[Today's Guide]
○ Capital invests in small-cap stocks, companies failed to reorganize attract attention
○ Apple Inc. and China UnionPay to cooperate in mobile payment, domestic market to see rapid growth
○ Mys Group to develop intelligent packaging through private placement, Song Liao Automotive to develop film industry
○ Uroica Mining Safety Engineering to develop military guidance industry, Reorganization of Xishui Strong Year approved
[SSN Focus]
○ Capital invests in small-cap stocks, companies failed to reorganize attract attention
------
Small-cap stocks in A-share market has performed strongly recently. As of Nov. 25, there are only 168 companies whose total market capitalization is less than 4.0 billion yuan, shrinking by 76 percent from 706 companies in end-August. Among the 30 companies with smallest market capitalization, 19 have suspended trading mainly due to major assets reorganization or other major events. Since this July, large institutional investors, such as China Science ＆ Merchants Investment Management Group and Guangdong New Value Invest Co., Ltd., have heavily bought small-cap stocks which usually have shown no outstanding performance and are urgent for transformation.
Comment: The rapid disappearance of small-cap stocks suggests that acute capital are preparing to invest in reorganization-related stocks, especially those having announced termination of reorganization previously. As their shareholders have strong will for capital operation, it is very likely for these companies to resume reorganization when it comes to the right time. According to statistics, Dandong Xintai Electric Co., Ltd. (300372.SZ) and Shanghai Huitong Energy Co., Ltd. (600605.SH) have promised not to reorganize within a time limit. The time limit within which Hainan Yatai Industrial Development Co., Ltd. (000691.SZ), Shanghai Sanmao Enterprise (Group) Co., Ltd. (600689.SH), Dalian Thermal Power Co., Ltd. (600719.SH), Qinghai Jinrui Mineral Development Co., Ltd.(600714.SH) and Hunan Zhongke Electric Co., Ltd. (300035.SZ) promised not to reorganize will end at the year of this year or the beginning of next year.
[TOP]
◆ ST stocks likely to remain listed at year-end
------
Statistics show that 20 ST companies have provided forecasts for their full-year performance. Among them 14 predict their performing turning loss to profits, including Phenix Optical Company Limited (600071.SH), Taiyuan Lionhead Cement Co., Ltd. (600539.SH), Fujian Sunnada Communication Co., Ltd. (002417.SZ) and Gansu Huangtai Wine-Marketing Industry Co., Ltd. (000995.SZ). Some companies have left some room for their capital operation. For example, Phenix Optical obtained approval from the State-owned Assets Supervision and Administration Commission (SASAC) for its private placement plan. The company is certified as a optical industry platform under China Electronics Technology Group Corporation.
Although some other ST companies have not forecast their full-year performance, there is a high possibility form them to remain listed. For example, Stellar Megaunion Corporation (000892.SZ) has remained to be listed through connected transaction after reorganization. Unisplendour Guhan Group Corporation Limited (000590.SZ) has turned profitable in the first three quarters and launched private placement plans to expand its main business.
[SSN Selection]
○ China National Petroleum Corporation plans to sell 50 percent equities of its subsidiary Trans-Asia Gas Pipeline Company Limited, which experts say might be a signal for the direction of the oil and gas reform.
○ Minister of Public Security Guo Shengkun on Nov. 25 inspected the national anti-terrorism intelligence information platform, requiring adopting big data and cloud computing technologies to find clues for terrorism promptly.
○ All or part of Beijing municipal administrative institutions will be relocated to Tongzhou District, the subsidiary administrative center of Beijing in 2017. The core zone in Tongzhou has been under construction.
○ Shanghai Municipal Government urged in a notice to accelerate the integrated development of Shanghai Free-Trade Zone and Zhangjiang National Innovation Demonstration Zone.
○ The National Development and Reform Commission and other authorities issued a circular, pledging to improve the comprehensive utilization rate of straw to above 85 percent across the country in 2020.
[Industry Information]
○ Apple Inc. and China UnionPay to cooperate in mobile payment, domestic market to see rapid growth
------
Foreign media reported that Apple Pay under Apple Inc. (NASDAQ: AAPL) and China UnionPay have reached the preliminary partnership agreement on providing payment services in China. Apple Pay adopts the Near Field Communication (NFC) technology. Users can realize touch-free payment with the Apple mobile phone and the payment terminal in stores by storing the credit or debit cards information into the mobile phone account. Besides, the latest statistics released by the central bank show that banking institutes across China handled 4,542 mobile payments in the third quarter with a total amount of 18.17 trillion yuan, representing an increase of 250 percent and 190 percent.
Comment: The cooperation between Apple Inc. and China UnionPay will promote the development of the mobile payment industrial chain. In terms of listed companies, the mobile payment chips of Nationz Technologies Inc. (300077.SZ) have obtained the security certificates for UnionPay card chips. It also introduced mobile payment products based on the NFC technology. Sinodata Co., Ltd. (002657.SZ) is a service provider for the research and development of client ends and the operation of software in mobile payment.
[TOP]
[Announcement Interpretation]
○ Mys Group to develop intelligent packaging with RMB3.25 bln
------
Mys Group Co., Ltd. (002303.SZ) proposes to raise 3.25 billion yuan by issuing shares through private placement. The proceeds will be invested in three intelligent factories for the packaging and printing industry 4.0, the cloud platform for the Internet-based packaging and printing industry and the intelligent packaging Internet of Things platform.
