[Today’s Guide]
> Methods on network security censorship to make three breakthroughs, various companies to participate in pilots
> Subsidies on agricultural machinery to boost agricultural modernization, strictest regulation on environmental protection issued in Guangdong
> Guiguan Electric Power to acquire Longtan Hydropower Station, Dewei Advanced Materials to expand new material business
> Royal Group to control Sun Shine Cultural Communication, Salt Lake Industry bought through three institutional seats
[XFA Focus]
○ Methods on network security censorship to make three breakthroughs, various companies to participate in pilots
------
Insiders participated in the preparation of methods on network security censorship disclosed that the policy will make three major breakthroughs. Firstly, the security protection will be based on the sharing and opening of core data represented by government data. Secondly, the censorship will start with credibility and guarantee and foreign brands will not be blindly rejected. Thirdly, it highlights technological guarantee as well as the coordination of the management system. During relevant pilots conducted by the Cyberspace Administration of China, Dawning Information Industry Co., Ltd. (603019.SH), Inspur Electronic Information Industry Co., Ltd. (000977.SZ), Huawei Technologies Co. Ltd. and other companies will be participants in the pilot.
Comment: The methods on network security censorship will be submitted to the conference of the Office of the General Leading Group for Cyberspace Affairs for deliberation. Insiders believe that the introduction of the policy will benefit suppliers with independent technology and ancillary management systems and those can provide data owners with credible and standard services. Among the listed companies, the main service target of the cloud computing services center of Dawning Information Industry is the government data. The research and development of the Power server, database and other independently controllable products of Beijing Teamsun Technology Co., Ltd. (600410.SH) progresses smoothly. The company also undertook the industrialization project of the trustworthy and open high-end parallel computing system (TOP) in Beijing. Bluedon Information Security Technologies Co., Ltd. (300297.SZ) proposed the “Big Safety” industrial development strategy to accelerate in advancing into such emerging industries as military projects, aerospace, transportation, energy and Internet.
[XFA Selection]
○ Chinese Vice-Premier Zhang Gaoli indicated on Jan. 29 to strengthen the regulation on food safety and establish an intelligent regulation network.
○ The list for the reproduction of experiences of China (Shanghai) Pilot Free Trade Zone was issued, allowing domestic and overseas enterprises to conduct the production and sale of game and entertainment equipment.
○ Total investment in railway reached a new high of 808.8 billion yuan in 2014. China Railway will give priority to the construction of China-Laos Railway and China-Thailand Railway this year.
○ Guangxi Zhuang Autonomous Region, Shandong Province, Shaanxi Province, Gansu Province and Henan Province all put the application for free trade zones into the government work report of this year.
○ Anbang Insurance Group increased the shareholding of the A shares and H shares of China Minsheng Banking Corp., Ltd. (01988.HK; 600016.SH) to 22.51 percent and 5.18 percent by Jan. 26.
[Industry Information]
○ Opinions on subsidies on agricultural machinery issued, agricultural modernization to see new driver
------
The Ministry of Agriculture and the Ministry of Finance issued the “Opinions on the Implementation of Subsidies on Purchasing Agricultural Machinery 2015-2017” on Jan. 29, stipulating that the subsidies will be generally no more than 30 percent of the average selling price of last year and the maximum subsidy will be raised to 600,000 yuan from the 400,000 of last year.
Comment: The Central Rural Work Conference concluded in the end of last year focused on the theme of agricultural modernization. The agricultural mechanization is the key driver of agricultural modernization. The agricultural mechanization in China has been improving rapidly in recent years, but it still lags behind the U.S. The scale of the agricultural machinery market is expected to surpass 500 billion yuan in 2018. First Tractor Company Limited (00038.HK; 601038.SH) is the only mega enterprise in the agricultural machinery industry in China. Jiangsu Jianghuai Engine Co., Ltd. (000816.SZ) and Changchai C o., Ltd. (000570.SZ) produce diesel engines and other accessories of agricultural machinery.
○ Strictest regulation on environmental protection issued in Guangdong focusing on rectification of environmental pollution
------
The Standing Committee of Guangdong Provincial People’s Congress declared on Jan. 29 that the newly amended “Regulation on Environmental Protection in Guangdong Province” will come into effect on July 1. The regulation, which introduced the “dual punishment system” on environmental accidents with enterprises and individuals involved to be fined, is the strictest ever in the province. The province also issued the “Guidance Opinions on the Investigation of Criminal Cases Involving Environmental Pollution” on the same day. It will cooperate with the public security, the procuratorial and judicial organs to prevent “fines instead of civil or criminal sanctions”.
