[Today’s Guide]
> SOEs reform plan to release in late March, make active planning and wait for opportunities
> Access for internal combustion engine industry to issue soon to boost environmental protection and vehicles emission reduction
> Television games see more opportunities, electric vehicles development drive lithium carbonate prices higher
> Zhonghua Geotechnical Engineering issues shares to own employees through private placement, Communications Planning and Design Institute to control Ningxia Highway Survey and Design Institute
[XFA Focus]
○ SOEs reform plan to release in late March, make active planning and wait for opportunities
------
Authorities disclosed to XFA that the overall plan on the reform of state-owned assets and the mixed ownership system is expected to be released in late March. It is reported that the top design plan for new round of state-owned enterprises (SOEs) reform will be introduced in the form of “1+N”, of which, “1” shall be the “Instructions of the State Council on State-owned Enterprises Reform” and “N” shall be 34 documents including the “Instructions on the Development of Mixed Ownership System in State-owned Enterprises”, the “Functional Orientation and Classification of State-owned Enterprises”, the “Instructions on the Planning and Structural Adjustment of State-owned Enterprises” and the “Reform Plan on the Establishment of Companies with State-owned Capitals”.
Comment: Research institutes believe that 2015 will be a year of reform for SOEs and revaluation of state-owned assets. The SOE reform at the central level will be initiated soon. State-owned listed companies will see more opportunities. In terms of the investment subjects, central enterprises and companies in Shanghai, Guangdong Province, Anhui Province and other regions with rapid reform are first choices. Besides, the parent companies of small SOEs of large groups enjoy abundant resources and listed companies under them will be more likely to benefit.
◆ Shandong SOEs reform forum to convene soon, three companies to exchange experiences in mixed ownership system reform
------
The forum on the capital market and SOEs reform of Shandong Province will be convened on March 3. Shandong Jining Ruyi Woolen Textile Co., Ltd. (002193.SZ), Group Co., Ltd. and Shandong Gold Mining Co., Ltd. (600547.SH) exchanged experiences in the mixed ownership system reform. The mixed ownership system reform in state-owned enterprises at the provincial level in Shandong Province will be initiated soon.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) issued approvals on the IPOs of 24 companies. Shanghai and Shenzhen stock exchanges each accounts for half.
○ The National Inter-Ministerial Joint Conference of Modern Logistics will be convened on afternoon of March 3. Relevant departments will announce the working arrangement for this year.
○ Companies listed on the ChiNext Board saw an average year-on-year growth of 22.71 percent in net profits in 2014, hitting a new high in recent three years.
○ CITIC Securities Company Limited (06030.HK; 600030.SH), Huatai Securities Co., Ltd. (601688.SH) and other securities companies cut the benchmark rate for margin trading to 8.35 percent from 8.6 percent, which will improve the enthusiasm of investors in participation.
○ The capital gains tax on QFII and RQFII has been introduced. The elimination of uncertainties will boost the confidence of foreign capitals.
[Industry Information]
○ Access for internal combustion engine industry to issue soon to boost environmental protection and vehicles emission reduction
------
XFA learnt from the Ministry of Industry and Information Technology (MIIT) that the “Access Conditions for the Internal Combustion Engine Industry in China” has been prepared and will be released soon. The document sets an overall requirement on the fixed assets investment and research and development expenses of manufacturers. Qualified enterprises will receive policy supports.
Comment: Vehicle emissions are major pollutants to air pollution. The access threshold will be raised after the implementation of the access conditions to improve the market environment. Leading enterprises in turbocharging and other environmental protection and emission reduction technologies will benefit. Among A-share companies, Shanghai Diesel Engine Co., Ltd. (600841.SH), whose major client is SAIC Motor Corporation Limited (600104.SH), can reach the Europe 5 emissions standard. Changchai Co., Ltd. (000570.SZ) has obtained certifications for high and new technologies for several times.
○ SAPPRFT loosens restrictions, television games see more opportunities
------
The State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) recently indicated that 11 television games under Bestv New Media Co., Ltd. (600637.SH) and Shanghai Oriental Pearl (Group) Co., Ltd. (600832.SH), including Dynasty Warriors, have obtained import approvals. It is the first time for PS4 hosts to receive approvals.
