[Today’s Guide]
> Shanghai Bailian suspends trading for significant events, increasing expectation on Shanghai state-owned assets reorganization
> Environmental boilers to receive policy supports, national security to accelerate military industrial reform
> Wanliyang Transmission to acquire transmission assets of Geely Automobile, Hengxin Mobile to fully control YSTen
> Hundsun Technologies to acquire shares of Zhengtong, Yifeng Phar. bought through four institutional seats
[XFA Focus]
○ Shanghai Bailian suspends trading for significant events, increasing expectation on Shanghai state-owned assets reorganization
------
Shanghai Bailian Group Co., Ltd. (600827.SH) applies trading suspension from March 5 as Bailian Group, its controlling shareholder, is preparing for significant events. Shanghai Bailian announced in early 2015 that it proposed to exchange assets with Bailian Group.
Comment: The state-owned assets consolidation in Shanghai obviously accelerated. Shanghai International Group Co., Ltd. and Shanghai Guosheng Group Co., Ltd., two state-owned assets flow platform, have been transferred with certain equities of SAIC Motor Corporation Limited (600104.SH) and equities of Bright Food (Group) Co., Ltd. and Shanghai Construction Group Co., Ltd. (600170.SH). Besides, Shanghai Chengtou Holding Co., Ltd. (600649.SH) and Shanghai Young Sun Investment Co., Ltd (900935.SH) will hold investor briefing sessions on March 5 to disclose the progress of their significant unprecedented reorganizations. The above moves are expected to drive high expectations of capitals on the reorganization of state-owned assets in Shanghai. The A-share listed companies under Bailian Group also include Shanghai No.1 Pharmacy Co., Ltd. (600833.SH) and Shanghai Material Trading Co., Ltd. (600822.SH). Shangtex Holding Co., Ltd., the parent of Shanghai Shenda Co., Ltd. (600626.SH) and Shanghai Dragon Corporation (600630.SH), is also expected to transfer to Shanghai Guosheng.
◆ Shanghai determines 83 significant projects this year
------
The arrangement for the significant construction projects of Shanghai in 2015 was made. A total of 83 official projects with a total planned investment of about 107.1 billion yuan were scheduled this year. Among the projects, Shanghai will conduct a new round of rail transit construction with 800 kilometers, including 11 lines and 12 projects. Shanghai Disneyland Park is scheduled to open next spring and the specific date is under negotiation between the Chinese and U.S. sides.
[XFA Selection]
○ Media reported that the “Action Plan for Water Pollution Prevention and Control” has been deliberated and approved and it will be released soon.
○ Zhu Zhixin, former vice-minister of the National Development and Reform Commission, said on March 4 that the plan on the coordinated development of Beijing, Tianjin Municipality and Hebei Province will be issued soon.
○ Ministry of Water Resources issued the “Opinions on the Implementation of Accelerating the Construction of Water Conservancy Projects” and relevant constructions are expected to speed up in the second quarter.
○ The Secretary of the Municipal Party Committee of Sansha City indicated that the “Sansha Tourism Plan” is expected to be released by June and it will open new cruise tourist routes.
○ Li Yining, a renowned economist and professor at Peking University, indicated on March 4 that the real estate industry play a vital role in driving China’s economic growth. He calls for loosening policies on houses purchase.
[Industry Information]
○ Beijing-Tianjin-Hebei to see heavy air pollution, environmental boilers to receive policy supports
------
The Ministry of Environmental Protection said on March 4 that the central and southern part of the Beijing-Tianjin-Hebei region will encounter a light to medium air pollution on March 5 and some cities will even see heavy to serious air pollution as a result of unfavorable meteorological conditions and the fireworks to set off on the Lantern Festival, which falls on March 5. The medium to heavy air pollution will continue on March 6 and 7. The Ministry of Industry and Information Technology issued the “Plan on the Implementation of Special Campaign on the Development of Green Industries in 2015”, which gives top priorities to the “promotion of clean production and structural improvement in key industries” and requires the implementation of projects with coal boilers with environmental protection and energy conservation technologies.
