[Today's Guide]
○ Strengthening army through reform to implement, institutes favors military engineering IT application
○ Purchasing and storage of rare metals expected, tungsten prices show signs of picking up
○ Tempus Global Business Service to buy Xiyou National Travel Agency, Nanfang Black Sesame to acquire Jinri Edible Oil
○ Huadong Automation to supplement working capital through private placement, Chint Electrics to pour in photovoltaic business
[SSN Focus]
○ Strengthening army through reform to implement, institutes favors military engineering IT application
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A meeting of the Central Military Commission (CMC) reforming the armed forces was held from Nov. 24 to 26. President Xi Jinping attended the meeting and made important remarks, emphasizing the full implementation of the strategy of strengthening the army by reforming and steadfastly following the road of a strong army with Chinese characteristics. Based on the timetable set in the overall reform plan, it will make breakthroughs in improving the size and structure, optimizing the policy system and promoting military and civil integration by 2020. It will strive to establish a modern military forces system with Chinese characteristics which can win information battles and effectively performing its missions and tasks.
Comment: With the kicking-off of the reform, the military engineering theme is expected to be revalued. Institutes believe the establishment of the military engineering IT application will be a key area on national defense input for a long time. SSN continued to focus on military reform and military engineering IT application. Among A-share companies, Guangzhou Haige Communications Group Incorporated Company (002465.SZ) is a leader in the simulator for national defense. It recently announced that it has signed an order for virtual reality system equipment with 52.52 million yuan. The data security business of Beijing TRS Information Technology Co., Ltd. (300229.SZ) has been applied in public security and military areas. The electromagnetic safety business of Bluedon Information Security Technologies Co., Ltd. (300297.SZ) serves such clients as communication, radar and missile forces.
◆ The new generation of Beidou navigation satellite completed the in-orbit testing recently. It will officially join the network to provide navigation services in the next stage. HWA Create Co., Ltd. (300045.SZ) and Chengdu CORPRO Technology Co., Ltd. (300101.SZ) have competitive edge in military and civilian Beidou products market.
[SSN Selection]
○ The Forum on China-Africa Cooperation will be convened in South Africa in early December. The Ministry of Commerce will hold the China International Equipment Manufacturing Exposition at the same period.
○ Refined oil export is further relaxed. Local refinery enterprises may be approved refined oil export quota in the second quarter at the soonest.
○ The Ministry of Transport discloses that the integrated plan on the coordinated development of transport in Beijing-Tianjin-Hebei has been approved and will be issued soon.
○ Reuters reported that China plans to cut the price of corn for temporary storage by 10 percent in 2016/17 and may offer freight subsidizes to animal farms.
○ CITIC Securities Company Limited (06030.HK; 600030.SH) and Guosen Securities Co., Ltd. (002736.SZ) received investigation notices from the China Securities Regulatory Commission (CSRC) and will fully cooperate in the relevant investigation.
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[Industry Information]
○ Purchasing and storage of rare metals expected, tungsten prices show signs of picking up
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Foreign media reported that the China Nonferrous Metals Industry Association made proposals to the National Development and Reform Commission (NDRC), advising the government to purchase aluminum, nickel, cobalt, indium and other rare metals to absorb excess production capacity. SSN learnt that impacted by supply restrictions in large mines and the shutdown and overhaul in middle and small mines, tungsten concentrate prices started to pick up, and jumped over 5 percent in the recent week. Downstream smelting factories also lifted their factory prices. Ammonium paratungstate (APT) prices have soared nearly 4 percent in a week and gradually accepted the increased prices of the upstream tungsten ore.
Comment: As an important national strategic resource, the tungsten industrial chain will boom driven by the country's purchasing and storage and production restrictions in the industry. As for companies, Chongyi Zhangyuan Tungsten Co., Ltd. (002378.SZ) enjoys advantages in the entire industrial chain ranging from tungsten mining, smelting and deep processing. Xiamen Tungsten Co., Ltd. (600549.SH) is a domestic leader in the tungsten industry. It is also actively developing the lithium battery materials industry.
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[Announcement Interpretation]
○ Tempus Global Business Service to buy Xiyou National Travel Agency with RMB 880mln
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Shenzhen Tempus Global Business Service Holding Ltd. (300178.SZ) proposes to purchase 55 percent equities of Shenzhen Xiyou National Travel Agency with 880 million yuan by issuing 31,530,000 shares at 23.72 yuan per share through private placement and a payment of 132 million yuan in cash. It will also raise a supporting fund of 880 billion yuan by issuing shares through private placement at 15.05 per yuan to its actual controller Zhong Baisheng and others. The company will hold 66 percent equities of Xiyou National Travel Agency after the deal. The counterparty promises that the net profit of Xiyou National Travel Agency will be no less than 150 million yuan,188 million yuan and 234 million yuan from 2016 to 2018, respectively.
Xiyou National Travel Agency is a comprehensive service provider that is engaged in the entire overseas travel industrial chain. It owns 2 travel agencies in China, 5 local travel agencies in foreign countries, 10 shops and 1 tourism e-commerce company.
○ Nanfang Black Sesame to acquire Jinri Edible Oil with RMB 660mln.
