[Today's Guide]
> Shanghai state-owned assets transfer platform to operate, Guangdong FTZ the first to establish
> Opinions on comprehensively deepening public security reform to release, Apple to develop unmanned driving
> Chunhui to acquire Tong Dai Control (Hong Kong), Ourpalm and Geeya Technology to develop games through reorganization
> Newcapec Electronics to expand all-purpose card industry, Qiyuan Mechanical and Electrical Equipment to acquire environmental protection assets
[XFA Focus]
○ Equity of SAIC Motor transfers, Shanghai state-owned assets transfer platform starts operation
------
SAIC Motor Corporation Limited (600104.SH) receives a notice that according to the overall planning of Shanghai state-owned assets and enterprises reform, all the equities held by its third largest shareholder SAIC Automobile Industry Sales Co., Ltd. will be transferred to Shanghai International Group. The aim of this move is to push forward the substantive operation of the state-owned assets operation platform.
Comment: The International Group is one of the two state-owned assets transfer platforms in Shanghai. The state-owned assets reform in Shanghai is benchmarking nationally and will mainly be realized in the form of listed companies. Injection of quality assets is encouraged, and employee shareholding plans, equity incentive, merger & acquisition and reorganizations, etc. will come along with. Among other state-owned enterprises in Shanghai, Bright Food (Group) Co., Ltd. and Shanghai Textile Industry (Group) Co., Ltd. belong to competitive industry, have obvious diversified features and might be involved in the operation earlier. Relevant listed companies include Shanghai Maling Aquarius Co., Ltd. (600073.SH), ShangHai JinFeng Wine Company Limited (600616.SH), Shanghai Dragon Corporation (600630.SH), and Shanghai Shenda Co., Ltd. (600626.SH), etc.
○ Guangdong FTZ to establish first
------
XFA learns that Guangdong Province has issued a notice requiring the Nansha New District of Guangzhou City, Shenzhen Qianhai and Shekou District, Hengqin New District of Zhuhai City to get prepared for the establishment of free trade zones (FTZ) before Feb. 26.
Comment: This date is earlier than expected, indicating that Guangdong free trade zone might run ahead of Fujian Province and Tianjin Municipality and become the first to establish in the second batch of free trade zones. Guangdong FTZ faces Hong Kong and Macao and might enjoy unexpected policy supports in custom clearance and financial reform. Port companies like Zhuhai Port Co., Ltd. (000507.SZ) and companies who own industrial land in the Nansha New District of Guangzhou City like Guangzhou Lonkey Industrial Co., Ltd. (000523.SZ) will see benefit.
[XFA Selection]
○ The State Council issues document requiring accelerated development of service trade and supports on the export of transportation, communication, culture & art, etc. areas.
○ The China Securities Regulatory Commission (CSRC) indicated that the first draft of the IPO registration system reform has been submitted to the State Council and there is no suspension of new IPO applications.
○ The first batch of New-Three-board indexes will be launched on March 18 and there are already institutions preparing for the design of relevant products.
○ Alibaba Pictures Group Limited (01060.HK) joins hands with Guang Dong TV to expand e-commerce customized series; broadcasting and TV related stocks like Shaanxi Broadcast & TV Network Intermediary（Group）Co., Ltd. (600831.SH) and Wasu Media Holding Co., Ltd. (000156.SZ), etc. were bought by institutions on Feb. 13.
○ Tsinghua Unigroup obtained more than 10 billion yuan investment from national integrated circuit industry investment funds. The integration of industry and finance pushes forward the domestication of chips.
[Industry Information]
○ Opinions on comprehensively deepening public security reform to release, informatization of police affairs to become development tendency
------
Xinhuanet reported on Feb. 15 that the “Framework Opinions on Important Issues Related to Comprehensively Deepening Public Security Reform” and relevant reform schemes have been approved by the central government and will be printed for implementation. The responsible person of the Ministry of Public Security indicated to establish modern police affairs operation mechanism based on intelligence information; realize all-dimension, all-time and all-standing prevention and control; link together illegal and criminal record with social credit system.
