[Today's Guide]
○ Beijing issues first red alert on smog, power vehicles development to speed up
○ Shanghai Science and Technology Innovation Center construction to speed up, local parks to benefit
○ Agricultural modernization to boost food security, rural e-business to speed up
○ Century Huatong Group to invest RMB10 bln in game industry, Aba Chemicals to resume trading
[SSN Focus]
○ Beijing issues first red alert on smog, power vehicles development to speed up
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Beijing has upgraded its alert for air pollution from orange to red, the most serious level, on Dec. 7. From 7:00 a.m. Dec. 8 to 12:00 p.m. Dec. 10, car use (excluding pure power vehicles) will be limited as cars are allowed on the roads on alternating days depending on the odd or even numbers of their license plates. In addition, 30 percent of government cars will be banned from streets on an odd/even basis. This is the first time the capital has issued the red alert.
Comment: According to the analysis on the pollution source in nine cities by the Ministry of Environmental Protection, vehicles are the primary source of pollution in four cities including Beijing. Pure power vehicles are increasingly favored for their zero emission. Besides, SSN learnt that Tesla Motors is expected to speed up in establishing plants in China. Many A-share companies are actively transforming into the new energy vehicle industry. Do-Fluoride Chemicals Co., Ltd. (002407.SZ) obtained the qualification for the production of complete new energy vehicles through eth acquisition of Hebei Red Star Vehicles Manufacturing Co., Ltd. The trading volume ranking list on Dec. 7 shows that two institutes bought it with 381 million yuan. EVE Energy Co., Ltd. (300014.SZ) is actively applying for the production qualification for new energy vehicles. Xinzhi Motor Co., Ltd. (002664.SZ) indirectly supply motor products to Tesla.
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[SSN Selection]
○ China's foreign exchange reserves saw the second biggest decline in history in November. Institutes estimate that the central bank will lower the reserve requirement ratio this month.
○ The core insurance premium of four listed insurance companies saw an increase of about 50 percent in November. The life insurance industry recorded the highest profit in history.
○ The property turnover in Shanghai saw a new high in nearly six years in November with a new high of an average price of 34,700 yuan/m2.
○ The meeting on promoting the coordinated development of Beijing, Tianjin and Hebei Province was convened on Dec. 7, proposing to orderly and effectively relive the non-capital functions of Beijing through scientific plans.
○ An earthquake measuring 7.4 on the Richter scale in Tajikistan was felt in the south of Xinjiang Uygur Autonomous Region.
[Industry Information]
○ Shanghai Science and Technology Innovation Center construction to speed up, local parks to benefit
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SSN learns that the construction of Shanghai Science and Technology Innovation Center shows signs of speeding up. The technology and innovation board of Shanghai Equity Exchange has been approved. Han Zheng, Secretary of CPC Shanghai Committee, indicated that the strategy of intellectual property rights will cover the whole process of the construction. Yang Xiong, mayor of Shanghai, indicated that it will speed up in advancing towards the Shanghai Science and Technology Innovation Center. It is disclosed in the municipal government work report in July that two plans on the construction of the Shanghai Science and Technology Innovation Center have been submitted. Based on the experiences on the approval of the China (Shanghai) Pilot Free Trade Zone in 2013, it will take about half a year to approve the plan. It is estimated that the construction of the Shanghai Science and Technology Innovation Center will make progress soon.
Comment: Top government officials have high expectations on the mass innovation and entrepreneurship strategy. Compared with Beijing and Shenzhen, Shanghai has fewer leading technology companies and the proportion of its research and development investment in its GDP is relatively lower. Institutes are optimistic that the construction of the Technology Innovation Center bring more policy support. Local science parks in Shanghai will be upgraded to spatial carriers, gather enterprises and expand in functions. Shanghai Zhangjiang Hi-tech Park Development Co., Ltd. (600895,SH), Shanghai Shibei Hi-tech Co., Ltd. (600604.SH) and Shanghai Zijiang Enterprise Group Co., Ltd. (600210.SH ) are expected to benefit from the increasing land value and innovation center project.
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○ Agricultural modernization to boost food security, rural e-business to speed up
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At the press conference on agricultural reclamation reform held on Dec. 7, the Ministry of Agriculture indicated that it will advance new types of agricultural modernization through reform and innovation to guarantee national food security and the effective supply of important agricultural products. On the same day, the The Communist Party of China (CPC) Central Committee and the State Council a document of instructions on poverty alleviation, proposing more targeted and precise measures to alleviate poverty and more supports for the promotion and marketing of agricultural product brands in poverty-stricken areas.
