[Today's Guide]
○ Superconducting materials industry see breakthroughs, industrialization environment continue to improve
○ Intelligent manufacturing favored by various parties, industry to see more policy supports
○ Lithium battery demands continue to grow, Output value of membrane industry to double during 13th Five-Year Plan period
○ Western Metal Materials to develop nuclear and environmental protection, Shenda to develop carbon fiber
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[SSN Focus]
○ Superconducting materials industry see breakthroughs, industrialization environment continue to improve
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The 13th National Superconductivity Academic Conference kicked off on Oct. 28. According to Suzhou New Materials Institute, the organizer of the symposium, it owns the first 1,000-meter high-temperature superconducting tapes production line with fully proprietary intellectual property rights in China with an expansion growth of 180 meters per hour, which is at the leading level in the world. It is reported that the above superconducting tapes production line is under pilot application in military engineering and power industries. It can improve the transmission capacity by five to ten times in power transmission and reduce the long-distance transmission line loss from 10 percent to below 2 percent and reduce the energy consumption by two thirds. With the maturity of the 1,000-meter tapes manufacturing technology, it is expected to trial-produce new superconducting products for industrialization.
Comment: The superconductor is considered as one of the greatest discoveries in the 20th century. The large-scale production of the second generation of high-temperature superconducting materials lays a foundation for the industrialization of the materials. Institutes estimate that the environment for the industrialization of high-temperature superconducting materials will continue to improve. Among listed companies, Jiang Su Etern Co., Ltd. (600105.SH) holds 50.4 percent equities of the above Suzhou New Materials. The superconducting filtering technology of the subsidiary of Jiangsu Zongyi Co., Ltd. (600770.SH) enjoys the monopoly position in domestic market. Tianjin Benefo Tejing Electric Co., Ltd. (600468.SH) proposes to invest in high-temperature superconducting wire projects through private placement and the plan has been approved by the Issuance Examination Committee.
[SSN Selection]
○ Global Times reported that senior U.S. navy officers, including Harry Harris Jr., commander of the U.S. Pacific Fleet, will visit China soon.
○ The signing ceremony on the partnership in producing public television signals and copyright of the Chinese Super League (CSL) is held on Oct. 28. Ti'ao Dongli, a Beijing-based company specializing in sports events broadcast, purchased the five-year copyright of the CSL for 8 billion yuan.
○ Bloomberg reported that China may announce the cut of in-grid power price by 0.03 yuan per kilowatt in early November at the soonest to boost its economy.
○ The general office of the Ministry of Industry and Information Technology issued two specifications on promoting the standardized construction of methanol fuel stations to endure the smooth progress of the pilot work on methanol vehicles.
○ Urban public hospital in Jiangsu Province will sell medicines without different prices from October. Meanwhile, they will raise the prices of surgeries, nursing and other services.
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[Industry Information]
○ Intelligent manufacturing favored by various parties, industry to see more policy supports
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According to the SSN, the intelligent manufacturing industry will see various key incidents soon. German Chancellor Angela Merkel visit China. The German ambassador to China hopes that Germany and China can conduct more cooperation in high-tech industry and raise China's industrial manufacturing to a new level. The China International Industry Fair will be held from Nov. 3 to 7 in Shanghai. Robots and other intelligent manufacturing will be the highlights of the fair. The World Robot Conference will be convened in China for the first time on Nov. 23. China's leaders are expected to attend the conference. The 13th Five-Year Plan on the robot industry, the medium- to long-term development strategy on intelligent manufacturing and other relevant policies are expected to be released in the year.
Comment: With the driving of policies and incidents as well as the continuous progress of the replacement of human beings by robots, intelligent manufacturing will see rapid development. In terms of listed companies, Nanjing Estun Automation Co., Ltd. (002747.SZ) enjoys technological advantages in electro-hydraulic servo system, alternating current servo system, industrial robots and other industries. The joint reducer for industrial robots of Qinchuan Machine Tool ＆ Tool Group Share Co., Ltd. (000837.SZ) is under small-scale production. Jiangsu Yawei Machine Tool Co., Ltd. (002559.SZ) cooperates with KUKA in participating in linear and horizontal joint robots as well as the system integration business.
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○ Demands for new energy vehicle batteries continue to rise, lithium battery manufacturers expand production
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Tesla Motors Inc (NASDAQ: TSLA) has approached LG Chem Power Inc. through engagement on new energy vehicle batteries, foreign media reported. On Oct. 28, LG Chem Power surged by 5 percent to the highest level since this year. In addition, the world's largest electric vehicle battery factory invested by LG Chem in Nanjing started to production on Oct. 27. It is planned to meet the needs of 50,000 units of electric vehicles in 2016 and 200,000 units of electric vehicles in 2020. China Development Bank, China's policy bank, recently contributed nearly 1.1 bilion yuan in the field of new energy vehicle and environmental protection through equity acquisition.