Comment: The introduction of various key measures on the rectification of environmental pollution will immediately boost the enthusiasm of enterprises on environmental equipment. Among local listed companies, Grandblue Environment Co., Ltd. (600323.SH) achieved continuous business expansion through private placement. Dongjiang Environmental Company Limited (00895.HK; 002672.SZ) has various projects under construction and renovation and extension projects to be put into operation this year.
[Announcement Interpretation]
○ Guiguan Electric Power to acquire Longtan Hydropower Station with huge sum of money, Datang Cooperation sees heated reform
------
Guangxi Guiguan Electric Power Co., Ltd. (600236.SH) plans to issue 3,678 million shares at 4.59 yuan per share to purchase 100 percent equities of Longtan Hydropower Station and issue 19 million preference shares to raise 1.9 billion yuan for supplementing the working capital of Longtan Company. The predicted value of the 100 percent equities of Longtan Hydropower Station is 16.88 billion yuan with an appreciation rate of 212 percent. The operation revenue of Longtan Company from 2012 to 2014 is 2,878 million yuan, 2,013 million yuan and 3,611 million yuan, respectively.
Comment: China Datang Cooperation owns listed companies like Datang International Power Generation Co., Ltd. (601991.SH; 00991.HK), Datang Huayin Electric Power Co., Ltd. (600744.SH), Guiguan Electric Power, etc. In Oct., 2014, Huayin Electric Power with poor performance announced that it will acquire the quality electric power assets of Datang Cooperation with 2.6 billion yuan. In Nov., 2010, Datang Cooperation promised to inject its thermal power assets into Datang International Power Generation.
○ Dewei Advanced Materials to expand new material business through private placement
------
Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ) proposes to issue shares at 7.5 yuan per share through private placement to raise 600 million yuan, among which, 430 million yuan will be invested in new material projects like high-voltage cable insulation material, etc. and the rest 170 million yuan will be used to supplement working capital. Suzhou Dewei Investment Co., Ltd., controlling shareholder of the company, and Lhasa Economic and Technological Development Zone Xiangtang Investment Management Co., Ltd., a subsidiary of Suzhou Xiangtang Venture Capital Limited Liability Company, the company’s second largest shareholder, will respectively subscribe 50 million shares and 10 million shares. After reaching the designed capacity, the annual after-tax profit of the project will surpass 100 million yuan. The net profit of Dewei Advanced Materials in 2013 was 61.86 million yuan and its stock price before trade suspension was 8.41 yuan per share.
○ Royal Group to control Sun Shine Cultural Communication to develop culture and media business
------
Royal Group Co., Ltd. (002329.SZ) plans to purchase 100 percent equities of Beijing Sun Shine Cultural Communication Co., Ltd., whose predicted value is 780 million yuan, by issuing 24.89 million shares at 26.39 yuan per share and in cash. At the meantime, it will issue 9.22 million shares at no less than 23.75 yuan per share to raise a supporting fund of 219 million yuan. Sun Shine Cultural Communication is a new media company focusing on the integration, issuance and operation of video programs with its profit in 2014 recorded at 61 million yuan. The counterparty promised that the net profit of Sun Shine Cultural Communication in 2015 to 2017 will be no less than 75 million yuan, 90 million yuan and 108 million yuan. The net profit of Royal Group in 2013 was 36.36 million yuan.
Comment: Royal Group is principally engaged in dairy products and is transforming towards the direction of culture and media. It purchased Yujia Media Movie and Television Group Co., Ltd. with 680 million yuan in last Nov. and acquired the shares of Korean MG Movie and Television Production Company recently. This purchase will help Royal Group to build a complete industrial chain of “movie and television production-new media operation-terminal communication” and make its culture and media business bigger and stronger.
○ Kehua Hengsheng to raise RMB2.1 bln to invest in PV power generation
------
Xiamen Kehua Hengsheng Co., Ltd. (002335.SZ) plans to issue 114 million shares at no less than 18.47 yuan per share to raise 2.1 billion yuan for investing in photovoltaic power generation project and supplementing working capital. Chen Chenghui, actual controller of the company, will subscribe at least 10 percent of the total issuance. After the fundraising, the scale of the company’s under-construction and under-operation photovoltaic power stations will reach 200MW. Its strategic layout on photovoltaic power station business will be completed preliminarily.
