[Today's Guide]
○Strategic integration of China Metallurgical and China Minmetals, huge potential for following capital integration
○Selection of 3rd batch of FTZs starts, Chongqing municipality and Guangxi province might listed
○Qingdao Kingking Applied Chemistry to add stakes in cosmetics business, Liantronics to acquire equities of four companies to explore outdoor digital media
○New shareholder acquires Renzhi Oilfield Technology Services at high premium, Canaan Technology invests in intelligent manufacturing
[SSN Focus]
○Strategic integration of China Metallurgical and China Minmetals, huge potential for following capital integration
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State-owned Assets Supervision and Administration Commission of the State Council on Dec. 8 announced that with approval of the State Council, China Metallurgical Group Corporation was wholly acquired by China Minmetals Corporation to become its wholly-owned subsidiary. China Minmetals Corporation is a group of metallic ore, and Metallurgical Corporation of China Ltd. (MCC) is the largest metallurgy construction contractor and metallurgy enterprise operation service provider. It is an integration of large central state-owned enterprises (SOEs) after the previous merger case of CRRC Corporation Limited (601766.SH).
Comments: Along with issuance of state-owned assets reform schemes one by one, activities related to reforms, such as integration of central SOEs and overall listing of the groups, are accelerating. Current asset securitization ratio of MCC reaches 98 percent, and that of China Minmetals Corporation with five companies listed in A-share market is only 33 percent; the following capital operation is worthy of expectation. Research report of institutions believed that Minmetals Development Co., Ltd. (600058.SH) will integrate ferrous metal circulation business, one of the core businesses of the group; China Minmetals Rare Earth Co., Ltd. (000831.SZ) will integrate the rare earth assets; Kingray New Materials Science ＆ Technology Co., Ltd. (600390.SH) is likely to reinforce its technological support through its advantage that it is the shareholder of research institute of mining ＆ metallurgy. Suspended China Tungsten and Hightech Materials Co., Ltd. (000657.SZ) has clearly pointed out that it will invest ferrous metal assets of Hunan Province; Zhuzhou Smelter Group Co., Ltd. (600961.SH) will also solve the problems of horizontal competition related to nonferrous metal business.
[SSN Selection]
○Chinese Premier Li Keqiang hosted the discussion on formulation for the 13th Five-year Plan, and required that strength should be constantly intensified for supply and demand sides to promote structural reform.
○Bloomberg reported that China plans to issue policies to reduce the inventory of real estate industry, encouraging small and medium cities to provide subsidies and deduct the taxes for farmers who purchase their first houses.
○Last week, transactions of A shares greatly dropped back, and proportion of accounts involved in the transactions declined to 23.01 percent from 25.68 percent of previous week.
○Reverse repo scale of People's Bank of China (PBOC) returned to a ground level of 10 billion yuan on Dec. 8. With the year end coming and the market expectation that the FED will adjust the interest rate, the PBOC may cut the reserve requirement ratio.
○Chongqing New Century Cruise Co., Ltd. (002558.SZ) was suspended for review and investigation due to abnormal fluctuation of its stock price, which had surged by the daily limit of 10 percent for 20 consecutive trading days since it announced that Giant Interactive Group Inc. (GA.NYSE) conducted backdoor listing through the company.
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[Industry Information]
○Selection of 3rd batch of FTZs starts, Chongqing municipality and Guangxi province might listed
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SSN learns that the selection of the third batch of Free Trade Zones (FTZs) in China has been kicked off with the applications to be discussed by relevant authorities soon. Chongqing Municipality, Guangxi province and etc. have submitted the scheme earlier. Chongqing FTZ plans to center on Liangjiang New Area and comprise its comprehensive bonded zone, covering around 40 square kilometers; the thirteenth five-year plan recently nodded by Guangxi proposes to accelerate the establishment of Beibuwan FTZ.
Comment: A new round of open economic system is urgently needed by China under new normal to expand development space. FTZs might be built into a leading force of China's open economy during the period of the thirteenth five-year plan. Port enterprises including Chongqing Gangjiu Co., Ltd. (600279.SH) and Beibuwan Port Co., Ltd. (000582.SZ), and real estate enterprises including Chongqing Yukaifa Co., Ltd. (000514.SZ) might benefit from the construction of FTZs.
