[Today's Guide]
○ Two shipping giants to reorganize, central enterprises reform enters acceleration period
○ Preferential tax on health insurance to implemented, Integrated circuit industry sees more supports from national fund
○ STO Express to go backdoor listing via IDC Fluid Control, Commercial City to develop Internet-based car service
○ Anbang Insurance holds 5 pct equities in Eurasia and Dashang, five institutes buy Sino Great Wall
[SSN Focus]
○ Two shipping giants to reorganize, central enterprises reform enters acceleration period
------
The State-owned Assets Supervision and Administration Commission (SASAC) on Dec. 11 disclosed on its website that China Ocean Shipping (Group) Company (COSCO) and China Shipping Group Company (China Shipping) will reorganize, after the approval by the State Council. Presidents of the two giants indicated in an interview with Xinhua News Agency that after this merger and reorganization, four specialized shipping and financial industrial clusters focusing on container shipping, port and pier, oil and gas transportation and leasing businesses will come into being.
Comment: the reorganization involves unparalleled assets and complexity, demonstrating the determination of leadership to push forward SOEs reform. Given merger of other central enterprises, such as Zhen Rong Company and Nam Kwong (Group) Company Limited, China Minmetals Corporation and Metallurgical Corporation of China Ltd., have also achieved progress recently, it is estimated that the reform is entering an acceleration period. Besides, reorganization of the two shipping giants will enhance the competitiveness of China's shipping industry overseas, reduce overlapping investment and costs. Institutions are also optimistic about the integration of China Merchants Group and Sinotrans ＆ CSC Holdings Co. Ltd. (Sinotrans): Sinotrans Air Transportation Development Co., Ltd. (600270.SH) is a company under Sinotrans, and recent announcement shows that actual controller of the company is preparing strategic reorganization; China Merchants Energy Shipping Co. Ltd. (601872.SH) is primarily engaged in tanker transportation, and has jointly established a tanker transportation company with Sinotrans.
[SSN Selection]
○ Industrial, investment and consumption data disclosed at the weekend all are better than expected, which released signs that China's economy is bouncing along the bottom.
○ Spot exchange rate of the yuan against the dollar has dropped below 6.45, the lowest in four years. The central bank published an article on its website, which said that a basket of currencies should be taken into account when observing RMB exchange rate.
○ International Energy Agency warns that global energy oversupply may worsen next year, following which the crude oil futures in New York stumbled below 36 dollars a barrel, the lowest since financial crisis in 2008.
○ Financial reform schemes of Guangdong, Fujian and Tianjin free trade zones has been released, which allow the free conversion of capital accounts within 10 million dollars.
○ Listed companies under Fosun Group said in the resumption of trading announcements that Guo Guangchang is assisting relevant judicial authorities in investigation; Fosun Group on Dec. 13 held a telephone conference and indicated that relevant departments of the group has made proper arrangements for Guo Guangchang to participate in the group's decision making to the largest extent.
TOP
[Industry Information]
○ Preferential tax on health insurance to implemented form Jan.1 next year, the industry expected to boom
------
The Ministry of Finance, the State Administration of Taxation (SAT) and China Insurance Regulatory Commission on Dec. 11 jointly issued notice on the implementation of pilot policy of individual income tax related to commercial health insurance, which requires that for any individual who buys specified health insurance products, the upper limit of 2400 yuan per year in his/her expense will be exempted from individual income tax. The notice will be implemented from Jan. 1, 2016.
Comment: Since the State Council released the opinions on the development of the insurance industry, the industry has witnessed a roll of policy benefits. With the improvement of people's living standards in China, health insurance has attracted more and more attention. In recent years, the premium of health insurance has grown at an annual average rate of 40 to 50 percent. With support from preferential tax policy, health insurance is expected to enter a gold age. A great number of large insurance companies are preparing files for reporting insurance-related products.
○ Integrated circuit industry sees huge potential for localization with more supports from national fund
------
The National Integrated Circuit Industry Investment Fund has raised 138.7 billion yuan since its established over one year ago, Xinhua News reported on Dec. 13. The fund has planned to raise 120.0 billion yuan at its establishment last year and continued to raise its target afterwards. An employee from the industry association disclosed that the total amount of local integrated circuit investment funds that have been set up or on the way of establishment in China approached 140.0 billion yuan.