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Nanfang Black Sesame Group Co., Ltd. (000716.SZ) proposes to purchase 100 percent equities of Jinri Edible Oil Co., Ltd. with 660 million yuan by issuing 31,910,000 shares at 14.48 yuan per share through private placement and a payment of 198 million yuan in cash. It also plans to raise a supporting fund of 310 billion yuan by issuing shares through private placement at 10.45 per yuan to its actual controller and director. Jinri Edible Oil is mainly engaged in the production, processing and sales of edible vegetable oil. Based on its commitment on performance, the net profit after extraordinary items of Jinri Edible Oil will be no less than 55 million yuan, 65 million yuan, 75 million yuan and 85 million yuan from 2015 to 2018.
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○ Huadong Automation to raise RMB 660mln through private placement, Gaojin Technology to become its controlling shareholder
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Weihai Huadong Automation Co., Ltd. (002248.SZ) plans to raise 660 Million yuan by issuing 67.07 million shares at 9.84 yuan per share through private placement to supplement working capital and repay loans. The largest shareholder of the company Dalian Gaojin Technology Co., Ltd. will subscribe. Currently, the company has no controlling shareholder and actual controller. Gaojin Technology will become the company's controlling shareholder and Chen Yongkai will be its actual controller after the private placement.
○ Chint Electrics to pour RMB 9.4bln in photovoltaic business
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Zhejiang Chint Electrics Co., Ltd. (601877.SH) plans to purchase 100 percent equities of Chint New Energy Development Co. Ltd. which are owned by its controlling shareholder Chint Group with 9.4 billion yuan by issuing 383 million shares at 24.57 yuan per share through private placement. It also plans to raise a supporting fund of 4.5 billion yuan through private placement, which will be invested in photovoltaic power stations both at home and abroad, residential distributed photovoltaic power station at home and intelligent manufacturing application projects.
Chint New Energy Development is mainly engaged in the development, construction and operation of photovoltaic power station. Based on its commitment on performance, its net profit will be no less than 700 million yuan, 750 million yuan and 800 million yuan and 85 million yuan from 2016 to 2018.
○ Yabaite Technology to buy metal roof builder Sanyi Building with RMB 200mln
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Shandong Yabaite Technology Co., Ltd., wholly-owned subsidiary of Jiangsu Yabaite Technology Co., Ltd. (002323.SZ), plans to acquire 100 percent equities of Shenzhen Sanyi Building Co., Ltd. with 200 million yuan cash after stripping some assets. The counterparty promises that the net profit after extraordinary items of Sanyi Building will be no less than 18 million yuan, 26 million yuan and 31 million yuan from 2015 to 2018. With special qualifications in the design and construction of building metal roof (wall), Sanyi Building is involved in the design, production and installation of the metal roof bounding system. The company announced on the same day that Shandong Yabaite Technology and its joint bidder win a 198 million yuan contract.
○ Dongfang Caizhi increases shareholding in Hai Nan Yedao and becomes the largest shareholder
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Shenzhen Dongfang Caizhi Assets Management Company Limited, shareholder of Hai Nan Yedao (Group) Co., Ltd. (600238.SH) on Nov. 25 increased holding of 1,0367,700 shares, representing 2.31 percent of the total equity in Hai Nan Yedao at the price of over 17 yuan per share together with trust products Hengying 10 and Hengying 11, the parties acting in concert. After which Dongfang Caizhi and the parties acting in concert will hold aggregate 18.47 percent shareholding and become the largest shareholder. SSN had reported on Nov.22 that the second largest shareholder of Hai Nan Yedao has largely increased shareholding and intended to further control the company.
○ Zoneco Group seeking private placement, the largest shareholder to subscribe
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Zoneco Group Co., Ltd. (002069.SZ) proposes to issue 125 million shares at 11.58 yuan a share to raise 1,450 million yuan, of which 1,100 million yuan will be used to repay bank borrowings, 180 million yuan will be used for the construction of seed-industry platform, and 160 million yuan will be used for O2O new commercial construction. Controlling shareholder Zoneco Investment Development Center will subscribe with an amount of 250 million yuan. The latest price of the company is 14.03 yuan per share.
○ Controlling shareholder of Boxin Investing ＆ Holdings changed
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Yang Zhimao, the controlling shareholder of Guangdong Boxin Investing ＆ Holdings Co., Ltd. (600083.SH), transferred 14.09 percent of his shareholding to Shenzhen Qianhai Xuanzhuo Assets Management Company Limited at 18 yuan per share, at the valuation of 583 million yuan. Upon completion of the transaction, Shi Zhimin will become the actual controller of the company.
[Trading Trends]
○ Four institutions bought Shenzhen Technology
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The trading volume ranking list on Nov. 26 shows that four institutions has bought Shenzhen Kaifa Technology Co., Ltd. (000021.SZ), with an amount of 385 million yuan, accounting for 35.46 percent of the trading volume of the same day. No institutions sold shares of the company.
Comment: the company indicated on the investor interactive platform that integrated circuit memory chips and LED business which the company engaged in provide fundamental components for virtual reality. The company also indicated that the company will focus on intelligent manufacturing in the reminder of the year, and accelerate the transformation of core technology from lower end to mid-high end, and main business from mid-down stream to mid-upper stream.
○ Revenue swap of financing transaction halted, market to be more stable
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Recently, a dozen of securities companies have received phone calls from regulators , which requires securities companies to immediately stop providing funds through OTC transaction for its clients to trade A shares and New Third Board shares. Industry insiders indicated that China's revenue swap of financing transaction is characterized by high concentration and short term, and the stocks involved usually show sharp volatility in short term prices. The regulators' curb on this business contribute to control fluctuations in prices and maintain a stable market.
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