[Today's Guide]
○ State Council supports express delivery development, Internet plus to be important driver
○ Innovation and entrepreneurship education reform to adopted in 13th Five-year Plan, Ctrip to merge with Qunar
○ Gloria Phar. to conduct private placement, Hualing Xingma Automobile to release employee shareholding plan in mixed ownership reform
○ Huapeng Glass to expand main business, Huafang to build plant in Vietnam through private placement
[SSN Focus]
○ State Council supports express delivery development, Internet plus to be important driver
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The State Council released certain opinions on facilitating the development of the express delivery industry on Oct. 26, proposing to generally establish an express delivery services system covering urban and rural areas with advanced technology and quality services, which is safe, efficient, green and energy-saving and form a service network covering the whole country and connected with the globe. The opinions also encourage express delivery enterprises to optimize the services network, improve the operation and management efficiency, expand coordinated development, promote the transformation of service models and speed up in transforming into comprehensive express delivery logistics operators based on the mobile Internet, the Internet of Things, big data, cloud computing and other information technologies.
Comment: An advanced express delivery network is a precondition for the development of Internet-based e-business while the development of e-business brings a huge market to the express delivery industry. According to the estimation of Cainiao Network, about 140 million packages are expected on Nov. 11. It will rely on the connection of big data and socialized coordination to improve the efficiency. As China's economy is transforming from being driven by investment into being driven by consumption, the Internet plus will be an important driver in the development of the express delivery industry facing increasing packages. Among listed companies, Jiangsu Xinning Modern Logistics Co., Ltd. (300013.SZ) is leader in the domestic intelligent logistics and storage. Zhejiang Transfar Co., Ltd. (002010.SZ) plans to establish a big platform with "logistics plus Internet plus finance". Hunan Copote Science Technology Co., Ltd. (600476.SH) is engaged in the development of postal software and the positioning of GPS postal vehicles.
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[SSN Selection]
○ French President Francois Hollande will pay a state visit to China from Nov. 2 to 3 at the invitation of Chinese President Xi Jinping
○ Chinese Premier Li Keqiang will pay an official visit to the Republic of Korea (ROK) from Oct. 31 to Nov. 2 and attend the sixth trilateral summit between China, Japan and the ROK to be held in Seoul.
○ China successfully launched the Tianhui-1C mapping satellite on Oc. 26. The satellite will be used for scientific experiments, land resource surveys, mapping, crop yield estimation and disaster relief.
○ The national energy Internet action plan is expected to be released within the year. It will conduct pilots on innovation at different levels in technology, policy and business models in different regions.
○ The Shanghai Stock Exchange releases guidelines on the formats of four temporary announcements, which are mainly targeted at the abnormal fluctuation of stock prices, the signing of strategic framework agreements, the change of stock abbreviations, high conversion and other matters.
[Industry Information]
○ Innovation and entrepreneurship education reform to adopted in 13th Five-year Plan, education industry to see huge opportunities
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According to the latest issue of the China Education Daily, Chinese Vice Premier Liu Yandong delivered a speech at the forum on deeply advancing reform on innovation and entrepreneurship education in universities recently, proposing to adopt deepening reform on innovation and entrepreneurship into the 13th Five-year Plan following the requirements of the fifth plenary session of the 18th CPC Central Committee. Deputy Education Minister Lu Xin indicated at the joint meeting of higher vocational college presidents across China that driven by the Made in China 2025, the innovation and entrepreneurship, the Belt and Road Initiatives and other key national strategies, higher vocational education will provide supports in technology and talents. The reform and development of vocational education will see golden opportunities.
Comment: With the introduction of various supporting policies, the reform of the education system in China is speeding up. Institutes are optimistic that the reform of universities and colleges will vitalize listed companies under state-owned enterprises and colleges. The vocational education and online education will see a market with 1 trillion yuan in their rapid development. Among A-share companies, the actual controller of China Hi-Tech Group Co., Ltd. (600730.SH) is Peking University, which will focus on the establishment of the Internet plus education platform. Xiamen Insight Investment Co., Ltd. (000526.SZ) received investment from companies under Tsinghua University. It will privatize Xueda Education Group (NYSE:XUE) through issuing additional shares. Guomai Technologies, Inc. (002093.SZ) owns Fuzhou Institute of Technology under it.
