[Today’s Guide]
> “Ordinances on Irrigation and Water Conservancy” solicit opinion, paid use to facilitate water-saving irrigation.
> Nuclear power to highlight “One Belt and One Road” initiatives, renewable resources recycling receives support.
> Urea industrial prosperity continues to improve, EM Technology to expand industrial chain.
> Sanhua obtains assets injection from substantial shareholder, Stock-leaning funds see net subscription.
[XFA Focus]
○ “Ordinances on Irrigation and Water Conservancy” solicit opinion, paid use to facilitate water-saving irrigation
-----
The Legislative Affairs Office of the State Council issued the “Ordinances on Irrigation and Water Conservancy (Draft for Comments)” on Jan. 26. The Ordinances stipulate that the irrigation and water conservancy projects shall adopt a paid use and metered charge system. It will gradually implement an agricultural pricing system with preferential prices within the quota and accumulated price exceeding the quota. It will promote the application of sprinkling irrigation, micro irrigation, the integration of water and fertilizer, water-saving irrigation technologies like pipeline water irrigation and seepage proof irrigation through channels as well as advanced agricultural machinery, agricultural workmanship and biotechnology, etc.
Comment: The introduction of the “Ordinances on Irrigation and Water Conservancy” will fill the legislation vacancy in the area. It will specify such key issues as the delimitation of property rights, water pricing and charging, authorization clarification and compensations on occupation and play a significant role in the long-term healthy development of the irrigation and water conservancy. As a country with scarce water resources and frequent droughts, China’s agricultural water consumption accounts for 63.2 percent of the total water consumption. The water-saving irrigation in agriculture is of great significance. Currently, the micro irrigation, sprinkling irrigation and other efficient and water-saving irrigation account for only 8 percent of the more than 900 million mu of effective irrigation areas nationwide and enjoy great potential. Among A-share companies, Gansu Dayu Water-Saving Group Co., Ltd. (300021.SZ) is a leader in professionally efficient and water-saving irrigation in China. Shimge Pump Industry Group Co., Ltd. (002532.SZ), whose agricultural pumps sales rank top, has a complete network of distributors. Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) is a leading compound fertilizer enterprise in China. It signed a cooperation agreement with Laibin City, Guangxi Zhuang Autonomous Region on land transfer and the integration of water and fertilizer in last June.
[XFA Selection]
○ Premier Li Keqiang listened to opinions on the “Report on the Work of the Government” on Jan. 26. Entrepreneurs from Zhongguancun Development Group, China National Building Materials Group Corporation and other enterprises as well as professionals and scholars participated into the forum.
○ The spot exchange rate of RMB against U.S. dollars set a new low in eight months. The periodic slowdown of position for Forex purchase provided large space for monetary policies.
○ Three ministries and commissions issued notices on the adjustment of the charging standards on wastewater treatment. It will be no less than 0.95 yuan per ton for residents by the end of 2016.
○ The Ministry of Civil Affairs will vigorously promote the construction of facilities for pension services in 2015 and strive to reserve 6.63 million beds for the elderly.
○ The cost of Beidou-compatible SOC navigation modules significantly dropped, breaking the price bottleneck in the market promotion of the Beidou system.
○ Anbang Insurance further increases the shareholding of the A shares of China Minsheng Banking Corp., Ltd. (01988.HK; 600016.SH) to 19.28 percent by Jan. 20.
[Industry Information]
○ Pakistan suffers from energy crisis, nuclear power to highlight “One Belt and One Road” initiatives
-----
80 percent of Pakistan encountered power failure on Jan. 25, which is dubbed as one of the most serious energy crisis in history by foreign media. The power generation of Pakistan is only equivalent to half of its power demand and the energy crisis is not optimistic. XFA learnt that China and Pakistan have inked an agreement with 34 billion U.S. dollars. The nuclear power will play an important role in the “One Belt and One Road” program.
