[Today's Guide]
○ China to perform anti-terrorism work well, security industry to speed up in expansion
○ VLC witnessed major breakthrough, with annual output value expected to reach 1 trln
○ Reorganization of Beifang Chuangye and Yangtze Power to roll out, Linzhou Heavy Machinery Group, Yangmei Chemical to resume trading
○ Actual controller of Boxin Investing ＆ Holdings to transfer equity, Lanxum Technology to conduct M＆A through private placement
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[SSN Focus]
○ China to perform anti-terrorism work well, security industry to speed up in expansion
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Various terrorist attacks in Paris on Nov. 13 evening local time killed 129 people and injured 352 as at Nov. 14. French President Francois Hollande declared a state of emergency and called it an act of war. China convened an video conference on anti-terrorism on Nov. 15. Minister of Public Security Guo Shengkun required strengthening early intelligence warning and performing well in the current anti-terrorism and social prevention and control work.
Comment: It can be seen from past terrorist attacks happened this year that terrorists increasingly prefer terrorist attacks at different places at the same time. The international community should face up to the serious anti-terrorism conditions. Xinhua News Agency points out in comments that all countries should accelerate in the establishment of an information sharing network and join hands in security check in personnel movement and materials transfer. Many A-share companies are actively investing in security control and surveillance industries. Bejing Sinonet Science ＆ Technology Co., Ltd., a company acquired by Anhui Xinlong Electrical Co., Ltd. (002298.SZ), has won the bid for video platform for public securities departments in various places. The Internet-based public opinion management system of Beijing TRS Information Technology Co., Ltd. (300229.SZ) can achieve rapid recognition and targeted tracking on significant cases. NetPosa Technologies, Ltd. (300367.SZ) is expanding into security control industrial chains through extensional mergers and acquisitions.
◆ The stock markets in Middle East opened for trading on Nov. 15 plunged. The stock indexes in Dubai and Egypt dropped by nearly 4 percent. Analysts believe that the terrorist attacks will driven investors seeking hedge assets and will boost gold prices.
○ Margin deposit proportion raises with limited substantial impact on fundamentals
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Shanghai and Shenzhen stock exchanges announced the revision on implementation rules on margining trading and short selling. The minimum proportion of margin deposit on margin buy of securities by investors will be raised from 50 percent to 100 percent. The adjustment will be implemented from Nov. 23 and it will separate new and old ones with no inventory contracts involved. Responsible persons from relevant departments of the China Securities Regulatory Commission (CSRC) pointed out that it is to restrict the leverage ratio in margin trading, protect investors' interests and prevent systematic risks.
Comment: It is reported that the proportion of margin deposit in securities companies is far above the minimum requirement of 50 percent and most of them reached 60 percent to 80 percent . Some companies even reached up to 95 percent. The raising of the minimum deposit to 100 percent cannot be simply deemed as halving the leverage ratio. It will have limited effects on the overall market, but it will curb the excessive growth of margin balance in certain sectors. On the other hand, with the increasingly wide application of counter-cyclical adjustment instruments, it will ease market fluctuations and will benefit the continuous and healthy development of the market.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) indicated that IPOs will follow the principal of continuous issuing at low prices. The first ten companies are expected to publicize their prospectus around Nov. 20.
○ The CSRC resumed the disclosure of the IPO approval progress. The applications of 84 enterprises have been accepted in recent four months with nine revoked.
○ Yao Gang, vice-chairman of the CSRC, is being investigated for suspected severe disciplinary violations. The Party committee of the CSRC requires performing well in building a clean and honest Party and anti-corruption.
○ SSN learnt that the preliminary scheme on the China-Pakistan Free Trade Zone is under revision. Gwadar Port is intended to be established into free port like Hong Kong.
○ Xinhuanet reported that Shanghai Disney Resort is expected to open in next spring. The first park with the theme of Pirates of the Caribbean in the world will be a highlight.
○ Taiwan media reported that the second generation of Apple watch is expected to be released by end-June, 2016.
