[Today's Guide]
○Executive meeting of State Council enhanced technical transformation to push intelligent manufacturing
○Three sectors to see opportunities in merger and reorganization, Scheme on natural gas price reform to unveil
○Shengda Forestry adds stakes in natural gas industry, Huangshan Novel to extend industrial chain
○Xinri Hengli Steel Wire Rope to buy equity of BoyaLife, Meiling raises RMB1.5 bln to develop intelligence home appliance
[SSN Focus]
○Executive meeting of State Council enhanced technical transformation to push intelligent manufacturing
------
The executive meeting of the State Council held on Nov. 18 deployed and accelerated technical upgrading and transformation to push the industries stepping towards medium and high-end development. The meeting focused on key fields of Made in China 2025, initiated and implemented a wave of major technical upgrading and transformation, supported technological improvement in enterprises of traditional industries, and enhanced development and growth of innovative enterprises and emerging industries.
Comments: Industries are the main battlefields to restructure China's economy and change developing patterns. In recent years, all policies, which have been issued by large industrial provinces including Guangdong and Zhejiang to boost the technical transformation of enterprises, focus on development of intelligent manufacturing and industrial robots. Institutions believe that intelligent manufacturing becomes more important in "13th Five-year Plan" than before; automatic and information-oriented manufacturing industry of China will gain a huge development space. Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) creates products based on intelligent machinery equipment; Ken Holding Co., Ltd. (300126.SZ) and Shenzhen Riland Industry Co., Ltd. (300154.SZ) are actively boosting intelligent welding robot; Shanghai STEP Electric Corporation (002527.SZ) proposes to merge and acquire two robot companies through private placement.
[TOP]
[SSN Selection]
○Chinese President Xi Jinping made a speech in Economic Leaders' Meeting of Asia-Pacific Economic Cooperation (APEC), proposing to accelerate the construction of free trade zone in Asia-Pacific region.
○Shanghai and Shenzhen stock exchanges recently issued a notice to each brokerage that clients of margin trading and short selling can maintain the margin ratio through extension.
○China Europe International Exchange AG opened in Frankfurt, Germany and issued first batch of RMB products, with RMB stepping towards internationalization.
○Chairman of CITIC Group Corporation indicated that it will initiate and establish Baixin Bank to promote its each business sector to deeply cooperate with Baidu, Inc. (BIDU.NASDAQ).
○Housing prices of 70 large and medium cities are obviously different in October, and newly-constructed commercial housing price rose by 40.5 percent year on year in Shenzhen.
[Data Voice]
○Three sectors to see opportunities in merger and reorganization
------
Based on the statistics of SSN, about 60 companies have released proposals on reorganization in recent two months. More than 100 companies suspended trading for mulling significant events. Compared with the hedge purpose under the disguise of reorganization during the plunge, the enthusiasm of buyers and sellers on reorganization and the operability have rebounded. Investors may see potential reorganization opportunities, namely stocks with failed reorganizations, state-owned enterprises reform and PE acquisition.
Firstly, companies failed in mulling significant assets organization before the plunge have passed the commitment period of three or six months. The remaining companies not resume reorganization with small market value include Shandong Lubei Chemical Co., Ltd. (600727.SH) and Beijing Bewinner Communications Co., Ltd. (002148.SZ). Institutions are optimistic towards China North Industries Group Corporation, the asset securitization rate of which is the lowest among military industry groups, and Aviation Industry Corporation of China, which is the most active one in capital operation. Besides, institutional participants are also optimistic about the capital operation in companies under Tsinghua University and China Development Bank Co., Ltd. Finally, the move of PE companies including China Science ＆ Merchants Investment Management Group (CSC) and Guangdong New Value Investment Co., Ltd. in buying shares of listed companies through secondary market acquisition to 5 percent limit and even controlling listed companies aims at achieving linkage of both primary and secondary markets. The underlying asset even covers the stocks that failed to realize reorganization in the first half, such as Chengdu Tianxing Instrument and Meter Co., Ltd. (000710.SZ) and Beijing Mainstreets Investment Group Corporation (000609.SZ).
[TOP]
[Industry Information]
○Scheme on natural gas price reform to unveil with downtream consumption stimulated
------
The National Development and Reform Commission (NDRC) announced on Nov. 18 that from Nov. 20, the non-residential natural gas price at city gate stations will be cut by 0.7 yuan per cubic meters. Industry players are allowed to raise gas prices by 20 percent based on supply and demand after the cut of non-residential natural gas prices, said the NDRC.
Comment: Industrial insiders believe that this move will further decrease the cost of fertilizers using natural gas as raw materials, stimulate natural gas consumption and benefit downstream LNG and CNG gas station industries. As to listed companies, Sichuan Meifeng Chemical Industry Co., Ltd. (000731.SZ) is an important domestic production base of urea using natural gas as raw materials; Changchun Sinoenergy Corporation (600856.SH) becomes principally engaged in the production and sales of natural gas, storage equipment of natural gas, etc. after acquiring Tsingtao Sinoenergy Co., Ltd. The company also manages CNG gas stations.
