[Today’s Guide]
> Xi Jinping requires improving water quality of Erhai Lake, environmental-protection sector to benefit
> Internet finance brings new growth point, equity appreciation of fund companies to expect
> Yabaite to achieve back-door listing through ZhongLian Electric at RMB3.5 bln
> Zhongding Sealing Parts to develop nuclear power sealing products
[XFA Focus]
○ Xi Jinping requires improving water quality of Erhai Lake, environmental-protection sector to benefit
------
Chinese President Xi Jinping visited Gusheng Villiage of Wanqiao Town near Erhai Lake (in Yunnan Province) in the morning of Jan. 20 to research the ecological protection of Erhai Lake. Xi required local cadres to improve the water quality of Erhai Lake, and said that “Yunnan has very good ecological environment that must be cherished. We can never destroy it.”
Comment: State leaders attach great importance to ecological environment issues during the inspection in Yunnan Province. Environmental-protection sector expects to be favored by the market again. Research institutions believe that 2015 will be the year to assess and end the “Twelfth Five-year Plan” for environmental pollution improvement; a series of environmental protection policies, including environmental tax, etc., designed by the top level will be launched and implemented successively; the promotion of SOEs reform, PPP mode and third-party operation will activate industrial investment; performance growth of relevant enterprises expects to reach or surpass expectations. Among A-share companies, Beijing Originwater Technology Co., Ltd. (300070.SZ) owns several sewage treatment projects in Yunnan Province, and the company holds 36.38 percent equities of Yunnan Water Investment Co., Ltd. controlled by the State-owned Assets Supervision and Administration Commission (SASAC) of Yunnan Province; Jiangsu WELLE Environmental Co., Ltd. (300190.SZ) announced recently that it won the bidding of the sewage treatment projects of Tonglu Fuchun Sewage Treatment Limited Company. Its senior management increases their shareholding in the company by 95 million yuan; Shanghai Safbon Water Service Co., Ltd. (300262.SZ) announced recently that it succeeded in bidding the Phase II project of the comprehensive treatment of Shuicheng River, Liupanshui City. The company’s orders see gradual increase.
◆ The Ministry of Environmental Protection announced the findings of the pollution event of Qianzhangyan reservoir on Jan.20. Director of the enterprise causing the trouble has been approved to be arrested by judicial authority. The director of the Environmental Protection Bureau of Enshi Tujia and Miao Autonomous Prefecture was relieved of his post.
[XFA Selection]
○ Chinese President Xi Jinping will attend the opening ceremony of 2015 Boao Forum for Asia on March, 28. Issues of agriculture, rural areas and farmers will be covered in the topics of the forum for the first time.
○ The government work report of Xinjiang Uygur Autonomous Region proposes to accelerate the construction of the core area of the Silk Road economic belt as well as the development of mixed ownership economy.
○ Central Huijin Investment Ltd., substantial shareholder of New China Life Insurance Company Ltd. (601336.SH; 01336.HK), is going to transfer some equities to Alibaba Group (NYSE: BABA). This move will add new power to the development of New China Life Insurance.
○ The annual national GDP growth speed of 2014 slackens to 7.4 percent. Hi-tech industry and Internet- and e-business-related emerging industries stand out conspicuously.
○ China Banking Regulatory Commission (CBRC) announced the initiation of major structural reform on Jan. 20, specifying that micro and online loans and other non-licensed institutes will be regulated by the Inclusive Financial Department.
[Industry Information]
○ Internet finance brings new growth point, equity appreciation of fund companies to expect
------
XFA learns that since the stock market went bullish in 2014, some fund companies achieved a booming in both management scale and profit. The scale of the products on private placement of Caitong Fund Management Co., Ltd surpasses 50 billion yuan, and its “Private Placement Workroom”, called as “private placement king” by the industry, enters Wind information terminal. By the end of last year, the unrealized profit of its private placement products records as high as 17 billion yuan, bringing along a management income of 170 million yuan. Even without newly launched products, the old products due this year will also contribute to an income of more than one billion yuan based on the performance deduction proportion of 20 percent.