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[Industry Information]
○ VLC witnessed major breakthrough, with annual output value expected to reach 1 trln
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Xinhua News Agency reported that China's key technology research on visible light communication (VLC) system has achieved breakthrough recently, after test certification carried out by the Ministry of Industry and Information. The real-time communication rate has rose to 50Gbps, which means a high-definition movie could be download with just 0.2 seconds. Experts said that VLC technology is a next generation wireless communication technology with promising application prospect and may effectively resolve the serious lack of radio spectrum resource, and this strategic emerging industry is likely to form an annual output value of a trillion yuan.
Comment: institution's research report pointed out that so far modulation bandwidth of light source LED is limited, and it is mainly used for illumination. Communication-utilization LED requires higher modulation bandwidth LED light source. On China's market, LED epitaxial chips manufacturers including Sanan Optoelectronics Co., Ltd. (600703.SH), HC SemiTek Corporation (300323.SZ), etc. Sanan Optoelectronics announced in July that it intended to work together with Shanghai Institute of Electronic and Communications Equipment in developing and promoting outdoor LED smart lighting and communication products.
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[Announcement Interpretation]
○ Reorganization of Beifang Chuangye ,Yangtze Power to roll out, reform of central enterprises become hot topic
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Baotou Beifang Chuangye Co.,Ltd. (600976.SH) proposes to issue 485 million shares through private placement at 13.50 yuan per share, and pay 1,156 million yuan in cash, being 7,700 million yuan in total as the valuation to acquire productive assets and liabilities of its controlling shareholder, Inner Mongolia First Machinery Group Corporation, as well as entire equity of Shanxinorth Machine-building Co., Ltd, Shanxi Fenglei Drilling Tools Co., Ltd and Qin Huangdao Fenglei Drilling Tools Co., Ltd, which are all subsidiaries of First Machinery Group. In addition, the company proposes to raise matching fund of 3 billion yuan at no less than 14.32 yuan per share. Upon completion of the transaction, core assets of First Machinery Group will be listed entirely. New business of Beifang Chuangye will include research on defense equipments such as armored vehicles and manufacturing of petroleum machinery.
China Yangtze Power Co.,Ltd. (600900.SH) proposes to issue 3.5 billion shares to the controlling shareholders of China Three Gorges Cooperation through private placement at 12.08 yuan per share, and pay 37.4 billion yuan in cash, being 79.7 billion yuan in total as the valuation to acquire 100 percent equity in Three Gorges Chuanyun Company; meanwhile, the company intended to raise 24.16 billion yuan of matching fund, and Ping An Asset Management Co. , Ltd., Sunshine life Insurance Co., Ltd., China Life Insurance Company Limited(601628.SH) and Guangzhou Development Group Incorporated (600098.SH) will participate in the subscription. Three Gorges Chuanyun Company is a major power source of West-East power transmission project, with net profits of 2014 recorded 7.3 billion yuan.
Besides, Sinotrans ＆ CSC Holdings Co. Ltd., actual controller of Sinotrans Air Transportation Development Co.,Ltd. (600270.SH), is preparing strategic reorganization, which may result in the change of its status as the actual controller, but SASAC remains the ultimate controller . Media reported that China Merchant Group and Sinotrans ＆ CSC Holdings Co. Ltd. will implement restructuring integration.
○ Linzhou Heavy Machinery Group, Yangmei Chemical to resume trading
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Linzhou Heavy Machinery Group Co.,ltd. (002535.SZ), Yangmei Chemical Co.,ltd. (600691.SH) have terminated material assets reorganization and will resume trading on Nov. 16.
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○ Actual controller of Boxin Investing ＆ Holdings to transfer equity
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Yang Zhimao, actual controller of Guangdong Boxin Investing ＆ Holdings Co.,Ltd. (600083.SH) plans to transfer 32.4 million shares, representing 14.09 percent of the total equity in the company, to Shenzhen Qianhai Xuanzhuo Investment Management Co., Ltd at the price of 18 yuan per share, with the total amount exceed 580 million yuan. After the transfer, Yang Zhimao and his spouse still hold 13.3 percent equity in the company. The transfer price has a premium of 16 percent over the latest price of 15.48 a share.
