EARLYBIRD
19-Jan-2015
[Today's Guide]
> SSE Composite Index plummets nearly 8 pct, adjustment needs likely to release soon
> State Council to deepen medical & health institutional reforms, social hospitals enjoy huge potential
> Network security review system to launch, industry to embrace policy support
> Controlling shareholder of Taiantang Phar. undertakes whole private placement
[XFA Focus]
○ SSE Composite Index plummets nearly 8 pct, adjustment needs likely to release soon
-----
The Shanghai and Shenzhen stock markets plummeted on Jan. 19 after the China Securities Regulatory Commission (CSRC) reined in margin trading. The SSE Composite Index closed plunging 7.7 percent and the IF1502, the main contract price of share index futures, plummeted by the daily limit of 10 percent in the afternoon. Financial stocks, which witnessed continuous increases, saw a wave of slumping by the daily limit of 10 percent and the financial sector sank over 9 percent. The margin buying reached a medium level of 72.8 billion yuan on the Shanghai Stock Exchange on Jan. 19. Meanwhile, the margin buying is 1.73 times of the short selling of 42 billion yuan, far below the 2.31 times since the beginning of the year.
Comment: XFA learnt that a majority of accounts for margin trading and short selling currently opened can normally participate in various businesses currently and a majority of securities companies indicated that they have no intention to make additional actions. Most institutes interviewed believe that the plunge represents a centralized releasing of accumulated adjustment demands in the market. The adjustment is not expected to deepen and is likely to form an important low level this week. In addition, other H shares other than securities companies recorded smaller decreases than A shares, which shows to some extent that the sell-into-corrections of A shares was resulted from a panic stampede. Capitals are likely to flow into growth stocks which experienced long-term adjustment with performance supporting after the market stabilized.
◆Funds: growth stocks to dominate future market
Some fund managers in Shenzhen believe that the plummeting market on Monday (Jan. 19) means the conclusion of the blue-chip market speculation recently. Benefited from the economic transformation and the industrial development trends, growth stocks are likely to be reviewed by institutional capitals. The growth stocks related to the Internet industries in particular are likely to dominate the market in the future. The hotspots in the future will focus on such subdivisions as Internet financing, online healthcare, Internet sports and Internet tourism.
[XFA Selection]
○ China’s Premier Li Keqiang highlighted structural reforms in promoting structural adjustments and increasing the supply of public products and services on Jan. 19.
○ Xiao Gang, chairman of the CSRC, indicated on Jan. 19 that it shall facilitate the transformation of Asian savings into Asian investments and further advance the mutual recognition of funds between the mainland and Hong Kong.
○ The China Banking Regulatory Commission (CBRC) and the National Development and Reform Commission (NDRC) jointly released the “Instructions on Energy-efficient Credit”. Energy conservation, environment protection and other green economic sectors will receive more credit supporting.
○ The Shanghai Municipal Development & Reform Commission is coordinating with the NDRC in preparing the plan for overall innovation and reform pilots, including the incentive mechanism and preferential tax policies.
○ China Mobile Limited (CHL.NYSE; 00941.HK) will make huge investments in the establishment of a data center by 2016 to meet the increasing demand for 4G user data services.
[Industry Information]
○ State Council to deepen medical & health institutional reforms, social hospitals enjoy huge potential
------
The “National Medical and Health Services System Plan” discussed and passed at the executive meeting of the State Council convened on Jan. 19 proposed that the number of beds at public hospitals for every 1,000 permanent residents will be limited to 3.3 by 2020. It will actively promote the development of social hospitals and 1.5 beds will be reserved for social hospitals. The number of beds in social hospitals for every 1,000 permanent residents was only 0.52 by 2013.
Comment: It means that social hospitals are likely to see huge increase. The construction of hospitals and medical devices industries will directly benefit from the process. The National Health and Family Planning Commission recently proposed that doctors can orderly practice medicine at different places, which will break the biggest bottleneck in the development of social hospitals. Among A-share companies, Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) received various orders for the construction of complete hospitals, which will guarantee its performance growth in 2015 and 2016. Shenzhen Glory Medical Co., Ltd. (002551.SZ) will develop the medical devices and consumables with its advantages in medical projects and hospital channels. Jinling Pharmaceutical Company Limited (000919.SZ) will increase the proportion of medical services with its advantages as a state-owned enterprise.