Among A-share companies, Zhejiang Shenghua Biok Biology Co., Ltd. (600226.SH) holding 30 percent equities of Caitong Fund Management Co., Ltd. announced last Oct. that it expected an annual growth of 180 percent. As investment income realizes gradually, its earnings per share expect to surge sharply. Lion Fund Management Co., Ltd. participated by Daheng New Epoch Technology, Inc. (600288.SH) and Tianhong Fund Management Co., Ltd. participated by Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd. (601216) lift their ranking in terms of scale through the means of Internet finance and are favored by various funds.
○ Spring drought might attack Northern China, NFCDRO emphasizes drought relief and irrigation guarantee
------
The National Flood Control & Drought Relief Work Video Conference was held on Jan. 20, and the National Flood Control and Drought Relief Office (NFCDRO) required doing the work for drought relief and irrigation guarantee as well as urban and rural water supply well. Overall precipitation is relatively low and the temperature is relatively high in Northern China this winter. And many places see no snowfall by now. Meteorological departments predict that severe spring drought might attack some places in the southwest and the winter wheat area in the north.
Comment: The drought will increase the investment in water conservancy construction and irrigation facility. At the beginning of 2009, Northern China also suffered severe drought. Leo Group Co., Ltd (002131.SZ) donated water pump products to the disaster area in Henan Province at that time and saw its stock price to soar by the daily limit of 10 percent for four consecutive trading days. Both Shimge Pump Industry Group Co., Ltd. (002532.SZ) and Nanfang Pump Industry Co., Ltd. (300145.SZ) focus on water pump business.
○ Chemical products see differentiated profit in low oil price era, profit of three categories enhances
------
After the price of bulk commodities like crude oil plummets, some chemical products with good supply-demand structure and stable terminal product price expect to expand price difference and enhance profitability. According to incomplete statistics, blue disperse dyes increase quoted price for three times in just one month. Some enterprises stop production due to environmental protection problems, thus the dyes industry experiences supply shortage; though polyester filament yarn suffers price drop, the drop is obviously smaller than the price drop of upstream material PTA; tire industry benefits from the decrease of rubber and its downstream car sales still grows steadily.
[Announcement Interpretation]
○ Yabaite to achieve back-door listing through ZhongLian Electric at RMB3.5 bln
------
JiangSu ZhongLian Electric Co., Ltd. (002323.SZ) proposes to set a majority of its assets and debts as exchange-out assets priced at 789 million yuan and exchange with the equivalent equities of Shandong Yabaite Technology Co., Ltd. The 100 percent equities of Yabaite are valued at 3.5 billion yuan. ZhongLian Electric will buy the 2.7 billion yuan exceeding the exchange-out assets from all shareholders of Yabaite by issuing about 141 million shares at 19.21 yuan per share through private placement. The actual controller will be changed to Lu Yong after the reorganization.
Yabaite is a supplier of integrated services for the metal roof (walls) maintenance system. It pioneered into the distributed solar photovoltaic roof industry and is a leader in the application of new photovoltaic energy in the metal roof system. The counterparty committed that the net profit of Yabaite from 2015 to 2017 would be 255 million yuan, 361 million yuan and 476 million yuan, respectively.
○ Shidai Wanheng to acquire Jiuyi Energy to develop NI-MH battery
------
Liaoning Shidai Wanheng Co., Ltd. (600241.SH) proposes to buy 100 percent equities of Liaoning Jiuyi Energy Technology Co., Ltd. through private placement at 7.61 yuan per share. The transaction is priced at 350 million yuan. The principal product of Jiuyi Energy is the nickel metal hydride (NI-MH) storage battery. According to its performance commitment, it net profits from 2015 to 2017 shall be no less than 33 million yuan, 36.3 million yuan and 39.93 million yuan, respectively. Shidai Wanheng is principally engaged in the import and export of clothes and property development.