Comment: According to the statistics of institutes, the nuclear power installed capacity of overseas countries under preparation, including Pakistan, is twice of China’s. The “going out” of nuclear power enjoys huge market and is expected to be a key driver in the industrial development in following years. China National Nuclear Corporation is a main subject of the national nuclear technology and industry. The A-share companies under it include SUFA Technology Industry Co., Ltd., CNNC. (000777.SZ) and Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd. (002167.SZ).
○ Five ministries encourage development of renewable resources recycling
-----
The Ministry of Commerce and other four ministries issued the “Medium- and Long-term Plan on the Construction of Renewable Resources Recycling System (2015-2020)” on Jan. 26, proposing that the average recycling rate of major renewable resources in large and medium-sized cities will reach above 75 percent by 2020. It will actively promote the assets reorganization among different regions, industries and ownership systems and encourage various capitals flowing into the recycling industry.
Among A-share companies, Shenzhen Green Eco-manufacture Hi-tech Co., Ltd. (002340.SZ) enjoys technological advantages in back-end deep recycling. Institutes are rosy about the initiation of integrative extension. E Fund Management Co., Ltd. and Penghua funds greatly increased their shareholdings in Dongjiang Environmental Company Limited (00895.HK; 002672.SZ), whose stock price underperformed the market. Shaanxi Qinling Cement (Group) Co., Ltd. (600217.SH) will become the unique listing platform under China Recycling Development Corporation Ltd. after reorganization.
○ Urea prices remain high, prosperity continues to improve
-----
According to the data of Baichuan, Luxi Chemical Group Co., Ltd. (000830.SZ), Shandong Hualu-Hengsheng Chemical Co., Ltd. (600426.SH) and other urea manufacturers raised their products quotations. Under the backdrop of falling prices of bulk commodities, the average price in the urea market set a new high since last Nov. The new policies on tariffs implemented this year stimulated the export of urea and the No. 1 Central Document of 2015 will be released soon. The trend of the scale agricultural operation will enable leading enterprises with brand and capacity advantages to obtain larger market shares.
[Announcement Interpretation]
○ Technology to control Jinzhang Technology to expand industrial chain
------
Sichuan EM Technology Co., Ltd. (601208.SH) plans to purchase 51 percent equities of Taihu Jinzhang Technology Company with 133 million yuan. Jinzhang Technology mainly focuses on high-end optical film materials and protection materials, which are the upstream of the 20,000-ton optical-grade polyester film project, jointly invested with EM Technology. The project is going to be put into operation soon. After the purchase, the company will build a complete industrial chain of optical film. By Sept. 30, 2014, the net assets and the net profit in the first three quarters of Jinzhang Technology reached 124 million and 16.90 million yuan, respectively.
Comment: EM Technology announced that it signed the letter of intention about purchasing the equities of Jinzhang Technology on Oct. 29, but the specific amount was not disclosed. The optical film business of Jinzhang Technology sees explosive growth in recent years and will contribute to the performance growth of EM Technology, the performance growth of which is expected to be multiplied in 2014.
○ Sanhua obtains assets injection from substantial shareholder
------
Zhejiang Sanhua Co., Ltd. (002050.SZ) plans to issue 104 million shares at 12.36 yuan per share to Zhejiang Sanhua Qianjiang Automobile Components Group Co., Ltd., which is under the same controlling shareholder with Sanhua, for purchasing 100 percent equities of Sanhua Micro-channel Heat Exchanger Company held by Sanhua Qianjiang. The transaction is priced at 1.28 billion yuan. At the meantime, Sanhua plans to issue shares at no less than 13.13 yuan per share through private placement to raise 400 million yuan for technical modification, supplementing working capital, etc. Sanhua Qianjiang committed that the net profit of Sanhua Micro-channel Heat Exchanger will be no less than 110 million yuan, 142 million yuan and 175 million yuan from 2015 to 2017, respectively, representing that the total expected net profit will be no less than 427 million yuan. The net profit of Sanhua was 323 million yuan last year.