○ Network security review system to launch, industry to embrace policy support
------
According to the information from the Office of the Central Leading Group for Cyberspace Affairs, China’s network security review methods will be submitted to the central government for deliberation next month, indicating that the launch of China’s network security review system is just around the corner. Furthermore, Tencent Holdings Limited (00700.HK) will hold its “Operation Thunder” annual press conference on Jan. 20 with the attendance of leaders from the Ministry of Public Security. The conference will make public the “2014 Annual Report on Network Black Industry Chain” for the first time to reveal the inside stories behind the black industry chain of network security.
Comment: With the pressure of network security accidents happening frequently, the industrial development is embracing a policy honeymoon. The information security market expects to reach 70 billion yuan in scale by 2015. As for listed companies, Beijing Vrv Software Corporation Limited (300352.SZ) owns the Jinjia Defense System that can protect the security of XP system; Surfilter Network Technology Co., Ltd. (300311.SZ) is principally engaged in security products integration business; Nsfocus Information Technology Co., Ltd. (300369.SZ) layouts domestic operation system business through capital increase in its subsidiary.
[Companies Hotspot]
○ Handler to sell LED smart chip
------
XFA learns that the LED smart control chip, produced by Shenzhen G-energy Technology Company which is planned to be purchased by Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ), is under final stability test and is expected to come into the market in March. The purchase plan has been approved by the China Securities Regulatory Commission (CSRC) and is expected to be consolidated in the first quarter. According to previous commitment, the net profit of G-energy Technology shall reach at least 8.50 million yuan in 2014, which is almost equal to the overall net profit of all business owned by Handler.
Furthermore, the “Water Washing Set”, a new product developed by Handler for electricity system, was officially delivered for operation last Dec. The product can wash transformer substations with water while in a charged state.
[Announcement Interpretation]
○ Controlling shareholder of Taiantang Phar. undertakes whole private placement
------
Guangdong Taiantang Pharmaceutical Co., Ltd. (002433.SZ) plans to issue 45.29 million shares at 11.04 yuan per share through private placement to Taiantang Group, the company's controlling shareholder, to raise 500 million yuan for supplementing working capital needed in operation.
○ Masterwork Machinery to participate Brilliant Circle Holdings International
------
Masterwork Machinery Co., Ltd. (300195.SZ) plans to purchase totally 16.93 percent equities of Brilliant Circle Holdings International Limited (01008.HK) with capital at its disposal, and the transaction price ranges from 2.4 to 2.5 HKD per share. By then, Masterwork Machinery will hold 252 million shares of Brilliant Circle Holdings International, ranking as the second largest shareholder of the company. As one of the leading enterprises in China’s cigarette packing and printing industry, Brilliant Circle Holdings International is listed on the Main Board of the HK Stock Exchange. Masterwork Machinery is principally engaged in printing cigarette trademark.
○ Changchun Department Jituan resumes review on assets reorganization
------
Changchun Department Jituan Store Company Limited (600856.SH) announces that the China Securities Regulatory Commission (CSRC) has decided to resume review on the company’s major assets reorganization. According to the plan, the company plans to purchase 100 percent equities of Qingdao Zhongtian Energy Limited Company and raise supporting funds with all its assets and debts. The transaction price is 2.26 billion yuan. After the reorganization iscompleted, Changchun Department Jituan will be transformed into a new energy enterprise from a company focusing on department retailing. XFA reported on Jan. 14 that the reorganization of Changchun Department Jituan was approved by the Ministry of Commerce.
○ Shengyun Environment-Protection Group wins the bidding for flue gas cleaning system
------
Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ) wins the section bidding of flue gas cleaning in four places including Huaxi City with a contract price of around 75 million yuan, accounting for 6.41 percent of the revenue audited in 2013.
[Financial Reports Express]
○ ZYNP and Shapuaisi Phar. propose high share dividend
------
Xue Delong, actual controller of ZYNP Corporation (002448.SZ), proposes a 15-for-10 conversion of capital surplus into shares combined with 2 yuan dividend in its 2014 profit distribution plan. Chen Dekang, actual controller of Zhejiang Shapuaisi Pharmaceutical Co., Ltd. (603168.SH), proposes a 10-for-10 bonus share and 5-for-10 conversion of capital surplus into shares combined with cash dividend in its 2014 profit distribution plan.
○ Gree Electric Appliances and China World Trade Center expect performance growth in annual reports
------
The net profit of Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) reaches 14,114 million yuan, representing a year-on-year growth of 30 percent. Thanks to the rent increase of investment property and the large revenue growth, China World Trade Center Co., Ltd. (600007.SH) expects its net profit in 2014 to see a year-on-year growth of above 50 percent.