○MOST releases guidelines for applications of China's major R＆D projects, breeding of seven major crops included
------
The Ministry of Science and Technology (MOST) recently printed and issued the guidelines for applying for the first batch of China's pilot projects with significant research and development plan in 2016. The application guideline for the breeding of seven major crops proposes to make breakthroughs in core technologies such as gene discovery, variety design and seed quality control so as to establish a high-efficiency breading technology system. Efficiency of new variety breading of major crops will increase by 50 percent. It also puts forward cultivating and popularizing new varieties and raising the improved variety's contribution rate to increasing production from 43 percent to 50 percent.
Comment: Thanks to the inclusion into major R＆D projects of the MOST this time, the breeding of major crops is expected to gain policy and capitals support to bolster food safety. In addition, the approval on new seed law recently is also conducive to improve the R＆D efficiency and market concentration of leading enterprises. In terms of listed companies, Shandong Denghai Seeds Co., Ltd. (002041.SZ) is a leader in hybrid corn seed and Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ) takes the leading position in hybrid rice market in China.
[Announcement Interpretation]
○ Shengda Forestry adds stakes in natural gas industry
------
Sichuan Shengda Forestry Industry Co., Ltd. (002259.SZ) plans to acquire 51 percent equities of Yulin Jinyuan Natural Gas Co., Ltd., Mizhi Lvyuan Natural Gas Co., Ltd. and Yulin Jinyuan Logistics Co., Ltd., respectively, with around 288 million yuan. According to performance commitment, the total net profit of the three underlying companies from 2015 to 2018 should reach 50 million yuan, 80 million yuan, 104 million yuan and 135 million yuan, respectively. Upon completion of transaction, Shengda Forestry will manage another two LNG factories and four LNG gas stations. The natural gas business and sheet material will take up half of its whole business, respectively, thus, its income structure will be improved.
[TOP]
○Huangshan Novel proposes private placement at premium to extend industrial chain
------
Huangshan Novel Co., Ltd. (002014.SZ) plans to buy 100 percent equity of Huangshan Xinli Ink Technology Co., Ltd. from its controlling shareholder Huangshan Yongjia (Group) Co., Ltd. by issuing shares at a price of 14.72 yuan per share through private placement. The deal will cost the company 143 million yuan in total. According to performance commitment, net profit of Xinli Ink Technology will be no less than 13.5 million yuan, 15.8 million yuan and 19.1 million yuan during 2016 and 2018 respectively. Huangshan Novel is principally engaged in plastic color-printed flexible packaging material and it needs to buy printing ink at present. This acquisition may change the company's costs and unstable supply of raw material. The company's stock closed at 13.85 yuna per share before trading suspension.
○ Xinri Hengli Steel Wire Rope to buy equity of BoyaLife at RMB1,566 mln
------
Ningxia Xinri Hengli Steel Wire Rope Co., Ltd. (600165.SH) intends to buy 80 percent equity of BoyaLife Stem Cell Technology Co., Ltd. in cash 1,566 million yuan. BoyaLife is specialized in products of mesenchymal stem cell of newborn babies during perinatal period, manufacturing and storing hematopoietic stem cell and adult immune cell. Based on performance commitment, net profit of BoyaLife will be no less than 30 million yuan, 50 million yuan and 80 million yuan during 2015 and 2018 respectively. Xinri Hengli Steel Wire Rope is now principally engaged in steel wire rope products and coal products and its net profit declined significantly by 160 percent in the first three quarters.
[TOP]
○ Meiling raises RMB1.5 bln to develop intelligence home appliance
------
Hefei Meiling Co., Ltd. (000521.SZ) plans to raise 1.57 billion yuan by issuing 274 million shares at a price of no less than 5.72 yuan per share through private placement to its controlling shareholder Sichuan Changhong Electric Co., Ltd. (600839.SH) and other companies. The fundraising will be used for developing intelligent R＆D capability and project of new product development with intelligence home appliance technology, intelligent manufacturing construction project, smart life project and supplementing working capital so as to accelerating to implement the company's intelligence strategy to form the "hardware plus service" double growth engines.
○PDSTI buys RMB2 bln shares of Shanghai Wanye Enterprises
------
Salim Wanye (Shanghai) Enterprises Group Co., Ltd., controlling shareholder of Shanghai Wanye Enterprises Co., Ltd. (600641.SH), plans to transfer 227 million shares of Shanghai Wanye Enterprises at a price of 9 yuan per share to Shanghai Pudong Science Technology Investment (PDSTI), which is valued at 2,043 million yuan. After the transfer, PDSTI will hold 28.16 percent equity in Shanghai Wanye Enterprises to become the biggest shareholder. PDSTI is a profession institution specialized in merger and investment of hi-tech industries. Its shareholders include Shanghai Hongtianyuan Venture Investment Partnership, Shanghai Shangshi Assets Management Company and State-owned Assets Supervision and Administration Commission of Shanghai Pudong New Area People's Government. It once invested in many famous integrated circuit design companies. Share price of Shanghai Wanye Enterprises closed at 11.23 yuan per share before trading suspension.
○President of Longi Silicon Materials increases shareholding in company
------
Zhong Baoshen, president of Xi'an Longi Silicon Materials Corp. (601012.SH), increased shareholding in the company by 400,000 shares and 3.2 million shares at an average price of 13.82 yuan and 13.42 yuan per share on Nov. 17 and 18 respectively. The latest share price of the company closed at 13.29 yuan per share.
Latest comments