Comment: With the supporting of strong software, the sale of the Chinese version of PS4 host will start soon. Following the online and mobile games, the sitting room entertainment represented by television games will bring new growth to the domestic game industry. In terms of listed companies, Geeya Technology Co., Ltd. (300028.SZ), which introduced the built-in smart STB for television games, has been soaring by the daily limit of 10 percent for days. Avit., Ltd. (300264.SZ) expanded into the television game industry through investing in the British company Paly Jam.
○ Quoted prices for lithium carbonate continues hiking, environmental protection boosts demands for lithium battery
------
Lithium carbonate enterprises in Sichuan Province and Jiangxi Province raised the quoted prices by about 2 percent on March 2, hitting a new high in recent years.
Comment: With an increasing pressure on environmental protection, the development of new energy vehicles will further accelerate, which will create a demand for 10,000 tons of lithium carbonate. Foreign media also reported on March 2 that LG Chem, a leading Lorean battery enterprise, has developed a new technology, which can help electric vehicles drive for 400 to 500 kilometers. The competitiveness of electric vehicles has been improving. In terms of listed companies, Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ) owns the largest spodumene mine in Asia. Jiangxi Ganfeng Lithium Co., Ltd. (002460.SZ) is a leader in the lithium deep-processing industry in China.
[Announcement Interpretation]
○ Zhonghua Geotechnical Engineering issues shares to own employees through private placement
------
China Zhonghua Geotechnical Engineering Co., Ltd. (002542.SZ) plans to raise 817 million yuan to supplement working capital by issuing 70 million shares at 11.67 yuan per share through private placement to Wu Yanwei, actual controller of the company, Liang Fuhua, Song Weiming and Liu Zhongchi, three directors of the company, Yinhua Fortune Management (Beijing) Co., Ltd and CDBS Cathay Asset Management Co., Ltd. Yinhua Fortune Management will set up three dedicated asset management plans, which will be subscribed by the Phase I employee shareholding plan of Zhonghua Geotechnical Engineering and mainly be invested in the subscription of 54 million shares issued non-publicly this time. After the private placement, the above employee shareholding plan will hold no more than 10 percent shares of the total share capitals of the listed company and the lock-up period will be 36 months. The company indicated that this move will further establish and perfect the benefit sharing mechanism between workers and owners.
○ Communications Planning and Design Institute to control Ningxia Highway Survey and Design Institute
------
Jiangsu Province Communications Planning and Design Institute Limited Company (603018.SH) plans to purchase no less than 67 percent equities of Ningxia Highway Survey and Design Institute Duty Company with 310 million yuan. The subject company is the only design institute in Ningxia Hui Autonomous Region that owns class-A qualification of highway industry (major bridges and highways).
Comment: As the planning of “One Belt and One Road” implements, the market of western transportation infrastructure construction will see opportunities of rapid growth. The transaction will help Communications Planning and Design Institute to go out, quickly occupy Ningxia’s market and expand to surrounding provinces.
○ Huaxin Cement to control Cambodia Cement Chakrey Ting Factory
------
The oversea subsidiary of Huaxin Cement Co., Ltd. (600801.SH) acquires 28 percent equities of Cambodia Cement Chakrey Ting Factory Co., Ltd. with 32.90 million U.S. dollars. Huaxin Cement owns a 3200t/d new-type dry process cement clinker production line that is ready for trial production. After the transaction, Huaxin Cement indirectly holds 68 percent equities of the subject company and becomes the absolute controlling shareholder of the company.
○ Shengyun Environment-Protection inks garbage power project with RMB950 mln
------
Hebei Shenyun Environment-Protection Power Co., Ltd., a fully-owned subsidiary of Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ), will invest in the household garbage incineration power project in Shijiazhuang City in the way of BOO, namely, building, operation and ownership. The total investment in the project is estimated to be 950 million yuan.
Comment: The tender invitation and construction of environmental protection projects including domestic garbage disposal might see outbreak this year. The company signed BOT project agreements with government organs including Nongan County of Jilin Province, Haiyang City of Shandong Province, Leling City of Shandong Province, respectively. The total estimated investments in these three places are 550 million yuan, 250 million yuan and 250 million yuan, respectively. Moreover, the company also wins the bidding in the projects in Danzhou City of Hainan Province and Zaozhuang City of Shandong Province. Its business in environmental protection will be accelerated.