Comment: To supplement the rule of law with deepening reform is the core thought of this administration. Under the general tendency of informatization, the police safeguards of public security system lag behind and in-adaptation occurs. The opinions on public security reform focus on information construction and bring development opportunities to relevant industries. As for companies, Hytera Communications Corporation Limited (002583.SZ) and Guangzhou Haige Communications Group Incorporated Company (002465.SZ) win the bidding of communication system projects of public security bureaus for several times. The emerging commanding system of AVCON Information Technology Co., Ltd. (300074.SZ) is applied by the public security bureau of Yunnan Province.
○ Apple to develop unmanned driving, smart cars become new wind hole of technology
------
According to several foreign media, Apple Inc. (NASDAQ: AAPL) is contacting with experts on car enterprises and suppliers, establishing a development team of more than a thousand people, and secretly developing unmanned electro-car named as Titan. The stock price of Apple closed a new record at 127.08 U.S. dollars on Feb. 13, representing a surge of 66 percent in over the past year.
Comment: As the smartphone market approaches saturation, smart car with the function of unmanned driving becomes the new development direction of technology giants. Industries like sensors, car networking, automotive electronics, etc. will see benefit of the tendency of car intelligence. Among A-share companies, Wuhan Guide Infrared Co., Ltd. (002414.SZ) is preparing for the expansion of auto-products; Gohigh Data Networks Technology Co., Ltd. (000851.SZ) owns the active safety technology realized through car short-distance communication; Ningbo Joyson Electronic Corp. (600699.SH) develops the electronic control area of new energy car through acquisition.
[Announcement Interpretation]
○ Chunhui to acquire Tong Dai Control (Hong Kong)
------
Guangdong Kaiping Chunhui Co., Ltd. (000976.SZ) proposes to acquire 100 percent equities of Tong Dai Control (Hong Kong) Limited by issuing shares at 3.32 yuan per share through private placement to raise 3.35 billion yuan. The subject company provides solutions to the power supply and sanitation systems, alternate power system and braking pads to affiliated companies of CSR Corporation Limited (01766.HK; 601766.SH) and China CNR Corporation Limited (06199.HK; 601299.SH). The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 312 million yuan with a corresponding acquisition P/E ratio of 10.6 times. The stocks of the company closed at 3.78 yuan before trading suspension.
○ Ourpalm and Geeya Technology to develop games through reorganization
------
Ourpalm Co., Ltd. (300315.SZ) plans to acquire equities of three game companies, namely 100 percent equities of Blingstorm Entertainment Limited, 80 percent equities of Beijing Tianma Shikong Network Technology Co., Ltd. and 30 percent equities of Shangyou Information Technology (Shanghai) Co., Ltd., at 4 billion yuan by issuing shares at 15.58 yuan per share through private placement and in cash. It also proposes to raise supporting funds. It is noteworthy that Tencent Holdings Limited (00700.HK) and Chinese smartphone brand Xiaomi indirectly holds shares of Blingstorm Entertainment and Tianma Shikong Network Technology and will hold shares of Ourpalm through this reorganization. The counterparties committed that the net profits after extraordinary items of the three companies in 2015 will be no less than 151 million yuan, 158 million yuan and 156 million yuan, respectively. The stocks of the company closed at 15.83 before trading suspension in last July.
Geeya Technology co., Ltd. (300028.SZ) intends to acquire 100 percent equities of Chengdu Skymoons Technology Co., Ltd. at 2.2 billion by issuing shares at 13.76 yuan per share through private placement and in cash. It also plans to raise supporting funds by issuing shares at 12.74 yuan per share. Skymoons Technology is principally engaged in the development and operation of mobile games. The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 220 million yuan with a corresponding acquisition P/E ratio of 10 times. The stocks of the company closed at 14.16 yuan before trading suspension.
