[Today's Guide]
○ CPC Central Committee to promote reclamation reform, reclamation asset integration to expected
○ Plan on water safety innovation projects issued to promote membrane treatment technologies
○ Vehicle exhaust to blame for smog in Beijing, emission reduction and treatment market to open
○ Weida Machinery to expand intelligent manufacturing, three companies see large buying by Sunshine Insurance
[SSN Focus]
○ CPC Central Committee to promote reclamation reform, reclamation asset integration to expected
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The Central Committee of the Communist Party of China (CPC) and the State Council on Dec. 1 released the Opinions on Further Promoting the Development of Reclamation Reform, proposing to accelerate in transforming economic development model, promote the integration of resource assets and industry upgrading and make enterprises play leading role in the construction of modern agriculture, driven by innovation while centering on promoting the collectivization of reclamation areas and enterprise-oriented reform of farms.
Comment: As the central conference on rural work is around the corner and the No. 1 Central Document is to be released soon, the agricultural sector will see series of policy benefits in this month. It is estimated that reclamation reform will be a key content at the central conference on rural work. The agricultural reclamation system is very likely to see land value promotion and asset integration. As for companies, China State Farms Agribusiness (Group) Corporation, the substantial shareholder of Zhongnongfa Seed Industry Group Co., Ltd. (600313.SH), is devoted to building itself as an integrated modern seed company. Heilongjiang Agriculture Company Limited (600598.SH) and China Hainan Rubber Industry Group Co., Ltd. (601118.SH), respectively the only listed reclamation company in Heilongjiang Province and Hainan Province, are highly expected to attract investment.
[SSN Selection]
○ The manufacturing purchasing managers' index (PMI) dropped to 49.6 percent in November, the lowest level in more than three years. Institutes believe that there will be more fiscal and monetary easing
○ Yi Gang, Vice Governor of the People's Bank of China, indicated that Renminbi will not depreciate after its inclusion into the IMF's Special Drawing Rights (SDR) basket, and the move will increase the bi-directional flexibility of Renminbi's foreign exchange rate.
○ The net inflow of securities margin last week recorded 46.7 billion yuan, hitting a new high in two month, indicating that investor's trading activities picked up remarkably.
○ The land transferring fees in first-tier cities hit all-time high with over 100 billion yuan in November. Beijing ranked the first in terms of floor price, premium rate and total amount of transferring fees.
○ Shanghai Municipal Government held a press conference on promoting the "Internet plus" action plan and indicated that it is applying for the innovation-driven and comprehensively-developed innovation reform pilot.
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[Industry Information]
○ Plan on water safety innovation projects issued to promote membrane treatment technologies
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The Ministry of Environmental Protection, the Ministry of Science and Technology and other ministries and commissions jointly issued the plan on the implementation of water safety innovation projects, requiring accelerating the technological innovation in water pollution control and treatment and promoting the transformation of technological results in sea water desalination. The plan also proposes to actively promote membrane treatment technologies and give full play to the meane biological reactor (MBR) and other strategic industry technology innovation alliances.
Comment: China is faced with shortage in fresh water resources and water environment pollution. The membrane water treatment can meet various demands for improving water quality, reusing of recycled water and sea water desalination. Based on the 13th Five-year Plan on the membrane industry under preparation, the output of functional membrane will reach over 250 billion yuan by 2020, representing an average annual growth of 20 percent. In terms of listed companies, South Huiton Co., Ltd. (000920.SZ) and Tianjin Motimo Membrane Technology Co., Ltd. (300334.SZ) own core technologies in the membrane treatment market.
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○ Vehicle exhaust to blame for smog in Beijing, emission reduction and treatment market to open
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Various cities in China were hit by severe air pollution. Beijing and Shanghai have issued air pollution warnings. According to the responsible person at the Department of Urban Construction under the Ministry of Housing and Urban-Rural Development, the smog in Beijing is mainly caused by vehicle exhaust other than heating. Beijing has been transforming clean energy for coal-fired boilers in recent years. Clean energy accounts for 80 percent of energy consumption.