[Companies Hotspot]
○ Truking Technology accelerates transformation to intelligent manufacturing
------
Tang Yue, director of the board of Truking Technology Limited (300358.SZ), recently indicated that the company is accelerating its transformation towards intelligent manufacturing area, joins hands with Industry 4.0 and speeds up the in-depth integration of industrialization and informatization. In terms of medical robot, the company cooperates with colleges and universities and has obtained project approval from the Ministry of Science and Technology as well as fiscal subsidies. New products might appear in market this year. The package market scale of pharmaceutical industry merely will exceed 20 billion yuan after intellectualization, and that of food industry will be even larger. Tang also indicated that external expansion will be achieved by resorting to capital market instruments this year.
[Financial Reports Express]
○ Er-Kang Phar. and Furui Medical Science propose high share conversion
------
Hunan Er-Kang Pharmaceutical Co., Ltd. (300267.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual distribution. The net profit of the company in 2014 records 288 million yuan, representing a year-on-year growth of 49 percent, and its performance in the first quarter expects a growth of 30 to 60 percent; Wang Guanyi, actual controller and chairman of the board of Inner Mongolia Furui Medical Science Co., Ltd. (300049.SZ), proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
[Trading Trends]
○ Westone Information Industry bought through three institutional seats
------
The trading volume ranking list on March 2 shows that ChengDu Westone Information Industry Inc. (002268.SZ) was bought through three institutional seats with a total of 87.67 million yuan, accounting for 13.31 percent of its intraday turnover.
Comment: Institutional research reports believe that the smart secure cellphones and the background key management system jointly developed by Westone Information Industry and China Mobile Limited (00941.HK; NYSE:CHL) sees vast market potentials. Moreover, under the background of state-owned assets reform and the reorganization of SOEs involved in confidentiality and military, the fully-owned subsidiary set up by the company in Beijing may undertake the platform function of the asset reorganization of the 30th Research Institute of China Electronics Technology Group Corporation and associate organizations.
> SOEs reform plan to release in late March, make active planning and wait for opportunities
> Access for internal combustion engine industry to issue soon to boost environmental protection and vehicles emission reduction
> Television games see more opportunities, electric vehicles development drive lithium carbonate prices higher
> Zhonghua Geotechnical Engineering issues shares to own employees through private placement, Communications Planning and Design Institute to control Ningxia Highway Survey and Design Institute
[XFA Focus]
○ SOEs reform plan to release in late March, make active planning and wait for opportunities
------
Authorities disclosed to XFA that the overall plan on the reform of state-owned assets and the mixed ownership system is expected to be released in late March. It is reported that the top design plan for new round of state-owned enterprises (SOEs) reform will be introduced in the form of “1+N”, of which, “1” shall be the “Instructions of the State Council on State-owned Enterprises Reform” and “N” shall be 34 documents including the “Instructions on the Development of Mixed Ownership System in State-owned Enterprises”, the “Functional Orientation and Classification of State-owned Enterprises”, the “Instructions on the Planning and Structural Adjustment of State-owned Enterprises” and the “Reform Plan on the Establishment of Companies with State-owned Capitals”.
Comment: Research institutes believe that 2015 will be a year of reform for SOEs and revaluation of state-owned assets. The SOE reform at the central level will be initiated soon. State-owned listed companies will see more opportunities. In terms of the investment subjects, central enterprises and companies in Shanghai, Guangdong Province, Anhui Province and other regions with rapid reform are first choices. Besides, the parent companies of small SOEs of large groups enjoy abundant resources and listed companies under them will be more likely to benefit.
◆ Shandong SOEs reform forum to convene soon, three companies to exchange experiences in mixed ownership system reform
------
The forum on the capital market and SOEs reform of Shandong Province will be convened on March 3. Shandong Jining Ruyi Woolen Textile Co., Ltd. (002193.SZ), Group Co., Ltd. and Shandong Gold Mining Co., Ltd. (600547.SH) exchanged experiences in the mixed ownership system reform. The mixed ownership system reform in state-owned enterprises at the provincial level in Shandong Province will be initiated soon.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) issued approvals on the IPOs of 24 companies. Shanghai and Shenzhen stock exchanges each accounts for half.