Comment: Boxin Investing ＆ Holdings had terminated material assets reorganization at the end of May, and had been bought by Xizang Kangsheng Investment through secondary market acquisition to the 5 percent threshold. The total capitalization of the company is 3.6 billion yuan, and the transfer price has a premium of 16 percent over the latest price of 15.48 yuan per share.
○ Lanxum Technology to invest RMB2.1 bln to expand education and security
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Beijing Lanxum Technology Co., Ltd. (300010.SZ) plans to invest 2,164 million yuan to acquire 100 percent equities of Beijing Combanc Technology Co., Ltd. and Jiang Nan Information Security Co., Ltd. through private placement and in cash. It will raise 1,796 million yuan through private placement to support the construction and operation of Internet-based education platform. Specially, the company's shares will be issued at 20.51 yuan per share through private placement to acquire assets. According to performance commitment, the net profit of Combanc Technology will be no less than 80 million yuan and its accumulative net profit from 2015 to 2017 will be no less than 319 million yuan; the net profit of Jiang Nan Information Security will be no less than 20 million yuan and its accumulative net profit from 2015 to 2017 will be no less than 75.20 million yuan.
○ Conba Phar. and Xingyu Automotive Lighting Systems to raise funds through private placement to expand main business
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Zhejiang Conba Pharmaceutical Co., Ltd. (600572.SH) plans to raise 1.78 billion yuan by issuing 168 million shares at 10.59 yuan per share through private placement to build international-level pharmaceutical-making base and modern medicine logistics storage and repay loans. In addition, the company plans to invest 500 million yuan to establish a wholly-owned company, Zhejiang Conba Medical Investment Management Company, as a platform for the investment operation and management of the "Internet medical treatment plus pharmaceutical" industry construction and development strategy.
Changzhou Xingyu Automotive Lighting Systems Co., Ltd. (601799.SH) plans to raise 1.5 billion yuan by issuing 65.67 million shares at a price no less than 22.84 yuan per share through private placement for the expansion of its manufacturing base in Changchun, Jilin Province and the construction of the R＆D center of automotive electronics lighting.
[Editor's Thought]
○ Hold onto your initial goal
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Investors are always beset by various disturbances when investing in stock markets. The China Securities Regulatory Commission (CSRC) announced on Nov. 13 that two companies, including Sichuan Teway Food Co., Ltd., have applied for approve for their initial public offerings (IPO) on Nov. 18. Shanghai and Shenzhen stock exchanges have raised the ratio of margin requirement. In addition, the sub-sector shares all fell on last Friday. All these factors will overshadow the Monday market.
Does it mean that investors should sell their shares to avoid risks? To be honest, this is now that we can tell. However, we believe that when the market is disturbed, the investors should think if the factors that have convinced them to buy shares have changed or not. Obviously, as IPO has been back on the track again, making sub-new stocks no longer scarce, which gives a blow to sub-new stocks. Yet it is not a good idea for investors to sell off others stocks that they are favoring for this reason.
One can only get to the end when always holding onto his initial goal. The upcoming IPO resumption, or the bearish news, made the electric vehicle, IP film and virtual reality sectors top winners in the stock market last week. But if investors always take bullish or bearish news as a basis for investment, they might easily suffer big losses for small gains. Last week, we reported that the output of new energy vehicles surged 8 times in October, and the new investment in power lithium battery will reach hundreds of million yuan within the year. Stocks related to these two themes were favored by the market. In addition, Shenzhen Deren Electronic Co., Ltd. (002055.SZ) which has transformed to the electric vehicle sector saw its stock prices surge by the daily limit of 10 percent for two straight days. Investment is a long lonely journey, but SSN will always be with you to stick to your goals.
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