Comment: Analysts pointed out that the carbon monoxide, hydrocarbon, oxynitride and other harmful gas exhausted by vehicles account for 60 percent of the total air pollution. Under the pressure of environmental treatment, the exhaust treatment market will see rapid development. In terms of listed companies, the EGR, SCR and other exhaust treatment products of Zhejiang Yinlun Machinery Co., Ltd. (002126.SZ) are leaders in the domestic technology. Sino-Platinum Metals Co., Ltd. (600459.SH) is the biggest exhaust catalyst enterprise in China.
[Companies Hotspot]
○ Gong Da High-Tech Enterprise Development actively advances asset reorganization
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Harbin Gong Da High-Tech Enterprise Development Co., Ltd. (600701.SH) proposes to acquire the main business of Opzoon Technology Co., Ltd. through private placement. As it involves information security, the transaction can be implemented after being approved by the Ministry of Industry and Information Technology (MIIT). The company is actively advancing the application. The company announced in mid-October that the company will submit application to the China Securities Regulatory Commission (CSRC) for resuming the review of this major asset reorganization as soon as possible after it is approved by the MIIT and the Ministry of Finance. Opzoon Technology is a well-known enterprise in the domestic network equipment and cloud computing integration system and provides comprehensive solutions to special network of enterprises, special cloud for industries and cloud computing data center.
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[Announcement Interpretation]
○ Weida Machinery to acquire two companies, expanding intelligent manufacturing
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Shandong Weida Machinery Co., Ltd. (002026.SZ) proposes to raise 486 million yuan through private placement at 9.55 yuan per share, to purchase the entire equities in Demac Electric and Shandong Weida Precision respectively; in addition, Weida Machinery proposes to raise 140 million matching fund at 9.55 yuan per share. Demac is primarily engaged in intelligent manufacturing system integration and intelligent equipment business; Weida Precision is engaged in the production and sales of precision castings. The counterparty promises that net profits after deducted of non-recurring profit or loss of the two acquirees will be no less than 21 million yuan and 7.9 million yuan respectively. The company closed at 10.86 yuan a share on the last trading day before suspension of trading.
○ Three companies see large buying by Sunshine Insurance
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Hebei Chengde Lolo Company Limited (000848.SZ), China CYTS Tours Holding Co., Ltd. (600138.SH), Metro Land Corporation Ltd. (600683.SH) each announced that Sunshine Life Insurance and Sunshine Property and Casualty Insurance had bought their shares through secondary market acquisition to the 5 percent threshold. Sunshine Property and Casualty Insurance bought 999,900 shares of Lolo at the average price of 13.78 per share; Sunshine life Insurance increased holding of 399,900 shares in CYTS at the average price of 19.42 yuan per share; Sunshine Life Insurance increased holding of 199,900 shares in Metro Land Corporation at the average price of 9.45 yuan per share. Upon completion of the acquisition, Sunshine Life Insurance and Sunshine Property and Casualty Insurance altogether have 5 percent shareholding in each of the three companies respectively.
○ Suzhou Tianma Specialty Chemicals Co., Ltd. (002453.SZ) has terminated material assets reorganization plan. The company will resume trading on Dec. 2.
[Trading Trends]
○ Five institutions bought shares of FSPG Hi-Tech
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The trading volume ranking list on Dec. 1 shows that five institutions have bought shares of FSPG Hi-Tech Co., Ltd. (000973.SZ) with the amount reached 170 million yuan, representing 8.7 percent of the trading turnover on the same day. No institution seat has sold shares of the company.
Comment: institutions are in the view that FSPG Hi-Tech possess land parcel in tariff-free zone at Nansha Free Trade Zone in Guangdong Province, a scarce resource that cannot be replicated. The company has already established a cross-border ecommerce park, which is attractive to cross-border ecommerce businesses.
[Trading Alarms]
○ IPO of Thundersoft to go on stage on Dec. 2
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The issuing price of Thunder Software Technology Co., Ltd. (300496.SZ) is 23.27 yuan per share with a P/E ratio of 23 times. The upper limit of subscription is 10,000 shares. The company is primarily engaged in providing operating system solutions for mobile intelligent terminal.
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