19-Jan-2015
[Today's Guide]
> SSE Composite Index plummets nearly 8 pct, adjustment needs likely to release soon
> State Council to deepen medical & health institutional reforms, social hospitals enjoy huge potential
> Network security review system to launch, industry to embrace policy support
> Controlling shareholder of Taiantang Phar. undertakes whole private placement
[XFA Focus]
○ SSE Composite Index plummets nearly 8 pct, adjustment needs likely to release soon
-----
The Shanghai and Shenzhen stock markets plummeted on Jan. 19 after the China Securities Regulatory Commission (CSRC) reined in margin trading. The SSE Composite Index closed plunging 7.7 percent and the IF1502, the main contract price of share index futures, plummeted by the daily limit of 10 percent in the afternoon. Financial stocks, which witnessed continuous increases, saw a wave of slumping by the daily limit of 10 percent and the financial sector sank over 9 percent. The margin buying reached a medium level of 72.8 billion yuan on the Shanghai Stock Exchange on Jan. 19. Meanwhile, the margin buying is 1.73 times of the short selling of 42 billion yuan, far below the 2.31 times since the beginning of the year.
Comment: XFA learnt that a majority of accounts for margin trading and short selling currently opened can normally participate in various businesses currently and a majority of securities companies indicated that they have no intention to make additional actions. Most institutes interviewed believe that the plunge represents a centralized releasing of accumulated adjustment demands in the market. The adjustment is not expected to deepen and is likely to form an important low level this week. In addition, other H shares other than securities companies recorded smaller decreases than A shares, which shows to some extent that the sell-into-corrections of A shares was resulted from a panic stampede. Capitals are likely to flow into growth stocks which experienced long-term adjustment with performance supporting after the market stabilized.
◆Funds: growth stocks to dominate future market
Some fund managers in Shenzhen believe that the plummeting market on Monday (Jan. 19) means the conclusion of the blue-chip market speculation recently. Benefited from the economic transformation and the industrial development trends, growth stocks are likely to be reviewed by institutional capitals. The growth stocks related to the Internet industries in particular are likely to dominate the market in the future. The hotspots in the future will focus on such subdivisions as Internet financing, online healthcare, Internet sports and Internet tourism.
[XFA Selection]
○ China’s Premier Li Keqiang highlighted structural reforms in promoting structural adjustments and increasing the supply of public products and services on Jan. 19.
○ Xiao Gang, chairman of the CSRC, indicated on Jan. 19 that it shall facilitate the transformation of Asian savings into Asian investments and further advance the mutual recognition of funds between the mainland and Hong Kong.
○ The China Banking Regulatory Commission (CBRC) and the National Development and Reform Commission (NDRC) jointly released the “Instructions on Energy-efficient Credit”. Energy conservation, environment protection and other green economic sectors will receive more credit supporting.
○ The Shanghai Municipal Development & Reform Commission is coordinating with the NDRC in preparing the plan for overall innovation and reform pilots, including the incentive mechanism and preferential tax policies.
○ China Mobile Limited (CHL.NYSE; 00941.HK) will make huge investments in the establishment of a data center by 2016 to meet the increasing demand for 4G user data services.
[Industry Information]
○ State Council to deepen medical & health institutional reforms, social hospitals enjoy huge potential
------
The “National Medical and Health Services System Plan” discussed and passed at the executive meeting of the State Council convened on Jan. 19 proposed that the number of beds at public hospitals for every 1,000 permanent residents will be limited to 3.3 by 2020. It will actively promote the development of social hospitals and 1.5 beds will be reserved for social hospitals. The number of beds in social hospitals for every 1,000 permanent residents was only 0.52 by 2013.
Comment: It means that social hospitals are likely to see huge increase. The construction of hospitals and medical devices industries will directly benefit from the process. The National Health and Family Planning Commission recently proposed that doctors can orderly practice medicine at different places, which will break the biggest bottleneck in the development of social hospitals. Among A-share companies, Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) received various orders for the construction of complete hospitals, which will guarantee its performance growth in 2015 and 2016. Shenzhen Glory Medical Co., Ltd. (002551.SZ) will develop the medical devices and consumables with its advantages in medical projects and hospital channels. Jinling Pharmaceutical Company Limited (000919.SZ) will increase the proportion of medical services with its advantages as a state-owned enterprise.