○ Newcapec Electronics to expand all-purpose card industry
------
Newcapec Electronics Co., Ltd. (300248.SZ) proposes to acquire 100 percent equities of Beijing Datalook Technology Co., Ltd at 320 million yuan by issuing shares at 28.44 yuan per share through private placement and in cash. Datalook Technology is a well-known enterprise in the domestic campus all-purpose card industry with massive college clients. The acquisition will effectively improve the company’s market share in the industry. The counterparty committed that the net profit after extraordinary items of the target company in 2015 will be no less than 20 million yuan with a corresponding acquisition P/E ratio of 16 times. The stocks of the company closed at 31.74 yuan before trading suspension.
○ Qiyuan Mechanical and Electrical Equipment to acquire environmental protection assets from substantial shareholder
------
Xi’an Qiyuan Mechanical and Electrical Equipment Co., Ltd. (300140.SZ) intends to acquire 100 percent equities of CECEP L&T Environmental Technology Co., Ltd. at 936 million yuan by issuing shares at 18.03 yuan per share from its substantial shareholder China Energy Conservation and Environmental Protection Group (CECEP) and other parties. The company is principally engaged in the desulfurization and denitrification of flue gas, the monitoring of environmental and energy efficiency information and their big data. The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 80 million yuan with a corresponding acquisition P/E ratio of 11.7 times. The stocks of the company closed at 25.01 yuan before trading suspension.
Comment: As one of the first six central enterprises to reform, CECEP is accelerating the integration of its internal assets. Besides Qiyuan Mechanical and Electrical Equipment, A-share companies under CECEP also include Yantai Valiant Fine Chemicals Co., Ltd. (002643.SZ) and CECEP Wind-power Corporation Co., Ltd. (601016.SH)
[Trading Trends]
○ M2 growth hits new low, institutes rosy about loosening monetary policies
------
According to the latest statistics of the central bank, the broad monetary supply (M2) by end-January grew by 10.8 percent year on year, far below the market expectation of 12.1 percent and hitting a new low. The balance of social financing also increased at a new low of 13.4 percent. New loans saw increases while off-sheet financing increases significantly dropped.
Considering the viewpoints of various institutes, it may mean that the demand of corporate financing declined and the capitals are significantly flowing out. Despite the credit demand brought out by local governments’ investments in infrastructure, it is uncertain if it will continue. The economy and CPI will still be under downward pressures. The monetary policies are expected to further loosen.
[Weekly Review]
○ Choose one from XFA among plenty of market opportunities
------
The market maintained the surging trend last week with various subscriptions of IPOs. The Internet finance, pharmaceutical e-business and environmental protection surged one after another. Meanwhile, various listed companies introduced reorganization plans with massive themes in the active market, which really confused investors. Among various market opportunities, investors are advised to choose one from XFA.
XFA reported that SOA would strengthen maritime rights this year and vessels demand may boost on Feb. 9. Companies involved, including Beijing Highlander Digital Technology Co., Ltd. (300065.SZ), maintained hiking in the week with a maximum increase of over 20 percent. The “Industry Information” on the same day also indicated that the NdFeB industry would see prices rises and industry expects quantity and price hikes. Beijing Zhong Ke San Huan High-Tech Co., Ltd. (000970.SZ) and Ningbo Yunsheng Co., Ltd. (600366.SH) both saw satisfactory increases. XFA highlighted domestic integrated circuits in the “Industry Information” and “XFA Selection” on Feb. 10 and 11, ZTE Corporation (00763.HK; 000063.SZ), Datang Telecom Technology Co., Ltd. (600198.SH), Nationz Technologies Inc. (300077.SZ) and other individual stocks strongly surged after that. The Political Bureau of the CPC Central Committee convened a conference on Feb. 12 and discussed the government work report. Based on the interpretation on the contents of the conference, we indicated that education, health care and environmental protection would enjoy long-term growth. Beijing Lanxum Technology Co., Ltd. (300010.SZ) surged by 9 percent at the highest on the flowing day.
Looking back this week, we should admit that the outstanding performance is closely related to the market environment. We do not recommend frequent transactions. But investors are advised to give close attention to information in the active market. When you feel confused about the various hotspots, why not pay attention to our information and products. We believe that you will find your own opportunity one day.