[Financial Reports Express]
○ Mingtai Al. Industrial and Lansheng Corporation expect large performance growth
------
Thanks to the reduction of production cost and the increase of gross profit margin, Henan Mingtai Al. Industrial Co., Ltd. (601677.SH) expect its net profit in 2014 to see a year-on-year growth of 180 to 210 percent. Shanghai Lansheng Corporation (600826.SH) expects its net profit to grow by 940 percent year on year in 2014 due to its decrease of shareholding in the equities of Haitong Securities Company Limited (06837.HK; 600837.SH) in the fourth quarter of last year.
[Trading Trends]
○ Salt Lake Industry bought through three institutional seats
------
The trading volume ranking list on Jan. 29 shows that Qinghai Salt Lake Industry Co., Ltd. (000792.SZ) was bought through three institutional seats with a total of 176 million yuan, accounting for 17.5 percent of its intraday turnover.
Comment: Salt Lake Industry expected its net profit in 2014 to see a year-on-year growth of 10 to 40 percent on Wednesday evening, surpassing previous expectation. Several research institutions believe that the storage of the muriate of potash industry has seen a periodical bottom and its prosperity tendency is almost for certain.
○ Shanghai Stock Connection market saw sudden huge turnover at end of trading hour
------
In the last 30 minutes of A-share trading hour on Jan. 29, around 3 billion yuan buying orders crowded into the market, leading to a two-week new high of single day net buying in Shanghai Stock Connection market. The most popular stocks that day included Daqin Railway Co., Ltd. (601006.SH), Shanghai International Airport Co., Ltd. (600009.SH), China Minsheng Banking Corp., Ltd. (600016.SH; 01988.HK), etc.
Comment: The data from Hong Kong Exchanges and Clearing Limited shows that the total net buying volume in Shanghai Stock Connection market reached 8.8 billion yuan in the seven trading days from Jan. 20 to 28 after the big slump on Jan. 19, increasing by 300 percent compared with the net buying volume of 2.2 billion yuan in the previous seven trading days. Some market analysts believe that overseas investors buy more A shares as stock prices increase because of their expectation that the mainland might launch easing monetary policy.
> Methods on network security censorship to make three breakthroughs, various companies to participate in pilots
> Subsidies on agricultural machinery to boost agricultural modernization, strictest regulation on environmental protection issued in Guangdong
> Guiguan Electric Power to acquire Longtan Hydropower Station, Dewei Advanced Materials to expand new material business
> Royal Group to control Sun Shine Cultural Communication, Salt Lake Industry bought through three institutional seats
[XFA Focus]
○ Methods on network security censorship to make three breakthroughs, various companies to participate in pilots
------
Insiders participated in the preparation of methods on network security censorship disclosed that the policy will make three major breakthroughs. Firstly, the security protection will be based on the sharing and opening of core data represented by government data. Secondly, the censorship will start with credibility and guarantee and foreign brands will not be blindly rejected. Thirdly, it highlights technological guarantee as well as the coordination of the management system. During relevant pilots conducted by the Cyberspace Administration of China, Dawning Information Industry Co., Ltd. (603019.SH), Inspur Electronic Information Industry Co., Ltd. (000977.SZ), Huawei Technologies Co. Ltd. and other companies will be participants in the pilot.
Comment: The methods on network security censorship will be submitted to the conference of the Office of the General Leading Group for Cyberspace Affairs for deliberation. Insiders believe that the introduction of the policy will benefit suppliers with independent technology and ancillary management systems and those can provide data owners with credible and standard services. Among the listed companies, the main service target of the cloud computing services center of Dawning Information Industry is the government data. The research and development of the Power server, database and other independently controllable products of Beijing Teamsun Technology Co., Ltd. (600410.SH) progresses smoothly. The company also undertook the industrialization project of the trustworthy and open high-end parallel computing system (TOP) in Beijing. Bluedon Information Security Technologies Co., Ltd. (300297.SZ) proposed the “Big Safety” industrial development strategy to accelerate in advancing into such emerging industries as military projects, aerospace, transportation, energy and Internet.
[XFA Selection]
○ Chinese Vice-Premier Zhang Gaoli indicated on Jan. 29 to strengthen the regulation on food safety and establish an intelligent regulation network.
○ The list for the reproduction of experiences of China (Shanghai) Pilot Free Trade Zone was issued, allowing domestic and overseas enterprises to conduct the production and sale of game and entertainment equipment.
