EARLYBIRD
15-Jan-2015
[Today's Guide]
> Xi Jinping encourages nuclear industry to boom, new projects expect to launch
> SGCC to construct highway quick-charge network in
> Biocause Phar. to buy equities of Guohua Life at nearly RMB10 bln, life insurance sees huge capital injection
> COSCO Shipping expects significant profit increase
[XFA Focus]
○ Xi Jinping encourages nuclear industry to boom, new projects expect to launch
------
At the approach of the 60th anniversary of the establishment of China's nuclear projects, Chinese President Xi Jinping commented that nuclear industry is a hi-tech strategic industry and also an important foundation for national security. Core competitive edge of nuclear industry must be sharpened comprehensively to continue the booming of China’s nuclear industry. Premier Li Keqiang hopes that the leading edge can be focused, competitiveness of nuclear industry can be enhanced comprehensively and to push nuclear power equipment to “go out”.
Comment: Experts believe that under the general background of accelerating the adjustment of energy structure, coastal nuclear power is expected to be re-launched in the beginning of 2015. Combined with the mid-and long-term development planning of nuclear power, the number of newly-approved units might be beyond market expectation. With the pushing of expected launch of domestic nuclear projects and the “going out” strategy, nuclear island (NI), conventional island (CI), butterfly valve, etc. all will see substantial order opportunities. Among A-share companies, Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd. (002167.SZ) and SUFA Technology Industry Co., Ltd., CNNC. (000777.SZ), actually controlled by China National Nuclear Corporation, mainly produce nuclear-level zirconium sponge and nuclear valves; Dongfang Electric Corporation Limited (600875.SH; 01072.HK) occupies large market share in the equipment of NI, CI, etc.; Yantai Taihai Manoir Nuclear Equipment Ltd. plans back-door listing through Sichuan Danfu Compressor Co., Ltd. (002366.SZ), and Danfu Compressor will turn to the construction of main circuits’ pipelines of nuclear power station.
[XFA Selection]
○ The central bank distributes “Notice on Adjusting the Deposit and Lending Standards of Financial Institutions”. China Banking Regulatory Commission (CBRC) will decide whether to lift banks’ lending ability.
○ The first batch of 50 ETF option makers will be selected from 15 securities companies, and 11 listed securities companies including Citic Securities Company Limited (600030.SH; 06030.HK), Haitong Securities Company Limited (600837.SH; 06837.HK), etc. are shortlisted.
○ Comprehensive and Deepening Reform Leading Group of the State-owned Assets Supervision and Administration Commission (SASAC) recently deliberated the “Instructions on Piloting Employee Shareholding in Mixed Ownership Enterprises ”.
○ Minister of the Ministry of Land and Resources indicated on Jan. 15 to pilot and explore reasonable price ratio mechanism between industrial and residential land to increase the price of industrial land.
○ Director of the National Tourism Administration stated on Jan. 15 that total investment in China’s tourism industry will reach 3 trillion yuan in next three years.
○ The National Health and Family Planning Commission indicated on Jan. 15 that flu will be rampant in the winter and coming spring. It required to strictly control the input of EBHF (Ebola hemorrhagic fever).
[Industry Information]
○ SGCC to construct highway quick-charge network in 2015
------
The Xinhua News Agency reported on Jan. 15 that Beijing-Shanghai highway quick-charge network, also the first one of its kind, is linked up. According to the introduction of responsible person from the State Grid Corporation of China (SGCC), 269 quick-charge stations and 1,076 charging points will be constructed on Beijing-Taibei Highway, Shenyang-Haikou Highway, Shanghai-Chengdu Highway and highways in Yangtze River delta in 2015. The route will cover all model cities in Beijing-Tianjin-Hebei Province and the Yangtze River delta. It is planned to construct 401 quick-charge stations and 1,604 charging points by 2020, covering all inter-city quick-charge network of model cities within the range of the company’s business area.
