[Today's Guide]
○ Reform measures to land soon, six supporting documents for power reform to unveil soon
○ Preliminary 13th five-year plan on nuclear power prepared, military and civil integration speeds up
○ Bluefocus Communication to expand mobile Internet-based marketing, Shapuaisi Phar. to develop TCM
○ Hai Nan Yedao to resume trading, China United Travel to jointly control Yingbo Xuncai to develop lottery
[SSN Focus]
○ Reform measures to land soon, six supporting documents for power reform to unveil soon
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The National Development and Reform Commission (NDRC) indicated at a press conference on Nov. 12 that the six supporting documents on power transmission and distribution pricing reform and power sales reform have been submitted for approval and will be unveiled soon. In the next stage, the NDRC will accelerate in promoting the electricity reform and conduct pilots on comprehensive electricity reform in Yunnan and Guizhou provinces. SSN learnt that electricity sales licenses are expected to be first issued in the pilots.
Comment: The marketization of electricity sales will make low-cast hydropower enterprises win. Institutions expect that China Huadian Corporation, the substantial shareholder of Guizhou Qianyuan Power Co., Ltd. (002039.SZ), a company based on Guizhou, will inject assets into the latter. Electrolytic aluminium companies and other power consumption enterprises, including Yunnan Aluminium Co., Ltd. (000807.SZ), an aluminium leader in Yunan Province will benefit from the lower cost resulting from direct electricity purchasing. With the development of electricity transmission and distribution integration and distributed power generation, the electricity transmission and distribution sector will attract more investment. Beijing Hezong Science ＆ Technology Co., Ltd.(300477.SZ) and Integrated Electronic Systems Lab Co., Ltd. (002339.SZ) are engaged in electricity distribution equipment.
◆ The NDRC also indicated that the plan on the oil and natural gas reform has been submitted to relevant departments for soliciting public opinions, and it is reviewing the plan on state-owed forest farms with the State Forestry Administration; the unified social credit record system will be fully implemented by the year end, which will facilitate the development of personal credit market.
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[SSN Selection]
○ China's social financing expanded 476.7 billion yuan in October, an increment 852.3 billion yuan on a monthly basis. Institutes believe that the future fiscal and monetary polices will look set to more positive.
○ The Minister of Housing and Urban-Rural Development addressed on Nov. 12 that the sponge city pilots are progressing well and will remarkably improve urban inland inundation in the next five years.
○ The National Energy Administration (NEA) held a meeting to solicit opinions for the guidance on promoting the Internet Plus intelligent energy actions on Nov. 12, and indicated that it would focus on making energy consumption more Internet-enabled.
○ China Food and Drug Administration released multiple policies on the registration, examination and approval of drugs to support the application for registration of new medicines, including those preventing AIDS and malignant tumor .
○ The Ministry of Commerce (MOFCOM) recently hold a press conference to promote the innovation of online and offline interaction in the commerce circulation and the development of e-commerce in rural areas.
[Industry Information]
○ Preliminary 13th five-year plan on nuclear power prepared, demand in supply chain to improve
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SSN learnt that the primary 13th five-year plan on nuclear power led by the National Energy Administration (NEA) has been prepared and is soliciting opinions. The plan covers the prospects of the nuclear power in the medium and long term. It is expected that the installed capacity of nuclear power in 2030 will reach 120 to 150 million kilowatt and the proportion of nuclear power generation will be further improved to 8 to 10 percent. It is previously estimated that the installed capacity of nuclear power in 2030 will be 130 million kilowatt.
Comment: Analysts pointed out that the installed capacity of nuclear power will surge significantly in the future. As the construction of main pump motors for nuclear power, vapor generators and other key equipment takes long time, they shall be procured through bidding in advance, which will further boost the demand in the supply chain for nuclear equipment during the 13th five-year plan period. Among A-share listed companies, Jiangsu Shentong Valve Co., Ltd. (002438.SZ) developed butterfly valves for nuclear safety, which filled the domestic gap. Zhejiang Jiuli Hi-tech Metals Co., Ltd. (002318.SZ) can produce welding titanium tubes for nuclear power stations. The businesses of China National Nuclear Power Co., Ltd. (601985.SH) cover the development, investment and operation of nuclear power projects.
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○ Military and civil integration speeds up, enterprises with civil participation in military engineering to see huge market
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According to SSN, the military and civil integration has been speeding up redently. Xu Qiliang, vice chairman of the Central Military Commission (CMC), issued an article on People's Daily on Nov. 12, indicating that it should make new plans on promoting the integrated development of economic growth and national defense construction standing at the height of times. Xu Dazhe, director of China's State Administration for Science, Technology and Industry for National Defense, made an inspection on military and civil integration in Baotou City on Nov. 7. In addition, leading military engineering groups have been introducing projects on military and civil integration.
Comment: The military and civil integration can fully attract private capital and technology and improve the efficiency in research and manufacturing, which have become major drivers in China's military power strategy. At the same time, national defense products enjoy a huge demand, which provides huge market potential to enterprises with civil participation in military engineering. In terms of companies, the electrical management and control products of Heifei Tongzhi Electrical Control Technology Co., Ltd., a company acquired by Jiangsu Yinhe Electronics Co., Ltd. (002519.SZ), are applied in such military areas as tanks and self-propelled guns. Kingsignal Technology Co., Ltd. (300252.SZ) is principally engaged in high-end radio frequency products, which are widely applied in military electronics and aerospace industries. The company also actively develops the research and manufacturing of maritime defense equipment.