○ Network security review system to launch, industry to embrace policy support
------
According to the information from the Office of the Central Leading Group for Cyberspace Affairs, China’s network security review methods will be submitted to the central government for deliberation next month, indicating that the launch of China’s network security review system is just around the corner. Furthermore, Tencent Holdings Limited (00700.HK) will hold its “Operation Thunder” annual press conference on Jan. 20 with the attendance of leaders from the Ministry of Public Security. The conference will make public the “2014 Annual Report on Network Black Industry Chain” for the first time to reveal the inside stories behind the black industry chain of network security.
Comment: With the pressure of network security accidents happening frequently, the industrial development is embracing a policy honeymoon. The information security market expects to reach 70 billion yuan in scale by 2015. As for listed companies, Beijing Vrv Software Corporation Limited (300352.SZ) owns the Jinjia Defense System that can protect the security of XP system; Surfilter Network Technology Co., Ltd. (300311.SZ) is principally engaged in security products integration business; Nsfocus Information Technology Co., Ltd. (300369.SZ) layouts domestic operation system business through capital increase in its subsidiary.
[Companies Hotspot]
○ Handler to sell LED smart chip
------
XFA learns that the LED smart control chip, produced by Shenzhen G-energy Technology Company which is planned to be purchased by Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ), is under final stability test and is expected to come into the market in March. The purchase plan has been approved by the China Securities Regulatory Commission (CSRC) and is expected to be consolidated in the first quarter. According to previous commitment, the net profit of G-energy Technology shall reach at least 8.50 million yuan in 2014, which is almost equal to the overall net profit of all business owned by Handler.
Furthermore, the “Water Washing Set”, a new product developed by Handler for electricity system, was officially delivered for operation last Dec. The product can wash transformer substations with water while in a charged state.
[Announcement Interpretation]
○ Controlling shareholder of Taiantang Phar. undertakes whole private placement
------
Guangdong Taiantang Pharmaceutical Co., Ltd. (002433.SZ) plans to issue 45.29 million shares at 11.04 yuan per share through private placement to Taiantang Group, the company's controlling shareholder, to raise 500 million yuan for supplementing working capital needed in operation.
○ Masterwork Machinery to participate Brilliant Circle Holdings International
------
Masterwork Machinery Co., Ltd. (300195.SZ) plans to purchase totally 16.93 percent equities of Brilliant Circle Holdings International Limited (01008.HK) with capital at its disposal, and the transaction price ranges from 2.4 to 2.5 HKD per share. By then, Masterwork Machinery will hold 252 million shares of Brilliant Circle Holdings International, ranking as the second largest shareholder of the company. As one of the leading enterprises in China’s cigarette packing and printing industry, Brilliant Circle Holdings International is listed on the Main Board of the HK Stock Exchange. Masterwork Machinery is principally engaged in printing cigarette trademark.
○ Changchun Department Jituan resumes review on assets reorganization
------
Changchun Department Jituan Store Company Limited (600856.SH) announces that the China Securities Regulatory Commission (CSRC) has decided to resume review on the company’s major assets reorganization. According to the plan, the company plans to purchase 100 percent equities of Qingdao Zhongtian Energy Limited Company and raise supporting funds with all its assets and debts. The transaction price is 2.26 billion yuan. After the reorganization iscompleted, Changchun Department Jituan will be transformed into a new energy enterprise from a company focusing on department retailing. XFA reported on Jan. 14 that the reorganization of Changchun Department Jituan was approved by the Ministry of Commerce.
○ Shengyun Environment-Protection Group wins the bidding for flue gas cleaning system
------
Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ) wins the section bidding of flue gas cleaning in four places including Huaxi City with a contract price of around 75 million yuan, accounting for 6.41 percent of the revenue audited in 2013.
[Financial Reports Express]
○ ZYNP and Shapuaisi Phar. propose high share dividend
------
Xue Delong, actual controller of ZYNP Corporation (002448.SZ), proposes a 15-for-10 conversion of capital surplus into shares combined with 2 yuan dividend in its 2014 profit distribution plan. Chen Dekang, actual controller of Zhejiang Shapuaisi Pharmaceutical Co., Ltd. (603168.SH), proposes a 10-for-10 bonus share and 5-for-10 conversion of capital surplus into shares combined with cash dividend in its 2014 profit distribution plan.
○ Gree Electric Appliances and China World Trade Center expect performance growth in annual reports
------
The net profit of Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) reaches 14,114 million yuan, representing a year-on-year growth of 30 percent. Thanks to the rent increase of investment property and the large revenue growth, China World Trade Center Co., Ltd. (600007.SH) expects its net profit in 2014 to see a year-on-year growth of above 50 percent.
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