[Today's Guide]
○Top design scheme enhancing Northeast China approved, new stable growth to intensify
○NDRC supports renewable energy sources, concentration ratio of printing and dyeing industry to improve
○Tangel Publishing to acquire Youai Network Technology and Renmin Jindian (Beijing) Book Industry to expand to online game and education areas, Gosun Holding purchase Yingyue Network Technology at RMB1.1 bln to extend industrial chain
○Tianze Information Industry acquires Yuanjiang Information Technology, Talent Television ＆ Film expand film business through private placement
[SSN Focus]
Top design scheme enhancing Northeast China approved, new stable growth to intensify
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The Political Bureau of the CPC Central Committee held a meeting on Dec. 30, and approved Several Opinions on Comprehensively Enhancing Old Industrial Bases including Northeast China. The meeting proposed that, by 2020, Northeast China should gain great achievements in major fields and key reforms, make huge progress in transforming the models of economic development and structural reform, maintain the economic growth of a medium and high speed, and synchronously realize the goal of building up a comprehensive well-off society.
Comment: Northeast China faces the difficulties from lagged market-oriented reform and slow industrial upgrading, which is a typical epitome of China's economy during the "three superposed periods". With high concern of the central government, Northeast China is likely to become the first pilot area for stable growth and manufacturing industrial upgrading, and the following detailed measures will be successively issued. Infrastructure companies, such as Heilongjiang Transport Development Co., Ltd. (601188.SH) and Yingkou Port Liability Co., Ltd. (600317.SH), were very active when previous policies were released. Snow sports carried out by Changbai Mountain Tourism Co., Ltd. (603099.SH) and nuclear motors produced by Harbin Electric Corporation Jiamusi Electric Machine Co., Ltd. (000922.SZ) are competitive industries in Northeast China.
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[SSN Selection]
○Central Huijin Investment Ltd. announced that it has transferred the stocks acquired from China Securities Finance Corporation Limited to its wholly-owned Huijin Assets Management Co., Ltd. since August this year.
○Chinese Football Association (CFA) confirmed that it will bid for 2023 Asian Cup. Previously, comment article of the Xinhua News Agency once suggested CFA take the Asian Cup as practice to bid for the World Cup.
○National Development and Reform Commission recently will issue a document to change the price of natural gas, and build an adjustment mechanism that connecting prices of natural gas and alternative energy.
○Planning on Synergetic Development of Beijing-Tianjin-Hebei for Ecological Environment Protection has been released on Dec. 30, requiring average annual concentration of PM2.5 down by 40 percent in 2020 when compared to 2013.
○China Meteorological Administration announced that China's average temperature in this year sets a historical high, making it a super El Nino event.
○Wu Xiaohui, chairman of Anban Insurance Group, indicated that insurance fund's buying shares through the secondary market acquisition to 5 percent limit supports the real economy, and also mentioned that the total assets of Anbang valued 1.7 trillion yuan.
[Industry Information]
○Tax surcharge on renewable energy power price raised to boost biomass power generation
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The National Development and Reform Commission (NDRC) announced today that the tax surcharge on renewable energy power price is raised to 0.019 yuan per kilowatt. The levy of the tax surcharge on renewable energy power price will be used for the establishment of funds for renewable energy development and subsidizing the biomass power generation, wind power and solar power.
Comments: Based on the agreement reached at the Paris Climate Change Conference, China will increase the input in environmental protection. According to the targets of policies, the proportion of non-fossil energy will reach 20 percent in 2020, which will speed up the development of renewable energy. As the cost of biomass power generation is higher than that of hydropower and thermal power, the NDRC raised the tax surcharge on renewable energy power to promote its development and provide key supports to the orderly development of clean energy. In terms of listed companies, Guangdong Chant Group Inc. (002616.SZ) and Kaidi Ecological and Environmental Technology Co., Ltd. (000939.SZ) are quite competitive in the biomass power generation industry.
○Environmental protection treatment accelerates obsolescence of outdated printing and dyeing capacity, improving industrial concentration ratio
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SSN learns that under the propelling environmental protection treatment, 9 printing and dyeing enterprises in Shaoxing City, Zhejiang Province will all be relocated before end-December. Data shows that the printing and dyeing capacity in Shaoxing and Xiaoshan of Zhejiang takes up over one third of national printing and dyeing capacity.
Comment: The obsolescence of outdated printing and dyeing capacity in Shaoxing will contribute to improve industrial concentration ratio and the supply-demand structure. It is also learnt that thanks to the year-on-year decrease in the price of coal and dye, which are the main raw materials for printing and dyeing, the industry sees improving gross profit. Since 2016 G20 Summit will be held in Hangzhou, Zhejiang province, great efforts will be devoted to the treatment of high-pollution industries with printing and dyeing industry included so as to improve industrial supply-demand structure. As to listed companies, Zhejiang Hangmin Co., Ltd. (600987.SH), a leading domestic company in printing and dyeing, owns a capacity of 1 billion meters; Zhejiang Mizuda Printing ＆ Dyeing Group Co., Ltd. (002034.SZ) is able to produce 80 million meters of various dyed cloth.
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○CNNC and CGN jointly establishes Hualong International Nuclear Technology to boost nuclear technology exports
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China National Nuclear Corporation (CNNC) and China General Nuclear Power Corporation (CGN), two Chinese nuclear giants, inked agreement on Dec. 30 to jointly establish Hualong International Nuclear Technology Limited Company. According to the agreement, Hualong International Nuclear Technology will actively implement the state's strategy on nuclear power development, conduct unified management and implementation on the operation of assets including Hualong technology, brand and intellectual property at home and abroad, and push Hualong One technology to become a flagship of the "going out" of China's nuclear power technology.
