[Today's Guide]
> Executive meeting of State Council plans “going out” of equipment, attentions on electricity and communication to increase.
> Reorganization of six rare earth groups to accelerate, National Health and Family Planning Commission supports medical informatization.
> Tianma Microelectronics to invest in sixth-generation production line of high-end LTPS, Mainstreets Investment invests in railway vehicle auxiliary products through private placement.
> Tianshan Animal Husbandry Bio-engineering to expand industrial chain, Meiya Pico Information and Hongda Blasting plan high share conversion and dividend.
[XFA Focus]
○ Executive meeting of State Council plans “going out” of equipment, attentions on electricity and communication to increase
------
Chinese Premier Li Keqiang hosted the executive meeting of the State Council on Jan. 28 to map out and promote the “going out” of China’s major equipment and competitive capacities. The meeting proposed to strengthen the standardization of enterprise operation order and firmly prevent vicious competition.
Comment: Besides railway and nuclear power that attracted lots of attention before, industries that are encouraged to go out this time also include steel, non-ferrous metal, building material, textile, communication, electricity, engineering machinery, ship, etc. Research institutions believe that the developing countries along the Silk Road are weak in infrastructures like communication, electricity, etc., while China has strong competitive advantages in communication and electrical equipment industries, so there hides huge export potentials. Among A-share companies, the amount of overseas orders of TBEA Co., Ltd. (600089.SH) reached 3 billion U. S. dollars at the end of 2013, indicating its regional advantages to radiate the Central Asia and West Asia; the internationalization strategy of Nari Technology Co., Ltd. (600406.SH) has been implemented for years and the company owns several projects in the Philippines, Brazil, etc.; the overseas business income of ZTE Corporation (000063.SZ; 00763.HK), a leading communication equipment enterprise, accounts for nearly half of its total revenue.
○ Transportation becomes key word of “One Belt and One Road”, Sichuan and Jiangsu to connect in multi-aspects
------
The government work report of Sichuan Province was published on Jan. 28, actively proposing to connect with China’s opening up in the south and west as well as the “One Belt and One Road” strategy and push forward the construction of main international logistics network like Chengdu-Europe International Through Railway Express and 19 highways. The investment in highway and waterway of the province has ranked first in China for four consecutive years. The government work report of Jiangsu Province published on the same day also proposed to strengthen the construction of “One Belt and One Road” intersections, Lianyungang East-Central-West Regional Cooperation Demonstration Area and China-Kazakhstan logistics transit base.
Comment: Both Sichuan Province and Jiangsu Province are covered in the core area of the “One Belt and One Road” initiatives. Infrastructure construction enterprises like Sichuan Expressway Company Limited (601107.SH; 00107.HK), Sichuan Road & Bridge Co., Ltd. (600039.SH), Chengdu Road & Bridge Engineering Co., Ltd. (002628.SZ), etc. will play great roles in changing the road conditions in Sichuan Province; China Railway Tielong Container Logistics Co., Ltd. (600125.SH) is the operator of Chengdu-Europe International Through Railway Express; the advantages of Jiangsu Lianyungang Port Co., Ltd. (601008.SH) in ocean-rail through transportation will also be displayed.
◆ The State Administration of Taxation indicated on Jan. 28 that it will actively study on formulating taxation measures that support the construction of the “One Belt and One Road” initiatives, strengthen the efforts in negotiating, signing and implementing taxation agreements, solve the overseas taxation disputes of China’s outward investors through bilateral negotiations, enhance the taxation certainty of enterprises’ transnational operation, eliminate double taxation and better support enterprises to “go out”.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) indicated that the on-site inspection over securities companies’ margining trading business to be carried out on Feb.2 to 16 is just a routine supervision and there is no need to over interpret it.
○ The scope of “replacing turnover tax with value-added tax” will be expanded to construction, real estate, finance and insurance, life services industries in 2015.
○ Caijing reported that the merger of China Power Investment Corporation and State Nuclear Power Technology Corporation (SNPTC) has been approved by the decision-makers, and the State-owned Assets Supervision and Administration Commission (SASAC) is working on the detailed scheme.
○ Apple Watch Apple Watch will come into the market in April this year. The operation revenue of Apple Inc. in the first financial quarter grows by 30 percent, surpassing expectation.
○ Shanghai Huarui Bank, the main initiators of which are JuneYao Group and Shanghai Metersbonwe Fashion & Accessories Co., Ltd. (002269.SZ), becomes the second approved privately-owned bank.