○ Total investment in railway reached a new high of 808.8 billion yuan in 2014. China Railway will give priority to the construction of China-Laos Railway and China-Thailand Railway this year.
○ Guangxi Zhuang Autonomous Region, Shandong Province, Shaanxi Province, Gansu Province and Henan Province all put the application for free trade zones into the government work report of this year.
○ Anbang Insurance Group increased the shareholding of the A shares and H shares of China Minsheng Banking Corp., Ltd. (01988.HK; 600016.SH) to 22.51 percent and 5.18 percent by Jan. 26.
[Industry Information]
○ Opinions on subsidies on agricultural machinery issued, agricultural modernization to see new driver
------
The Ministry of Agriculture and the Ministry of Finance issued the “Opinions on the Implementation of Subsidies on Purchasing Agricultural Machinery 2015-2017” on Jan. 29, stipulating that the subsidies will be generally no more than 30 percent of the average selling price of last year and the maximum subsidy will be raised to 600,000 yuan from the 400,000 of last year.
Comment: The Central Rural Work Conference concluded in the end of last year focused on the theme of agricultural modernization. The agricultural mechanization is the key driver of agricultural modernization. The agricultural mechanization in China has been improving rapidly in recent years, but it still lags behind the U.S. The scale of the agricultural machinery market is expected to surpass 500 billion yuan in 2018. First Tractor Company Limited (00038.HK; 601038.SH) is the only mega enterprise in the agricultural machinery industry in China. Jiangsu Jianghuai Engine Co., Ltd. (000816.SZ) and Changchai C o., Ltd. (000570.SZ) produce diesel engines and other accessories of agricultural machinery.
○ Strictest regulation on environmental protection issued in Guangdong focusing on rectification of environmental pollution
------
The Standing Committee of Guangdong Provincial People’s Congress declared on Jan. 29 that the newly amended “Regulation on Environmental Protection in Guangdong Province” will come into effect on July 1. The regulation, which introduced the “dual punishment system” on environmental accidents with enterprises and individuals involved to be fined, is the strictest ever in the province. The province also issued the “Guidance Opinions on the Investigation of Criminal Cases Involving Environmental Pollution” on the same day. It will cooperate with the public security, the procuratorial and judicial organs to prevent “fines instead of civil or criminal sanctions”.
Comment: The introduction of various key measures on the rectification of environmental pollution will immediately boost the enthusiasm of enterprises on environmental equipment. Among local listed companies, Grandblue Environment Co., Ltd. (600323.SH) achieved continuous business expansion through private placement. Dongjiang Environmental Company Limited (00895.HK; 002672.SZ) has various projects under construction and renovation and extension projects to be put into operation this year.
[Announcement Interpretation]
○ Guiguan Electric Power to acquire Longtan Hydropower Station with huge sum of money, Datang Cooperation sees heated reform
------
Guangxi Guiguan Electric Power Co., Ltd. (600236.SH) plans to issue 3,678 million shares at 4.59 yuan per share to purchase 100 percent equities of Longtan Hydropower Station and issue 19 million preference shares to raise 1.9 billion yuan for supplementing the working capital of Longtan Company. The predicted value of the 100 percent equities of Longtan Hydropower Station is 16.88 billion yuan with an appreciation rate of 212 percent. The operation revenue of Longtan Company from 2012 to 2014 is 2,878 million yuan, 2,013 million yuan and 3,611 million yuan, respectively.
Comment: China Datang Cooperation owns listed companies like Datang International Power Generation Co., Ltd. (601991.SH; 00991.HK), Datang Huayin Electric Power Co., Ltd. (600744.SH), Guiguan Electric Power, etc. In Oct., 2014, Huayin Electric Power with poor performance announced that it will acquire the quality electric power assets of Datang Cooperation with 2.6 billion yuan. In Nov., 2010, Datang Cooperation promised to inject its thermal power assets into Datang International Power Generation.
○ Dewei Advanced Materials to expand new material business through private placement
------
Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ) proposes to issue shares at 7.5 yuan per share through private placement to raise 600 million yuan, among which, 430 million yuan will be invested in new material projects like high-voltage cable insulation material, etc. and the rest 170 million yuan will be used to supplement working capital. Suzhou Dewei Investment Co., Ltd., controlling shareholder of the company, and Lhasa Economic and Technological Development Zone Xiangtang Investment Management Co., Ltd., a subsidiary of Suzhou Xiangtang Venture Capital Limited Liability Company, the company’s second largest shareholder, will respectively subscribe 50 million shares and 10 million shares. After reaching the designed capacity, the annual after-tax profit of the project will surpass 100 million yuan. The net profit of Dewei Advanced Materials in 2013 was 61.86 million yuan and its stock price before trade suspension was 8.41 yuan per share.