The products of Sanhua Micro-channel Heat Exchanger are micro-channel condenser, evaporator, heat pump heat exchanger, water tank heat exchanger, etc., which are mainly applied in areas like household and commercial air conditioners, transportation air conditioners, heat pump air conditioners, etc. Its main markets are in areas like Europe and America, Southeast Asia, the Middle East, India, Brazil, etc. Currently, it owns two overseas production bases respectively in the United States and Mexico.
○ Do-Fluoride Chemicals to raise RMB600 mln to invest in lithium battery
------
Do-Fluoride Chemicals Co., Ltd. (002407.SZ) plans to issue 37.32 million shares at no less than 16.11 yuan per share through private placement to raise 600 million yuan for the project that can produce 300 million Ah energy Li-ion battery series annually. Li Yunfeng, the controlling shareholder and son of the actual controller of the company, will subscribe 15 to 25 percent of the private placement, and the lockup period will be 36 months. The construction of the project will last for 24 months, and the productivity of 300 million Ah Li-ion battery series will be added after the designed capacity is reached. The annual sales revenue is expected to reach 1,269 million yuan.
○ Jointown Phar. to invest RMB2.5 bln in constructing Hanyang Medical and Old-age Care Complex Project
------
Jointown Pharmaceutical Group Co., Ltd. (600998.SH) signed a strategic cooperation intention agreement with the government of Hanyang District, Wuhan City to jointly build a medical and old-age care complex project, covering settlement center, e-commerce, medicine supermarket, grade 3A hospitals, recovery and old-age care service and relevant supporting facilities, in the present Jointown medical park in Hanyang Economic Development Zone. The total intended investment of the project is 2.5 billion yuan, the total construction area will be 320, 000 square meters and the construction will last for three to four years.
[Financial Reports Express]
○ Heilan Home and Youngor Group expect large net profit growth
------
Thanks to the reorganization and large growth of operation revenue, Heilan Home Co., Ltd. (600398.SH) expects its net profit in 2014 to see a year-on-year growth of 1,550 to 1,600 percent with an income of 133 million yuan after financial consolidation.
Youngor Group Co., Ltd. (600177.SH) expects its net profit in 2014 to see an increase of 120 to 150 percent year on year due to the sales of financial assets and the adjustment of accounting methods on financial assets.
○ Wenzhou Hongfeng Electrical Alloy plans high share conversion and dividend
------
The actual controller of Wenzhou Hongfeng Electrical Alloy Co., Ltd. (300283.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares in its 2014 annual report
[News Tracking]
○ Wanwei Updated High-tech Material Industry expects explosive performance growth
------
Thanks to sales growth, loss reduction and efficiency improvement, Anhui Wanwei Updated High-tech Material Industry Co., Ltd. (600063.SH) expects its net profit to see a year-on-year growth of 700 to 800 percent in 2014. XFA reported several times that the company’s performance is expected to see large growth.
[Data Speaks]
○ Stock-leaning funds see net subscription, stagnant bulk holding stocks interested
------
Though indexes fluctuated sharply last week, most stock-leaning funds still see net subscription. A fund manager in Shanghai indicated that the sharp slump on Jan. 19 was regarded as a good opportunity to go bottom fishing by lots of investors. Since lots of incremental capitals enter the stock market, the market may surge again if the monetary policy releases further easing signal.
Comment: Under such background, the bulk holding stocks that were newly disclosed in the fourth quarterly performance report of funds and did not see large increase in stock prices yet might be interested again. Statistics show that Dacheng Fund Management Co., Ltd. acquires 13.86 million shares of Guizhou Qianyuan Power Co., Ltd. (002039.SZ); ICBC Fund Management Co., Ltd. acquires 4.29 million shares of Focus Technology Co., Ltd. (002315.SZ); ChinaAMC Fund Management Co., Ltd. acquires 16.52 million shares of China Haisum Engineering Co., Ltd. (002116.SZ). The proportion between stocks held by funds and tradable stocks sees large increase compared with the data in the third quarter.