Comment: As the foundation for information security as well as a major support for various automatic and controllable devices, integrated circuit has a huge potential to become localized in China. Since the State Council unveiled the Outlines on Promoting the Development of National Integrated Circuit Industry, the government has constantly strengthened supports for the industry. The design, manufacturing and encapsulation links along the industrial chain are expected to see rapid development. As for companies, Nantong Fujitsu Microelectronics Co., Ltd. (002156.SZ) plans to acquire the encapsulation and testing businesses from Advanced Micro Devices, Inc. (NYSE: AMD), which has gained support from the National Integrated Circuit Industry Investment Fund; Hitech Semiconductor Technology Co., Ltd, a joint venture of Wuxi Taiji Industry Company Ltd. (600667.SH), has strong competitive advantage in the DRAM encapsulation and testing sector.
[Announcement Interpretation]
○ STO Express to go backdoor listing via IDC Fluid Control
------
Zhejiang IDC Fluid Control Co., Ltd.(002468.SZ) proposes to sell all its assets and liabilities and purchase 100 percent equities of STO Express with 16.9 billion yuan which will be paid by issuing shares at 16.44 yuan per share through private placement and in cash. The company also plans to raise no more than 4.8 billion yuan by issuing shares at 16.44 yuan per share through private placement. The counterparty promises that the net profit of STO Express will be no less than 1.17 billion yuan in 2016 with a P/E ratio of 14.4. The stock prices of the company closed at 13.71 yuan per share before its trading suspension.
○ Commercial City to develop Internet-based car service
------
Shenyang Commercial City Co., Ltd. (600306.SH) proposes to purchase 100 percent equities of Ucar Net with 1.5 billion yuan by issuing shares at 13.28 yuan per share through private placement. The underlying asset Ucar Net is an Internet-based car service provider which is based on car leasing business and provides close-loop services ranging from car purchasing to car disposal. According to profit forecast, the net profit of Ucar Net is 118 million yuan in 2016. The stock price of Commercial City closed at 12.4 yuan per share before its trading suspension.
TOP
○ Anbang Insurance holds 5 pct equities in Eurasia and Dashang
------
As of Dec. 10, subsidiaries of Anbang Insurance Group altogether hold 5 percent equities of Changchun Eurasia Group Co., Ltd. (600697.SH) and Dashang Co., Ltd. (600694.SH), respectively. In addition, subsidiaries of Anbang Insurance altogether hold 25 percent equities in Financial Street Holdings Co., Ltd. (000402.SZ).
[Trading Trends]
○ Five institutes buy Sino Great Wall
------
The trading volume ranking list on Dec. 11 shows that Sino Great Wall Co., Ltd. (000018.SZ) was bought through five institutional seats with a total of 90.537 million yuan, accounting for 28 percent of its intraday turnover. No institutional seat sold it.
Comment: The company recently announced that it has signed the general contract on the free urban center in Colombo with an estimated amount of 250 million U.S. dollars. Institutes estimate that its overseas business will continue to see breakthroughs. As the company raised less funds from back-door listing, potential financing demands will bring more value to the company. In addition, the company will expand through the capital market and has huge potential in transformation and upgrading.
[Trading Alarms]
○ Nine new shares for subscription on Dec. 14, including Fortune Techgroup
------
Henan Thinker Automatic Equipment Co., Ltd. (732508.SH) issues shares at 33.56 yuan per share with an upper subscription limit of 12,000 shares for each account. Chung Sheen Technology Co., Ltd. (732996.SH) issues shares at 10.52 yuan per share with an upper subscription limit of 20,000 shares for each account. Shenyang Toly Bread Co., Ltd. (732866.SH) issues shares at 13.76 yuan per share with an upper subscription limit of 13,000 shares for each account. Jiangsu Misho Ecology Landscape Co., Ltd. (300495.SZ) issues shares at 31.82 yuan per share with an upper subscription limit of 6,500 shares for each account. Sichuan Cendes Architectural Design Co., Ltd. (300492.SZ) issues shares at 6.9 yuan per share with an upper subscription limit of 8,000 shares for each account. Shenzhen Silver Basis Technology Co., Ltd. (002786.SZ) issues shares at 10.72 yuan per share with an upper subscription limit of 12,500 shares for each account. Xiamen Wanli Stone Stock Co., Ltd. (002785.SZ) issues shares at 2.29 yuan per share with an upper subscription limit of 20,000 shares for each account. Shenzhen Click Technology Co., Ltd. (002782.SZ) issues shares at 7.58 yuan per share with an upper subscription limit of 17,000 shares for each account. Shenzhen Qixin Construction Group Co., Ltd. (002781.SZ) issues shares at 13.31 yuan per share with an upper subscription limit of 22,500 shares for each account. The IPO P/E ratios are all below 23 times. Full subscription of these shares needs 1.66 million yuan in total. Institutes are rosy about Thinker Automatic Equipment, a leader in the controlling system of trains.
