB1 bln
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Leyard Optoelectronic Co., Ltd. (300296.SZ) plans to acquire a Nasdaq-listed company Planar Systems, Inc. (NASDAQ: PLNR) at about one billion yuan in cash, making the latter delisted from the Nasdaq market. Planar is a supplier of high-end home theater and its solution to digital display system boasts higher market share in the globe, especially in North America.
○Donlinks Grain ＆ Oil expected to stop losses by selling soybean processing assets at premium
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Donlinks Grain ＆ Oil Co., Ltd. (000893.SZ) plans to sell 100 percent equity of its subsidiaries Jiangsu Zhizhiyuan Industrial Co., Ltd. and Donlinks Sales Company to its controlling shareholder at a total price of 728 million yuan. It sells the unprofitable assets of soybean processing at a premium, aiming to realize strategic transformation and trying to stop losses. After the deal, the main business of Donlinks Grain ＆ Oil will include grain trade, international shipping and logistics, and potash exploitation.
○5 companies buying assets gets approval
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Aerospace Communications Holdings Group Co., Ltd. (600677.SH) purchasing equities of Smart Hipad (Shenzhen) Technology Co., Ltd. and Jiangsu Jiecheng Vehicle Electronic information Engineering Company, Miracle Automation Engineering Co., Ltd. (002009.SZ) purchasing equities of Yichang Lidi Environmental Technology Group Co., Ltd. and Ningbo Scrap Car Recycle Co., Ltd., New Hua Du Supercenter Co., Ltd. (002264.SZ) purchasing equity of Juiai Zhihe (Beijing) Technology Co., Ltd., Jiuai (Tianjin) Technology Development Co., Ltd. and Luzhou Jujiu Zhihe E-commerce Limited, Dalian Zhiyun Automation Co., Ltd. (300097.SZ) purchasing 100 percent equity of Shenzhen Xinsanli Automatic Equipment Co., Ltd. and Shanghai Pudong Development Bank Co., Ltd. (600000.SH) acquiring Shanghai International Trust Corp., Ltd. was approved by China Securities Regulatory Commission without conditions.
[Financial Reports Express]
○Central Huijin and CSF buy shares of several firms
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Tianjin Jingwei Electric Wire Co., Ltd. (300120.SZ) disclosed in its Q3 report that Central Huijin Investment Ltd. holds 4.99 percent equity and ten assets management plans of China Securities Finance Corporation Limited (CSF) hold 1.7 percent equity of the company respectively, accounting for a total of 21.99 percent of the share capital. Shanghai Belling Corp., Ltd. (600171.SH) disclosed that Central Huijin holds 4.54 percent equity and ten assets management plans of CSF hold 1.36 percent equity of the company respectively, accounting for 18.14 percent in total. Nanjing Gaoke Company Limited (600064.SH) disclosed that Central Huijin holds 2.72 percent equity, CSF holds 2.72 percent equity and ten assets management plans of CSF hold 0.78 percent equity of the company respectively, accounting for 11.81 percent in total.
Hisense Electric Co., Ltd. (600060.SH) disclosed that CSF holds 2.99 percent equity, Central Huijin holds 1.73 percent equity and ten assets management plans of CSF hold 0.66 percent equity of the company respectively, accounting for 11.32 percent in total. Shenzhen Yan Tian Port Holdings Co., Ltd. (000088.SZ) disclosed that Central Huijin holds 3.21 percent equity and eight assets management plans of CSF hold 7.68 percent equity of the company, accounting for 10.89 percent in total. He Bei Cheng De LoLo Company Limited (000848.SZ) disclosed that Central Huijin holds 2.36 percent equity, CSF holds 1.72 percent equity and ten assets management plans of CSF hold 0.64 percent equity of the company respectively, accounting for 10.48 percent in total.
[Weekly Review]
○Big investment trend in small life perspective
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It is not known since when some changes are quietly taking place in our life. There are more and more advertisements along the two sides of roads and in fitness centers. Following showing delicious foods and travel, showing running has become another hot topic in wechat moment. It is no longer only choice to line up in hospital for registration when getting ill; instead, online registration and inquiry through mobile Apps is prevailing now. All these changes reveal that people are attaching more attention to health.
Health is always one of the most significant pursuits of human being since ancient times. Qigong and health care products were once popular in China before. It is not until recent years that health industry are enjoying huge market potential driven by improvement in consumption level, development of new technologies and change in population structure. Compared with the highest point of the bull market in 2007, pharmacy sector in A-share market all soared by over 150 percent. Emerging industry including private hospitals, medicine e-business and health care equipment saw remarkable surge. It is not difficult to realize this investment trend once you notice people's increasing investment in health.
Of course, the long-term trend of fundamentals cannot be used to guide the short-term operation in stock market. Even if everything is ready, big health industry still needs to be driven by information. SSN made an exclusive report last week that the concept of healthy China is expected to be included in document of CPC central committee, and then big health sector will see boom. This is a typical reflection of linkage between industrial long-term trend and short-term policy.
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