[Today's Guide]
○ State Council executive meeting supports medical sector, private hospital to again see support for development
○ Online games to maintain high growth, Investment on power lithium battery to reach over RMB100 bln
○ Huasheng Electrical Appliances to fully control Golden Sun Securities, Zhong Jiang Real Estate buys Kunwu Jiuding Capital
○ Topway Video Communication taps into TV shopping after resuming trading, Five institutions buy Deren Electronic
[SSN Focus]
○ State Council executive meeting supports medical sector, private hospital to again see support for development
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The executive meeting of the State Council chaired by Chinese Premier Li Kejiang on Nov. 11 decided to promote the integration between medical care and elderly care services, accelerate the reform of public institutions in the health sector and give full access to private capital.
Comment: To encourage social medical is an important content in "Health China" initiative. As more policies, including easing market access, allowing doctors to have a license to work in more than one hospital and hierarchical medical system, have been implemented, private hospitals are expected to see rapid development. Among A-share companies, Xi'an International Medical Investment Company Limited (000516.SZ) owns Xi'an Gaoxin Hospital. Hunan Development Group Co., Ltd. (000722.SZ) plans to build rehabilitation hospital chains in Hunan Province. Jiangnan Mould ＆ Plastic Technology Co., Ltd. (000700.SZ) builds Mingci Hospital which is expected to open to business at the beginning of next year.
◆ The executive meeting also proposed multiple measures to promote consumption, including accelerating the reform of household registration system to boost consumption in housing and household appliances; extending consumer finance company pilots to nationwide; expanding imports of popular goods for everyday consumption and building more duty-free shops in ports of entry.
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[SSN Selection]
○ China Securities Depository and Clearing Corporation Limited (CSDC) will suspend business on Nov. 14 in order to cooperate with Shanghai Stock Exchange's full-network testing of its circuit-breaker mechanism.
○ Bloomberg reported that the Ministry of Finance of China would increase the quota of local government bond swaps to as high as 4 trillion yuan from the current quota of 3.2 trillion yuan this year.
○ The Ministry of Industry and Information Technology (MIIT) reviewed and approved the 13th Five-Year Plan on the implementation of numerically-controlled machine tool projects, requiring focusing on making breakthroughs in key generic technologies.
○ SSN learnt that Xinjiang Uygur Autonomous Region are promoting PPP projects valued billions of yuan. Xinjiang Urban Construction (Group) Co., Ltd. (600545.SH) and China West Construction Group Co., Ltd. (002302.SZ) are likely to participate in the PPP projects.
○ The demolition of administrative office area of Tongzhou district, the sub-center of the capital, has completed. Over 60 municipal infrastructure projects will be gradually put into use next year.
[Industry Information]
○ Giant Interactive to attract more attention on online games through backdoor listing, industry to maintain high growth
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Giant Interactive Group Inc. (NYSE: GA), an online game tycoon, proposes backdoor listing through Chongqing New Century Cruise Co., Ltd. (002558.SZ). As a result, the game sector stood out on Nov. 11. In addition, Tencent Holdings Limited (00700.HK) released the latest financial results for the third quarter. Its revenue recorded a year-on-year growth of 34 percent and the smart phone games generated a year-on-year growth of 60 percent. Public statistics show that the size of the game market in the first half of 2015 is 60.5 billion yuan, representing a year-on-year increase of 22 percent. The smart phone games generated revenues of 20.93 billion yuan, surging 67.2 percent year on year.
Comment: Institutes believe that with the popularity of smart phones, the improvement in broadband speed and the adjustment on the sharing proportion among channels, the Chinese smart phone game market will continue to maintain high growth. In terms of listed companies, Rastar Group (300043.SZ) is developing online games marketing and operation through the acquisition of Guangdong Teamtop Information Technology Co., Ltd. Talkweb Information System Co., Ltd. (002261.SZ) recorded a hike of 1,500 percent in the results in the third quarter thanks to the profits contributed by the new games introduced by Shanghai Huorong Information Technology Co., Ltd., a company under it.
○ Investment on power lithium battery to reach over RMB100 bln, listed companies to develop
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The third Advanced Batteries for xEV/ESS Conference kicked off on Nov. 11. Experts participating at the conference pointed out that the output and sale of new energy vehicles in China will reach over 300,000 in 2015. New investments on power lithium battery will reach over 100 billion yuan this year. With the releasing of relevant capacity of lithium ion battery, the market demand will be gradually met in the second half of 2016.