> “Ordinances on Irrigation and Water Conservancy” solicit opinion, paid use to facilitate water-saving irrigation.
> Nuclear power to highlight “One Belt and One Road” initiatives, renewable resources recycling receives support.
> Urea industrial prosperity continues to improve, EM Technology to expand industrial chain.
> Sanhua obtains assets injection from substantial shareholder, Stock-leaning funds see net subscription.
[XFA Focus]
○ “Ordinances on Irrigation and Water Conservancy” solicit opinion, paid use to facilitate water-saving irrigation
-----
The Legislative Affairs Office of the State Council issued the “Ordinances on Irrigation and Water Conservancy (Draft for Comments)” on Jan. 26. The Ordinances stipulate that the irrigation and water conservancy projects shall adopt a paid use and metered charge system. It will gradually implement an agricultural pricing system with preferential prices within the quota and accumulated price exceeding the quota. It will promote the application of sprinkling irrigation, micro irrigation, the integration of water and fertilizer, water-saving irrigation technologies like pipeline water irrigation and seepage proof irrigation through channels as well as advanced agricultural machinery, agricultural workmanship and biotechnology, etc.
Comment: The introduction of the “Ordinances on Irrigation and Water Conservancy” will fill the legislation vacancy in the area. It will specify such key issues as the delimitation of property rights, water pricing and charging, authorization clarification and compensations on occupation and play a significant role in the long-term healthy development of the irrigation and water conservancy. As a country with scarce water resources and frequent droughts, China’s agricultural water consumption accounts for 63.2 percent of the total water consumption. The water-saving irrigation in agriculture is of great significance. Currently, the micro irrigation, sprinkling irrigation and other efficient and water-saving irrigation account for only 8 percent of the more than 900 million mu of effective irrigation areas nationwide and enjoy great potential. Among A-share companies, Gansu Dayu Water-Saving Group Co., Ltd. (300021.SZ) is a leader in professionally efficient and water-saving irrigation in China. Shimge Pump Industry Group Co., Ltd. (002532.SZ), whose agricultural pumps sales rank top, has a complete network of distributors. Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) is a leading compound fertilizer enterprise in China. It signed a cooperation agreement with Laibin City, Guangxi Zhuang Autonomous Region on land transfer and the integration of water and fertilizer in last June.
[XFA Selection]
○ Premier Li Keqiang listened to opinions on the “Report on the Work of the Government” on Jan. 26. Entrepreneurs from Zhongguancun Development Group, China National Building Materials Group Corporation and other enterprises as well as professionals and scholars participated into the forum.
○ The spot exchange rate of RMB against U.S. dollars set a new low in eight months. The periodic slowdown of position for Forex purchase provided large space for monetary policies.
○ Three ministries and commissions issued notices on the adjustment of the charging standards on wastewater treatment. It will be no less than 0.95 yuan per ton for residents by the end of 2016.
○ The Ministry of Civil Affairs will vigorously promote the construction of facilities for pension services in 2015 and strive to reserve 6.63 million beds for the elderly.
○ The cost of Beidou-compatible SOC navigation modules significantly dropped, breaking the price bottleneck in the market promotion of the Beidou system.
○ Anbang Insurance further increases the shareholding of the A shares of China Minsheng Banking Corp., Ltd. (01988.HK; 600016.SH) to 19.28 percent by Jan. 20.
[Industry Information]
○ Pakistan suffers from energy crisis, nuclear power to highlight “One Belt and One Road” initiatives
-----
80 percent of Pakistan encountered power failure on Jan. 25, which is dubbed as one of the most serious energy crisis in history by foreign media. The power generation of Pakistan is only equivalent to half of its power demand and the energy crisis is not optimistic. XFA learnt that China and Pakistan have inked an agreement with 34 billion U.S. dollars. The nuclear power will play an important role in the “One Belt and One Road” program.