[Weekly Review]
○ Embrace new value investment times
------
The most influential event on the capital market of last week is the widely expected registration-based IPO system. The system to be implemented soon worries the market over the surging supply in the future. Rumor has it that individual stocks with high valuation will face pressure and traditional blue chips will be favored again for some time.
However, the author believes that the implementation of the registration-based IPO system never means the plunge of individual stocks with high valuation. The scarce quality stocks will remain the targets in the future market. Take the new energy vehicles industry repeatedly reported by the SSN as an example, Sichuan Tianqi Lithium Industries, Inc. (002466.SZ), the owner of the lithium mine of Talison in Australia, is the target with the best quality under the backdrop of surging lithium prices. For such an enterprise, new lithium enterprises in the future will never challenge its monopoly position in the market. Economics tells us that scarce items are generally expensive. For the stocks with reasonably high prices, the registration-based IPO system will generally have psychological disturbance.
From another perspective, the registration-based IPO system will bring more fresh blood into the capital market. There may be more attractive themes in the future market and there are more hidden opportunities for investors. If the past investment means buying and holding at a low P/E ratio, the future investment value may be buying at a relatively high valuation and waiting for the growth of emerging stocks. The times of new value investment has come. Are you ready?
TOP
○ Two shipping giants to reorganize, central enterprises reform enters acceleration period
○ Preferential tax on health insurance to implemented, Integrated circuit industry sees more supports from national fund
○ STO Express to go backdoor listing via IDC Fluid Control, Commercial City to develop Internet-based car service
○ Anbang Insurance holds 5 pct equities in Eurasia and Dashang, five institutes buy Sino Great Wall
[SSN Focus]
○ Two shipping giants to reorganize, central enterprises reform enters acceleration period
------
The State-owned Assets Supervision and Administration Commission (SASAC) on Dec. 11 disclosed on its website that China Ocean Shipping (Group) Company (COSCO) and China Shipping Group Company (China Shipping) will reorganize, after the approval by the State Council. Presidents of the two giants indicated in an interview with Xinhua News Agency that after this merger and reorganization, four specialized shipping and financial industrial clusters focusing on container shipping, port and pier, oil and gas transportation and leasing businesses will come into being.
Comment: the reorganization involves unparalleled assets and complexity, demonstrating the determination of leadership to push forward SOEs reform. Given merger of other central enterprises, such as Zhen Rong Company and Nam Kwong (Group) Company Limited, China Minmetals Corporation and Metallurgical Corporation of China Ltd., have also achieved progress recently, it is estimated that the reform is entering an acceleration period. Besides, reorganization of the two shipping giants will enhance the competitiveness of China's shipping industry overseas, reduce overlapping investment and costs. Institutions are also optimistic about the integration of China Merchants Group and Sinotrans ＆ CSC Holdings Co. Ltd. (Sinotrans): Sinotrans Air Transportation Development Co., Ltd. (600270.SH) is a company under Sinotrans, and recent announcement shows that actual controller of the company is preparing strategic reorganization; China Merchants Energy Shipping Co. Ltd. (601872.SH) is primarily engaged in tanker transportation, and has jointly established a tanker transportation company with Sinotrans.
[SSN Selection]
○ Industrial, investment and consumption data disclosed at the weekend all are better than expected, which released signs that China's economy is bouncing along the bottom.
