[Today's Guide]
> CNBM issues announcement, central enterprise reform pilots attract attention again
> Top-level design of Yangtze River Economic Zone to launch, information security attracts concern
> Star-net Communication to control Asiatelco, Winsan to acquire MedEx
> Baosight Software to further explore big data, Song Xiaoming further adds stakes in TianMuShan Phar. for three times
[XFA Focus]
○ CNBM issues announcement, central enterprise reform pilots attract attention again
------
China Fiberglass Co., Ltd. (600176.SH) and Beijing New Building Materials Public Limited Company (000786.SZ), under China National Building Materials Group Corporation (CNBM), announced that the scheme of the pilot mixed ownership reform of China National Building Materials Group, their actual controller, has been nodded by the State-owned Assets Supervision and Administration Commission (SASAC). Both of the companies are covered in the first batch of pilot enterprises of the Group.
Comment: This is another scheme of central enterprise mixed ownership reform approved after China National Pharmaceutical Group Corporation (Sinopharm). A-share companies under CNBM are Luoyang Glass Company Limited (600876.SH; 01108.HK), Ruitai Materials Technology Co., Ltd. (002066.SZ), Anhui Fangxing Science & Technology Co., Ltd. (600552.SH), etc. Beijing New Building Materials, China Fiberglass, Luoyang Glass, etc. have taken actions in industrial upgrading and transforming. The “mixed ownership reform” will bring more development opportunities to those pilot companies. The SASAC announced the pilot reform of six central enterprises in last July. Institutions believe that COFCO Group with pilot state-owned capital investment has larger development space. Companies under COFCO Group are COFCO Biochemical (Anhui) Co., Ltd. (000930.SZ), COFCO Tunhe Co., Ltd. (600737.SH), etc.
[XFA Selection]
○ The State Council pushes land reform pilot and submits it to the National People's Congress for looser legal control.
○ SSE 50 ETF options will be traded in market on Feb. 9, and institutions will take a wait-and-see attitude at the beginning.
○ Shanghai is about to start the operation of state-owned capital flow platform this year and take global technology innovation center as its reform and development thought.
○ The Ministry of Agriculture will promote the connection between agricultural operation management entities and e-commerce enterprises to develop pilot agriculture e-commerce demonstration work.
○China’s import-export volume saw a year-on-year decrease of 10.8 percent in Jan. The trade surplus in the same month was 366.9 billion yuan or expanded by 87.5 percent.
○ The number of people died of flu increased to 140 in Hong Kong and the Department of Health called for early vaccination.
[Industry Information]
○ Top-level design of Yangtze River Economic Zone to launch, golden waterway sees value increase
------
On the Yangtze River Economic Zone Development Promotion Work Conference held on Feb. 6, Chinese Vice-Premier Zhang Gaoli proposed that the planning and guidance must be strengthened and the top-level design of Yangtze River Economic Zone development must be promoted. On the two sessions (the National People's Congress and the Chinese Political Consultative Conference) held in various provinces and cities earlier, the development of Yangtze River Economic Zone has become a hot topic among provinces and cities along the river. It is planned that the “Waterway Law of the People's Republic of China” will take effect officially on March. 1 to better protect, develop and utilize the resources in Yangtze River waterway.
Comment: With good foundation, large potential, wide coverage as well as relatively small coordination difficulties among provinces, the Yangtze River Economic Zone is expected to act as a quick driver of China’s economy. Transportation facilities like waterway, channels crossing the river, railways along the river, etc. must be constructed first, and port operation enterprises like Nanjing Port Co., Ltd. (002040.SZ), Chongqing Gangjiu Co., Ltd. (600279.SH), etc. benefit the most.
○ New policies of information security attract international concern, independent domestication sees obvious trend
------
Several foreign media reported on Feb. 6 that aiming at China’s new IT industry policies, American enterprise associations are calling for their governments to take actions in negotiating with China. Reports show that China will require foreign technology enterprises to make public sensitive information like software source code, etc. to prevent potential spying. Bank, telecom, etc. industries will be the key areas to be reviewed. The U.S. enterprise associations worry that this might bring obvious negative effect on their business in China.
