[Today's Guide]
○New Third Board embraces various system innovation, venture capital industry gains more fuel
○"Belt and Road" initiatives promote export of satellite industry, football industry to embrace various benefits
○Sanlux to invest in unmanned underwater vehicles, Kairuide to buy internet service firm
○3 companies resume trading, Harbin High-Tech to raise RMB1 bln for modern agriculture and PV industry
[SSN Focus]
○New Third Board embraces various system innovation, venture capital industry gains more fuel
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The China Securities Regulatory Commission (CSRC) on Nov. 20 released the Certain Opinions on Further Advancing the Development of National Equities Exchange and Quotations to quicken the development of the National Equities Exchange and Quotations (NEEQ), better known as the New Third Board. The CSCR proposes to split the New Third Board into two tiers at present, so different listings and trading requirements can be formulated for different companies; study on allowing NEEQ-listed companies to transfer to the startup-dominated ChiNext board; encourage institutional investors such as mutual funds to participate in the market; study on allowing QFII and RQFII participating in the New Third Board market.
Comment: The CSRC issues special circular on the New Third Board to make it more market-oriented, meaning that the status of the New Third Board is further confirmed. The introduction of institutional investors and a string of innovative trading mechanisms will improve the liquidity of the New Third Board and pave way for the steady launch of the registration-based IPO system in the future. As to listed companies engaged in venture capital, Luxin Venture Capital Group Co., Ltd. (600783.SH) has 10 projects listed on the New Third Board as of the end of the first half; Leaguer Stock Co., Ltd. (000532.SZ) plans to split its subsidiary Zhuhai Higrand Electronics Technology Co., Ltd. and list the company on the New Third Board; Shanghai Zijiang Enterprise Group Co., Ltd. (600210.SH) is engaged in several equity investment funds through its subsidiary Shanghai Zijiang Venture Capital Co., Ltd.
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[SSN Selection]
○Chinese Premier Li Keqiang urges to conclude the Regional Comprehensive Economic Partnership (RCEP) negotiation in 2016 and build a free trade zone covering the most people in the world.
○The China Securities Regulatory Commission (CSRC) announces that the preparation for restarting the IPO of the first 10 companies has been completed and it will confirm with the stock exchanges about the issuance date.
○CCB Pension Fund Management Co., Ltd. was opened on Nov. 20, becoming the first professional pension fund management institution in China.
○Main enterprises engaged in the smelter of Zinc in China proposed on Nov. 20 to reduce production by 500,000 tons next year. The Zinc futures in London closed at surging by 1.47 percent.
○As reported by China Business News, the technological innovation board of the Shanghai Equity Exchange has been officially nodded on Nov. 20. The first batch of enterprises will be listed on the board before year end.
[Industry Information]
○Laos-1 satellite launched successfully, "Belt and Road" initiatives promote export of satellite industry
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The Laos-1 communications satellite was successfully launched by the Long March-3 carrier rocket in Xichang Satellite Launching Center, Sichuan Province on Nov. 21. The Laos-1 communications satellite is the first satellite exported by China to the ASEAN countries and it will provide the Laos with services including satellite TV broadcasting, wireless broadband access and international communication.
Comment: Under the promotion of the "Belt and Road" initiatives, the export of the satellite industry will be quickened. The State Administration of Science, Technology and Industry for National Defense previously disclosed that breakthrough has been achieved in the core technologies of Long March-5 carrier rocket, facilitating the development of China's space satellite industry. As to listed companies, Shaanxi Aerospace Power Hi-Tech Co., Ltd. (600343.SH) masters the core technologies of the fluid of liquid-propellant rocket engine; China Spacesat Co., Ltd. (600118.SH) leads China's research on small satellites. Institutions believe that the company might see asset injection of large satellites.