○ Spot exchange rate of the yuan against the dollar has dropped below 6.45, the lowest in four years. The central bank published an article on its website, which said that a basket of currencies should be taken into account when observing RMB exchange rate.
○ International Energy Agency warns that global energy oversupply may worsen next year, following which the crude oil futures in New York stumbled below 36 dollars a barrel, the lowest since financial crisis in 2008.
○ Financial reform schemes of Guangdong, Fujian and Tianjin free trade zones has been released, which allow the free conversion of capital accounts within 10 million dollars.
○ Listed companies under Fosun Group said in the resumption of trading announcements that Guo Guangchang is assisting relevant judicial authorities in investigation; Fosun Group on Dec. 13 held a telephone conference and indicated that relevant departments of the group has made proper arrangements for Guo Guangchang to participate in the group's decision making to the largest extent.
TOP
[Industry Information]
○ Preferential tax on health insurance to implemented form Jan.1 next year, the industry expected to boom
------
The Ministry of Finance, the State Administration of Taxation (SAT) and China Insurance Regulatory Commission on Dec. 11 jointly issued notice on the implementation of pilot policy of individual income tax related to commercial health insurance, which requires that for any individual who buys specified health insurance products, the upper limit of 2400 yuan per year in his/her expense will be exempted from individual income tax. The notice will be implemented from Jan. 1, 2016.
Comment: Since the State Council released the opinions on the development of the insurance industry, the industry has witnessed a roll of policy benefits. With the improvement of people's living standards in China, health insurance has attracted more and more attention. In recent years, the premium of health insurance has grown at an annual average rate of 40 to 50 percent. With support from preferential tax policy, health insurance is expected to enter a gold age. A great number of large insurance companies are preparing files for reporting insurance-related products.
○ Integrated circuit industry sees huge potential for localization with more supports from national fund
------
The National Integrated Circuit Industry Investment Fund has raised 138.7 billion yuan since its established over one year ago, Xinhua News reported on Dec. 13. The fund has planned to raise 120.0 billion yuan at its establishment last year and continued to raise its target afterwards. An employee from the industry association disclosed that the total amount of local integrated circuit investment funds that have been set up or on the way of establishment in China approached 140.0 billion yuan.
Comment: As the foundation for information security as well as a major support for various automatic and controllable devices, integrated circuit has a huge potential to become localized in China. Since the State Council unveiled the Outlines on Promoting the Development of National Integrated Circuit Industry, the government has constantly strengthened supports for the industry. The design, manufacturing and encapsulation links along the industrial chain are expected to see rapid development. As for companies, Nantong Fujitsu Microelectronics Co., Ltd. (002156.SZ) plans to acquire the encapsulation and testing businesses from Advanced Micro Devices, Inc. (NYSE: AMD), which has gained support from the National Integrated Circuit Industry Investment Fund; Hitech Semiconductor Technology Co., Ltd, a joint venture of Wuxi Taiji Industry Company Ltd. (600667.SH), has strong competitive advantage in the DRAM encapsulation and testing sector.
[Announcement Interpretation]
○ STO Express to go backdoor listing via IDC Fluid Control
------
Zhejiang IDC Fluid Control Co., Ltd.(002468.SZ) proposes to sell all its assets and liabilities and purchase 100 percent equities of STO Express with 16.9 billion yuan which will be paid by issuing shares at 16.44 yuan per share through private placement and in cash. The company also plans to raise no more than 4.8 billion yuan by issuing shares at 16.44 yuan per share through private placement. The counterparty promises that the net profit of STO Express will be no less than 1.17 billion yuan in 2016 with a P/E ratio of 14.4. The stock prices of the company closed at 13.71 yuan per share before its trading suspension.
○ Commercial City to develop Internet-based car service
------
Shenyang Commercial City Co., Ltd. (600306.SH) proposes to purchase 100 percent equities of Ucar Net with 1.5 billion yuan by issuing shares at 13.28 yuan per share through private placement. The underlying asset Ucar Net is an Internet-based car service provider which is based on car leasing business and provides close-loop services ranging from car purchasing to car disposal. According to profit forecast, the net profit of Ucar Net is 118 million yuan in 2016. The stock price of Commercial City closed at 12.4 yuan per share before its trading suspension.