Comment: It is expected that rapid construction of charging network will bring huge market for the industry. According to institutions’ calculation, both commercial charging and passenger vehicle charging facilities will see a respective total investment of 5 billion yuan by 2015. Among A-share companies, Shenzhen Auto Electric Power Plant Co., Ltd. (002227.SZ) cooperates with China Southern Power Grid in supplying the equipment of 134 charging points and two electro-mobile charging stations which are Shenzhen Universiade Center station and Harmony station; Shanghai Potevio Co., Ltd. (600680.SH) is one of the main suppliers of charging points of Shenzhen electro-mobile charging network.
○ Bid of controlling equity of Tuopai Shede launches, liquor enterprises turn to mixed ownership reform
------
The state-owned equity transfer and equity capital expansion of Tuopai Shede Group, controlling shareholder of Sichuan Tuopai Shede Wine Co., Ltd. (600702.SH), start biding on Jan. 15 and the company’s stock will resume trading on Jan. 16. Announcement from property exchange shows that the floor price of 70 percent controlling stake of Tuopai Shede Group is 1.22 billion yuan. Potential investors shall committee to realize sales proceeds of 5 billion yuan in 2018 and 10 billion yuan in 2020, while the operating revenue of the Group in 2013 is 1,856 million yuan. XFA reported during the trading hours of Dec. 15 that controlling shareholder of Tuopai Shede was actively pushing forward strategic reorganization.
Comment: Under the slump of the whole industry, several liquor enterprises have turned to mixed ownership reform. For example, privatization reform of Luzhou Laojiao Co., Ltd. (000568.SZ) has entered deep water area in 2013; Chief executive of Wuliangye Yibin Co., Ltd. (000858.SZ) once indicated that the introduction of strategic investments, merchants shareholding, salary system reform, employee shareholding, etc. are all possible options; Shanxi Xinghuacun Fen Wine Factory Co., Ltd. (600809.SH) has investigated the situation of mixed ownership pilot in Shanghai Fen Wine Sales Company.
○ LED bulbs price hikes as industry booms again
According to the latest statistics of LEDinside, the retail prices of LED bulbs for the replacement of 40W and 60W incandescent lamps increased by 8.8 percent and 12.9 percent to 4.9 U.S. dollars and 14 U.S. dollars, respectively in last Dec., which is the biggest increase in 2014. Despite a decrease of 48 percent and 20 percent from the beginning of 2014, the price increases have improved the bargaining power of the upstream chips and packaging enterprises and the industry booms again.
Comment: Among A-share companies, Foshan Nationstar Optoelectronics Co., Ltd. (002449.SZ), a leading enterprise in the white light devices packaging industry, is actively advancing into the upstream chips and downstream lighting industries to improve its bargaining power in industrial chains. With the Phase I LED project, the overall profitability of Jiangsu Aucksun Co., Ltd. (002245.SZ) has been significantly improved. Zhejiang Yankon Group Co., Ltd. (600261.SH) has seamlessly transplanted its marketing channels and brand advantages into the new LED lamps business and will gradually transform from a subcontracting enterprise into one with its own brands.
[Announcement Interpretation]
○ Biocause Phar. to buy equities of Guohua Life at nearly RMB10 bln, life insurance sees huge capital injection
Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ) proposes to issue 2.9 billion shares at 3.39 yuan per share to its controlling shareholder Sunlinesh Group, its actual controller Liu Yiqian and his spouse Wang Wei through private placement. The 9.85 billion yuan to be raised will be used in the acquisition of 44 percent equities of Guohua Life and the capital increase. Biocause Phar. will hold 51 percent equities of Guohua Life after the acquisition. Guohua Life recorded a profit of 1.42 billion yuan in 2014.
Comment: The life insurance sector saw various bullish factors recently, which is closely related to the aging trend in China. Biocause Phar. proposed to sell equities in Guohua Life in 2014, but it turned to acquire its equities, increase the capitals and consolidate its statements, showing that Liu is rosy about the prospects of the life insurance industry. Tsinghua Tongfang Co., Ltd. (600100.SH) acquired 50 percent equities of AEGON-CNOOC Life Insurance Co., Ltd. with 1 billion yuan, which also shows the preference of industrial capitals to the life insurance industry.