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○ Ctrip to merge with Qunar, competitive pressure on business travel booking market eases
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Ctrip (NASDAQ: CTRP) on 26 Oct. entered into a stock-for-stock deal with Qunar (NASDAQ:QUNR), according to which the parties has built a partnership, symbolizing the largest online tourism service provider in China. It is a significant merger in internet O2O sector following the merger between Didi and Kuaidadi, 58.com and ganji.com as well as metituan.com and dianping.com.
Comment: at the early stage of development of O2O business model like online business tourism booking, mobile apps taxi hailing and group buying, each internet enterprise usually taps into the market via huge subsidies. While after consumers developed a spending habit in mature market, merger between market giants could avoid internal friction in the industry, giving room for the differentiation development of other medium and smaller companies. A share company Besttone Holding Co., Ltd. (600640.SH) is a business tourism booking platform under China Telecommunications Corporation; Beijing Shiji Information Technology Co., Ltd. (002153.SZ) is the largest hotel information system provider, which has depth cooperation with Alitrip.
[Companies Hotspot]
○ Western Animal Husbandry's infant formula milk powder sales surge, capacity expansion to unveil
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SSN recently learnt that to prepare for the policies on allowing to have the second child, Xinjiang Western Animal Husbandry Co., Ltd. (300106.SZ) is gradually development the mainland market through professional sales teams and e-business platforms. The sales of its infant formula milk powder have maintained an annual average growth of 40 percent. The company will consider the establishment of O2O and Wechat business platforms next year. It will further increase its input in advertising to improve the brand awareness.
In terms of capacity expansion, the company initiated the acquisition of Shihezi Yili Dairy Industry Co., Ltd. this year. The target company owns the designed production of about 10,000 tons of infant formula milk powder while the annual production capacity of Western Animal Husbandry is about 3,500 tons. The company announced in August that it plans to acquire Zhejiang Yiheng Husbandry Co., Ltd. and it will further expand into the Yangtze Delta market based on the project.
[Announcement Interpretation]
○ Gloria Phar. proposes to raise 4 billion yuan through private placing, half to subscribe in-house
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Harbin Gloria Pharmaceuticals Co., Ltd.(002437.SZ) proposes to raise 4 billion yuan through private placing at the price of 22.14 yuan per share. The proceeds will be used for expanding ginkgolide B injections production line of Guangzhou Xinhuacheng Biotech Co. Ltd., comprehensive workshop project of Aonuo (China) Pharmaceutical Co,. Ltd. and construction project of sales center concerning sales terminal network management system.
Of all the acquisition targets, Xuri Longchang, Hengyi Dachang and Zunya Jinxiuare partnerships controlled by Zhu Jiman and his spouse Bai Lihui, the actual controllers of Gloria Pharmaceuticals; Xuri Jiujia is a partnership controlled by Wang Dongxu, vice president of Gloria Pharmaceuticals, Kanghong Zhongwang, Jiarun Hongshi are partnerships proposed to set up by management and core employees of Gloria Pharmaceuticals for the purpose of the private placing. Subscription by such companies accounting for nearly 50% of the total fundraising.
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○ Hualing Xingma Automobile to release employee shareholding plan in mixed ownership reform
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Hualing Xingma Automobile (Group) Co., Ltd. (600375.SH) plans to raised 317 million yuan by issuing 57 million shares (with a lock-up period of 36 months) to the first phase of the employee shareholding plan at 5.57 yuan per share through private placement for the repayment of its debts. The stock of the company closed at 6.86 yuan before trading suspension. The company is under the State-owned Assets Supervision and Administration Commission of Maanshan City, Anhui Province. The employee shareholding plan through private placement is a part of its mixed ownership reform.
