[Today's Guide]
○Executive meeting of State Council pushes expansion of domestic demand, construction of expressway to accelerate
○PV industry sees surging installation again, Double 11 boosts logistics industry
○Canaan Technology to acquire Leemit Technology to expand production line, Coship Electronics to to expand internet TV
○Hi-Target Navigation Tech to acquire UVA company, Sanxia Paints to cooperate with Sitong Mining for graphite mineral
[SSN Focus]
○Executive meeting of State Council pushes expansion of domestic demand, construction of expressway to accelerate
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The executive meeting of the State Council, hosted by Chinese Premier Li Keqiang on Nov. 4, determines to simplify and optimize the approval of expressway and to push the expansion of domestic demand so as to benefit people's livelihood. The 17 preconditions for approval will be reduced to 7. For qualified applications, "construct first and check afterwards" is allowed.
Comment: The investment in infrastructure including expressway is a critical measure in stabilizing growth and also an important support to the promotion of economic upgrading. Since the construction of expressway in China has always been faced with problems including long approval cycle and low efficiency, it usually takes at least two to three years and even four to five years in getting the permit, already impeding social and economic development. The determination in simplifying the approval will release more industrial investment potential. Sichuan Road ＆ Bridge Co., Ltd. (600039.SH) is a leading constructor of road and bridge in Sichuan Province; Punan Expressway, involved in by Fujian Expressway Development Company Limited (600033.SH), was officially put into operation last year; multiple road assets owned by the substantial shareholder of Guangdong Provincial Expressway Development Co., Ltd. (000429.SZ) are planned to be injected into the company.
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The executive meeting of the State Council also launches various measures, including piloting steel structure building, expanding the application of green building materials, supporting the upgrading of agricultural machine and ships as well as quickening the pace of the "going out" of high-end equipment like railway and communications, to facilitate steady industrial growth.
[SSN Selection]
○Chinese President Xi Jinping and Taiwan's leader Ma Ying-jeou are scheduled to meet in Singapore on Nov. 7, pioneering direct communication between leaders on both sides.
○The State Council releases the Certain Opinions of the State Council on Reforming and Improving the State-owned Assets Management System on Nov. 4, advancing the optimization and reorganization of state-owned capital.
○The Ministry of Water Resources announces that the investment by the central government in major water conservancy projects in the first 10 months this year reaches 66 billion yuan, representing 260 percent of that of the same period last year.
○SSN learns that the completion of the location of Boeing Global Completion Center in Zhoushan City might be released soon.
○The fourth session of risk management and agricultural development forum will be convened on Nov. 7. Vice-Chairman of the China Securities Regulatory Commission Yao Gang and leaders of agricultural departments will attend the forum and address speeches.
○The CPC's Central Commission for Discipline Inspection announces on Nov.4 that Si Xianmin, president of China Southern Airlines Company Limited (600029.SH; 01055.HK), is under investigation for "serious disciplinary violations".
[Industry Information]
○Q4 sees surging installation, PV industrial chain not sluggish in slack season
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SSN learnt that the PV equipment installation surges in China's PV market since the fourth quarter. Most major manufacturers of components and battery run in a full capacity and component prices also jump slightly. Risen Energy Co., Ltd. (300118.SZ) told SSN that the current shipment of the company is 7 megawatt per day while it was only 2 to 3 megawatt per day in the first half. The internal consumption accounts for increasingly larger proportion and the company is actively expanding production. Other enterprises in the market are under production in full capacity. Based on the current trend, the first quarter of next year, which used to be the traditional slack season in the industry, will not be sluggish.
Comment: Industrial participants analyzed that local subsidies in many regions will mature by the end of the year, which mainly contributed to the surging installment in the fourth quarter. Some enterprises raised the quoted prices. The prices of components jumped about 3 percent compared with the first half. Changzhou Almaden Co., Ltd. (002623.SZ) principally engaged in PV glasses and Sungrow Power Supply Co., Ltd. (300274.SZ) mainly producing PV inverter are expected to benefit from the surging installation.
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○Double 11 boosts logistics industry, industry to see new development opportunity
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Next week will see the Nov. 11 shopping festival. A report revealed that 56 percent of over 1,000 Chinese netizens surveyed by the research company Nielsen stated they would spend more money this double 11 than last year. This means that there will more express parcels by then. Ma Junsheng, director of the State Post Bureau, addressed that the State Post Bureau strives to achieve the target with a total of 50 billion pieces of express parcels and 800 billion yuan of business income by 2020.