○ Devotion Thermal Technology to raise RMB750 mln through private placement for heat and gas supply with biomass energy
------
Guangzhou Devotion Thermal Technology Co., Ltd. (300335.SZ) proposes to issue 75 million shares through private placement to raise 750 million yuan, which will be invested in the heat and gas supply with biomass energy and the establishment of a research and development center for biomass energy. The limited partner established by the actual controller of the company will subscribe no less than 60 million yuan. Based on the estimation, the heat and gas supply with biomass energy will record a net profit of 127 million yuan after it fully achieves the designed capacity in 2020.
○ Tech-Long Packaging Machinery to develop Internet finance
------
Guangzhou Tech-Long Packaging Machinery Co., Ltd. (002209.SZ) proposes to buy 10 percent equities of Guangzhou Edai with 15 million yuan. Guangzhou Edai is positioned at the Internet financial industry. Tech-Long Packaging Machinery will offer value-added services in the up and down streams and is expected to bring investment revenues through the transaction.
[Financial Reports Express]
○ Four companies expect significant profit growth
------
Sichuan Hebang Corporation Limited (603077.SH) expects a growth of 950 percent in its 2014 net profit mainly attributed to the huge investment revenue from the consolidation of the financial statements of Leshan Hebang Agricultural Technology Co., Ltd. Zhongnongfa Seed Industry Group Co., Ltd. (600313.SH) expects a growth of 150 percent in its 2014 net profit mainly attributed to the acquisition and the investment in the establishment of subsidiaries, which expanded the coverage of its consolidated statements. Shanghai Industrial Development Co., Ltd. (600748.SH) expects a growth of more than 100 percent in its 2014 net profit mainly attributed to the revenues from the transfer of equities in subsidiaries. Hunan Tianyi Science and Technology Co., Ltd. (000908.SZ) expects a growth of 70 to 92 percent in its 2014 net profit mainly attributed to the injection into the assets of Shanghai Jingfeng Pharmaceutical Co., Ltd. and the rapid growth of principal products.
[News Tracking]
○ Zhongding Sealing Parts to develop nuclear power sealing products
------
Anhui Zhongding Sealing Parts Co., Ltd. (000887.SZ) proposes to establish Zhongding Sealing Technology (Beijing) Co., Ltd., which will be engaged in the development and production of advanced nuclear power sealing products. Zhongding Sealing Parts will contribute 27 million yuan or 50 percent. The products of its partner Ningbo Tiansheng Sealing Parts Co., Ltd. are used in all domestic nuclear power stations in operation and major military equipment. Ningbo Tiansheng is also responsible for the preparation of four nuclear power criteria for the National Energy Administration.
[Data Speaks]
○ Annual reports and performance increasingly draw attention, three companies expect multiplied growth
------
The market has been increasingly focusing on the performance. Shandong Wohua Pharmaceutical Co., Ltd. (002107.SZ), the first company released the annual report, saw an increase of nearly 60 percent in the stock market. According to the statistics of XFA, each of Guangxi Guidong Electric Power Co., Ltd. (600310.SH), Shanghai Lansheng Corporation (600826.SH) and Anhui Huamao Textile Company Limited (000850.SZ) recorded an investment revenue of about 500 million yuan through reducing the shareholding in securities companies. Their net profits in 2013 were only 55 million yuan, 51 million yuan and 190 million yuan, respectively. Their performances are expected to record huge growth in the annual reports. In terms of industries, the information technology, pharmaceutical and electric equipment account higher proportion in companies with expected higher performance growth.
[Trading Trends]
○ More stock-learning funds may establish in Jan.
------
The profit-making bull market has attracted more investors into the market. Public funds, which experienced years of bottleneck in issuance, have been favored by capitals again. Six new funds have completed raising earlier in less than one month from the beginning of the new year. 40 new funds are expected to be established this month, double of those in the corresponding period last year with most products in issue being equities. In terms of the investment direction, new funds in issue prefer growth stocks, medical, information technology and national defense and security themes in particular.