○Evergrande Taobao Football Club wins AFC Champions League again, football industry to embrace various benefits
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Guangzhou Evergrande Taobao Football Club won the AFC Champions League title for the second time in three years on Nov. 21. The General Office of the State Council releases the guidelines on quickening the development of living-related service industry and promoting the upgrading of consumption structure on Nov. 22, proposing to take football, basketball and volleyball as entry point as well as facilitate the development of sports projects that are popular and highly-concerned and have great market potential. In addition, the second general meeting of the tenth session of the Chinese Football Association will be convened in Beijing in middle December.
Comment: The above events are expected to cause the market or even the society to attach more attention to the football industry. With industry reform accelerating and proportion of mass sports consumption increasing, relevant companies in the industry may find new profit growth points based on their existing principal businesses. In terms of companies, Shenzhen Aoto Electronics Co., Ltd. (002587.SZ), an overall solution provider of LED, is actively making deployment in football and other sports industries. Synthetic leather products of Wuxi Double Elephant Micro Fibre Material Co., Ltd. (002395.SZ) boasts nearly 70 percent share in football market and the company plans to set up investment funds of sports industry. China Sports Industry Group Co., Ltd. (600158.SH) is engaged in sports events management, sports brokerage, sports lotteries and other businesses.
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[Announcement Interpretation]
○Sanlux to raise RMB500 mln to produce unmanned underwater vehicles
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Sanlux Co., Ltd. (002224.SZ) plans to raise 500 million yuan by issuing 50 million shares through private placement for the new project with annual production of 150 units of intelligent unmanned underwater vehicles and for supplementing working capitals. One of the company's actual shareholders Wu Qiongying will subscribe 400 million yuan of shares and Beijing Oriental Junsheng Investment Management Co., Ltd. will buy shares valued 100 million yuan. The investment in the underwater vehicle project totals 460 million yuan, which is expected to gain a net profit of 90.13 million yuan when reaching the designed capacity.
○Kairuide to buy internet service firm in cash RMB250 mln
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Kairuide Holding Co., Ltd. (002072.SZ) plans to acquire 100 percent equity of Beijing Yiliyou Data Service Co., Ltd. by cash 250 million yuan. Yiliyou Data Service is principally engaged in internet acceleration service. The equity transferor promises that the net profit after extraordinary gains and losses of Yiliyou Data Service will be no less than 17 million yuan, 23 million yuan and 28 million yuan during 2015 and 2017 respectively. Kairuide indicates that its principal business will consist of lottery and internet acceleration service once its textile assets are sold out.
○3 companies resume trading
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Sichuan Xun You Network Technology Co., Ltd. (300467.SH) terminates mulling for major asset restructuring and resumes trading. During the trading suspension, the firm proposed a 30-for-10 conversion of capital surplus into shares according to its annual report. Sotech Smarter Equipment Co., Ltd. (300173.SZ) and Zhangjiagang Furui Special Equipment Co., Ltd. (300228.SZ) also terminate mulling for assets acquisition and resume trading. ChiNext Board Index surged significantly during the trading suspension.
○Harbin High-Tech to raise RMB1 bln for modern agriculture and PV industry
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Harbin High-Tech (Group) Co., Ltd. (600095.SH) intends to raise 1 billion yuan by issuing 95.24 million shares at a price of 10.5 yuan per share through private eplacement to its controlling shareholder Zhejiang Xinhu Group Co., Ltd. The fundraising will be used for modern agricultural construction, R＆D and manufacturing of high-efficiency thin-film solar cells and its products, and design, consulting and investment construction of PV power station project. The copmany's latest share price posts 11.99 yuan per share.
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○Second largest shareholder of Hai Nan Yedao increased shareholding
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Shenzhen Orient Caizhi Assets Management Co., Ltd, the second largest shareholder of Hai Nan Yedao (Group) Co., Ltd. (600238.SH), increased its shareholding in the company through trust products by a total of 22.41 million shares during Nov. 17 and 19. The shares accounted for 5 percent of the company's total share capital, raising Orient Caizhi's shareholding proportion to 16.16 percent, which is quite close to 17.57 percent equity held by the company's biggest shareholder Haikou State-owned Assets Management Company. Orient Caizhi Assets Management indicated that it may continue to hold more shares in the company in the future.