Comment: The air pollution overlaps with the two sessions and the Lantern Festival, which will cause more attention discussion on environmental protection. Many provinces and cities improved the coal boilers in winter. Institutes estimate that the market for boilers improvement will reach 450 billion yuan in 2018. In terms of listed companies, Hangzhou Boiler Group Co., Ltd. (002534.SZ) is a leader in the waste heat boiler industry. The pulse bag filter for coal boilers of Kelin Environmental Protection Equipment, Inc. (002499.SZ) was adopted in the Torch Program at the national level. Shenwu Environmental Technology Co., Ltd. (300156.SZ) focuses on the energy saving and emission reduction for industrial furnaces.
○ Military expenditure to see stable growth, national security to accelerate military industrial reform
------
Fu Ying, spokeswoman of the third session of the 12th National People’s Congress (NPC), said on March 4 that financial support is essential for the modernization of China’s national defense and the army. It is proposed that China will raise its defense budget by around 10 percent this year to about 889 billion yuan,
Comment: The figure means that China’s military expenditure will maintain a stable growth in recent years. Given the increasingly complicated global security environment, the “National Security Law” and the “Anti-terrorism Law” will enter into the legislation and deliberation processes. Driven by the strong army target and deepening reform, the military assets securitization and the military and civilian integration are expected to speed up. China Spacesat Co., Ltd. (600118.SH), Aerospace Hi-Tech Holding Group Co., Ltd. (000901.SZ), China Aerospace Times Electronics Co., Ltd. (600879.SH) and other companies under airspace and military institutes are expected to lead the reform.
[Announcement Interpretation]
○ Wanliyang Transmission to acquire transmission assets of Geely Automobile
------
Zhejiang Wanliyang Transmission Company Ltd. (002434.SZ) plans to acquire the passenger car transmission (5MT and 6MT) production line and relevant assets owned by Geely Automobile Holdings Limited (00175.HK) with 300 million yuan. According to the agreement, Wanliyang Transmission will supply Geely Automobile with products produced by the transaction subject, while Geely Automobile will incorporate Wanliyang Transmission into its core supplier management and give priority to Wanliyang Transmission as a supplier of its associate automobile companies. Wanliyang Transmission will enjoy prior rights in developing new transmissions for the vehicle types to be developed by Geely Automobile.
Geely Automobile commits that it will avoid direct or indirect competition with Wanliyang Transmission within 10 years after the transaction. This transaction can greatly enhance the development level of Wanliyang Transmission in passenger car transmission technology, expand its capacity of passenger car transmissions and improve its ability in market expansion. The net profit of Wanliyang Transmission in 2014 sees a year-on-year growth of 31 percent and it proposes a 5-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
○ Hengxin Mobile to fully control YSTen to expand Internet television operation service
------
Hengxin Mobile Business Co., Ltd. (300081.SZ) plans to fully control YSTen Technology Co., Ltd. by acquiring 91.30 percent equities of YSTen with 820 million yuan. Based on the offering price of 18 yuan per share, the company needs to issue 45.65 million shares. Meanwhile, the company also plans to raise a supporting fund of 270 million yuan by issuing shares at 18.52 yuan per share through private placement to invest in the OEM project of OTT terminal, business promotion, the construction of OTT practicing platform and the supplement of YSTen’s working capital.
YSTen is an advanced Internet television operation service provider in China. The counterparty promises that the number of activated user of OTT terminal will be no less than 8 million by the end of 2017 and the total net profit of the company will be no less than 100 million yuan from 2015 to 2017; if the number of activated user is less than 8 million, the total net profit of the company will be no less than 168 million yuan from 2015 to 2017.
○ Hundsun Technologies to acquire shares of Zhengtong with RMB25 mln
------
Hundsun Technologies Inc. (600570.SH) proposes to invest 25 million yuan in Zhengtong Co., Ltd., accounting for 1.25 percent of the total share capitals of Zhengtong after stock expansion.