Comment: The establishment of the joint venture by CGN and CNNC helps to reduce competition among domestic peers in the bidding for orders in overseas countries and sharpen the competitiveness of China's nuclear power technology. As the construction of China's nuclear power projects speeds up and the exporting market expands, enterprises producing nuclear power equipment might see growth of orders. As to listed companies, Anhui Yingliu Electromechanical Co., Ltd. (603308.SH) monopolizes the pump case of nuclear level-one main pump in domestic market; Zhejiang Jiuli Hi-tech Metals Co., Ltd. (002318.SZ) is able to produce U-type tubes for nuclear power stations; Jiangsu Shentong Valve Co., Ltd. (002438.SZ), a leading domestic producer of butterfly valves and ball valves for nuclear power stations, is now expanding to traffic control of nuclear power.
[Announcement Interpretation]
○Tangel Publishing to acquire Youai Network Technology and Renmin Jindian (Beijing) Book Industry to expand to online game and education areas
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Tangel Publishing Co., Ltd. (300148.SZ) plans to acquire 100 percent equities of Guangzhou Youai Network Technology Co., Ltd. with 1.62 billion yuan by issuing 60.80 million shares through private placement at 17.78 yuan per share and paying 539 million yuan in cash. A supporting fund of 1,144 million yuan will be raised through private placement at the same offering price. The company's employee shareholding plan proposes to subscribe 100 million yuan. According to performance commitment, the net profit of Youai Network Technology which is primarily engaged in the development, issuance and operation of mobile online games will be no less than 120 million yuan, 150 million yuan and 190 million yuan, respectively, from 2016 to 2018.
The company also proposes to acquire 26.5 percent equities of Renmin Jindian (Beijing) Book Industry Co., Ltd. with its own 114 million yuan and increase capital in the subject company with 106 million yuan so as to increase its shareholding to 51 percent for controlling stakes. Renmin Jindian (Beijing) Book Industry is principally engaged in education service and mainly produces education books, education textbooks and periodicals. The counterparty promises that the net profit of Renmin Jindian (Beijing) Book Industry from 2017 to 2019 will be no less than 109 million yuan, 119 million yuan and 129 million yuan, respectively.
○Gosun Holding purchase Yingyue Network Technology at RMB1.1 bln to extend industrial chain
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Gosun Holding Co., Ltd. (000971.SZ) plans to raise funds by issuing 33.2 million shares at a price of 19.58 yuan per share through private placement and pay 500 million yuan in cash (through raising supporting funds) to purchase 100 percent equity of Shanghai Yingyue Network Technology Company at a total amount of 1.15 billion yuan. Yingyue Network Technology is principally engaged in virtual private networks (VPNs) services and other value-added services. The counterparty promised that net profits of Yingyue Network Technology will not be less than 60 million yuan, 70 million yuan and 90 million yuan during 2016 and 2018 respectively. This acquisition will allow the company to expand its business from IDC and CDN businesses to data transmission service.
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○Tianze Information Industry acquires Yuanjiang Information Technology at RMB1 bln
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Tianze Information Industry Inc. (300209.SZ) plans to issue 47.19 million shares at a price of 21.19 yuan per share to Yuanjiang Information Technology Co., Ltd. through private placement to purchase 100 percent equity of the company at 1 billion yuan. Yuanjiang Information Technology is specialized in providing communication network construction and relevant comprehensive technology services to communication operators. Tianze Information Industry promised that net profits of Yuanjiang Information Technology will not be less than 60 million yuan, 95 million yuan and 145 million yuan from 2015 to 2017 respectively.
○Talent Television ＆ Film expand film business through private placement
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Zhejiang Talent Television ＆ Film Co., Ltd. (300426.SZ) intends to raise 650 million yuan by issuing 8.98 million shares at a price of 72.36 yuan per share through private placement to supplement working capitals for movie and TV drama business. The company's actual controller Wu Hongliang will subscribe 3.54 million shares and consignors of an asset management plan of Changjiang Securities (Shanghai) Assets Management Co., Ltd., which are some senior executives of the company, will subscribe 2.31 million shares.
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○Hansen Phar. to raise RMB1.1 bln to build hospitals
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Hunan Hansen Pharmaceutical Co., Ltd. (002412.SZ) plans to raise 1.08 billion yuan through private placement. The funds will be invested in the construction projects of two women and children hospitals in Ningxiang and Yiyan counties of Hunan Province and used to supplement working capitals. The company's controlling shareholder Hainan Hansen Investment Co., Ltd. will subscribe shares at no less than 50 million yuan.
[Financial Reports Express]
○Dakang Pasture Farming proposes high share conversion
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Hunan Dakang Pasture Farming Co., Ltd. (002505.SZ) proposes a 9-for-10 conversion of capital surplus into shares in its annual report.
[Trading Trends]
○Meiya Pico Information bought by five institutional seats
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The trading volume ranking list on Dec. 30 shows that Xiamen Meiya Pico Information Co., Ltd. (300188.SZ) was bought through five institutional seats with a total amount of 421 million yuan, accounting for 40.33 percent of its intraday turnover.
Comment: General Office of the State Council recently issued the Opinion on Strengthening Governance of Infringement Counterfeit Behaviors on Internet, proposing to effectively contain the infringement counterfeit behaviors on the Internet through new information technology in about three years. Institutions believe that Meiya Pico Information, whose businesses cover network supervision, digital intellectual property protection and public opinion monitoring, will directly benefit from this.
[Publication Suspension]
○SSN Early Bird will be suspended during the New Year's Day holiday according to the trading suspension arrangement of Shanghai and Shenzhen stock exchanges and publication will be resumed on Jan. 3, 2016. Wish investors a happy New Year!
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