[Announcement Interpretation]
○ Bluefocus Communication to expand mobile Internet-based marketing through mergers
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Bluefocus Communication Group Co., Ltd. (300058.SZ) proposes to acquire 96.32 percent equities of Lanhan (Shanghai) Technology Co., Ltd. at 1,852 million yuan by issuing shares through private placement to Ping An Uob Fund Management Co., Ltd., Beijing Jingdong Century Trading Co., Ltd. and other subscribers as well as cash payment. It also plans to raise a supporting fund of 1,802 million yuan by issuing shares through private placement to CCB Principal Asset Management and other targets. The proceeds will be used in capital increase in Lanhan Technology and the payment of the consideration. The average price of the private placements is 12.26 yuan per share.
The company adopted Domob and Madhouse, two mobile Internet-based marketing enterprises, into its industrial chain through the platform of Lanhan Technology, which will improve the development of the company in mobile marketing industry. Domob is a leader in the domestic mobile marketing industry while Madhouse owns well-known brands as its clients, including Coca-Cola, P＆G, BMW and Lexus.
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○ Shapuaisi Phar. to raise RMB570 mln to develop TCM
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Zhejiang Shapuaisi Pharmaceutical Co., Ltd. (603168.SH) intends to raise 570 million yuan by issuing shares at 36.73 yuan per share through private placement. 346 million yuan will be used in acquiring 100 percent equities of Jilin Qiangshen Pharmaceutical Co., Ltd., a Chinese patent medicine company. The remaining of the proceeds will be invested in pharmaceutical workshops under Qiangshen Phar. and other projects.
Comment: Shapuaisi Phar. mainly sells eye drops, infusion solutions, cefixime and other Western medicines. If the acquisition succeeds, the company will expand into the traditional Chinese medicine (TCM) industry. It can conduct rapid marketing through its marketing channels for OTC products.
○ Hai Nan Yedao to resume trading for cooperation with SDIC High-tech Investment
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During the trading suspension period, Hai Nan Yedao (Group) Co., Ltd. (600238.SH) announced that it will cooperate with SDIC High-tech Investment Co., Ltd. to work together in developing 100,000 ton fuel ethanol project in Hainan Province. The company also declared that it had terminated preparation for material assets reorganization and will resume trading soon. Besides, Shenzhen Microgate Technology Co., Ltd. (300319.SZ) had terminated preparation for material asset reorganization and will resume trading.
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○ China United Travel to jointly control Yingbo Xuncai to expand to big data on lottery
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The sports industry M＆A fund China Travel Xinji Sports Investment Center proposes to contribute 150 million yuan to Beijing Yingbo Xuncai network technology Co., Ltd in exchange for 51 percent equities in the investee. China Travel Xinji Sports Investment Center is jointly established by China United Travel Sports, a wholly owned subsidiary of China United Travel Co., Ltd. (600358.SH); Yingbo Xuncai is a company engaged in providing big data service for guessing type lottery, sport personal media and Liaoqiu8 App operation, and its core team includes the well-known sports commentator Huang Jianxiang and senior sports media professional Yan Xiaohua .
○ Keybridge Communications to buy Brilliant Norton Securities with 24 mln HK dollars
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Keybridge Investment, a wholly owned subsidiary of Shenzhen Keybridge Communications Co., Ltd. (002316.SZ), proposes to acquire the entire equity in Brilliant Norton Securities with 24 billion HK dollars. Net profits of Brilliant Norton Securities for the whole year of 2014 and the first eight months of 2015 amounted to 3.47 million HK dollars and 630,000 HK dollars, respectively.
○ Sichuan Western Resources proposes to develop culture media through assets replacement
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Sichuan Western Resources Holding Co., Ltd.(600139.SH) proposes to cooperate with Changchun Film Studio Group Co., Ltd. It intended to replace 65 percent equities in Changchun Film Studio Lida (Hainan) Real Estate and Changchun Film Studio Xingda (Hainan) Real Estate, respectively held by Changchun Film Studio Group with its own assets, i.e. the entire equities in Sanshan Mining and Kailong Mining, 85 percent equities in Long Powers and 80 percent equities in You Lion Battery. Meanwhile, the company intended to acquire the controlling rights in Changchun Film Studio (Hainan) Entertainment Company limited, which is controlled by Changchun Film Studio Group in cash. The valuation of the subject is 65 million yuan. The company expect to tap into culture media industry through cooperation with Changchun Film Studio Group, and working together to create film projects and movie theme park.
○ Ankai Automobile receives big order in new energy vehicles
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Anhui Ankai Automobile Co., Ltd. (000868.SZ) plans to supply 618 Ankai passenger coaches to Hefei Buses Group at a price of about 368 million yuan. There will be 180 new energy passenger coaches and 438 LNG passenger coaches. The above products will be delivered before Dec. 15. Meanwhile, the company will receive an investment of 150 million yuan from Hefei Construction Investment and Holding Co., Ltd. The investment will be used for new energy vehicles projects.
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