Comment: As an important driver in agricultural modernization, industrial poverty alleviation is an important instrument in precision poverty alleviation. As the current domestic agricultural products are less competitive in international competitions, more policies on improving the agricultural mechanization and agricultural operation efficiency through rural e-business and IT application will be introduced. In terms of listed companies, Jiangsu Huifeng Agrochemical Co., Ltd. (002496.SZ) owns an e-business platform www.16899.com whose workstations cover all counties in 28 provinces and cities. Nongrj.com, an e-business platform under Anhui Huilong Agricultural Means Of Production Co., Ltd. (002556.SZ), has been released and started trial operation. Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) acquired Beijing Jinhe Tiancheng Technology Co., Ltd., a company engaged in agricultural IT application, and established a big data company with Nanfang Media Group.
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[Announcement Interpretation]
○ Century Huatong Group to buy game companies with over RMB10 bln
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Zhejiang Century Huatong Group Co., Ltd. (002602.SZ) proposes to acquire 100 percent equities of China Mobile Games (NASDAQ:CMGE) DianDian Interactive Holding, Diandian Beijing Technology Co., Ltd. with 13,463 million yuan among by issuing shares at 11.65 yuan per share through private placement. The company will also raise 11,033 million yuan supporting funds by issuing shares at the same price through private placement. The underlies are all engaged in the research, development, release and operation of mobile games. The counterpart promises that the total net profit of the three companies will be no less than 918 million yuan in 2016 with a PE ratio of about 14.7 times. The stock price of the company closed at 26.58 yuan per share before its trading suspension.
○ Aba Chemicals to increase investment in medical intermediate
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Aba Chemicals Corporation (300261.SZ) proposes to acquire the entire equity of Shanghai Puyi Chemical Co., Ltd. at the consideration of 160 million yuan through private placement at 13.88 yuan per share and cash; besides, the company intend to raise matching fund of 166 million yuan at the same price. Puyi Chemical primarily involves in the production of medical intermediate, the counterparty committed that net profits of Puyi Chemical after deduction of non-recurring profit or loss in 2016 will be no less than 14 million yuan, with corresponding PE ratio of 11.4 times. The company closed at 11.26 yuan a share before suspension of trading.
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○ Golden Eagle to set foot in lithium battery material
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Zhejiang Golden Eagle Co., Ltd. (600232.SH) proposes to establish a joint venture with Hunan Reshine New Material Co., Ltd. to set up a ternary lithium battery cathode material project with annual production output of 10,000 tons. Golden Eagle will contribute 90 million yuan, representing 60 percent share capital of the joint venture. Reshine guaranteed that the joint venture will generate sales profits within 2 years of operation, and realize direct sales of special types of material to more than two mainstream battery producers at designated locations. Besides, the company also intends to subscribe 30 million shares issued by Reshine through seasoned new issue at the price of no more than 3.5 yuan a share.
○ Binhai Energy to accelerate transformation towards culture and education
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Tianjin Binhai Energy ＆ Development Co., Ltd. (000695.SZ) proposes to raise 1,020 million yuan through private placement of no less than 15.28 yuan per share, to build internet education platform, artwork transaction platform and culture and film and television platform. Tianjin Publishing and Media Group, the new actual controller of the company since September, proposes to subscribe no less than 20 percent private placing shares of the company through wholly owned subsidiary. The company closed at 19.97 yuan before suspension of trading.
○ Kangsheng to buy Fujia Leasing
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Zhejiang Kangsheng Co., Ltd. (002418.SZ) proposes to acquire 75 percent shareholding of Fujia Leasing, a company under Zhongzhi Enterprise Group. The counterparty committed that net profits of Fujia Leasing after deduction of non-recurring profit or loss will be 100 million yuan. Upon completion of the transition, Kangsheng's business model will transform from new energy vehicle to the whole industrial chain of "manufacturing-sale-leasing-services". Moreover, its actual controller proposes 20-for-10 conversion of capital l surplus into shares in the annual report.
○ Winsan (shanghai) Medical Science And Technology Co., Ltd. (600767.SH) has terminated material assets reorganization. The company will resume trading on Dec. 8.
[Financial Reports Express]
○ Controlling shareholder of CASIN Guoxing Property Development Co., Ltd. (000838.SZ) proposes 25-for-10 conversion of capital surplus into shares. The latest price of the company is 21.67 yuan a share. Actual controller of Shenzhen Mason Technologies Co., Ltd. (002654.SZ) proposes 20-for-10 of capital surplus in to shares in the annual report. The latest price of the company is 34.4 yuan a share.
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