> Shanghai state-owned assets transfer platform to operate, Guangdong FTZ the first to establish
> Opinions on comprehensively deepening public security reform to release, Apple to develop unmanned driving
> Chunhui to acquire Tong Dai Control (Hong Kong), Ourpalm and Geeya Technology to develop games through reorganization
> Newcapec Electronics to expand all-purpose card industry, Qiyuan Mechanical and Electrical Equipment to acquire environmental protection assets
[XFA Focus]
○ Equity of SAIC Motor transfers, Shanghai state-owned assets transfer platform starts operation
------
SAIC Motor Corporation Limited (600104.SH) receives a notice that according to the overall planning of Shanghai state-owned assets and enterprises reform, all the equities held by its third largest shareholder SAIC Automobile Industry Sales Co., Ltd. will be transferred to Shanghai International Group. The aim of this move is to push forward the substantive operation of the state-owned assets operation platform.
Comment: The International Group is one of the two state-owned assets transfer platforms in Shanghai. The state-owned assets reform in Shanghai is benchmarking nationally and will mainly be realized in the form of listed companies. Injection of quality assets is encouraged, and employee shareholding plans, equity incentive, merger & acquisition and reorganizations, etc. will come along with. Among other state-owned enterprises in Shanghai, Bright Food (Group) Co., Ltd. and Shanghai Textile Industry (Group) Co., Ltd. belong to competitive industry, have obvious diversified features and might be involved in the operation earlier. Relevant listed companies include Shanghai Maling Aquarius Co., Ltd. (600073.SH), ShangHai JinFeng Wine Company Limited (600616.SH), Shanghai Dragon Corporation (600630.SH), and Shanghai Shenda Co., Ltd. (600626.SH), etc.
○ Guangdong FTZ to establish first
------
XFA learns that Guangdong Province has issued a notice requiring the Nansha New District of Guangzhou City, Shenzhen Qianhai and Shekou District, Hengqin New District of Zhuhai City to get prepared for the establishment of free trade zones (FTZ) before Feb. 26.
Comment: This date is earlier than expected, indicating that Guangdong free trade zone might run ahead of Fujian Province and Tianjin Municipality and become the first to establish in the second batch of free trade zones. Guangdong FTZ faces Hong Kong and Macao and might enjoy unexpected policy supports in custom clearance and financial reform. Port companies like Zhuhai Port Co., Ltd. (000507.SZ) and companies who own industrial land in the Nansha New District of Guangzhou City like Guangzhou Lonkey Industrial Co., Ltd. (000523.SZ) will see benefit.
[XFA Selection]
○ The State Council issues document requiring accelerated development of service trade and supports on the export of transportation, communication, culture & art, etc. areas.
○ The China Securities Regulatory Commission (CSRC) indicated that the first draft of the IPO registration system reform has been submitted to the State Council and there is no suspension of new IPO applications.
○ The first batch of New-Three-board indexes will be launched on March 18 and there are already institutions preparing for the design of relevant products.
○ Alibaba Pictures Group Limited (01060.HK) joins hands with Guang Dong TV to expand e-commerce customized series; broadcasting and TV related stocks like Shaanxi Broadcast & TV Network Intermediary（Group）Co., Ltd. (600831.SH) and Wasu Media Holding Co., Ltd. (000156.SZ), etc. were bought by institutions on Feb. 13.
○ Tsinghua Unigroup obtained more than 10 billion yuan investment from national integrated circuit industry investment funds. The integration of industry and finance pushes forward the domestication of chips.
[Industry Information]
○ Opinions on comprehensively deepening public security reform to release, informatization of police affairs to become development tendency
------
Xinhuanet reported on Feb. 15 that the “Framework Opinions on Important Issues Related to Comprehensively Deepening Public Security Reform” and relevant reform schemes have been approved by the central government and will be printed for implementation. The responsible person of the Ministry of Public Security indicated to establish modern police affairs operation mechanism based on intelligence information; realize all-dimension, all-time and all-standing prevention and control; link together illegal and criminal record with social credit system.