> Xi Jinping requires improving water quality of Erhai Lake, environmental-protection sector to benefit
> Internet finance brings new growth point, equity appreciation of fund companies to expect
> Yabaite to achieve back-door listing through ZhongLian Electric at RMB3.5 bln
> Zhongding Sealing Parts to develop nuclear power sealing products
[XFA Focus]
○ Xi Jinping requires improving water quality of Erhai Lake, environmental-protection sector to benefit
------
Chinese President Xi Jinping visited Gusheng Villiage of Wanqiao Town near Erhai Lake (in Yunnan Province) in the morning of Jan. 20 to research the ecological protection of Erhai Lake. Xi required local cadres to improve the water quality of Erhai Lake, and said that “Yunnan has very good ecological environment that must be cherished. We can never destroy it.”
Comment: State leaders attach great importance to ecological environment issues during the inspection in Yunnan Province. Environmental-protection sector expects to be favored by the market again. Research institutions believe that 2015 will be the year to assess and end the “Twelfth Five-year Plan” for environmental pollution improvement; a series of environmental protection policies, including environmental tax, etc., designed by the top level will be launched and implemented successively; the promotion of SOEs reform, PPP mode and third-party operation will activate industrial investment; performance growth of relevant enterprises expects to reach or surpass expectations. Among A-share companies, Beijing Originwater Technology Co., Ltd. (300070.SZ) owns several sewage treatment projects in Yunnan Province, and the company holds 36.38 percent equities of Yunnan Water Investment Co., Ltd. controlled by the State-owned Assets Supervision and Administration Commission (SASAC) of Yunnan Province; Jiangsu WELLE Environmental Co., Ltd. (300190.SZ) announced recently that it won the bidding of the sewage treatment projects of Tonglu Fuchun Sewage Treatment Limited Company. Its senior management increases their shareholding in the company by 95 million yuan; Shanghai Safbon Water Service Co., Ltd. (300262.SZ) announced recently that it succeeded in bidding the Phase II project of the comprehensive treatment of Shuicheng River, Liupanshui City. The company’s orders see gradual increase.
◆ The Ministry of Environmental Protection announced the findings of the pollution event of Qianzhangyan reservoir on Jan.20. Director of the enterprise causing the trouble has been approved to be arrested by judicial authority. The director of the Environmental Protection Bureau of Enshi Tujia and Miao Autonomous Prefecture was relieved of his post.
[XFA Selection]
○ Chinese President Xi Jinping will attend the opening ceremony of 2015 Boao Forum for Asia on March, 28. Issues of agriculture, rural areas and farmers will be covered in the topics of the forum for the first time.
○ The government work report of Xinjiang Uygur Autonomous Region proposes to accelerate the construction of the core area of the Silk Road economic belt as well as the development of mixed ownership economy.
○ Central Huijin Investment Ltd., substantial shareholder of New China Life Insurance Company Ltd. (601336.SH; 01336.HK), is going to transfer some equities to Alibaba Group (NYSE: BABA). This move will add new power to the development of New China Life Insurance.
○ The annual national GDP growth speed of 2014 slackens to 7.4 percent. Hi-tech industry and Internet- and e-business-related emerging industries stand out conspicuously.
○ China Banking Regulatory Commission (CBRC) announced the initiation of major structural reform on Jan. 20, specifying that micro and online loans and other non-licensed institutes will be regulated by the Inclusive Financial Department.
[Industry Information]
○ Internet finance brings new growth point, equity appreciation of fund companies to expect
------
XFA learns that since the stock market went bullish in 2014, some fund companies achieved a booming in both management scale and profit. The scale of the products on private placement of Caitong Fund Management Co., Ltd surpasses 50 billion yuan, and its “Private Placement Workroom”, called as “private placement king” by the industry, enters Wind information terminal. By the end of last year, the unrealized profit of its private placement products records as high as 17 billion yuan, bringing along a management income of 170 million yuan. Even without newly launched products, the old products due this year will also contribute to an income of more than one billion yuan based on the performance deduction proportion of 20 percent.