Comment: As there is a great demand for new energy vehicles, China's power batteries are now in short supply and battery prices are high. According to an estimation on the production expansion plan of first and second-tier power battery manufacturers, battery short supply will at least continue till the year end. Combining the third quarter reports that have been released, the net profit in the battery sector in the third quarter jumped 63 percent year on year. Lithium battery enterprises, such as Guoxuan High-tech Co., Ltd. (002074.SZ) and Sunwoda Electronic Co., Ltd. (300207.SZ), have seen their performance multiple.
○ Output value of membrane industry to double during 13th Five-Year Plan period to boost environmental protection
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SSN learnt that the Thirteenth Five-Year Plan on the Strategic Development of China's Membrane Industry is under preparation. The plan proposes that the output value of functional membranes during the 13th Five-Year Plan period should double from that of the 12th Five-Year Plan period, new breakthroughs should be made in the quality of micro-filtration membrane and ultrafiltration membrane, and they should obtain 60 to 80 percent share in domestic market.
Comment: China is beset with water resources scarcity and serious water pollution. Driven by policies on total water quantity control and water rights transference, sewage treatment and seawater desalination will create indexes of water utilization. Water treatment membrane has a huge potential market. Among A shares, South Huiton Co., Ltd. (000920.SZ) is the only environmental protection platform of the central SOE CRRC Corporation Limited (601766.SH; 01766.HK) and is a leader in reverse osmosis membrane. Tianjin Motimo Membrane Technology Co., Ltd. (300334.SZ) has expanded its business from membrane products to membrane engineering.
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[Announcement Interpretation]
○ Western Metal Materials raises RMB 900mln through private placement to develop nuclear and environmental protection industries
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Western Metal Materials Co., Ltd. (002149.SZ) proposes to raise 940 million yuan by issuing 64.38 million shares at a price of 14.61 yuan per share through private placement for the domestication of key materials for reactor cores of independent nuclear power plant, the construction of production line of high-performance metallic composite for the use of energy and environmental protection, acquisition of 8.33 percent equities of Western Energy Material Technologies Co., Ltd. through capital increase and loan repayment.
○ Shenda invests RMB 1.25bln to develop carbon fiber industry
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Shanghai Shenda Co., Ltd. (600626.SH) proposes to raise 1.25 billion yuan at prices no less than 12.79 yuan per share through private placement. Its substantial shareholder Shenda Enterprise Group will subscribe 31.07 percent of the total shares. The proceeds will be used for the production of carbon fiber and its prepreg, investment in Cross River LLC who will acquire 100 percent equities of PFI Holdings, a U.S. Company engaged in bedding article and textile products, development of its car trim business and acquisition of 35 percent equities of the U.S. Company NYX which is a first-tier supplier of solutions to products in car interior and under bonnet.
○ Beingmate acquires factory of Fonterra
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Beingmate Baby ＆ Child Food Co., Ltd. (002570.SZ) proposes to set up subsidiaries abroad through the acquisition of 51 percent equities of Darun factory under Fonterra Co-operative Group in Australia at a consideration of 367 million yuan. Darun factory (production line) is a production department under the Australian branch of Fonterra located in the State of Victoria, Australia. This acquisition will accelerate Beingmate's plan to integrate resources in global baby and child food sector, enabling the company to be accessible to quality milk source and extend its value chain.
○ Major assets reorganization of multiple companies approved
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Acquisition of equity in Jilin Kangda Agricultural Machinery Co., Ltd and Ningxia Jifeng Agricultural Machinery Co., Ltd. by Gifore Agricultural Machinery Chain Co., Ltd. (300022.SZ) has been approved by CSRC unconditionally; acquisition of the entire equity in Shanghai Eorive Co., Ltd. by Zhongshan Broad-Ocean Motor Co., Ltd. (002249.SZ) and acquisition of the entire equity in First New Energy Group Co., Ltd by Far East Smarter Energy Co., Ltd. (600869.SH) have been approved conditionally.
[Financial Reports Express]
○ Companies: Annual results see growth
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Wuhu Shunrong Sanqi Interactive Entertainment Network Technology Co., Ltd. (002555.SZ)predicted that its annual results will increase by 1,182 percent to 1,214 percent YoY, primarily attributed to the combination of the results of 37.com into its financial statements. Sichuan Danfu Compressor Co., Ltd. (002366.SZ) estimated that its net profits for the year will grow 595 percent to 765 percent, primarily due to the changes in combined financial statements following assets reorganization.
[Trading Trends]
○ Three institutes buy Hongbo
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The trading volume ranking list on Oct. 28 shows that three institutes bought Hongbo Co., Ltd. (002229.SZ) with 99.50 million yuan, accounting for 5.89 percent of its intraday turnover.
Comment: The Internet-based lottery in China has been called off for five times. It has suspended for eight months since it was suspended this year. SSN reported on Oct. 27 that the 13th five-year plan on the lottery industry has been formulated and Internet-based lottery sale may be reinitiated. Analysts believe that once the 13th five-year plan on the lottery industry is nodded, the Internet-based lottery industry will surge. As a leading player in the Internet-based lottery industry, Hongbo was bought by institutions in advance and is worthy of attention.
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