Comment: To supplement the rule of law with deepening reform is the core thought of this administration. Under the general tendency of informatization, the police safeguards of public security system lag behind and in-adaptation occurs. The opinions on public security reform focus on information construction and bring development opportunities to relevant industries. As for companies, Hytera Communications Corporation Limited (002583.SZ) and Guangzhou Haige Communications Group Incorporated Company (002465.SZ) win the bidding of communication system projects of public security bureaus for several times. The emerging commanding system of AVCON Information Technology Co., Ltd. (300074.SZ) is applied by the public security bureau of Yunnan Province.
○ Apple to develop unmanned driving, smart cars become new wind hole of technology
------
According to several foreign media, Apple Inc. (NASDAQ: AAPL) is contacting with experts on car enterprises and suppliers, establishing a development team of more than a thousand people, and secretly developing unmanned electro-car named as Titan. The stock price of Apple closed a new record at 127.08 U.S. dollars on Feb. 13, representing a surge of 66 percent in over the past year.
Comment: As the smartphone market approaches saturation, smart car with the function of unmanned driving becomes the new development direction of technology giants. Industries like sensors, car networking, automotive electronics, etc. will see benefit of the tendency of car intelligence. Among A-share companies, Wuhan Guide Infrared Co., Ltd. (002414.SZ) is preparing for the expansion of auto-products; Gohigh Data Networks Technology Co., Ltd. (000851.SZ) owns the active safety technology realized through car short-distance communication; Ningbo Joyson Electronic Corp. (600699.SH) develops the electronic control area of new energy car through acquisition.
[Announcement Interpretation]
○ Chunhui to acquire Tong Dai Control (Hong Kong)
------
Guangdong Kaiping Chunhui Co., Ltd. (000976.SZ) proposes to acquire 100 percent equities of Tong Dai Control (Hong Kong) Limited by issuing shares at 3.32 yuan per share through private placement to raise 3.35 billion yuan. The subject company provides solutions to the power supply and sanitation systems, alternate power system and braking pads to affiliated companies of CSR Corporation Limited (01766.HK; 601766.SH) and China CNR Corporation Limited (06199.HK; 601299.SH). The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 312 million yuan with a corresponding acquisition P/E ratio of 10.6 times. The stocks of the company closed at 3.78 yuan before trading suspension.
○ Ourpalm and Geeya Technology to develop games through reorganization
------
Ourpalm Co., Ltd. (300315.SZ) plans to acquire equities of three game companies, namely 100 percent equities of Blingstorm Entertainment Limited, 80 percent equities of Beijing Tianma Shikong Network Technology Co., Ltd. and 30 percent equities of Shangyou Information Technology (Shanghai) Co., Ltd., at 4 billion yuan by issuing shares at 15.58 yuan per share through private placement and in cash. It also proposes to raise supporting funds. It is noteworthy that Tencent Holdings Limited (00700.HK) and Chinese smartphone brand Xiaomi indirectly holds shares of Blingstorm Entertainment and Tianma Shikong Network Technology and will hold shares of Ourpalm through this reorganization. The counterparties committed that the net profits after extraordinary items of the three companies in 2015 will be no less than 151 million yuan, 158 million yuan and 156 million yuan, respectively. The stocks of the company closed at 15.83 before trading suspension in last July.
Geeya Technology co., Ltd. (300028.SZ) intends to acquire 100 percent equities of Chengdu Skymoons Technology Co., Ltd. at 2.2 billion by issuing shares at 13.76 yuan per share through private placement and in cash. It also plans to raise supporting funds by issuing shares at 12.74 yuan per share. Skymoons Technology is principally engaged in the development and operation of mobile games. The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 220 million yuan with a corresponding acquisition P/E ratio of 10 times. The stocks of the company closed at 14.16 yuan before trading suspension.