[Industry Information]
○ MIIT arranges new policy for rare earth and to complete integration of six groups
------
The Ministry of Industry and Information Technology (MIIT) convened the rare earth work conference on Jan. 28. Su Bo, deputy head of MIIT, indicated that the formulation and launch of the “Rare Metal Management Ordinances” will be key work for the whole industry this year. The MIIT is planning rare earth resource tax reform. The six big rare earth groups will integrate the rare earth mines and smelting separation enterprises across China before the end of the year to achieve substantive reorganization with assets as belt.
Comment: Rampant illegal exploitation is one of the main reasons that resulted in the low price of rare earth. Under the promotion of “cracking down evil forces” from last year, the price of rare earth has risen a little. Along with the integration of rare earth resource nationwide by the six groups in the future, the speaking right of the industry will be further enhanced. Relevant listing platforms like China Minmetals Rare Earth Co., Ltd. (000831.SZ), Xiamen Tungsten Co., Ltd. (600549.SH), etc. will see benefit.
○ National Health and Family Planning Commission supports medical informatization, mobile medical market to see multiplied growth
------
The National Health and Family Planning Commission made public the “Action Plan on Further Improvement of Medical Services” on Jan. 28, proposing to realize convenient and smart medical services in three years, push forward appointment medical services, play the advantage of IT, and improve patients’ medical experience. The Medical Pharmaceutical Material Association Development Blue Book published on the same day shows that China’s mobile medical APP develops rapidly, and its market scale is expected to increase by 300 percent within three years.
Among A-share companies, Dhc Software Co., Ltd. (002065.SZ) preliminarily plans to release the third version of Happy Health APP this March; Lepu Medical Technology (Beijing) Co., Ltd. (300003.SZ) owns the APP concerning inquiry on cardiovascular diseases, appointment medical service and health management.
[Announcement Interpretation]
○ Tianma Microelectronics to raise RMB6 bln to invest in sixth-generation production line of high-end LTPS
------
Tianma Microelectronics Co., Ltd. (000050.SZ) proposes to issue shares at no less than 17.92 yuan per share through private placement to raise 6 billion yuan for constructing the sixth-generation production line of LTPS (low temperature poly-silicon) in Wuhan Tianma Micro-electronics Co. Ltd. The investment in the sixth-generation production line, the highest generation of LTPS production line in the world at present, is expected to total 12 billion yuan.
Comment: Among TFT-LCD display technologies, LTPS technology is one of the most promising mainstream application technologies in the high-end application market at present. It is expected that LTPS TFT-LCD will become the main impetus of the demand growth of global small and medium-sized display market from 2015 to 2020.
○ Mainstreets Investment invests in railway vehicle auxiliary products through private placement
------
Beijing Mainstreets Investment Group Corporation (000609.SZ) plans to purchase 60 percent equities of Qingdao Compin Railway GRP Co., Ltd. through private placement and in cash. The transaction is priced at 120 million yuan, among which, 60 million yuan will be paid by issuing 5.19 million shares at 11.56 yuan per share and the rest 60 million yuan will be paid in cash. At the meantime, a supporting fund of 18 million yuan will be raised through private placement at 11.96 yuan per share. The net profit of Qingdao Compin from 2012 to the first eight months of 2014 was 35.89 million yuan, 15.55 million yuan and 37.62 million yuan, respectively.
Comment: The main products of Qingdao Compin are the washing-room module, sleeper-room module, front hood, driver desk, passenger seats, etc. of passenger train, high-speed rail motor car set and urban rail vehicles. Qingdao Compin keeps close long-term cooperation with CSR Corporation Limited (01766.HK; 601766.SH). CSR Investment Leasing Company Ltd., a subsidiary of CSR Corporation, will also purchase 20 percent equities of Qingdao Compin. Mainstreets Investment is principally engaged in catering and real estate industries. The subsidiary controlled by it established the Longlong Web, a P2B platform that involves with Internet financing.
○ Tianshan Animal Husbandry Bio-engineering to purchase 70,000 mu farmland to expand industrial chain
------
Xinjiang Tianshan Animal Husbandry Bio-engineering Co., Ltd. (300313.SZ) plans to issue 6.83 million shares at 17.86 yuan per share through private placement and purchase the use right and relevant ancillary assets of 68,500 mu farmland as well as the use right of 15, 600 mu grassland with 122 million yuan. At the meantime, it is going to raise a supporting fund of 40 million yuan through bidding, and all the raised fund will be used for the planning and modification of the land to be purchased. After the transaction, the company’s business will expand to downstream beef raising industry and establish a complete industry chain of “breeding base-fattening base-beef butchery-beef sales”.