◆ China Life Insurance Company Limited (02628.HK; 601628.SH) recorded a premium income of 331.2 billion yuan in 2014, increasing 1.38 percent year on year. Driven by the termination of the dual pension system, China Life Insurance and New China Life Insurance Company Ltd. (01336.HK; 601336.SH) soared by the daily limit of 10 percent on Jan. 15. Ping An Insurance (Group) Company Of China, Ltd. (02318.HK; 601318.SH) and China Pacific Insurance (Group) Co., Ltd. (02601.HK; 601601.SH) both saw increases in trading turnover and stock prices on the same day.
○ Daheng New Epoch to raise RMB3 bln in principal business, Zexi Investment to subscribe all shares in private placement
Daheng New Epoch Technology, Inc. (600288.SH) proposes to issue 309 million shares to Zheng Suzhen, its new actual controller, at 9.71 yuan per share through private placement. The 3 billion yuan to be raised will be invested in the industrialization of the intelligent detection equipment, photoelectricity and the industrialization of the laser technology. The company will see an annual revenue increase of 3,171 million yuan and an average annual after-tax profit of 426 million yuan after the projects reached their designed capacities. Daheng New Epoch recorded a net profit of 37.08 million yuan in 2013.
Comment: Zheng Suzhen is Xu Xiang’s mother and Xu is a well-known private fund manager. Zheng was transferred 29.52 equities from two former shareholders at 9.32 yuan per share and 1,202 million yuan in total during the trading suspension. The shareholding of Zheng will increase to 58.72 percent after the private placement.
○ Yanhua Smartech to acquire Chengdian Yixing to develop intelligent healthcare
Shanghai Yanhua Smartech Group Co., Ltd. (002178.SZ) proposes to acquire 100 percent equities of Chengdu Chengdian Yixing E-health Software Co., Ltd. through the issuance of shares and in cash. The acquisition is priced at 477 million yuan and the shares will be issued at 10.25 yuan per share through private placement. It will also raise a supporting fund of 120 million yuan from its actual controller Hu Liming at the same price to pay part of the cash consideration. The counterparty committed that the net profit of Chengdian Yixing from 2015 to 2017 shall be no less than 39.92 million yuan, 49.90 million yuan and 62.27 million yuan, respectively. Yanhua Smartech recorded a net profit of 37.62 million yuan in 2013.
Chengdian Yixing is principally engaged in the development of software and products for medical informationization. Its current core product is the hospitals information system and regional healthcare information platform. Its hospitals information system product is implemented and applied in more than 1,000 hospitals and medical and sanitary institutions in 17 provinces and municipalities across China.
○ Nanshan Aluminium inks supply agreement with Boeing
Shandong Nanshan Aluminium Co., Ltd. (600219.SH) and Boeing Company (BA.NYSE) signed an agreement on airline materials supply. Boeing will assist Nanshan Aluminium in passing the verification of airline materials for the certificate of airworthiness. Nanshan Aluminium will bid for the airline materials supply for Boeing after the verification. The materials will be used in the manufacturing of Boeing commercial airplanes. The cooperation between the two companies offers Nanshan Aluminium preemptive opportunities in airline materials.
[Financial Reports Express]
○ COSCO Shipping expects significant profit increase
COSCO Shipping Co., Ltd. (600428.SH) saw a year-on-year increase of 491 percent in its 2014 net profit mainly attributed to a subsidy of 183 million yuan for the demolition of old vessels and the supplementation of new ones. Wolong Real Estate Group Co., Ltd. (600173.SH) expects a year-on-year growth of 318 percent in its 2014 net profits mainly attributed to a net land acquisition and storage compensation of 548 million yuan. Xinjiang International Industry Co., Ltd. (000159.SZ) expects its 2014 net profit to increase 210 to 294 percent from last year. Jinlong Machinery & Electronic Co., Ltd. (300032.SZ) expects a year-on-year increase of 430 to 460 percent in its 2014 net profit mainly attributed to the principal business growth and the merger and reorganization. Shanghai Bestway Marine Engineering Design Co., Ltd. (300008.SZ) expects its 2014 net profit to increase 270 to 300 percent from last year thanks to the principal business growth and the new natural gas sales increase.