Comment: Zhengtong is established with the approval of the China Securities Regulatory Commission (CSRC). It is a permanent stockholding financial service organization co-founded by 36 organizations in securities industry. It aims to achieve the interconnection and interworking among securities organizations as well as construct a public service platform providing fundamental support to securities organizations in businesses like comprehensive financial management, e-commerce, equity crowd-funding, etc.
○ Iflytek joins hands with JD.com in smart home
------
Iflytek Co., Ltd. (002230.SZ) and JD.com, Inc. (NASDAQ: JD) jointly invest 150 million yuan in founding Xunjing Information Technology Co., Ltd. Iflytek contributes 82.50 million yuan, accounting for 55 percent of the registered capital. Both parties will work together to build an industry leading enterprise in the development, service and operation of smart home hardware products, smart voice control solutions and smart home platform.
[Financial Reports Express]
○ Himile Mechanical Science and Technology, CEC Environmental Protection and Jinlong Machinery & Electronic propose high share conversion and dividend
------
The net profit of Himile Mechanical Science and Technology (Shandong) Co., Ltd. (002595.SZ) in 2014 sees a year-on-year growth of 50.59 percent. It proposes a 10-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares. Its performance in the first quarter of 2015 expects a year-on-year growth of 30 ~50 percent.
Nanjing CEC Environmental Protection Co., Ltd. (300172.SZ) expects its net profit to see a year-on-year growth of 21 percent in its annual report. Six directors of the company propose a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. Jinlong Machinery & Electronic Co., Ltd. (300032.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014.
[Companies Hotspot]
○ Anhui Xinhua Media sees stable performance growth, cooperation with Disneyland to work
------
Anhui Xinhua Media Co., Ltd. (601801.SH) announces performance express that its revenue and net profit see a year-on-year growth of 25 percent and 15 percent, respectively, last year, recording a new high since listing. Moreover, the animated TV series for Disneyland jointly casted with Shanghai Huakai Culture Communication Co., Ltd. is drawing to a close. It will be broadcasted after being audited. Information shows that the company has quietly expanded to cartoon industry since 2012. TV series, TV cartoons, etc., were incorporated into its business scope in Dec. 2013, indicating that it officially expands to television and cartoon areas.
[Trading Trends]
○ Yifeng Phar. bought through four institutional seats
------
The trading volume ranking list on March 4 shows that Yifeng Pharmacy Chain Co., Ltd. (603939.SH) was bought through four institutional seats with a total of 89.34 million yuan, accounting for 10 percent of its intraday turnover.
Comment: Yifeng Phar., principally engaged in medicine retailing and wholesale, has been trying e-commerce business since 2013. The online mall on its official website has started to operate and it has set up a flagship store on Tmall.com and achieved mobile payment in stores. Institutions believe that medicine e-commerce has just kicked off and medicine sellers enjoy natural advantage in supply chain, memberships, coordinated online and offline business, etc. Along with the deregulation of e-commerce policy, the company might gain new opportunities in O2O market.
> Shanghai Bailian suspends trading for significant events, increasing expectation on Shanghai state-owned assets reorganization
> Environmental boilers to receive policy supports, national security to accelerate military industrial reform
> Wanliyang Transmission to acquire transmission assets of Geely Automobile, Hengxin Mobile to fully control YSTen
> Hundsun Technologies to acquire shares of Zhengtong, Yifeng Phar. bought through four institutional seats
[XFA Focus]
○ Shanghai Bailian suspends trading for significant events, increasing expectation on Shanghai state-owned assets reorganization
------
Shanghai Bailian Group Co., Ltd. (600827.SH) applies trading suspension from March 5 as Bailian Group, its controlling shareholder, is preparing for significant events. Shanghai Bailian announced in early 2015 that it proposed to exchange assets with Bailian Group.
