[Today's Guide]
○Political Bureau studies economic work of next year, proposing to reduce real estate inventory
○MIIT first mentions issuing action plan on Internet of automobiles, technology giants to add investment
○CGN to control Dalian International, Fujian Snowman sets foot in natural gas by merger
○Cheng Da to acquire insurance assets, Citychamp Dartong to enter medical service industry
[SSN Focus]
○Political Bureau studies economic work of next year, proposing to reduce real estate inventory
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The Political Bureau of the CPC Central Committee on Dec. 14 held a meeting to analyze and study the economic work of 2016, and to research and deploy the urban work. It stressed that the inventory of the real estate market should be reduced; citizenization of farmers should speed up; housing system reform should be enhanced based on the demands of new citizens; effective demands should be expanded to stabilize the real estate market.
Comment: Senior management recently focuses on reducing the inventory of real estate market. Research institutions believe that the policies on the credit, loan and interest rates for the real estate market are likely to further ease in the future, especially that the role of the housing provident fund is likely to be reinforced, and national housing bank is also possibly arranged in the timetable. A series of supporting policies benefit the stable and solid growth of sales in the real estate market. Transaction service providers, such as Shenzhen Worldunion Properties Consultancy Incorporated (002285.SZ) and Everyday Network Co., Ltd. (300295.SZ), and other companies focusing on the deployments in Beijing suburbs with rapid urbanization ratio, including RiseSun Real Estate Development Co., Ltd. (002146.SZ) and China Fortune Land Co., Ltd. (600340.SH), are likely to gain benefits.
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[SSN Selection]
○China's fiscal expenditure in November greatly increased by 25.9 percent year on year, showing that infrastructure construction projects are gradually implemented under the fiscal incentives on stable growth.
○The State Council on Dec. 14 announced the newly-approved Map Management Regulations which encourages Internet-based map service providers to explore the development and utilization of geographic information.
○The Silk Road Fund will invest 2 billion U.S. dollars to establish China-Kazakhstan Production Capacity Cooperation Fund which is the first specialized fund built by the Silk Road Fund since its establishment.
○The National Development and Reform Commission announced that the first batch of 1,043 publically-recommended PPP projects have gained active progresses; up to the end of November, 329 projects have been signed.
○The Xinjiang Production and Construction Corps recently deliberated and approved the Implementation Opinions on Accelerating the Development of E-commerce, proposing that the annual sales volume will exceed 10 billion yuan at the end of the "13th Five-Year Plan" period.
[Industry Information]
○MIIT first mentions issuing action plan on Internet of Automobiles, technology giants to add investment
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The Ministry of Industry and Information Technology (MIIT) on Dec. 11 issued an action plan (2015-2018) to implement the Guidelines on Positively Enhancing "Internet Plus" Initiative of the State Council, and it also mentioned for the first time that it will issue the Action Plan for the Development and Innovation of Internet of Automobiles (2015-2020), requiring to promote the research and development of technologies and the preparation of standard on Internet of Automobiles and launch pilots on Internet of Automobiles based on 5G technology. On the same day, Baidu, Inc. (BIDU.NASDAQ) announced to build up a department of automatic drive business, planning to realize the commercialization of automatic-drive cars in three years, and also mass production in five years.
Comment: Intellectualization and sharing point the development direction of automobile industry. IT giants at home and abroad including Google and Baidu all crowd into the intelligent automobile field to advance the course of automobile intellectualization. Traditional automobile manufacturers are also actively facilitating the intellectualization process of their own products. The market size of the Internet of Automobiles might see explosive growth. As to listed companies, FutureMove Technologies Co., Ltd., a company participated by Zhejiang Vie Science ＆ Technology Co., Ltd. (002590.SZ), is a leading supplier of front-loading Internet of automobiles in China. The Internet of Automobiles products of Shenzhen Deren Electronic Co., Ltd. (002055.SZ) have passed the trial assembly detection by mainstream insurance companies.
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○Chinese yuan weakens to 4-year low against USD, export-oriented enterprises to benefit
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The spot exchange rate of RMB against USD drops for the seventh day straightly on Dec. 14 and even drops below 6.46 during the trading hours, setting a new low since 2011. According to the statement by the People's Bank of China, the funds outstanding for foreign exchange in November released on Dec. 14 reports a drop of 315.8 billion yuan, setting the second largest single-month drop ever.
