[Today's Guide]
○ Registration-based IPO system lands before amended Securities Law, CSRC: IPOs not increase
○ New energy vehicles output and sale hit new high, motor market to see potential of RMB100 bln
○ Jiangshan Chemical to take over engineering plastic enterprise, Steel Structure Engineering to enter new areas
○ Several companies saw increases in shareholding, institutions bought Miteno Communication Technology
[SSN Focus]
○ Registration-based IPO system lands before amended Securities Law, CSRC: IPOs not increase
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The executive meeting of the State Council held on Dec. 9 passed a draft document on amending stipulations in the applicable Securities Law in relation to the registration-based IPO system reform and submitted to the Standing Committee of the National People's Congress (NPC) for authorization. The document will allow authorities to apply registration-based IPO system in Shanghai and Shenzhen Stock Exchanges in two years starting from the day it takes effect. After the document is authorized, relevant departments will prepare rules and regulations and implement after soliciting public opinions.
The China Securities Regulatory Commission (CSRC) indicated on the same day that the registration-based IPO system reform will advance progressively, and the relation between progress, intensity and market tolerance should be deal properly. The registration-based IPO system reform will not settle in one step. The speed and princes for IPO will not be relaxed soon, which may avoid a flood of IPOs.
Comment: The move indicates that the registration-based IPO system reform will launch in advance of the Securities Law being amended. The acceleration of the registration-based IPO system reform might cause market volatility in a short term, and especially greatly impact mid and small-cap stocks with high valuation. IPOs will certainly progress more rapidly in the future than now. The launch of the registration-based IPO system does not mean that companies can go listing after putting on records. In a long term, easier IPO application and strict approval rules for companies will prevent companies from speculating via backdoor listing and require high abilities of investors in selecting stocks.
[TOP]
[SSN Selection]
○ The State Council appoints and removes officials. Yao Gang was removed from the post of vice chairman of the China Securities Regulatory Commission
○ Bloomberg reported that China is planning to launch a new round of polices on providing subsidies for rural residents to purchase vehicles and increase efforts in constructing parking lots and charging facilities for new energy vehicles.
○ The renmbi exchange rate hit a new low since August on Dec. 9. Reuters reported that the People's Bank of China has suspended new applications for RQDII (Renminbi Qualified Domestic Institutional Investor) quota to ease capital outflow.
○ Three ministries and commissions including the National Development and Reform Commission determined to implement supporting policies on extra low power pricing for coal-fueled power plants to promote energy saving and emission reduction.
○ The China-ROK and China-Australia free trade agreements will come into effect on Dec. 20 and tariffs will be reduced for the first time.
[Industry Information]
○ New energy vehicles output and sale hit new high, motor market to see potential of RMB100 bln
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Based on the statistics of the www.chinanewauto.org.cn, the output of new energy vehicles in China surged to 72,378 in November. Based on the statistics of Baichuan, the price of lithium carbonate hiked to 5,000 yuan per ton, hitting a new high.
Comment: With the rapid expansion of the new energy vehicle market, the demand for motors, electric controlling and other ancillary systems will also grow significantly and will attract more industrial capitals. Based on the target of policies and plans, the demand for motor driving system will reach 50 to 100 billion yuan. In terms of listed companies, Shanghai Dajun Power Controlling Technology Co., Ltd., a subsidiary of Yantai Zhenghai Magnetic Material Co., Ltd. (300224.SZ), is quite competitive in the motor driver market. Zhejiang Founder Motor Co., Ltd. (002196.SZ) proposes to acquire Shanghai Haineng Automobile Electronics Co., Ltd. and Hangzhou Dewoshi Electric Technology Co., Ltd. to develop new energy vehicles.
[TOP]
○ WIC catches much attention, listed companies to actively participate
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The State Council Information Office announced on Dec. 9 that the 2nd World Internet Conference (WIC) will be held from Dec. 16 to 18. It will be the biggest and highest Internet conference held in China. Chinese President Xi Jinping will attend the conference and deliver a keynote speech. Eight foreign leaders and nearly 50 foreign ministerial officials will attend the conference.
The conference has determined many sessions, covering the Internet innovation and sustainable development, digital Silk Road and cooperation and win-win, digital China, Internet technology and standards. BAT and other Internet leaders have determined to attend the conference. Among domestic listed companies, Dr. Peng Telecom ＆ Media Group Co., Ltd. (600804.SH), ZTE Corporation (00736.HK; 000063.SZ) and Chengdu Westone Information Industry Inc. (002268.SZ) will also attend the conference, participate in exhibitions or deliver keynote speeches.
[Announcement Interpretation]
○ Jiangshan Chemical to take over engineering plastic enterprise
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Zhejiang Jiangshan Chemical Co., Ltd. ("Jiangshan Chemical") (002061.SZ) proposes to acquire the entire equity of Ningbo Zhetie Daphoon Chemical Co., Ltd. at the consideration of 980 million yuan, which will be paid by issuing shares through private placement at 8.04 yuan per share and in cash; in addition, the company intends to raise matching fund of 980 million yuan at price of no less than 8.04 yuan per share. The subject company primarily involves in the manufacturing of makrolon, a kind of engineering plastic. The counterparty committed that net profits of the acquiree after deduction of non-recurring profit or loss from 2016 to 2020 will be no less than 450 million yuan. The company closed at 6.73 yuan per share before suspension of trading.
○ Steel Structure Engineering to enter new areas
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CSSC Steel Structure Engineering Co., Ltd. ("Steel Structure Engineering") (600072.SH) proposes to acquire 100 percent equity of China Shipbuilding NDRI Engineering Co., Ltd and 20 percent equity of Changshu Meili at the consideration of 1,548 million yuan, which will be paid by issuing shares through private placement at 21 yuan per share; besides, the company plans to raising matching fund of 1,548 million yuan at price of no less than 21 yuan per share. Upon completion of the transaction, the company's business will extend from the manufacturing end to high value-add areas of design, exploration and engineering contracting. The company closed at 26 yuan per share before suspension of trading.
[TOP]
○ Several companies saw increases in shareholding
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President of Shanghai Lvxin Packing Materials Science Technology Co., ltd. (002565.SZ) on Dec. 9 increased holding of 1,699,900 shares of the company at the average price of 12.437 yuan per share. The latest price of the company is 12.19 yuan.
Substantial shareholder of Tianshui Huatian Technology Co., Ltd. (002185.SZ) on Dec. 9 increased holding of 413,400 shares of the company, and the shareholder has altogether bought 663,400 shares of the company since its first shareholding increase on Sept. 15, with a total amount of 10,045,600 yuan; correspondingly, the average price is 15.14 yuan per share.
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[Trading Trends]
○ Four institutions bought Miteno Communication Technology
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The trading volume ranking list on Dec. 9 shows that Beijing Miteno Communication Technology Co., ltd. ("Miteno Communication Technology") (300038.SZ) was bought through four institutional seats with a total amount of 96,340,000 yuan, accounting for 13.47 percent of its intraday trading turnover; besides, two other institutional seats have sold the company with a total amount of 37,550,000 yuan, accounting for 5.25 percent of its intraday trading turnover.
Comment: institutions hold the view that the company has abundant high quality resources, such as close cooperative relationship with Unionpay, credit license and precision marketing, and its electronic coupon payment platform is expected to bridge online and offline POS resources. Leveraging huge amount POS resources of Unionpay, the payment platform is likely to enter profitable period soon.
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