TOP
○ Anbang Insurance holds 5 pct equities in Eurasia and Dashang
------
As of Dec. 10, subsidiaries of Anbang Insurance Group altogether hold 5 percent equities of Changchun Eurasia Group Co., Ltd. (600697.SH) and Dashang Co., Ltd. (600694.SH), respectively. In addition, subsidiaries of Anbang Insurance altogether hold 25 percent equities in Financial Street Holdings Co., Ltd. (000402.SZ).
[Trading Trends]
○ Five institutes buy Sino Great Wall
------
The trading volume ranking list on Dec. 11 shows that Sino Great Wall Co., Ltd. (000018.SZ) was bought through five institutional seats with a total of 90.537 million yuan, accounting for 28 percent of its intraday turnover. No institutional seat sold it.
Comment: The company recently announced that it has signed the general contract on the free urban center in Colombo with an estimated amount of 250 million U.S. dollars. Institutes estimate that its overseas business will continue to see breakthroughs. As the company raised less funds from back-door listing, potential financing demands will bring more value to the company. In addition, the company will expand through the capital market and has huge potential in transformation and upgrading.
[Trading Alarms]
○ Nine new shares for subscription on Dec. 14, including Fortune Techgroup
------
Henan Thinker Automatic Equipment Co., Ltd. (732508.SH) issues shares at 33.56 yuan per share with an upper subscription limit of 12,000 shares for each account. Chung Sheen Technology Co., Ltd. (732996.SH) issues shares at 10.52 yuan per share with an upper subscription limit of 20,000 shares for each account. Shenyang Toly Bread Co., Ltd. (732866.SH) issues shares at 13.76 yuan per share with an upper subscription limit of 13,000 shares for each account. Jiangsu Misho Ecology Landscape Co., Ltd. (300495.SZ) issues shares at 31.82 yuan per share with an upper subscription limit of 6,500 shares for each account. Sichuan Cendes Architectural Design Co., Ltd. (300492.SZ) issues shares at 6.9 yuan per share with an upper subscription limit of 8,000 shares for each account. Shenzhen Silver Basis Technology Co., Ltd. (002786.SZ) issues shares at 10.72 yuan per share with an upper subscription limit of 12,500 shares for each account. Xiamen Wanli Stone Stock Co., Ltd. (002785.SZ) issues shares at 2.29 yuan per share with an upper subscription limit of 20,000 shares for each account. Shenzhen Click Technology Co., Ltd. (002782.SZ) issues shares at 7.58 yuan per share with an upper subscription limit of 17,000 shares for each account. Shenzhen Qixin Construction Group Co., Ltd. (002781.SZ) issues shares at 13.31 yuan per share with an upper subscription limit of 22,500 shares for each account. The IPO P/E ratios are all below 23 times. Full subscription of these shares needs 1.66 million yuan in total. Institutes are rosy about Thinker Automatic Equipment, a leader in the controlling system of trains.
[Weekly Review]
○ Embrace new value investment times
------
The most influential event on the capital market of last week is the widely expected registration-based IPO system. The system to be implemented soon worries the market over the surging supply in the future. Rumor has it that individual stocks with high valuation will face pressure and traditional blue chips will be favored again for some time.
However, the author believes that the implementation of the registration-based IPO system never means the plunge of individual stocks with high valuation. The scarce quality stocks will remain the targets in the future market. Take the new energy vehicles industry repeatedly reported by the SSN as an example, Sichuan Tianqi Lithium Industries, Inc. (002466.SZ), the owner of the lithium mine of Talison in Australia, is the target with the best quality under the backdrop of surging lithium prices. For such an enterprise, new lithium enterprises in the future will never challenge its monopoly position in the market. Economics tells us that scarce items are generally expensive. For the stocks with reasonably high prices, the registration-based IPO system will generally have psychological disturbance.
From another perspective, the registration-based IPO system will bring more fresh blood into the capital market. There may be more attractive themes in the future market and there are more hidden opportunities for investors. If the past investment means buying and holding at a low P/E ratio, the future investment value may be buying at a relatively high valuation and waiting for the growth of emerging stocks. The times of new value investment has come. Are you ready?
TOP
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