Comment: Orient Caizhi Asset Management is an assets management company and it bought the share at a price of about 14 yuan per share. Haikou State-owned Assets Management Company previously decided to transfer its shares in Hai Nan Yedao to Hainan Jiantong Investment Management Co., Ltd. at a price of 9.59 yuan per share.
○3 companies to propose private placement
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Guirenniao Co., Ltd. (603555.SH) plans to rise 1,681 million yuan by issuing 55.84 million shares at a price of no less than 30.11 yuan per share through private placement for building supply chain, establishing sports cloud platform and repaying bank loans.
Jiangsu Hongdou Industrial Co., Ltd. (600400.SH) proposes to issue 120 million shares through private placement at 16.39 yuan per share as the base price to raise 1.96 billion yuan; and 1.81 billion yuan will be used for intelligent Hongdou construction projects and circulating capital supplement of the company. Intelligent Hongdou covers intelligent design, product, supply chain system and management, involving in R＆D of intelligent dresses and costumes. The controlling shareholder Hongdou Group Co., Ltd. subscribes at least 10 percent of the private placement.
Wiscom System Co., Ltd. (002090.SZ) proposes to issue 58.76 million shares at 27.23 yuan per share to raise 1.6 billion yuan, and increase capital in China Financial Leasing Co., Ltd. to acquire its 20 percent equities.
○Tong-Da Cable to acquire Chengdu Hangfei with RMB290 mln, stepping into military field
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Henan Tong-Da Cable Co., Ltd. (002560.SZ) proposes to acquire 100 percent equities of Chengdu Hangfei Aviation Mechanical Equipment Manufacturing Company with 290 million yuan in cash. Chengdu Hangfei is mainly engaged in development and manufacture of aviation and aircraft components, and numerical control machining of precision parts of aviation; its products are applied for fighter plane, training plane, large transport plane, unmanned aerial vehicle, guided missile and corresponding manufacturers, which is a weapon equipment manufacturer based on science ＆ research and qualified with Confidential Grade III. According to the commitment, Chengdu Hangfei will gain a net profit of 20 million yuan, 26 million yuan and 33.80 million yuan respectively from 2016 to 2018.
[Weekly Review]
○Trust past, perceive now and look forward to future
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Sometimes, it is difficult to invest in the stock market, as there are new events constantly emerged to influence the values of listed companies, and nobody can be a magic prophet. But sometimes, it is easy, as we have no need to know each fluctuation in the market, and we can get close to touch the long-term profit, if we can find a right point.
The first way: trust experience. Favorable performance of a listed company can mainly reflect its previous prosperity, which can provide investment guidance for us in specific period, even if the performance cannot be regarded as a simple buying basis. In those years when massive capital flowed into A shares due to RQFII and Shanghai-Hong Kong Stock Connect program, financial stocks with lowest P/E ratio were always the ones to rise firstly. Although share price of Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH) once plummeted due to substandard milk powder event, and Kweichow Moutai Co., Ltd. (600519.SH) due to restrictions on public expenses, their previous but stable performances still support the investors' confidence.
The second way: perceive right now. New energy automobiles are in hot sale! And price of lithium carbonate soars. Such events constantly occur in this year. Reviewing the past, screen-touching phones with iphone as the representative and box office of domestic movies including Lost in Thailand, once gained rapid and high growth similar to the said events; it was inevitable for stock prices of related listed companies to soar. We should gain firsthand experience instead of entangling the high P/E ratio, or we should buy another phone or car to perceive the industrial trends as soon as possible.
The third way: look forward to the future. It was an original intention to form the stock market so as to gather the capital hundreds of years ago. Nowadays, we enhance business start-up and innovation, and the stock market will become a pioneer to support development of new science and technology. Although there still are some technological problems waiting to be solved, fields of virtual reality, military ＆ civilian integration as well as visible light communications will gain bright prosperity of "money". These are key points for SSN to report in recent period.
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