Comment: According to the statistics of institutes, the nuclear power installed capacity of overseas countries under preparation, including Pakistan, is twice of China’s. The “going out” of nuclear power enjoys huge market and is expected to be a key driver in the industrial development in following years. China National Nuclear Corporation is a main subject of the national nuclear technology and industry. The A-share companies under it include SUFA Technology Industry Co., Ltd., CNNC. (000777.SZ) and Guangdong Orient Zirconic Ind Sci and Tech Co., Ltd. (002167.SZ).
○ Five ministries encourage development of renewable resources recycling
-----
The Ministry of Commerce and other four ministries issued the “Medium- and Long-term Plan on the Construction of Renewable Resources Recycling System (2015-2020)” on Jan. 26, proposing that the average recycling rate of major renewable resources in large and medium-sized cities will reach above 75 percent by 2020. It will actively promote the assets reorganization among different regions, industries and ownership systems and encourage various capitals flowing into the recycling industry.
Among A-share companies, Shenzhen Green Eco-manufacture Hi-tech Co., Ltd. (002340.SZ) enjoys technological advantages in back-end deep recycling. Institutes are rosy about the initiation of integrative extension. E Fund Management Co., Ltd. and Penghua funds greatly increased their shareholdings in Dongjiang Environmental Company Limited (00895.HK; 002672.SZ), whose stock price underperformed the market. Shaanxi Qinling Cement (Group) Co., Ltd. (600217.SH) will become the unique listing platform under China Recycling Development Corporation Ltd. after reorganization.
○ Urea prices remain high, prosperity continues to improve
-----
According to the data of Baichuan, Luxi Chemical Group Co., Ltd. (000830.SZ), Shandong Hualu-Hengsheng Chemical Co., Ltd. (600426.SH) and other urea manufacturers raised their products quotations. Under the backdrop of falling prices of bulk commodities, the average price in the urea market set a new high since last Nov. The new policies on tariffs implemented this year stimulated the export of urea and the No. 1 Central Document of 2015 will be released soon. The trend of the scale agricultural operation will enable leading enterprises with brand and capacity advantages to obtain larger market shares.
[Announcement Interpretation]
○ Technology to control Jinzhang Technology to expand industrial chain
------
Sichuan EM Technology Co., Ltd. (601208.SH) plans to purchase 51 percent equities of Taihu Jinzhang Technology Company with 133 million yuan. Jinzhang Technology mainly focuses on high-end optical film materials and protection materials, which are the upstream of the 20,000-ton optical-grade polyester film project, jointly invested with EM Technology. The project is going to be put into operation soon. After the purchase, the company will build a complete industrial chain of optical film. By Sept. 30, 2014, the net assets and the net profit in the first three quarters of Jinzhang Technology reached 124 million and 16.90 million yuan, respectively.
Comment: EM Technology announced that it signed the letter of intention about purchasing the equities of Jinzhang Technology on Oct. 29, but the specific amount was not disclosed. The optical film business of Jinzhang Technology sees explosive growth in recent years and will contribute to the performance growth of EM Technology, the performance growth of which is expected to be multiplied in 2014.
○ Sanhua obtains assets injection from substantial shareholder
------
Zhejiang Sanhua Co., Ltd. (002050.SZ) plans to issue 104 million shares at 12.36 yuan per share to Zhejiang Sanhua Qianjiang Automobile Components Group Co., Ltd., which is under the same controlling shareholder with Sanhua, for purchasing 100 percent equities of Sanhua Micro-channel Heat Exchanger Company held by Sanhua Qianjiang. The transaction is priced at 1.28 billion yuan. At the meantime, Sanhua plans to issue shares at no less than 13.13 yuan per share through private placement to raise 400 million yuan for technical modification, supplementing working capital, etc. Sanhua Qianjiang committed that the net profit of Sanhua Micro-channel Heat Exchanger will be no less than 110 million yuan, 142 million yuan and 175 million yuan from 2015 to 2017, respectively, representing that the total expected net profit will be no less than 427 million yuan. The net profit of Sanhua was 323 million yuan last year.