○ The National Inter-Ministerial Joint Conference of Modern Logistics will be convened on afternoon of March 3. Relevant departments will announce the working arrangement for this year.
○ Companies listed on the ChiNext Board saw an average year-on-year growth of 22.71 percent in net profits in 2014, hitting a new high in recent three years.
○ CITIC Securities Company Limited (06030.HK; 600030.SH), Huatai Securities Co., Ltd. (601688.SH) and other securities companies cut the benchmark rate for margin trading to 8.35 percent from 8.6 percent, which will improve the enthusiasm of investors in participation.
○ The capital gains tax on QFII and RQFII has been introduced. The elimination of uncertainties will boost the confidence of foreign capitals.
[Industry Information]
○ Access for internal combustion engine industry to issue soon to boost environmental protection and vehicles emission reduction
------
XFA learnt from the Ministry of Industry and Information Technology (MIIT) that the “Access Conditions for the Internal Combustion Engine Industry in China” has been prepared and will be released soon. The document sets an overall requirement on the fixed assets investment and research and development expenses of manufacturers. Qualified enterprises will receive policy supports.
Comment: Vehicle emissions are major pollutants to air pollution. The access threshold will be raised after the implementation of the access conditions to improve the market environment. Leading enterprises in turbocharging and other environmental protection and emission reduction technologies will benefit. Among A-share companies, Shanghai Diesel Engine Co., Ltd. (600841.SH), whose major client is SAIC Motor Corporation Limited (600104.SH), can reach the Europe 5 emissions standard. Changchai Co., Ltd. (000570.SZ) has obtained certifications for high and new technologies for several times.
○ SAPPRFT loosens restrictions, television games see more opportunities
------
The State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) recently indicated that 11 television games under Bestv New Media Co., Ltd. (600637.SH) and Shanghai Oriental Pearl (Group) Co., Ltd. (600832.SH), including Dynasty Warriors, have obtained import approvals. It is the first time for PS4 hosts to receive approvals.
Comment: With the supporting of strong software, the sale of the Chinese version of PS4 host will start soon. Following the online and mobile games, the sitting room entertainment represented by television games will bring new growth to the domestic game industry. In terms of listed companies, Geeya Technology Co., Ltd. (300028.SZ), which introduced the built-in smart STB for television games, has been soaring by the daily limit of 10 percent for days. Avit., Ltd. (300264.SZ) expanded into the television game industry through investing in the British company Paly Jam.
○ Quoted prices for lithium carbonate continues hiking, environmental protection boosts demands for lithium battery
------
Lithium carbonate enterprises in Sichuan Province and Jiangxi Province raised the quoted prices by about 2 percent on March 2, hitting a new high in recent years.
Comment: With an increasing pressure on environmental protection, the development of new energy vehicles will further accelerate, which will create a demand for 10,000 tons of lithium carbonate. Foreign media also reported on March 2 that LG Chem, a leading Lorean battery enterprise, has developed a new technology, which can help electric vehicles drive for 400 to 500 kilometers. The competitiveness of electric vehicles has been improving. In terms of listed companies, Sichuan Yahua Industrial Group Co., Ltd. (002497.SZ) owns the largest spodumene mine in Asia. Jiangxi Ganfeng Lithium Co., Ltd. (002460.SZ) is a leader in the lithium deep-processing industry in China.
[Announcement Interpretation]
○ Zhonghua Geotechnical Engineering issues shares to own employees through private placement
------
China Zhonghua Geotechnical Engineering Co., Ltd. (002542.SZ) plans to raise 817 million yuan to supplement working capital by issuing 70 million shares at 11.67 yuan per share through private placement to Wu Yanwei, actual controller of the company, Liang Fuhua, Song Weiming and Liu Zhongchi, three directors of the company, Yinhua Fortune Management (Beijing) Co., Ltd and CDBS Cathay Asset Management Co., Ltd. Yinhua Fortune Management will set up three dedicated asset management plans, which will be subscribed by the Phase I employee shareholding plan of Zhonghua Geotechnical Engineering and mainly be invested in the subscription of 54 million shares issued non-publicly this time. After the private placement, the above employee shareholding plan will hold no more than 10 percent shares of the total share capitals of the listed company and the lock-up period will be 36 months. The company indicated that this move will further establish and perfect the benefit sharing mechanism between workers and owners.