○ Royal Group to control Sun Shine Cultural Communication to develop culture and media business
------
Royal Group Co., Ltd. (002329.SZ) plans to purchase 100 percent equities of Beijing Sun Shine Cultural Communication Co., Ltd., whose predicted value is 780 million yuan, by issuing 24.89 million shares at 26.39 yuan per share and in cash. At the meantime, it will issue 9.22 million shares at no less than 23.75 yuan per share to raise a supporting fund of 219 million yuan. Sun Shine Cultural Communication is a new media company focusing on the integration, issuance and operation of video programs with its profit in 2014 recorded at 61 million yuan. The counterparty promised that the net profit of Sun Shine Cultural Communication in 2015 to 2017 will be no less than 75 million yuan, 90 million yuan and 108 million yuan. The net profit of Royal Group in 2013 was 36.36 million yuan.
Comment: Royal Group is principally engaged in dairy products and is transforming towards the direction of culture and media. It purchased Yujia Media Movie and Television Group Co., Ltd. with 680 million yuan in last Nov. and acquired the shares of Korean MG Movie and Television Production Company recently. This purchase will help Royal Group to build a complete industrial chain of “movie and television production-new media operation-terminal communication” and make its culture and media business bigger and stronger.
○ Kehua Hengsheng to raise RMB2.1 bln to invest in PV power generation
------
Xiamen Kehua Hengsheng Co., Ltd. (002335.SZ) plans to issue 114 million shares at no less than 18.47 yuan per share to raise 2.1 billion yuan for investing in photovoltaic power generation project and supplementing working capital. Chen Chenghui, actual controller of the company, will subscribe at least 10 percent of the total issuance. After the fundraising, the scale of the company’s under-construction and under-operation photovoltaic power stations will reach 200MW. Its strategic layout on photovoltaic power station business will be completed preliminarily.
[Financial Reports Express]
○ Mingtai Al. Industrial and Lansheng Corporation expect large performance growth
------
Thanks to the reduction of production cost and the increase of gross profit margin, Henan Mingtai Al. Industrial Co., Ltd. (601677.SH) expect its net profit in 2014 to see a year-on-year growth of 180 to 210 percent. Shanghai Lansheng Corporation (600826.SH) expects its net profit to grow by 940 percent year on year in 2014 due to its decrease of shareholding in the equities of Haitong Securities Company Limited (06837.HK; 600837.SH) in the fourth quarter of last year.
[Trading Trends]
○ Salt Lake Industry bought through three institutional seats
------
The trading volume ranking list on Jan. 29 shows that Qinghai Salt Lake Industry Co., Ltd. (000792.SZ) was bought through three institutional seats with a total of 176 million yuan, accounting for 17.5 percent of its intraday turnover.
Comment: Salt Lake Industry expected its net profit in 2014 to see a year-on-year growth of 10 to 40 percent on Wednesday evening, surpassing previous expectation. Several research institutions believe that the storage of the muriate of potash industry has seen a periodical bottom and its prosperity tendency is almost for certain.
○ Shanghai Stock Connection market saw sudden huge turnover at end of trading hour
------
In the last 30 minutes of A-share trading hour on Jan. 29, around 3 billion yuan buying orders crowded into the market, leading to a two-week new high of single day net buying in Shanghai Stock Connection market. The most popular stocks that day included Daqin Railway Co., Ltd. (601006.SH), Shanghai International Airport Co., Ltd. (600009.SH), China Minsheng Banking Corp., Ltd. (600016.SH; 01988.HK), etc.
Comment: The data from Hong Kong Exchanges and Clearing Limited shows that the total net buying volume in Shanghai Stock Connection market reached 8.8 billion yuan in the seven trading days from Jan. 20 to 28 after the big slump on Jan. 19, increasing by 300 percent compared with the net buying volume of 2.2 billion yuan in the previous seven trading days. Some market analysts believe that overseas investors buy more A shares as stock prices increase because of their expectation that the mainland might launch easing monetary policy.
Latest comments