Among A-share companies, Zhejiang Shenghua Biok Biology Co., Ltd. (600226.SH) holding 30 percent equities of Caitong Fund Management Co., Ltd. announced last Oct. that it expected an annual growth of 180 percent. As investment income realizes gradually, its earnings per share expect to surge sharply. Lion Fund Management Co., Ltd. participated by Daheng New Epoch Technology, Inc. (600288.SH) and Tianhong Fund Management Co., Ltd. participated by Inner Mongolia Junzheng Energy & Chemical Industry Co., Ltd. (601216) lift their ranking in terms of scale through the means of Internet finance and are favored by various funds.
○ Spring drought might attack Northern China, NFCDRO emphasizes drought relief and irrigation guarantee
------
The National Flood Control & Drought Relief Work Video Conference was held on Jan. 20, and the National Flood Control and Drought Relief Office (NFCDRO) required doing the work for drought relief and irrigation guarantee as well as urban and rural water supply well. Overall precipitation is relatively low and the temperature is relatively high in Northern China this winter. And many places see no snowfall by now. Meteorological departments predict that severe spring drought might attack some places in the southwest and the winter wheat area in the north.
Comment: The drought will increase the investment in water conservancy construction and irrigation facility. At the beginning of 2009, Northern China also suffered severe drought. Leo Group Co., Ltd (002131.SZ) donated water pump products to the disaster area in Henan Province at that time and saw its stock price to soar by the daily limit of 10 percent for four consecutive trading days. Both Shimge Pump Industry Group Co., Ltd. (002532.SZ) and Nanfang Pump Industry Co., Ltd. (300145.SZ) focus on water pump business.
○ Chemical products see differentiated profit in low oil price era, profit of three categories enhances
------
After the price of bulk commodities like crude oil plummets, some chemical products with good supply-demand structure and stable terminal product price expect to expand price difference and enhance profitability. According to incomplete statistics, blue disperse dyes increase quoted price for three times in just one month. Some enterprises stop production due to environmental protection problems, thus the dyes industry experiences supply shortage; though polyester filament yarn suffers price drop, the drop is obviously smaller than the price drop of upstream material PTA; tire industry benefits from the decrease of rubber and its downstream car sales still grows steadily.
[Announcement Interpretation]
○ Yabaite to achieve back-door listing through ZhongLian Electric at RMB3.5 bln
------
JiangSu ZhongLian Electric Co., Ltd. (002323.SZ) proposes to set a majority of its assets and debts as exchange-out assets priced at 789 million yuan and exchange with the equivalent equities of Shandong Yabaite Technology Co., Ltd. The 100 percent equities of Yabaite are valued at 3.5 billion yuan. ZhongLian Electric will buy the 2.7 billion yuan exceeding the exchange-out assets from all shareholders of Yabaite by issuing about 141 million shares at 19.21 yuan per share through private placement. The actual controller will be changed to Lu Yong after the reorganization.
Yabaite is a supplier of integrated services for the metal roof (walls) maintenance system. It pioneered into the distributed solar photovoltaic roof industry and is a leader in the application of new photovoltaic energy in the metal roof system. The counterparty committed that the net profit of Yabaite from 2015 to 2017 would be 255 million yuan, 361 million yuan and 476 million yuan, respectively.
○ Shidai Wanheng to acquire Jiuyi Energy to develop NI-MH battery
------
Liaoning Shidai Wanheng Co., Ltd. (600241.SH) proposes to buy 100 percent equities of Liaoning Jiuyi Energy Technology Co., Ltd. through private placement at 7.61 yuan per share. The transaction is priced at 350 million yuan. The principal product of Jiuyi Energy is the nickel metal hydride (NI-MH) storage battery. According to its performance commitment, it net profits from 2015 to 2017 shall be no less than 33 million yuan, 36.3 million yuan and 39.93 million yuan, respectively. Shidai Wanheng is principally engaged in the import and export of clothes and property development.