○ TV & Broadcast Intermediary joins hands with Lionsgate Films
------
Hunan TV & Broadcast Intermediary Co., Ltd. (000917.SZ) is going to cooperate with Lionsgate Films, a U.S. film production studio. TV & Broadcast Intermediary and Lionsgate Films will jointly invest in film shooting with a respective proportion of 75 percent and 25 percent according to the investment amount of the films. The total investment will be 1.5 billion U.S. dollars. The cooperation period will last for three years from the day the first jointly invested film is shown in American theater chains. The company also enjoys the exclusive right of sales of four films that are cooperated with Lionsgate Films every year.
○ Actual controller of Zhengzhou Coal Mining Machinery plans state-owned assets integration
------
The State-owned Assets Supervision and Administration Commission (SASAC) of Henan Province, actual controller of Zhengzhou Coal Mining Machinery Group Co., Ltd. (601717.SH; 00564.HK), deepens SOEs reform and plans to integrate the provincial state-owned assets of machinery equipment manufacturing sector, establish provincial machinery equipment investment group limited company, and brings into the state-owned equities of Zhengzhou Coal Mining Machinery. However, this integration will not lead to the change of the company’s actual controller, and the company’s major assets and operation strategy will not change either.
[Financial Reports Express]
○ Meiya Pico Information and Hongda Blasting plan high share conversion and dividend
------
Xiamen Meiya Pico Information Co., Ltd. (300188.SZ) expects its net profit in 2014 to see a year-on-year growth of 83 to 113 percent. It proposes a 10-for-10 conversion of capital surplus into shares combined with 0.45 yuan dividend for every 10 shares in its annual report. Guangdong Hongda Blasting Co., Ltd. (002683.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares. The company expected its net profit in 2014 to see a year-on-year growth of 0 to 30 percent previously.
[Trading Trends]
○ Highsun Group bought through five institutional seats
------
The trading volume ranking list on Jan. 28 shows that Guangdong Highsun Group Co., Ltd. (000861.SZ) was bought through five institutional seats with a total of 120 million yuan, accounting for 26 percent of its intraday turnover.
Comment: The research report of China International Capital Corporation Limited (CICC) show that Highsun Group is expanding financial business and developing big data. It is open that it might continue to expand in areas like consumption credit, supply chain financing, etc.
> Executive meeting of State Council plans “going out” of equipment, attentions on electricity and communication to increase.
> Reorganization of six rare earth groups to accelerate, National Health and Family Planning Commission supports medical informatization.
> Tianma Microelectronics to invest in sixth-generation production line of high-end LTPS, Mainstreets Investment invests in railway vehicle auxiliary products through private placement.
> Tianshan Animal Husbandry Bio-engineering to expand industrial chain, Meiya Pico Information and Hongda Blasting plan high share conversion and dividend.
[XFA Focus]
○ Executive meeting of State Council plans “going out” of equipment, attentions on electricity and communication to increase
------
Chinese Premier Li Keqiang hosted the executive meeting of the State Council on Jan. 28 to map out and promote the “going out” of China’s major equipment and competitive capacities. The meeting proposed to strengthen the standardization of enterprise operation order and firmly prevent vicious competition.
Comment: Besides railway and nuclear power that attracted lots of attention before, industries that are encouraged to go out this time also include steel, non-ferrous metal, building material, textile, communication, electricity, engineering machinery, ship, etc. Research institutions believe that the developing countries along the Silk Road are weak in infrastructures like communication, electricity, etc., while China has strong competitive advantages in communication and electrical equipment industries, so there hides huge export potentials. Among A-share companies, the amount of overseas orders of TBEA Co., Ltd. (600089.SH) reached 3 billion U. S. dollars at the end of 2013, indicating its regional advantages to radiate the Central Asia and West Asia; the internationalization strategy of Nari Technology Co., Ltd. (600406.SH) has been implemented for years and the company owns several projects in the Philippines, Brazil, etc.; the overseas business income of ZTE Corporation (000063.SZ; 00763.HK), a leading communication equipment enterprise, accounts for nearly half of its total revenue.
○ Transportation becomes key word of “One Belt and One Road”, Sichuan and Jiangsu to connect in multi-aspects
------
The government work report of Sichuan Province was published on Jan. 28, actively proposing to connect with China’s opening up in the south and west as well as the “One Belt and One Road” strategy and push forward the construction of main international logistics network like Chengdu-Europe International Through Railway Express and 19 highways. The investment in highway and waterway of the province has ranked first in China for four consecutive years. The government work report of Jiangsu Province published on the same day also proposed to strengthen the construction of “One Belt and One Road” intersections, Lianyungang East-Central-West Regional Cooperation Demonstration Area and China-Kazakhstan logistics transit base.