Comment: The state-owned assets consolidation in Shanghai obviously accelerated. Shanghai International Group Co., Ltd. and Shanghai Guosheng Group Co., Ltd., two state-owned assets flow platform, have been transferred with certain equities of SAIC Motor Corporation Limited (600104.SH) and equities of Bright Food (Group) Co., Ltd. and Shanghai Construction Group Co., Ltd. (600170.SH). Besides, Shanghai Chengtou Holding Co., Ltd. (600649.SH) and Shanghai Young Sun Investment Co., Ltd (900935.SH) will hold investor briefing sessions on March 5 to disclose the progress of their significant unprecedented reorganizations. The above moves are expected to drive high expectations of capitals on the reorganization of state-owned assets in Shanghai. The A-share listed companies under Bailian Group also include Shanghai No.1 Pharmacy Co., Ltd. (600833.SH) and Shanghai Material Trading Co., Ltd. (600822.SH). Shangtex Holding Co., Ltd., the parent of Shanghai Shenda Co., Ltd. (600626.SH) and Shanghai Dragon Corporation (600630.SH), is also expected to transfer to Shanghai Guosheng.
◆ Shanghai determines 83 significant projects this year
------
The arrangement for the significant construction projects of Shanghai in 2015 was made. A total of 83 official projects with a total planned investment of about 107.1 billion yuan were scheduled this year. Among the projects, Shanghai will conduct a new round of rail transit construction with 800 kilometers, including 11 lines and 12 projects. Shanghai Disneyland Park is scheduled to open next spring and the specific date is under negotiation between the Chinese and U.S. sides.
[XFA Selection]
○ Media reported that the “Action Plan for Water Pollution Prevention and Control” has been deliberated and approved and it will be released soon.
○ Zhu Zhixin, former vice-minister of the National Development and Reform Commission, said on March 4 that the plan on the coordinated development of Beijing, Tianjin Municipality and Hebei Province will be issued soon.
○ Ministry of Water Resources issued the “Opinions on the Implementation of Accelerating the Construction of Water Conservancy Projects” and relevant constructions are expected to speed up in the second quarter.
○ The Secretary of the Municipal Party Committee of Sansha City indicated that the “Sansha Tourism Plan” is expected to be released by June and it will open new cruise tourist routes.
○ Li Yining, a renowned economist and professor at Peking University, indicated on March 4 that the real estate industry play a vital role in driving China’s economic growth. He calls for loosening policies on houses purchase.
[Industry Information]
○ Beijing-Tianjin-Hebei to see heavy air pollution, environmental boilers to receive policy supports
------
The Ministry of Environmental Protection said on March 4 that the central and southern part of the Beijing-Tianjin-Hebei region will encounter a light to medium air pollution on March 5 and some cities will even see heavy to serious air pollution as a result of unfavorable meteorological conditions and the fireworks to set off on the Lantern Festival, which falls on March 5. The medium to heavy air pollution will continue on March 6 and 7. The Ministry of Industry and Information Technology issued the “Plan on the Implementation of Special Campaign on the Development of Green Industries in 2015”, which gives top priorities to the “promotion of clean production and structural improvement in key industries” and requires the implementation of projects with coal boilers with environmental protection and energy conservation technologies.
Comment: The air pollution overlaps with the two sessions and the Lantern Festival, which will cause more attention discussion on environmental protection. Many provinces and cities improved the coal boilers in winter. Institutes estimate that the market for boilers improvement will reach 450 billion yuan in 2018. In terms of listed companies, Hangzhou Boiler Group Co., Ltd. (002534.SZ) is a leader in the waste heat boiler industry. The pulse bag filter for coal boilers of Kelin Environmental Protection Equipment, Inc. (002499.SZ) was adopted in the Torch Program at the national level. Shenwu Environmental Technology Co., Ltd. (300156.SZ) focuses on the energy saving and emission reduction for industrial furnaces.