[Trading Trends]
○ Three institutions buy Tagen Group
The trading volume ranking list on Jan. 15 shows that three institutes bought Shenzhen Tagen Group Co., Ltd. (000090.SZ) with 54.24 million yuan in total, accounting for 12 percent of its intraday turnover.
Comment: Tagen Group initiated its SOEs reform in Nov., 2014 with a plan on private placement of 2.2 billion yuan. The management subscribed 300 million yuan and an employee shareholding plan was introduced for the first time. As Tagen Group has the attributes of state-owned assets integration platforms and emerging industrial platforms, institutes estimate that Tagen Group will obtain more quality assets with the implementation of the assets integration by the State-owned Assets Supervision and Administration Commission.
[Trading Alarms]
○ Changzheng Engineering and Huayou Cobalt launch subscription on Jan. 16
------
Changzheng Engineering Co., Ltd. (732698.SH) issues shares at 12.52 yuan per share with an acquiring up-limit of 24 thousand shares; Zhejiang Huayou Cobalt Co., Ltd. (732799.SH) issues shares at 4.77 yuan per share with an acquiring up-limit of 27 thousand shares. Full subscription of both stocks needs around 430 thousand yuan. Changzheng Engineering is recommended as the first choice since the company is the general engineering contractor and supplies complete equipment set for the pulverized coal pressure gasification technology which is converted as civil from military technology. The issuance P/E ratio of the company is 23 times. Institutions believe that with abundant upstream coal reserves, great downstream demand and environmental-protection-qualified technology, the company will benefit from policy support.
15-Jan-2015
[Today's Guide]
> Xi Jinping encourages nuclear industry to boom, new projects expect to launch
> SGCC to construct highway quick-charge network in
> Biocause Phar. to buy equities of Guohua Life at nearly RMB10 bln, life insurance sees huge capital injection
> COSCO Shipping expects significant profit increase
[XFA Focus]
○ Xi Jinping encourages nuclear industry to boom, new projects expect to launch
------
At the approach of the 60th anniversary of the establishment of China's nuclear projects, Chinese President Xi Jinping commented that nuclear industry is a hi-tech strategic industry and also an important foundation for national security. Core competitive edge of nuclear industry must be sharpened comprehensively to continue the booming of China’s nuclear industry. Premier Li Keqiang hopes that the leading edge can be focused, competitiveness of nuclear industry can be enhanced comprehensively and to push nuclear power equipment to “go out”.
Comment: Experts believe that under the general background of accelerating the adjustment of energy structure, coastal nuclear power is expected to be re-launched in the beginning of 2015. Combined with the mid-and long-term development planning of nuclear power, the number of newly-approved units might be beyond market expectation. With the pushing of expected launch of domestic nuclear projects and the “going out” strategy, nuclear island (NI), conventional island (CI), butterfly valve, etc. all will see substantial order opportunities. Among A-share companies, Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd. (002167.SZ) and SUFA Technology Industry Co., Ltd., CNNC. (000777.SZ), actually controlled by China National Nuclear Corporation, mainly produce nuclear-level zirconium sponge and nuclear valves; Dongfang Electric Corporation Limited (600875.SH; 01072.HK) occupies large market share in the equipment of NI, CI, etc.; Yantai Taihai Manoir Nuclear Equipment Ltd. plans back-door listing through Sichuan Danfu Compressor Co., Ltd. (002366.SZ), and Danfu Compressor will turn to the construction of main circuits’ pipelines of nuclear power station.