○ Huapeng Glass to raise RMB630 mln through private placement to expand main business
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Shandong Huapeng Glass Co., Ltd. (603021.SH) intends to raise 630 million yuan by issuing 19.04 million shares to certain specific targets, including the controlling shareholder Zhang Dehua, at no less than 33.09 yuan per share through private placement. The proceeds will be invested in the construction of high-end glass products in Gansu Province and Jiangsu Province. The stock of the company closed at 38.26 yuan before trading suspension.
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○ Huafang to build plant in Vietnam through private placement to ease TPP's impacts
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Huafang Co., Ltd. (600448.SH) proposes to raise 900 million yuan by issuing 120 million shares at prices no less than 7.40 yuan per share through private placement. 700 million yuan proceeds will be used for the high-end garment materials (dyeing and finishing) project with an annual production 50 million meters in Vietnam. 150 million yuan proceeds will be used for the intelligentization research and development center in the textile industrial chain. The rest proceeds will be used to supplement the company's working capital. Its controlling shareholder Binzhou Municipal State-owned Assets Supervision and Administration Commission will subscribe 60 million yuan.
Comment: According to the Trans-Pacific Partnership Agreement (TPP) dominated by the U.S., garment produced in Vietnam and exporting to the U.S. is exempt for tariff. The investment in production lines in Vietnam and other foreign countries will bring low labor cost to the company.
○ Yanhua Smartech to raise RMB 1bln through private placement to expand smart industry
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Shanghai Yanhua Smartech Group Co., Ltd.(002178.SZ) proposes to raise 1,004 million yuan at prices no less than 8.58 yuan per share through private placement for the construction and operation of intelligent energy-saving and user-side energy Internet platform, the construction of intelligent medical treatment and intelligent elderly care platform, the intellectualization and informationization project of buildings, the expansion of "smart city model" and regional center, the construction of smart city research institute and supplementary to the company's working capital.
○ Longhua Heat Transfer ＆ Energy Conservation to set up industrial fund and to resume trading
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Luoyang Longhua Heat Transfer ＆ Energy Conservation Co., Ltd. (300263.SZ) will contribute 100 million yuan to set up Renda Longhua Investment Fund with the company's senior management and backbones. The fund will acquire equities of enterprises with promising prospects and growth potential in national strategic emerging industries. Meanwhile, the company announced the termination of major assets reorganization to resume trading.
○ Jiuzhitang ＆ INESA Electron nodded for reorganization
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Jiuzhitang Co., Ltd. (000989.SZ) was conditionally approved by China Securities Regulatory Commission (CSRC) to acquire 100 percent equities of Mudanjiang Youbo Pharmaceutical Co., Ltd. INESA Electron Co.,Ltd. (600602.SH) was unconditionally approved by CSRC to acquire the assets related to smart city of Shanghai Nanyang Wanang Software Co., Ltd. and others.
[Financial Reports Express]
○ Neptunus Bioengineering forecasts full-year net profit to rise over 10 times
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Shenzhen Neptunus Bioengineering Co., Ltd. (000078.SZ) saw the net profit of the first three quarters rise by 548 percent year on year and forecasts its full-year net profit increase by 1,497 to 1,791 percent year on year mainly due to the investment income from the transfer of its defective subsidiary and increasingly growing sales revenue.
[Trading Trends]
○ Two institutions buy Addsino
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The trading volume ranking list shows on Oct. 26 that Addsino Co., Ltd. (000547.SZ) was bought by two institutions with a total amount of 133 million yuan, accounting for 9.04 percent of the total turnover.
Comment: Addsino previously acquired 100 percent equities of Nanjing Changfeng Aerospace Electronic Technology Co., Ltd. China Aerospace Science ＆ Industry Corp (CASIC) becomes the actual controller of the latter. Insiders in the industry believe that CASIC attaches much importance to its electronic informationization platform, and that it is highly expected that the platform will integrate with its businesses of tactical communications, electronic countermeasure jamming and electromagnetic protection in the future.
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