Comment: Generally speaking, the devaluation of RMB boosts export-oriented enterprises. This is because these enterprises usually take the U.S. dollar as the currency of settlement, and the devaluation of RMB improves their exchange earning and sharpens their price competitiveness when exporting. According to SSN's statistics, excluding special industries including trade, companies with exporting accounting for over half of their income from principal business mainly come from textile and garment, household light industry, white household appliances and etc. Companies including Shanghai Challenge Textile Co., Ltd. (002486.SZ), Hang Zhou Great Star Industrial Co., Ltd. (002444.SZ) and Guang Dong Sitong Group Co., Ltd. (603838.SH) all see an export proportion higher than 90 percent.
[Announcement Interpretation]
○CGN to control Dalian International
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China Dalian International Cooperation (Group) Holdings Ltd. (000881.SZ) plans to acquire the equities of seven companies held by CGN (Beijing) Nuclear Technology Application Co., Ltd. with 4.25 billion yuan by issuing shares at 8.77 yuan per share through private placement to expand to non-powered nuclear technology industry; Dalian International also plans to raise a supporting fund of no more than 2.8 billion yuan at 10.46 yuan per share. Upon completion of the transaction, Dalian International will become the first A-share listing platform under China General Nuclear Power Corporation (CGN). The counterparty promises that the total net profit of the subject companies after consolidated statements will reach 313 million yuan in 2016. The stock price of the company closed at 13.15 yuan per share before trading suspension.
Comment: Analysts believe that CGN (Beijing) Nuclear Technology Application might grow into a new pillar industry of CGN in the future and other hi-tech assets might also be injected into the company. Therefore, it's highly possible that Dalian International will see more capital operation later.
○Fujian Snowman sets foot in natural gas by merger
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Fujian Snowman Co., Ltd. (002639.SZ) plans to issue shares at a price of 9.57 yuan per share through private placement to purchase 100 percent equity of Sichuan Jiayun Oil Gas Technical Services Co. Ltd. at 525 million yuan together with cash. It will raise no more than 525 million yuan of supporting funds. Jiayun Oil Gas Technical Services is principally engaged in construction and professional technical services of production operation of natural gas project. The counterparty promises its net profit will not be less than 38.89 million yuan in 2016. The company's stock price closed at 8.64 yuan per share before trading suspension.
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○Cheng Da to acquire insurance assets
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Liaoning Cheng Da Co., Ltd. (600739.SH) intends to bid for no more than 3 billion shares of China United Insurance Holding Company, account for 19.595 percent of the company's total capital stock. Auction price of the underlying assets starts from 1.72 yuan per share. China United Insurance is a comprehensive insurance financial group with the integration of real estate insurance, life insurance and assets management, whose net profit recorded 2,175 million yuan in the first half of the year.
○Citychamp Dartong to enter medical service industry
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Citychamp Dartong Co., Ltd. (600067.SH) plans to set up a wholly-owned subsidiary Citychamp Medical Investment Management Company as a regional investment platform facilitating the company to enter medical field. The company will also establish Citychamp Hospital with Huai'an Hospital of Traditional Chinese Medicine through investing 85 million yuan, taking up 85 percent of registered capitals of the new hospital. The company indicates that it will start to make investment deployment in the field of medical care for the aged, paving way for probing into the new way for elderly care and project of real estate for the elderly in the future.
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○Wanfeng Auto Wheel partners with Tuhu
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Zhejiang Wanfeng Auto Wheel Co., Ltd. (002085.SZ) plans to jointly set up a company with Tuhu.cn Corporation by investing 55 million yuan, accounting for 55 percent of the total registered capitals. Tuhu.cn Corporation is the biggest e-commerce and O2O platform of automobile maintenance at the automotive aftermarket in China. It has 15 warehouse logistics center across the country and 10,000 cooperant stores at more than 300 cities.
[Financial Reports Express]
○The controlling shareholder of Henan Tong-Da Cable Co., Ltd. (002560.SZ) proposes a 20-for-10 conversion of capital surplus into shares in the company's annual report. Its latest share price closes at 38.36 yuan per share. The controlling shareholder of Beijing Originwater Technology Co., Ltd. (300070.SZ) proposes a 15-for-10 conversion of capital surplus into shares in the company's annual report. Its latest share price is 49.01 yuan per share and its annual performance is expected to grow by 40-70 percent this year.
[Trading Trends]
○Zhongjin Lingnan Nonfemet bought through five institutional seats
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The trading volume ranking list on Dec. 14 shows that Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060.SZ) was bought through five institutional seats with a total of 525 million yuan, accounting for 22 percent of its intraday turnover. Two institutional seats sold its stocks totaling at 52.63 million yuan.
Comment: Nonferrous metal sector sees a slight growth amid this round of rebound. Some institutions are rosy about the shift of market style under the improvement in Chinese economic margin. In view of the supply side reform put forward by the central government for several times, the market expects that there may be new measures for the traditional cyclical industry after the Central Economic Work Conference is held.
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