[XFA Selection]
○ The central bank distributes “Notice on Adjusting the Deposit and Lending Standards of Financial Institutions”. China Banking Regulatory Commission (CBRC) will decide whether to lift banks’ lending ability.
○ The first batch of 50 ETF option makers will be selected from 15 securities companies, and 11 listed securities companies including Citic Securities Company Limited (600030.SH; 06030.HK), Haitong Securities Company Limited (600837.SH; 06837.HK), etc. are shortlisted.
○ Comprehensive and Deepening Reform Leading Group of the State-owned Assets Supervision and Administration Commission (SASAC) recently deliberated the “Instructions on Piloting Employee Shareholding in Mixed Ownership Enterprises ”.
○ Minister of the Ministry of Land and Resources indicated on Jan. 15 to pilot and explore reasonable price ratio mechanism between industrial and residential land to increase the price of industrial land.
○ Director of the National Tourism Administration stated on Jan. 15 that total investment in China’s tourism industry will reach 3 trillion yuan in next three years.
○ The National Health and Family Planning Commission indicated on Jan. 15 that flu will be rampant in the winter and coming spring. It required to strictly control the input of EBHF (Ebola hemorrhagic fever).
[Industry Information]
○ SGCC to construct highway quick-charge network in 2015
------
The Xinhua News Agency reported on Jan. 15 that Beijing-Shanghai highway quick-charge network, also the first one of its kind, is linked up. According to the introduction of responsible person from the State Grid Corporation of China (SGCC), 269 quick-charge stations and 1,076 charging points will be constructed on Beijing-Taibei Highway, Shenyang-Haikou Highway, Shanghai-Chengdu Highway and highways in Yangtze River delta in 2015. The route will cover all model cities in Beijing-Tianjin-Hebei Province and the Yangtze River delta. It is planned to construct 401 quick-charge stations and 1,604 charging points by 2020, covering all inter-city quick-charge network of model cities within the range of the company’s business area.
Comment: It is expected that rapid construction of charging network will bring huge market for the industry. According to institutions’ calculation, both commercial charging and passenger vehicle charging facilities will see a respective total investment of 5 billion yuan by 2015. Among A-share companies, Shenzhen Auto Electric Power Plant Co., Ltd. (002227.SZ) cooperates with China Southern Power Grid in supplying the equipment of 134 charging points and two electro-mobile charging stations which are Shenzhen Universiade Center station and Harmony station; Shanghai Potevio Co., Ltd. (600680.SH) is one of the main suppliers of charging points of Shenzhen electro-mobile charging network.
○ Bid of controlling equity of Tuopai Shede launches, liquor enterprises turn to mixed ownership reform
------
The state-owned equity transfer and equity capital expansion of Tuopai Shede Group, controlling shareholder of Sichuan Tuopai Shede Wine Co., Ltd. (600702.SH), start biding on Jan. 15 and the company’s stock will resume trading on Jan. 16. Announcement from property exchange shows that the floor price of 70 percent controlling stake of Tuopai Shede Group is 1.22 billion yuan. Potential investors shall committee to realize sales proceeds of 5 billion yuan in 2018 and 10 billion yuan in 2020, while the operating revenue of the Group in 2013 is 1,856 million yuan. XFA reported during the trading hours of Dec. 15 that controlling shareholder of Tuopai Shede was actively pushing forward strategic reorganization.
Comment: Under the slump of the whole industry, several liquor enterprises have turned to mixed ownership reform. For example, privatization reform of Luzhou Laojiao Co., Ltd. (000568.SZ) has entered deep water area in 2013; Chief executive of Wuliangye Yibin Co., Ltd. (000858.SZ) once indicated that the introduction of strategic investments, merchants shareholding, salary system reform, employee shareholding, etc. are all possible options; Shanxi Xinghuacun Fen Wine Factory Co., Ltd. (600809.SH) has investigated the situation of mixed ownership pilot in Shanghai Fen Wine Sales Company.