Comment: Experts believe that the current output increase of power lithium battery cannot meet the rapid development of the new energy vehicle industry. The high-quality power lithium battery market still sees short supply. It is expected that the size of the power lithium battery industry in China is expected to reach over 160 billion yuan in the following decade. Certain listed companies are actively expanding into the lithium battery industry. Shenzhen Center Power Tech. Co., Ltd. (002733.SZ) proposes to raise 935 million yuan by issuing shares through private placement to invest in power lithium battery and other projects. Shandong Sacred Sun Power Sources Co., Ltd. (002580.SZ) and Shandong Realforce Enterprises Co., Ltd. signed a cooperation memorandum on lithium battery industry in September and propose to establish an independent lithium battery company.
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[Announcement Interpretation]
○ Huasheng Electrical Appliances to fully control Golden Sun Securities
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Guangdong Huasheng Electrical Appliances Co., Ltd. (002670.SZ) intends to acquire 100 percent equities of Golden Sun Securities Corporation Limited at 6.93 billion yuan by issuing 258 million shares at 13.42 yuan per share through private placement and a cash payment of 3,465 million yuan. The company also plans to raise supporting 6.93 billion yuan by issuing 478 million shares at 14.50 yuan per share through private placement to five companies, including Beijing Phoenix Capital Investment Management Ltd.
The headquarters of the listed company will be upgraded into a shareholding management platform after the transaction. Zhongjiang International Trust Co., Ltd. and Jiangxi Ganyue Expressway Co., Ltd. (600269.SH) will hold over 5 percent equities of the listed company. Du Li and Zhang Wei will remain the actual controllers of Huasheng Electrical Appliances. Golden Sun Securities recorded a net profit of 109 million yuan, 278 million yuan and 554 million yuan in 2013, 2014 and the first months of 2015, respectively.
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○ Zhong Jiang Real Estate buys Kunwu Jiuding Capital to develop PE industry
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Jiangxi Zhong Jiang Real Estate Co., Ltd. (600053.SH) proposes to acquire the entire equities of Kunwu Jiuding Capital Co., Ltd. with 910 million yuan in cash. Meanwhile, the company plans to raise 12 billion yuan by issuing shares at 10 yuan per share through private placement. The proceeds will be used to contribute to the fund and "Little Giant" investment management plan. Zhong Jiang Real Estate will access to PE investment management industry through this acquisition and diversify its businesses. The stock price of the company was 13.14 yuan before trading suspension.
○ Topway Video Communication taps into TV shopping after resuming trading
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Shenzhen Topway Video Communication Co., Ltd. (002238.SZ) proposes to buy 60 percent shares in Eachome held by Shenzhen Media Group with 126 million yuan in cash, through which Topway Video Communication will expand into TV shopping industry. According to the performance commitment, the net profits of Eachome after deducting extraordinary items will be no less than 13.37 million yuan, 15.37 million yuan and 16.14 million yuan from 2015 to 2017, respectively.
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○ Various companies to introduce private placement
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Fujian Minfa Aluminium Co., Ltd. (002578.SZ) proposes to issue 64.55 million shares through private placement at 7.22 yuan a share to raise 466 million yuan, which will be primarily used to finance high performance aluminum alloy construction template project with an annual capacity of 400,000 square meters and supplementing the working capital. Over 90 percent of the private placement will be subscribed by Huang Wenle and Huang Wenxi, sons the actual controller of the company Huang Tianhuo.
Suofeiya Home Collection Co., Ltd. (002572.SZ) proposes to issue 31.26 million shares through private placement at a bottom price of 35.19 per share to raise 1.1 billion yuan. The proceeds will be used for four projects such as upgrading of Suofeiya household digital ecosystem (Internet) platform, to build an open 3D collaboration platform connecting consumers, household designers and businessperson.
Fujian Yongan Forestry (group) Joint-stock Co., Ltd. (000663) proposes to issue 110 million shares through private placement at 13.89 per share to raise 1,550 million yuan, which will be used to finance customized furniture production project, bamboo furniture production line construction as well as repay loans.
[Trading Trends]
○ Five institutions buy Deren Electronic
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The trading volume ranking list on Nov. 11 shows that five institutions bought Shenzhen Deren Electronic Co., Ltd. (002055.SZ) with a total of 115 million yuan, representing 11.3 percent of the company's trading volume of the same day. The list also shows that another institutional seat has sold 106 million yuan.
Comment: the company has been intensively researched by institutions since November. The company has acquired Meta System, which has cutting edge advantage on charging module technology. So far the acquiree is the sole supplier of BMW i3 charging module, and it has smoothly penetrate into non-BMW customers. Institutions believe that Meta's charging module technology can be expanded to charging pile and smart power grid areas. The company is expected to get a big share in domestic new energy car and charging pile market.
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