○ Newcapec Electronics to expand all-purpose card industry
------
Newcapec Electronics Co., Ltd. (300248.SZ) proposes to acquire 100 percent equities of Beijing Datalook Technology Co., Ltd at 320 million yuan by issuing shares at 28.44 yuan per share through private placement and in cash. Datalook Technology is a well-known enterprise in the domestic campus all-purpose card industry with massive college clients. The acquisition will effectively improve the company’s market share in the industry. The counterparty committed that the net profit after extraordinary items of the target company in 2015 will be no less than 20 million yuan with a corresponding acquisition P/E ratio of 16 times. The stocks of the company closed at 31.74 yuan before trading suspension.
○ Qiyuan Mechanical and Electrical Equipment to acquire environmental protection assets from substantial shareholder
------
Xi’an Qiyuan Mechanical and Electrical Equipment Co., Ltd. (300140.SZ) intends to acquire 100 percent equities of CECEP L&T Environmental Technology Co., Ltd. at 936 million yuan by issuing shares at 18.03 yuan per share from its substantial shareholder China Energy Conservation and Environmental Protection Group (CECEP) and other parties. The company is principally engaged in the desulfurization and denitrification of flue gas, the monitoring of environmental and energy efficiency information and their big data. The counterparty committed that its net profit after extraordinary items in 2015 will be no less than 80 million yuan with a corresponding acquisition P/E ratio of 11.7 times. The stocks of the company closed at 25.01 yuan before trading suspension.
Comment: As one of the first six central enterprises to reform, CECEP is accelerating the integration of its internal assets. Besides Qiyuan Mechanical and Electrical Equipment, A-share companies under CECEP also include Yantai Valiant Fine Chemicals Co., Ltd. (002643.SZ) and CECEP Wind-power Corporation Co., Ltd. (601016.SH)
[Trading Trends]
○ M2 growth hits new low, institutes rosy about loosening monetary policies
------
According to the latest statistics of the central bank, the broad monetary supply (M2) by end-January grew by 10.8 percent year on year, far below the market expectation of 12.1 percent and hitting a new low. The balance of social financing also increased at a new low of 13.4 percent. New loans saw increases while off-sheet financing increases significantly dropped.
Considering the viewpoints of various institutes, it may mean that the demand of corporate financing declined and the capitals are significantly flowing out. Despite the credit demand brought out by local governments’ investments in infrastructure, it is uncertain if it will continue. The economy and CPI will still be under downward pressures. The monetary policies are expected to further loosen.
[Weekly Review]
○ Choose one from XFA among plenty of market opportunities
------
The market maintained the surging trend last week with various subscriptions of IPOs. The Internet finance, pharmaceutical e-business and environmental protection surged one after another. Meanwhile, various listed companies introduced reorganization plans with massive themes in the active market, which really confused investors. Among various market opportunities, investors are advised to choose one from XFA.
XFA reported that SOA would strengthen maritime rights this year and vessels demand may boost on Feb. 9. Companies involved, including Beijing Highlander Digital Technology Co., Ltd. (300065.SZ), maintained hiking in the week with a maximum increase of over 20 percent. The “Industry Information” on the same day also indicated that the NdFeB industry would see prices rises and industry expects quantity and price hikes. Beijing Zhong Ke San Huan High-Tech Co., Ltd. (000970.SZ) and Ningbo Yunsheng Co., Ltd. (600366.SH) both saw satisfactory increases. XFA highlighted domestic integrated circuits in the “Industry Information” and “XFA Selection” on Feb. 10 and 11, ZTE Corporation (00763.HK; 000063.SZ), Datang Telecom Technology Co., Ltd. (600198.SH), Nationz Technologies Inc. (300077.SZ) and other individual stocks strongly surged after that. The Political Bureau of the CPC Central Committee convened a conference on Feb. 12 and discussed the government work report. Based on the interpretation on the contents of the conference, we indicated that education, health care and environmental protection would enjoy long-term growth. Beijing Lanxum Technology Co., Ltd. (300010.SZ) surged by 9 percent at the highest on the flowing day.
Looking back this week, we should admit that the outstanding performance is closely related to the market environment. We do not recommend frequent transactions. But investors are advised to give close attention to information in the active market. When you feel confused about the various hotspots, why not pay attention to our information and products. We believe that you will find your own opportunity one day.
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