○ LED bulbs price hikes as industry booms again
According to the latest statistics of LEDinside, the retail prices of LED bulbs for the replacement of 40W and 60W incandescent lamps increased by 8.8 percent and 12.9 percent to 4.9 U.S. dollars and 14 U.S. dollars, respectively in last Dec., which is the biggest increase in 2014. Despite a decrease of 48 percent and 20 percent from the beginning of 2014, the price increases have improved the bargaining power of the upstream chips and packaging enterprises and the industry booms again.
Comment: Among A-share companies, Foshan Nationstar Optoelectronics Co., Ltd. (002449.SZ), a leading enterprise in the white light devices packaging industry, is actively advancing into the upstream chips and downstream lighting industries to improve its bargaining power in industrial chains. With the Phase I LED project, the overall profitability of Jiangsu Aucksun Co., Ltd. (002245.SZ) has been significantly improved. Zhejiang Yankon Group Co., Ltd. (600261.SH) has seamlessly transplanted its marketing channels and brand advantages into the new LED lamps business and will gradually transform from a subcontracting enterprise into one with its own brands.
[Announcement Interpretation]
○ Biocause Phar. to buy equities of Guohua Life at nearly RMB10 bln, life insurance sees huge capital injection
Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ) proposes to issue 2.9 billion shares at 3.39 yuan per share to its controlling shareholder Sunlinesh Group, its actual controller Liu Yiqian and his spouse Wang Wei through private placement. The 9.85 billion yuan to be raised will be used in the acquisition of 44 percent equities of Guohua Life and the capital increase. Biocause Phar. will hold 51 percent equities of Guohua Life after the acquisition. Guohua Life recorded a profit of 1.42 billion yuan in 2014.
Comment: The life insurance sector saw various bullish factors recently, which is closely related to the aging trend in China. Biocause Phar. proposed to sell equities in Guohua Life in 2014, but it turned to acquire its equities, increase the capitals and consolidate its statements, showing that Liu is rosy about the prospects of the life insurance industry. Tsinghua Tongfang Co., Ltd. (600100.SH) acquired 50 percent equities of AEGON-CNOOC Life Insurance Co., Ltd. with 1 billion yuan, which also shows the preference of industrial capitals to the life insurance industry.
◆ China Life Insurance Company Limited (02628.HK; 601628.SH) recorded a premium income of 331.2 billion yuan in 2014, increasing 1.38 percent year on year. Driven by the termination of the dual pension system, China Life Insurance and New China Life Insurance Company Ltd. (01336.HK; 601336.SH) soared by the daily limit of 10 percent on Jan. 15. Ping An Insurance (Group) Company Of China, Ltd. (02318.HK; 601318.SH) and China Pacific Insurance (Group) Co., Ltd. (02601.HK; 601601.SH) both saw increases in trading turnover and stock prices on the same day.
○ Daheng New Epoch to raise RMB3 bln in principal business, Zexi Investment to subscribe all shares in private placement
Daheng New Epoch Technology, Inc. (600288.SH) proposes to issue 309 million shares to Zheng Suzhen, its new actual controller, at 9.71 yuan per share through private placement. The 3 billion yuan to be raised will be invested in the industrialization of the intelligent detection equipment, photoelectricity and the industrialization of the laser technology. The company will see an annual revenue increase of 3,171 million yuan and an average annual after-tax profit of 426 million yuan after the projects reached their designed capacities. Daheng New Epoch recorded a net profit of 37.08 million yuan in 2013.
Comment: Zheng Suzhen is Xu Xiang’s mother and Xu is a well-known private fund manager. Zheng was transferred 29.52 equities from two former shareholders at 9.32 yuan per share and 1,202 million yuan in total during the trading suspension. The shareholding of Zheng will increase to 58.72 percent after the private placement.