Comment: Though China does not repel foreign equipment blindly, domestication still represents the general trend in core areas concerning national security. If source codes are obtained, domestic enterprises are expected to make innovations through digestive absorption and achieve great-leap-forward development. Among A-share companies, Beijing Teamsun Technology Co., Ltd. (600410.SH) sees smooth progress of the technology introduction of IBM server; Hand Enterprise Solution Co., Ltd. (300170.SZ) has increased its market share during the course of ERP domestication; the data storage clients of Toyou Feiji Electronics Co., Ltd. (300302.SZ) cover government, armies, etc.
[Announcement Interpretation]
○ Star-net Communication to control Asiatelco to expand 4G industrial chain
------
Fujian Star-net Communication Co., Ltd. (002396.SZ) plans to purchase 65 percent equities of Asiatelco Technologies Co. Ltd. with 502 million yuan by issuing 8.44 million shares through private placement at 27 yuan per share and in cash. The appreciation rate is 287 percent. The counterparty promised that the net profit of Asiatelco from 2015 to 2017 will be no less than 45 million yuan, 55 million yuan and 65 million yuan, respectively.
Asiatelco, a self-dependent innovative enterprise that is principally engaged in wireless data access terminal products and solutions, provides mobile operators and mobile internet service providers in nearly 40 countries with customized products.
○ Winsan to acquire MedEx to transform into medical informatization
------
Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) intends to raise 550 million yuan by issuing 59.27 million shares at 9.28 yuan per share through private placement. The raised money will be used in acquiring 100 percent equities of Beijing MedEx Technology Co., Ltd., repaying loans and supplementing working capital. The 100 percent equities of MedEx are preliminarily valued at 450 million yuan.
MedEx is a manufacturer of digital medical devices and a provider of informatization solutions and is principally engaged in medical informatization services. The counterparty committed that the net profit after extraordinary items of MedEx for 2015 and 2016 will be no less than 36 million yuan and 45 million yuan, respectively.
Comment: Winsan acquired 51.08 percent equities of Shanghai Rongda Information Technology Co., Ltd. with capital increases and expanded into the medical informatization industry. The main business of the company will shift from the traditional industrial properties to the medical informatization industry through this private placement.
○ Baosight Software to further explore big data with Baosteel Group
------
Shanghai Baosight Software Co., Ltd. (600845.SH) proposes to cooperate with Ouye Yunshang Co., Ltd., a company controlled by Baosteel Group Corporation, in the establishment of the Ouye Data. The company will contribute 24.50 million yuan or 49 percent while Ouye Yunshang will contribute 25.50 million yuan in cash or 51 percent. Ouye Yunshang is newly established with a registered capital of 2 billion yuan.
Comment: The transaction is to explore the construction achievements of the Internet Data Center (IDC) of the company. Ouye Data will obtain massive data resources in e-business, industrial processing, logistics delivery technology and services and financial settlement after put into operation and further create more commercial value.
○ Song Xiaoming further adds stakes in TianMuShan Phar., fight for equities becomes increasingly fierce
------
Hangzhou TianMuShan Pharmaceutical Enterprise Co., Ltd. (600671.SH) announced that two assets management plans, “Chang Cheng Hui Li No.1 Plan” and “Zhongrong Fund—ChangChengHuiLi Merging No.1 Asset Management Plan”, and controlled by Song Xiaoming have acquired another 5.03 percent shares of the company on Feb. 3 and 4 through secondary market acquisition, exceeding the 5 percent limit.
Comment: This is the third time that Song acquired more than 5 percent shares of TianMuShan Phar. through secondary market acquisition. Song and his parties acting in concert hold 15 percent equities of the company after the acquisition. To fight against the former two acquisitions of the company’s equities by Song, Yang Zongchang, the actual controller of TianMuShan Phar., will increase his shareholding to 28.42 percent through private placement in order to consolidate his controlling status. Song snapped up the equities within two transaction days after the company resumed trading at high prices, which shows his ambition to control the company.
[Financial Reports Express]
○ Pengling Rubber Hose proposes high share conversion and dividend
------
Zhang Hongqi, chairman of Tianjin Pengling Rubber Hose Co., Ltd. (300375.SZ), proposes a 10-for-10 conversion of capital surplus into shares combined with 3.4 yuan dividend for every 10 shares according to its 2014 profit distribution plan.