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[Announcement Interpretation]
○Qingdao Kingking Applied Chemistry to add stakes in cosmetics business
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Qingdao Kingking Applied Chemistry Co., Ltd. (002094.SZ) plans to acquire 100 percent equities of Guangzhou Koreaasia Biotech Co., Ltd. and 40 percent equities of Shanghai Yuefeng Cosmetic Co., Ltd. with 659 million yuan by issuing shares at 16.35 yuan per share through private placement and paying in cash. Qingdao Kingking Applied Chemistry also plans to raise a supporting fund of 590 million yuan at no less than 14.72 yuan per share. Guangzhou Koreaasia Biotech is engaged in the R＆D, production and sales of cosmetics and skin care products; Shanghai Yuefeng Cosmetic is a professional offline direct channel operator of cosmetics. The counterparty promises that the net profit of the two companies in 2016 will be no less than 32 million yuan and 63 million yuan, respectively. The company's stock price closed at 13.14 yuan per share before trading suspension.
○Liantronics to acquire equities of four companies to explore outdoor digital media
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Shenzhen Liantronics Co., Ltd. (300269.SZ) plans to acquire 88.88 percent equities of Shenzhen Limart Network Technology Co., Ltd. and 100 percent equities of Shan Xi HuaHan Cultural Communications Co., Ltd., Shanghai Litang Marketing Management Co., Ltd. and Beijing Ocean Media Cultural Communications Co., Ltd., respectively, with 1.96 billion yuan by issuing shares at 23.5 yuan per share through private placement and paying in cash. Liantronics also plans to raise a supporting fund of 1.12 billion yuan. The underlying companies are mainly involved in the marketing service of Internet search engine, outdoor advertisement, marketing strategy, the planning of activities and etc. The counterparty promises that the net profit of above companies in 2016 will be 55 million yuan, 31.36 million yuan, 37.44 million yuan and 24 million yuan, respectively. The company's stock price closed at 28.81 yuan per share before trading suspension.
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○New shareholder acquires Renzhi Oilfield Technology Services at high premium
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The actual controller and other shareholders of Sichuan Renzhi Oilfield Technology Services Co., Ltd. (002629.SZ) plan to transfer 14.64 percent equity to Tibet Han Li Electronic Technology Partnership at a price of 17.47 yuan per share, which will make the latter as the biggest shareholder. The company's stock closed at 7.63 yuan per share before trading suspension.
○Canaan Technology invests in intelligent manufacturing
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Zhejiang Canaan Technology Co., Ltd. (300412.SZ) intends to raise 349 million yuan through private placement to invest in intelligent production line of extraction of Chinese traditional medicine and industry 4.0 experimental center for pharmaceutical equipments.
○Subsidiaries of Anbang Insurance Group buy shares of Goldwind Science And Technology and Tongrentang to 5 pct limit
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Xinjiang Goldwind Science And Technology Co., Ltd. (002202.SZ) announced that three subsidiaries of Anbang Insurance Group Co., Ltd., namely Hexie Health Insurance Co., Ltd., Annuity Insurance Co., Ltd. and Anbang Life Insurance Inc., totally held 5 percent equity in the company as of Dec. 7. Another announcement revealed that Anbang Insurance holds 5 percent equity in Beijing Tongrentang Co., Ltd. (600085.SH) by Dec. 8 and held 5 percent equity in China Vanke Co., Ltd. (000002.SZ) as of Dec. 7.
Funde Sino Life Insurance Co., Ltd. bought the share of Shanghai Pudong Development Bank Co., Ltd. (600000.SH) through secondary market acquisition to the 5 percent limit for the fourth time. It totally holds 20 percent equity in the bank as of Dec. 7.
○Greenland Holdings Corporation to raise RMB30 bln to make diversified deployment
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Greenland Holdings Corporation Limited (600606.SH) is going to raise 30,150 million yuan by issuing shares at a price of no less than 14.51 yuan per share through private placement. The fundraising will be invested in three real estate projects including Wuhan international financial town and establishing investment funds and internet-based innovative financial company. The company's stock ended at 17.44 yuan per share before trading suspension.
○Shenzhen Tatfook Technology Co., Ltd. (300134.SZ) terminates mulling major assets restructuring and will resume trading on Dec. 9.
[Financial Reports Express]
○The controlling shareholder of Beijing Capital Co., Ltd. (300066.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its annual report. The company's latest share price records 16.46 yuan per share.
[Trading Trends]
○5 institutional seats bought shares of Speed Wireless Technology
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The trading volume ranking list on Dec. 8 shows that Huizhou Speed Wireless Technology Co., Ltd. (300322.SZ) was bought through five institutional seats with a total of 228 million yuan, accounting for 26.9 percent of its intraday turnover. One institutional seat sold the company's shares valued at 11.35 million yuan.
Comment: Speed Wireless Technology is one of the leading enterprises in domestic wireless communication terminal antenna. Institutions believe that the company's antenna business will recover gradually and fingerprint identification business will see excellent performance in the future.
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