Comment: Both Sichuan Province and Jiangsu Province are covered in the core area of the “One Belt and One Road” initiatives. Infrastructure construction enterprises like Sichuan Expressway Company Limited (601107.SH; 00107.HK), Sichuan Road & Bridge Co., Ltd. (600039.SH), Chengdu Road & Bridge Engineering Co., Ltd. (002628.SZ), etc. will play great roles in changing the road conditions in Sichuan Province; China Railway Tielong Container Logistics Co., Ltd. (600125.SH) is the operator of Chengdu-Europe International Through Railway Express; the advantages of Jiangsu Lianyungang Port Co., Ltd. (601008.SH) in ocean-rail through transportation will also be displayed.
◆ The State Administration of Taxation indicated on Jan. 28 that it will actively study on formulating taxation measures that support the construction of the “One Belt and One Road” initiatives, strengthen the efforts in negotiating, signing and implementing taxation agreements, solve the overseas taxation disputes of China’s outward investors through bilateral negotiations, enhance the taxation certainty of enterprises’ transnational operation, eliminate double taxation and better support enterprises to “go out”.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) indicated that the on-site inspection over securities companies’ margining trading business to be carried out on Feb.2 to 16 is just a routine supervision and there is no need to over interpret it.
○ The scope of “replacing turnover tax with value-added tax” will be expanded to construction, real estate, finance and insurance, life services industries in 2015.
○ Caijing reported that the merger of China Power Investment Corporation and State Nuclear Power Technology Corporation (SNPTC) has been approved by the decision-makers, and the State-owned Assets Supervision and Administration Commission (SASAC) is working on the detailed scheme.
○ Apple Watch Apple Watch will come into the market in April this year. The operation revenue of Apple Inc. in the first financial quarter grows by 30 percent, surpassing expectation.
○ Shanghai Huarui Bank, the main initiators of which are JuneYao Group and Shanghai Metersbonwe Fashion & Accessories Co., Ltd. (002269.SZ), becomes the second approved privately-owned bank.
[Industry Information]
○ MIIT arranges new policy for rare earth and to complete integration of six groups
------
The Ministry of Industry and Information Technology (MIIT) convened the rare earth work conference on Jan. 28. Su Bo, deputy head of MIIT, indicated that the formulation and launch of the “Rare Metal Management Ordinances” will be key work for the whole industry this year. The MIIT is planning rare earth resource tax reform. The six big rare earth groups will integrate the rare earth mines and smelting separation enterprises across China before the end of the year to achieve substantive reorganization with assets as belt.
Comment: Rampant illegal exploitation is one of the main reasons that resulted in the low price of rare earth. Under the promotion of “cracking down evil forces” from last year, the price of rare earth has risen a little. Along with the integration of rare earth resource nationwide by the six groups in the future, the speaking right of the industry will be further enhanced. Relevant listing platforms like China Minmetals Rare Earth Co., Ltd. (000831.SZ), Xiamen Tungsten Co., Ltd. (600549.SH), etc. will see benefit.
○ National Health and Family Planning Commission supports medical informatization, mobile medical market to see multiplied growth
------
The National Health and Family Planning Commission made public the “Action Plan on Further Improvement of Medical Services” on Jan. 28, proposing to realize convenient and smart medical services in three years, push forward appointment medical services, play the advantage of IT, and improve patients’ medical experience. The Medical Pharmaceutical Material Association Development Blue Book published on the same day shows that China’s mobile medical APP develops rapidly, and its market scale is expected to increase by 300 percent within three years.
Among A-share companies, Dhc Software Co., Ltd. (002065.SZ) preliminarily plans to release the third version of Happy Health APP this March; Lepu Medical Technology (Beijing) Co., Ltd. (300003.SZ) owns the APP concerning inquiry on cardiovascular diseases, appointment medical service and health management.
[Announcement Interpretation]
○ Tianma Microelectronics to raise RMB6 bln to invest in sixth-generation production line of high-end LTPS
------
Tianma Microelectronics Co., Ltd. (000050.SZ) proposes to issue shares at no less than 17.92 yuan per share through private placement to raise 6 billion yuan for constructing the sixth-generation production line of LTPS (low temperature poly-silicon) in Wuhan Tianma Micro-electronics Co. Ltd. The investment in the sixth-generation production line, the highest generation of LTPS production line in the world at present, is expected to total 12 billion yuan.