[Trading Alarms]
○ Three new stocks start subscription on Feb. 9
------
Sichuan Scimee Sci. &Tech. Co., Ltd. (300425.SZ) issues shares at 15.21 yuan per share with an upper subscription limit of 7,000 shares for each account. It provides sewage treatment with magnetic separation water purification technology. Guangdong Guanghua Sci-Tech Co., Ltd. (002741.SZ) issues shares at 12.31 yuan with an upper subscription limit of 12,000 shares for each account. It is principally engaged in electronic chemicals. Shandong Xiantan Co., Ltd. (002746.SZ), an integrated broiler chicken breeding enterprise, issues shares at 5.28 yuan with an upper subscription limit of 15,500 shares for each account. The IPO P/E ratio of the three companies is 23 times with a full subscription of 340,000 yuan. Institutions are rosy about the prospects of Scimee Sci. &Tech. with a gross profit margin higher than other sewage treatment companies.
[Weekly Review]
○ SOEs reform theme picks up again
------
Despite such bullish news as RRR cut in last week, the SSE Composite Index remained sluggish with a weekly drop of 4.19 percent, approaching 3,000 points. The market recession has driven stock capitals into structural adjustments and more and more blue-chip stocks have joined the sell-into-corrections. Growth stocks represented by Internet and financial sectors and SOEs reform themed stocks represented by central and Shanghai enterprises are benefited from the position adjustment.
XFA paid special attention to SOEs reform last week. It reported on Feb. 2 that the Shanghai SASAC reform conference will be convened. It focused on the Chongqing SASAC conference on Feb. 4. The XFA Focus on Feb. 5 indicated that the pilots of central enterprises, including China National Building Materials Group Corporation and Jihua Group Corporation Limited (601718.SH), will be approved gradually and a listed company under China National Building Materials confirmed that the reform plan of the group was approved on Feb. 6 evening.
SOEs reform has been regarded as an engine for this round of bullish market. In short term, the plans of pilot central enterprises will come into operation and the top design plans for SOEs and the second batch pilot central enterprises is expected to be released soon. It is uncertain if the theme can lead the market in recovery, but it can be a harbor at least.
> CNBM issues announcement, central enterprise reform pilots attract attention again
> Top-level design of Yangtze River Economic Zone to launch, information security attracts concern
> Star-net Communication to control Asiatelco, Winsan to acquire MedEx
> Baosight Software to further explore big data, Song Xiaoming further adds stakes in TianMuShan Phar. for three times
[XFA Focus]
○ CNBM issues announcement, central enterprise reform pilots attract attention again
------
China Fiberglass Co., Ltd. (600176.SH) and Beijing New Building Materials Public Limited Company (000786.SZ), under China National Building Materials Group Corporation (CNBM), announced that the scheme of the pilot mixed ownership reform of China National Building Materials Group, their actual controller, has been nodded by the State-owned Assets Supervision and Administration Commission (SASAC). Both of the companies are covered in the first batch of pilot enterprises of the Group.
Comment: This is another scheme of central enterprise mixed ownership reform approved after China National Pharmaceutical Group Corporation (Sinopharm). A-share companies under CNBM are Luoyang Glass Company Limited (600876.SH; 01108.HK), Ruitai Materials Technology Co., Ltd. (002066.SZ), Anhui Fangxing Science & Technology Co., Ltd. (600552.SH), etc. Beijing New Building Materials, China Fiberglass, Luoyang Glass, etc. have taken actions in industrial upgrading and transforming. The “mixed ownership reform” will bring more development opportunities to those pilot companies. The SASAC announced the pilot reform of six central enterprises in last July. Institutions believe that COFCO Group with pilot state-owned capital investment has larger development space. Companies under COFCO Group are COFCO Biochemical (Anhui) Co., Ltd. (000930.SZ), COFCO Tunhe Co., Ltd. (600737.SH), etc.
[XFA Selection]
○ The State Council pushes land reform pilot and submits it to the National People's Congress for looser legal control.
○ SSE 50 ETF options will be traded in market on Feb. 9, and institutions will take a wait-and-see attitude at the beginning.
○ Shanghai is about to start the operation of state-owned capital flow platform this year and take global technology innovation center as its reform and development thought.