Comment: The rapid development of e-commerce has brought large development opportunity to the express delivery industry and also put forward higher requirements on logistics distribution system. Premier Li Keqiang recently made vital instructions to accelerate the modernization of domestic trade circulation so as to reduce circulation cost. The third-party logistics enterprises are expected to welcome new opportunity. In terms of listed companies, Jiangsu Aucksun Co., Ltd. (002245.SZ) and Jiangsu Xinning Modern Logistics Co., Ltd. (300013.SZ) own competitive edge in their own fields.
○Revised draft of Seed Law approved, innovation protection to benefit leading firms
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The 17th session of China's 12th NPC Standing Committee approves the revised draft of the Seed Law by voting on Nov. 4. The new Seed Law will strengthen protection over seed industrial innovation and is conducive to the healthy development of seed industry.
Comment: Institutions believe that innovation is the fundamental diver of development of the seed industry. The implementation of the new Seed Law can stimulate the innovation enthusiasm of seed companies. Companies possessing a great many of primordial plant products will be very competitive and the powerful ones will be always strong in the industry in the future. In terms of listed companies, Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ) and Shandong Denghai Seeds Co., Ltd. (002041.SZ) are leading in the industry.
[Announcement Interpretation]
○Canaan Technology to acquire Leemit Technology to expand production line
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Zhejiang Canaan Technology Co., Ltd. (300412.SZ) proposes to acquire 55 percent equities of Beijing Leemit Technology Co., Ltd. with 30.25 million yuan. Canaan Technology is an equipment provider for the whole production line of solid preparation, and Leemit Technology mainly engages in closed production system for powders of pharmacy, food, chemical engineering and etc. Canaan Technology also proposes to expand towards front-end ＆ after-end production lines through this acquisition, and other fields related to health industry. The targeted company commits that its net profit of 2015 to 2018 will reach 5 million yuan, 6.25 million yuan, 7.81 million yuan and 9.76 million yuan respectively.
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○Coship Electronics to acquire Global United Technology and China United Television to expand internet TV
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Shenzhen Coship Electronics Co., Ltd. (002052.SZ) proposes to acquire 20 percent equities of Global United Technology Co., Ltd. with 50 million yuan. Global United Technology was jointly established by Youku Tudou Inc. (YOKU.NYSE) and China International Broadcasting Network (CIBN). Coship Electronics will create a new business ecology of broadcasting and TV cable operator based on resources of content and application, systems as well as technologies of Global United Technology; meanwhile, it also proposes to o acquire 20 percent to 25 percent equities of China United Television with expected investment capital of 100 million yuan in cash, and both companies will pilot in Shenzhen and spread the pattern nationwide to create an ecosphere of TV and internet, so as to jointly create new access to TV-end internet.
○Hi-Target Navigation Tech to acquire UVA company
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Hi-Target Navigation Tech Co., Ltd. (300177.SZ) proposes to acquire 55 equities of Tianjin Tengyun Smart Aviation Technology Co., Ltd., an unmanned aerial vehicle (UVA) company, with 10 million yuan. The company will grasp UVA technologies to push out a series of UVA products with fixed wing, and focus on fields related to geographic information at early stage; and will soon carry out R ＆ D of UVAs with multi-rotor-wing and general UVAs with multi-function, and enter into the fields of territory security, mass consumption and etc., which have larger market space.
○Sanxia Paints to cooperate with Sitong Mining for graphite with RMB300 mln
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Chongqing Sanxia Paints Co., Ltd. (000565.SZ) proposes to acquire 10 percent equities of Sichuan Nanjiang Sitong Mining Co., Ltd. transferred by Sichuan Tianhui Cangyu New Energy Development Tech Co., Ltd. with 300 million yuan. Sitong Mining owns graphite reserve of 50.35 million ton in Nanjiang County of Sichuan Province, and will establish cooperative relationship on graphite materials with Sanxia Paints.
○Major assets restructuring of Jingxi Culture ＆ Tourism approved by CSRC
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Beijing Jingxi Culture ＆ Tourism Co., Ltd. (000802.SZ) proposes to raise the fund through private placement to acquire 100 equities of Beijing Century Partner Culture ＆ Media Inc. and Zhejiang Xinghe Culture Brokerage Co., Ltd. respectively, which has been conditionally approved by China Securities Regulatory Commission (CSRC).
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