○ Song Liao Automotive to develop film industry with RMB2.5 bln
------
Song Liao Automotive Co. Ltd. (600715.SH) plans to raise 2.5 billion yuan by issuing 112 million shares at 22.36 yuan per share through private placement. The proceeds will be used in the newly established film center and supplementing the working capital for the film business. Among the target subscribers, the fund manager of Wenchuang private placement fund and Yitang private placement fund is Wenchuang industrial fund, which under the same controller with Wenchuang development fund and the company. Yaolai Cultural Industry Co., Ltd. is the second biggest shareholder of the company. The shareholding proportion of the controlling shareholder of the company will be increased from 22.88 percent to 25.66 percent after the issuance.
[TOP]
○ Uroica Mining Safety Engineering to acquire Shikai Technology to develop military guidance industry
------
Uroica Mining Safety Engineering Co., Ltd. (300099.SZ) intends to purchase 100 percent equities of Changchun Shikai Technology Industry Co., Ltd. with 750 million yuan by issuing 37,735,800 shares at 15.9 yuan per share through private placement and a payment of 150 million yuan in cash. Shikai Technology is principally engaged in the research and development and integration of optoelectronic technologies for military engineering arms and equipment. Its main products are missile guidance systems for precision attacks on mobile targets (such as tanks, naval vessels and helicopters), including mobile guidance systems, handheld guidance systems and relevant components. Based on its commitment on performance, the net profit after extraordinary items of Shikai Technology wil be no less than 50 million yuan, 60 million yuan, 73 million yuan and 86 million yuan from 2015 to 2018.
○ Reorganizations of Xishui Strong Year and Xinbang Phar. approved
------
The reorganization of Xishui Strong Year Co., Ltd. Inner Mongolia (600291.SH) was conditionally approved by the China Securities Regulatory Commission (CSRC). The company proposes to acquire 26.96 percent equities of Tianan Property Insurance Co., Ltd. with 6,907 million yuan by issuing shares at 15.99 yuan per share through private placement and in cash. It also plans to raise a supporting fund of 6,907 million yuan by issuing shares at no less than 20.31 yuan per share through private placement. Xishui Strong Year will hold 50.87 percent equities of Tianan Property Insurance asnd control it after the transaction.
Guizhou Xinbang Pharmaceutical Co., Ltd. (002390.SZ) intends to acquire 100 percent equities of Chinese Peptide Company with 2 billion yuan by issuing shares through private placement and in cash, which has been unconditionally approved by the CSRC. In addition, Shandong Hongda Mining Co., Ltd. (600532.SH) terminated the preparation for assets reorganization and will resume trading on Nov. 26.
[TOP]
○ Nine Top Group seeking backdoor listing through Anshan Heavy Duty Mining Machinery
------
AnShan Heavy Duty Mining Machinery Co., Ltd. (002667.SZ) proposes to acquire 100 percent equity of Nine Top Group through assets replacement and private placement at 16.23 yuan per share. Upon completion of the transaction, Nine Top Group, the logistic service provider, will succeed in backdoor listing at the valuation of 3.7 billion yuan. Guo Congjun and his wife will become the new actual controller of Anshan Heavy Duty Mining Machinery. Nine Top Group realized net profits of 53.85 million yuan in the first half year. At the same time, Anshan Heavy Duty Mining Machinery proposes to raise 1.7 billion yuan at 18.07 yuan per share for the private placement in Nine Top Group, and the proceeds will be used for the upgrading of online transaction e-commerce platform for logistic service.
○ Real estate companies accelerate transformation
------
Greattown Holdings Ltd. (600094.SH) proposes to participate in the auction of 66.67 percent equity in Haiji Securities at the minimum asking price of 406 million yuan with its own capital. Greattown Holdings primarily engaged in real estate, and it set up a wholly owned subsidiary Greattown Financial Holding in May.
Suning Universal Media, subsidiary of Suning Universal Co., Ltd. (000718.SZ) proposes to purchase 22 percent equity in FNC Entertainment Co., Ltd with 3.3 million yuan, and become its second largest shareholder. As a new generation entertainment company in Asia, FNC founded musical education system FNC Academy. Suning Universal Co., Ltd. primarily engaged in real estate, and the company has quickened its step toward culture industry.
○ Actual controllers of Hengli Industrial Development Group to change
------
Zhu Zhenhui and Ao Shengxia, actual controllers of Hengli Industrial Development Group Co., Ltd. (000622.SZ), signed framework agreement with Xu Chunlong and Xin An River Investment to transfer 100 percent of Ao Shengxia's shareholding in Hengli Industrial Development Group at the price of 380 million yuan. Meanwhile, Jin Qinghua Equity Investment, which is also controlled by Zhu Zhenhui, committed to authorize Xin An River Investment the voting rights attached to 16 million shares in Hengli Industrial Development Group irrevocably and free of charge. Once the agreement is implemented, the actual controller of the company will be changed from Zhu Zhenhui to Li Rijing.
[Trading Trends]
○ Two institutions buy Xinjiang Dushanzi Tianli High＆New Tech
------
The trading volume ranking list on Nov. 25 shows that two institutions had entered Xinjiang Dushanzi Tianli High＆New Tech Co., Ltd (600339.SH) with the total trading turnover reached 169 million yuan, accounted for 28.4 of the total trading volume. No institutions sold the shares of the company.
Comment: the company primarily engaged in the production of chemical products at the downstream of petrochemical industry, including plastic raw materials, annexing agent and pitch. The company falls in the range of oil and gas reform concept. And recently, the National Development and Reform Commission (NDRC) has conducted price reform, which is expected to accelerate market oriented reform in oil and gas sector.
Latest comments