○ The Ministry of Agriculture will promote the connection between agricultural operation management entities and e-commerce enterprises to develop pilot agriculture e-commerce demonstration work.
○China’s import-export volume saw a year-on-year decrease of 10.8 percent in Jan. The trade surplus in the same month was 366.9 billion yuan or expanded by 87.5 percent.
○ The number of people died of flu increased to 140 in Hong Kong and the Department of Health called for early vaccination.
[Industry Information]
○ Top-level design of Yangtze River Economic Zone to launch, golden waterway sees value increase
------
On the Yangtze River Economic Zone Development Promotion Work Conference held on Feb. 6, Chinese Vice-Premier Zhang Gaoli proposed that the planning and guidance must be strengthened and the top-level design of Yangtze River Economic Zone development must be promoted. On the two sessions (the National People's Congress and the Chinese Political Consultative Conference) held in various provinces and cities earlier, the development of Yangtze River Economic Zone has become a hot topic among provinces and cities along the river. It is planned that the “Waterway Law of the People's Republic of China” will take effect officially on March. 1 to better protect, develop and utilize the resources in Yangtze River waterway.
Comment: With good foundation, large potential, wide coverage as well as relatively small coordination difficulties among provinces, the Yangtze River Economic Zone is expected to act as a quick driver of China’s economy. Transportation facilities like waterway, channels crossing the river, railways along the river, etc. must be constructed first, and port operation enterprises like Nanjing Port Co., Ltd. (002040.SZ), Chongqing Gangjiu Co., Ltd. (600279.SH), etc. benefit the most.
○ New policies of information security attract international concern, independent domestication sees obvious trend
------
Several foreign media reported on Feb. 6 that aiming at China’s new IT industry policies, American enterprise associations are calling for their governments to take actions in negotiating with China. Reports show that China will require foreign technology enterprises to make public sensitive information like software source code, etc. to prevent potential spying. Bank, telecom, etc. industries will be the key areas to be reviewed. The U.S. enterprise associations worry that this might bring obvious negative effect on their business in China.
Comment: Though China does not repel foreign equipment blindly, domestication still represents the general trend in core areas concerning national security. If source codes are obtained, domestic enterprises are expected to make innovations through digestive absorption and achieve great-leap-forward development. Among A-share companies, Beijing Teamsun Technology Co., Ltd. (600410.SH) sees smooth progress of the technology introduction of IBM server; Hand Enterprise Solution Co., Ltd. (300170.SZ) has increased its market share during the course of ERP domestication; the data storage clients of Toyou Feiji Electronics Co., Ltd. (300302.SZ) cover government, armies, etc.
[Announcement Interpretation]
○ Star-net Communication to control Asiatelco to expand 4G industrial chain
------
Fujian Star-net Communication Co., Ltd. (002396.SZ) plans to purchase 65 percent equities of Asiatelco Technologies Co. Ltd. with 502 million yuan by issuing 8.44 million shares through private placement at 27 yuan per share and in cash. The appreciation rate is 287 percent. The counterparty promised that the net profit of Asiatelco from 2015 to 2017 will be no less than 45 million yuan, 55 million yuan and 65 million yuan, respectively.
Asiatelco, a self-dependent innovative enterprise that is principally engaged in wireless data access terminal products and solutions, provides mobile operators and mobile internet service providers in nearly 40 countries with customized products.
○ Winsan to acquire MedEx to transform into medical informatization
------
Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) intends to raise 550 million yuan by issuing 59.27 million shares at 9.28 yuan per share through private placement. The raised money will be used in acquiring 100 percent equities of Beijing MedEx Technology Co., Ltd., repaying loans and supplementing working capital. The 100 percent equities of MedEx are preliminarily valued at 450 million yuan.
MedEx is a manufacturer of digital medical devices and a provider of informatization solutions and is principally engaged in medical informatization services. The counterparty committed that the net profit after extraordinary items of MedEx for 2015 and 2016 will be no less than 36 million yuan and 45 million yuan, respectively.
Comment: Winsan acquired 51.08 percent equities of Shanghai Rongda Information Technology Co., Ltd. with capital increases and expanded into the medical informatization industry. The main business of the company will shift from the traditional industrial properties to the medical informatization industry through this private placement.