Comment: Among TFT-LCD display technologies, LTPS technology is one of the most promising mainstream application technologies in the high-end application market at present. It is expected that LTPS TFT-LCD will become the main impetus of the demand growth of global small and medium-sized display market from 2015 to 2020.
○ Mainstreets Investment invests in railway vehicle auxiliary products through private placement
------
Beijing Mainstreets Investment Group Corporation (000609.SZ) plans to purchase 60 percent equities of Qingdao Compin Railway GRP Co., Ltd. through private placement and in cash. The transaction is priced at 120 million yuan, among which, 60 million yuan will be paid by issuing 5.19 million shares at 11.56 yuan per share and the rest 60 million yuan will be paid in cash. At the meantime, a supporting fund of 18 million yuan will be raised through private placement at 11.96 yuan per share. The net profit of Qingdao Compin from 2012 to the first eight months of 2014 was 35.89 million yuan, 15.55 million yuan and 37.62 million yuan, respectively.
Comment: The main products of Qingdao Compin are the washing-room module, sleeper-room module, front hood, driver desk, passenger seats, etc. of passenger train, high-speed rail motor car set and urban rail vehicles. Qingdao Compin keeps close long-term cooperation with CSR Corporation Limited (01766.HK; 601766.SH). CSR Investment Leasing Company Ltd., a subsidiary of CSR Corporation, will also purchase 20 percent equities of Qingdao Compin. Mainstreets Investment is principally engaged in catering and real estate industries. The subsidiary controlled by it established the Longlong Web, a P2B platform that involves with Internet financing.
○ Tianshan Animal Husbandry Bio-engineering to purchase 70,000 mu farmland to expand industrial chain
------
Xinjiang Tianshan Animal Husbandry Bio-engineering Co., Ltd. (300313.SZ) plans to issue 6.83 million shares at 17.86 yuan per share through private placement and purchase the use right and relevant ancillary assets of 68,500 mu farmland as well as the use right of 15, 600 mu grassland with 122 million yuan. At the meantime, it is going to raise a supporting fund of 40 million yuan through bidding, and all the raised fund will be used for the planning and modification of the land to be purchased. After the transaction, the company’s business will expand to downstream beef raising industry and establish a complete industry chain of “breeding base-fattening base-beef butchery-beef sales”.
○ TV & Broadcast Intermediary joins hands with Lionsgate Films
------
Hunan TV & Broadcast Intermediary Co., Ltd. (000917.SZ) is going to cooperate with Lionsgate Films, a U.S. film production studio. TV & Broadcast Intermediary and Lionsgate Films will jointly invest in film shooting with a respective proportion of 75 percent and 25 percent according to the investment amount of the films. The total investment will be 1.5 billion U.S. dollars. The cooperation period will last for three years from the day the first jointly invested film is shown in American theater chains. The company also enjoys the exclusive right of sales of four films that are cooperated with Lionsgate Films every year.
○ Actual controller of Zhengzhou Coal Mining Machinery plans state-owned assets integration
------
The State-owned Assets Supervision and Administration Commission (SASAC) of Henan Province, actual controller of Zhengzhou Coal Mining Machinery Group Co., Ltd. (601717.SH; 00564.HK), deepens SOEs reform and plans to integrate the provincial state-owned assets of machinery equipment manufacturing sector, establish provincial machinery equipment investment group limited company, and brings into the state-owned equities of Zhengzhou Coal Mining Machinery. However, this integration will not lead to the change of the company’s actual controller, and the company’s major assets and operation strategy will not change either.
[Financial Reports Express]
○ Meiya Pico Information and Hongda Blasting plan high share conversion and dividend
------
Xiamen Meiya Pico Information Co., Ltd. (300188.SZ) expects its net profit in 2014 to see a year-on-year growth of 83 to 113 percent. It proposes a 10-for-10 conversion of capital surplus into shares combined with 0.45 yuan dividend for every 10 shares in its annual report. Guangdong Hongda Blasting Co., Ltd. (002683.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares. The company expected its net profit in 2014 to see a year-on-year growth of 0 to 30 percent previously.
[Trading Trends]
○ Highsun Group bought through five institutional seats
------
The trading volume ranking list on Jan. 28 shows that Guangdong Highsun Group Co., Ltd. (000861.SZ) was bought through five institutional seats with a total of 120 million yuan, accounting for 26 percent of its intraday turnover.
Comment: The research report of China International Capital Corporation Limited (CICC) show that Highsun Group is expanding financial business and developing big data. It is open that it might continue to expand in areas like consumption credit, supply chain financing, etc.
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