○ Yanhua Smartech to acquire Chengdian Yixing to develop intelligent healthcare
Shanghai Yanhua Smartech Group Co., Ltd. (002178.SZ) proposes to acquire 100 percent equities of Chengdu Chengdian Yixing E-health Software Co., Ltd. through the issuance of shares and in cash. The acquisition is priced at 477 million yuan and the shares will be issued at 10.25 yuan per share through private placement. It will also raise a supporting fund of 120 million yuan from its actual controller Hu Liming at the same price to pay part of the cash consideration. The counterparty committed that the net profit of Chengdian Yixing from 2015 to 2017 shall be no less than 39.92 million yuan, 49.90 million yuan and 62.27 million yuan, respectively. Yanhua Smartech recorded a net profit of 37.62 million yuan in 2013.
Chengdian Yixing is principally engaged in the development of software and products for medical informationization. Its current core product is the hospitals information system and regional healthcare information platform. Its hospitals information system product is implemented and applied in more than 1,000 hospitals and medical and sanitary institutions in 17 provinces and municipalities across China.
○ Nanshan Aluminium inks supply agreement with Boeing
Shandong Nanshan Aluminium Co., Ltd. (600219.SH) and Boeing Company (BA.NYSE) signed an agreement on airline materials supply. Boeing will assist Nanshan Aluminium in passing the verification of airline materials for the certificate of airworthiness. Nanshan Aluminium will bid for the airline materials supply for Boeing after the verification. The materials will be used in the manufacturing of Boeing commercial airplanes. The cooperation between the two companies offers Nanshan Aluminium preemptive opportunities in airline materials.
[Financial Reports Express]
○ COSCO Shipping expects significant profit increase
COSCO Shipping Co., Ltd. (600428.SH) saw a year-on-year increase of 491 percent in its 2014 net profit mainly attributed to a subsidy of 183 million yuan for the demolition of old vessels and the supplementation of new ones. Wolong Real Estate Group Co., Ltd. (600173.SH) expects a year-on-year growth of 318 percent in its 2014 net profits mainly attributed to a net land acquisition and storage compensation of 548 million yuan. Xinjiang International Industry Co., Ltd. (000159.SZ) expects its 2014 net profit to increase 210 to 294 percent from last year. Jinlong Machinery & Electronic Co., Ltd. (300032.SZ) expects a year-on-year increase of 430 to 460 percent in its 2014 net profit mainly attributed to the principal business growth and the merger and reorganization. Shanghai Bestway Marine Engineering Design Co., Ltd. (300008.SZ) expects its 2014 net profit to increase 270 to 300 percent from last year thanks to the principal business growth and the new natural gas sales increase.
[Trading Trends]
○ Three institutions buy Tagen Group
The trading volume ranking list on Jan. 15 shows that three institutes bought Shenzhen Tagen Group Co., Ltd. (000090.SZ) with 54.24 million yuan in total, accounting for 12 percent of its intraday turnover.
Comment: Tagen Group initiated its SOEs reform in Nov., 2014 with a plan on private placement of 2.2 billion yuan. The management subscribed 300 million yuan and an employee shareholding plan was introduced for the first time. As Tagen Group has the attributes of state-owned assets integration platforms and emerging industrial platforms, institutes estimate that Tagen Group will obtain more quality assets with the implementation of the assets integration by the State-owned Assets Supervision and Administration Commission.
[Trading Alarms]
○ Changzheng Engineering and Huayou Cobalt launch subscription on Jan. 16
------
Changzheng Engineering Co., Ltd. (732698.SH) issues shares at 12.52 yuan per share with an acquiring up-limit of 24 thousand shares; Zhejiang Huayou Cobalt Co., Ltd. (732799.SH) issues shares at 4.77 yuan per share with an acquiring up-limit of 27 thousand shares. Full subscription of both stocks needs around 430 thousand yuan. Changzheng Engineering is recommended as the first choice since the company is the general engineering contractor and supplies complete equipment set for the pulverized coal pressure gasification technology which is converted as civil from military technology. The issuance P/E ratio of the company is 23 times. Institutions believe that with abundant upstream coal reserves, great downstream demand and environmental-protection-qualified technology, the company will benefit from policy support.
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