○ Baosight Software to further explore big data with Baosteel Group
------
Shanghai Baosight Software Co., Ltd. (600845.SH) proposes to cooperate with Ouye Yunshang Co., Ltd., a company controlled by Baosteel Group Corporation, in the establishment of the Ouye Data. The company will contribute 24.50 million yuan or 49 percent while Ouye Yunshang will contribute 25.50 million yuan in cash or 51 percent. Ouye Yunshang is newly established with a registered capital of 2 billion yuan.
Comment: The transaction is to explore the construction achievements of the Internet Data Center (IDC) of the company. Ouye Data will obtain massive data resources in e-business, industrial processing, logistics delivery technology and services and financial settlement after put into operation and further create more commercial value.
○ Song Xiaoming further adds stakes in TianMuShan Phar., fight for equities becomes increasingly fierce
------
Hangzhou TianMuShan Pharmaceutical Enterprise Co., Ltd. (600671.SH) announced that two assets management plans, “Chang Cheng Hui Li No.1 Plan” and “Zhongrong Fund—ChangChengHuiLi Merging No.1 Asset Management Plan”, and controlled by Song Xiaoming have acquired another 5.03 percent shares of the company on Feb. 3 and 4 through secondary market acquisition, exceeding the 5 percent limit.
Comment: This is the third time that Song acquired more than 5 percent shares of TianMuShan Phar. through secondary market acquisition. Song and his parties acting in concert hold 15 percent equities of the company after the acquisition. To fight against the former two acquisitions of the company’s equities by Song, Yang Zongchang, the actual controller of TianMuShan Phar., will increase his shareholding to 28.42 percent through private placement in order to consolidate his controlling status. Song snapped up the equities within two transaction days after the company resumed trading at high prices, which shows his ambition to control the company.
[Financial Reports Express]
○ Pengling Rubber Hose proposes high share conversion and dividend
------
Zhang Hongqi, chairman of Tianjin Pengling Rubber Hose Co., Ltd. (300375.SZ), proposes a 10-for-10 conversion of capital surplus into shares combined with 3.4 yuan dividend for every 10 shares according to its 2014 profit distribution plan.
[Trading Alarms]
○ Three new stocks start subscription on Feb. 9
------
Sichuan Scimee Sci. &Tech. Co., Ltd. (300425.SZ) issues shares at 15.21 yuan per share with an upper subscription limit of 7,000 shares for each account. It provides sewage treatment with magnetic separation water purification technology. Guangdong Guanghua Sci-Tech Co., Ltd. (002741.SZ) issues shares at 12.31 yuan with an upper subscription limit of 12,000 shares for each account. It is principally engaged in electronic chemicals. Shandong Xiantan Co., Ltd. (002746.SZ), an integrated broiler chicken breeding enterprise, issues shares at 5.28 yuan with an upper subscription limit of 15,500 shares for each account. The IPO P/E ratio of the three companies is 23 times with a full subscription of 340,000 yuan. Institutions are rosy about the prospects of Scimee Sci. &Tech. with a gross profit margin higher than other sewage treatment companies.
[Weekly Review]
○ SOEs reform theme picks up again
------
Despite such bullish news as RRR cut in last week, the SSE Composite Index remained sluggish with a weekly drop of 4.19 percent, approaching 3,000 points. The market recession has driven stock capitals into structural adjustments and more and more blue-chip stocks have joined the sell-into-corrections. Growth stocks represented by Internet and financial sectors and SOEs reform themed stocks represented by central and Shanghai enterprises are benefited from the position adjustment.
XFA paid special attention to SOEs reform last week. It reported on Feb. 2 that the Shanghai SASAC reform conference will be convened. It focused on the Chongqing SASAC conference on Feb. 4. The XFA Focus on Feb. 5 indicated that the pilots of central enterprises, including China National Building Materials Group Corporation and Jihua Group Corporation Limited (601718.SH), will be approved gradually and a listed company under China National Building Materials confirmed that the reform plan of the group was approved on Feb. 6 evening.
SOEs reform has been regarded as an engine for this round of bullish market. In short term, the plans of pilot central enterprises will come into operation and the top design plans for SOEs and the second batch pilot central enterprises is expected to be released soon. It is uncertain if the theme can lead the market in recovery, but it can be a harbor at least.
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