The products of Sanhua Micro-channel Heat Exchanger are micro-channel condenser, evaporator, heat pump heat exchanger, water tank heat exchanger, etc., which are mainly applied in areas like household and commercial air conditioners, transportation air conditioners, heat pump air conditioners, etc. Its main markets are in areas like Europe and America, Southeast Asia, the Middle East, India, Brazil, etc. Currently, it owns two overseas production bases respectively in the United States and Mexico.
○ Do-Fluoride Chemicals to raise RMB600 mln to invest in lithium battery
------
Do-Fluoride Chemicals Co., Ltd. (002407.SZ) plans to issue 37.32 million shares at no less than 16.11 yuan per share through private placement to raise 600 million yuan for the project that can produce 300 million Ah energy Li-ion battery series annually. Li Yunfeng, the controlling shareholder and son of the actual controller of the company, will subscribe 15 to 25 percent of the private placement, and the lockup period will be 36 months. The construction of the project will last for 24 months, and the productivity of 300 million Ah Li-ion battery series will be added after the designed capacity is reached. The annual sales revenue is expected to reach 1,269 million yuan.
○ Jointown Phar. to invest RMB2.5 bln in constructing Hanyang Medical and Old-age Care Complex Project
------
Jointown Pharmaceutical Group Co., Ltd. (600998.SH) signed a strategic cooperation intention agreement with the government of Hanyang District, Wuhan City to jointly build a medical and old-age care complex project, covering settlement center, e-commerce, medicine supermarket, grade 3A hospitals, recovery and old-age care service and relevant supporting facilities, in the present Jointown medical park in Hanyang Economic Development Zone. The total intended investment of the project is 2.5 billion yuan, the total construction area will be 320, 000 square meters and the construction will last for three to four years.
[Financial Reports Express]
○ Heilan Home and Youngor Group expect large net profit growth
------
Thanks to the reorganization and large growth of operation revenue, Heilan Home Co., Ltd. (600398.SH) expects its net profit in 2014 to see a year-on-year growth of 1,550 to 1,600 percent with an income of 133 million yuan after financial consolidation.
Youngor Group Co., Ltd. (600177.SH) expects its net profit in 2014 to see an increase of 120 to 150 percent year on year due to the sales of financial assets and the adjustment of accounting methods on financial assets.
○ Wenzhou Hongfeng Electrical Alloy plans high share conversion and dividend
------
The actual controller of Wenzhou Hongfeng Electrical Alloy Co., Ltd. (300283.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares in its 2014 annual report
[News Tracking]
○ Wanwei Updated High-tech Material Industry expects explosive performance growth
------
Thanks to sales growth, loss reduction and efficiency improvement, Anhui Wanwei Updated High-tech Material Industry Co., Ltd. (600063.SH) expects its net profit to see a year-on-year growth of 700 to 800 percent in 2014. XFA reported several times that the company’s performance is expected to see large growth.
[Data Speaks]
○ Stock-leaning funds see net subscription, stagnant bulk holding stocks interested
------
Though indexes fluctuated sharply last week, most stock-leaning funds still see net subscription. A fund manager in Shanghai indicated that the sharp slump on Jan. 19 was regarded as a good opportunity to go bottom fishing by lots of investors. Since lots of incremental capitals enter the stock market, the market may surge again if the monetary policy releases further easing signal.
Comment: Under such background, the bulk holding stocks that were newly disclosed in the fourth quarterly performance report of funds and did not see large increase in stock prices yet might be interested again. Statistics show that Dacheng Fund Management Co., Ltd. acquires 13.86 million shares of Guizhou Qianyuan Power Co., Ltd. (002039.SZ); ICBC Fund Management Co., Ltd. acquires 4.29 million shares of Focus Technology Co., Ltd. (002315.SZ); ChinaAMC Fund Management Co., Ltd. acquires 16.52 million shares of China Haisum Engineering Co., Ltd. (002116.SZ). The proportion between stocks held by funds and tradable stocks sees large increase compared with the data in the third quarter.
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