○ Devotion Thermal Technology to raise RMB750 mln through private placement for heat and gas supply with biomass energy
------
Guangzhou Devotion Thermal Technology Co., Ltd. (300335.SZ) proposes to issue 75 million shares through private placement to raise 750 million yuan, which will be invested in the heat and gas supply with biomass energy and the establishment of a research and development center for biomass energy. The limited partner established by the actual controller of the company will subscribe no less than 60 million yuan. Based on the estimation, the heat and gas supply with biomass energy will record a net profit of 127 million yuan after it fully achieves the designed capacity in 2020.
○ Tech-Long Packaging Machinery to develop Internet finance
------
Guangzhou Tech-Long Packaging Machinery Co., Ltd. (002209.SZ) proposes to buy 10 percent equities of Guangzhou Edai with 15 million yuan. Guangzhou Edai is positioned at the Internet financial industry. Tech-Long Packaging Machinery will offer value-added services in the up and down streams and is expected to bring investment revenues through the transaction.
[Financial Reports Express]
○ Four companies expect significant profit growth
------
Sichuan Hebang Corporation Limited (603077.SH) expects a growth of 950 percent in its 2014 net profit mainly attributed to the huge investment revenue from the consolidation of the financial statements of Leshan Hebang Agricultural Technology Co., Ltd. Zhongnongfa Seed Industry Group Co., Ltd. (600313.SH) expects a growth of 150 percent in its 2014 net profit mainly attributed to the acquisition and the investment in the establishment of subsidiaries, which expanded the coverage of its consolidated statements. Shanghai Industrial Development Co., Ltd. (600748.SH) expects a growth of more than 100 percent in its 2014 net profit mainly attributed to the revenues from the transfer of equities in subsidiaries. Hunan Tianyi Science and Technology Co., Ltd. (000908.SZ) expects a growth of 70 to 92 percent in its 2014 net profit mainly attributed to the injection into the assets of Shanghai Jingfeng Pharmaceutical Co., Ltd. and the rapid growth of principal products.
[News Tracking]
○ Zhongding Sealing Parts to develop nuclear power sealing products
------
Anhui Zhongding Sealing Parts Co., Ltd. (000887.SZ) proposes to establish Zhongding Sealing Technology (Beijing) Co., Ltd., which will be engaged in the development and production of advanced nuclear power sealing products. Zhongding Sealing Parts will contribute 27 million yuan or 50 percent. The products of its partner Ningbo Tiansheng Sealing Parts Co., Ltd. are used in all domestic nuclear power stations in operation and major military equipment. Ningbo Tiansheng is also responsible for the preparation of four nuclear power criteria for the National Energy Administration.
[Data Speaks]
○ Annual reports and performance increasingly draw attention, three companies expect multiplied growth
------
The market has been increasingly focusing on the performance. Shandong Wohua Pharmaceutical Co., Ltd. (002107.SZ), the first company released the annual report, saw an increase of nearly 60 percent in the stock market. According to the statistics of XFA, each of Guangxi Guidong Electric Power Co., Ltd. (600310.SH), Shanghai Lansheng Corporation (600826.SH) and Anhui Huamao Textile Company Limited (000850.SZ) recorded an investment revenue of about 500 million yuan through reducing the shareholding in securities companies. Their net profits in 2013 were only 55 million yuan, 51 million yuan and 190 million yuan, respectively. Their performances are expected to record huge growth in the annual reports. In terms of industries, the information technology, pharmaceutical and electric equipment account higher proportion in companies with expected higher performance growth.
[Trading Trends]
○ More stock-learning funds may establish in Jan.
------
The profit-making bull market has attracted more investors into the market. Public funds, which experienced years of bottleneck in issuance, have been favored by capitals again. Six new funds have completed raising earlier in less than one month from the beginning of the new year. 40 new funds are expected to be established this month, double of those in the corresponding period last year with most products in issue being equities. In terms of the investment direction, new funds in issue prefer growth stocks, medical, information technology and national defense and security themes in particular.
Latest comments