○ Communications Planning and Design Institute to control Ningxia Highway Survey and Design Institute
------
Jiangsu Province Communications Planning and Design Institute Limited Company (603018.SH) plans to purchase no less than 67 percent equities of Ningxia Highway Survey and Design Institute Duty Company with 310 million yuan. The subject company is the only design institute in Ningxia Hui Autonomous Region that owns class-A qualification of highway industry (major bridges and highways).
Comment: As the planning of “One Belt and One Road” implements, the market of western transportation infrastructure construction will see opportunities of rapid growth. The transaction will help Communications Planning and Design Institute to go out, quickly occupy Ningxia’s market and expand to surrounding provinces.
○ Huaxin Cement to control Cambodia Cement Chakrey Ting Factory
------
The oversea subsidiary of Huaxin Cement Co., Ltd. (600801.SH) acquires 28 percent equities of Cambodia Cement Chakrey Ting Factory Co., Ltd. with 32.90 million U.S. dollars. Huaxin Cement owns a 3200t/d new-type dry process cement clinker production line that is ready for trial production. After the transaction, Huaxin Cement indirectly holds 68 percent equities of the subject company and becomes the absolute controlling shareholder of the company.
○ Shengyun Environment-Protection inks garbage power project with RMB950 mln
------
Hebei Shenyun Environment-Protection Power Co., Ltd., a fully-owned subsidiary of Anhui Shengyun Environment-Protection Group Co., Ltd. (300090.SZ), will invest in the household garbage incineration power project in Shijiazhuang City in the way of BOO, namely, building, operation and ownership. The total investment in the project is estimated to be 950 million yuan.
Comment: The tender invitation and construction of environmental protection projects including domestic garbage disposal might see outbreak this year. The company signed BOT project agreements with government organs including Nongan County of Jilin Province, Haiyang City of Shandong Province, Leling City of Shandong Province, respectively. The total estimated investments in these three places are 550 million yuan, 250 million yuan and 250 million yuan, respectively. Moreover, the company also wins the bidding in the projects in Danzhou City of Hainan Province and Zaozhuang City of Shandong Province. Its business in environmental protection will be accelerated.
[Companies Hotspot]
○ Truking Technology accelerates transformation to intelligent manufacturing
------
Tang Yue, director of the board of Truking Technology Limited (300358.SZ), recently indicated that the company is accelerating its transformation towards intelligent manufacturing area, joins hands with Industry 4.0 and speeds up the in-depth integration of industrialization and informatization. In terms of medical robot, the company cooperates with colleges and universities and has obtained project approval from the Ministry of Science and Technology as well as fiscal subsidies. New products might appear in market this year. The package market scale of pharmaceutical industry merely will exceed 20 billion yuan after intellectualization, and that of food industry will be even larger. Tang also indicated that external expansion will be achieved by resorting to capital market instruments this year.
[Financial Reports Express]
○ Er-Kang Phar. and Furui Medical Science propose high share conversion
------
Hunan Er-Kang Pharmaceutical Co., Ltd. (300267.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual distribution. The net profit of the company in 2014 records 288 million yuan, representing a year-on-year growth of 49 percent, and its performance in the first quarter expects a growth of 30 to 60 percent; Wang Guanyi, actual controller and chairman of the board of Inner Mongolia Furui Medical Science Co., Ltd. (300049.SZ), proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
[Trading Trends]
○ Westone Information Industry bought through three institutional seats
------
The trading volume ranking list on March 2 shows that ChengDu Westone Information Industry Inc. (002268.SZ) was bought through three institutional seats with a total of 87.67 million yuan, accounting for 13.31 percent of its intraday turnover.
Comment: Institutional research reports believe that the smart secure cellphones and the background key management system jointly developed by Westone Information Industry and China Mobile Limited (00941.HK; NYSE:CHL) sees vast market potentials. Moreover, under the background of state-owned assets reform and the reorganization of SOEs involved in confidentiality and military, the fully-owned subsidiary set up by the company in Beijing may undertake the platform function of the asset reorganization of the 30th Research Institute of China Electronics Technology Group Corporation and associate organizations.
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