○ Military expenditure to see stable growth, national security to accelerate military industrial reform
------
Fu Ying, spokeswoman of the third session of the 12th National People’s Congress (NPC), said on March 4 that financial support is essential for the modernization of China’s national defense and the army. It is proposed that China will raise its defense budget by around 10 percent this year to about 889 billion yuan,
Comment: The figure means that China’s military expenditure will maintain a stable growth in recent years. Given the increasingly complicated global security environment, the “National Security Law” and the “Anti-terrorism Law” will enter into the legislation and deliberation processes. Driven by the strong army target and deepening reform, the military assets securitization and the military and civilian integration are expected to speed up. China Spacesat Co., Ltd. (600118.SH), Aerospace Hi-Tech Holding Group Co., Ltd. (000901.SZ), China Aerospace Times Electronics Co., Ltd. (600879.SH) and other companies under airspace and military institutes are expected to lead the reform.
[Announcement Interpretation]
○ Wanliyang Transmission to acquire transmission assets of Geely Automobile
------
Zhejiang Wanliyang Transmission Company Ltd. (002434.SZ) plans to acquire the passenger car transmission (5MT and 6MT) production line and relevant assets owned by Geely Automobile Holdings Limited (00175.HK) with 300 million yuan. According to the agreement, Wanliyang Transmission will supply Geely Automobile with products produced by the transaction subject, while Geely Automobile will incorporate Wanliyang Transmission into its core supplier management and give priority to Wanliyang Transmission as a supplier of its associate automobile companies. Wanliyang Transmission will enjoy prior rights in developing new transmissions for the vehicle types to be developed by Geely Automobile.
Geely Automobile commits that it will avoid direct or indirect competition with Wanliyang Transmission within 10 years after the transaction. This transaction can greatly enhance the development level of Wanliyang Transmission in passenger car transmission technology, expand its capacity of passenger car transmissions and improve its ability in market expansion. The net profit of Wanliyang Transmission in 2014 sees a year-on-year growth of 31 percent and it proposes a 5-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
○ Hengxin Mobile to fully control YSTen to expand Internet television operation service
------
Hengxin Mobile Business Co., Ltd. (300081.SZ) plans to fully control YSTen Technology Co., Ltd. by acquiring 91.30 percent equities of YSTen with 820 million yuan. Based on the offering price of 18 yuan per share, the company needs to issue 45.65 million shares. Meanwhile, the company also plans to raise a supporting fund of 270 million yuan by issuing shares at 18.52 yuan per share through private placement to invest in the OEM project of OTT terminal, business promotion, the construction of OTT practicing platform and the supplement of YSTen’s working capital.
YSTen is an advanced Internet television operation service provider in China. The counterparty promises that the number of activated user of OTT terminal will be no less than 8 million by the end of 2017 and the total net profit of the company will be no less than 100 million yuan from 2015 to 2017; if the number of activated user is less than 8 million, the total net profit of the company will be no less than 168 million yuan from 2015 to 2017.
○ Hundsun Technologies to acquire shares of Zhengtong with RMB25 mln
------
Hundsun Technologies Inc. (600570.SH) proposes to invest 25 million yuan in Zhengtong Co., Ltd., accounting for 1.25 percent of the total share capitals of Zhengtong after stock expansion.
Comment: Zhengtong is established with the approval of the China Securities Regulatory Commission (CSRC). It is a permanent stockholding financial service organization co-founded by 36 organizations in securities industry. It aims to achieve the interconnection and interworking among securities organizations as well as construct a public service platform providing fundamental support to securities organizations in businesses like comprehensive financial management, e-commerce, equity crowd-funding, etc.
○ Iflytek joins hands with JD.com in smart home
------
Iflytek Co., Ltd. (002230.SZ) and JD.com, Inc. (NASDAQ: JD) jointly invest 150 million yuan in founding Xunjing Information Technology Co., Ltd. Iflytek contributes 82.50 million yuan, accounting for 55 percent of the registered capital. Both parties will work together to build an industry leading enterprise in the development, service and operation of smart home hardware products, smart voice control solutions and smart home platform.
[Financial Reports Express]
○ Himile Mechanical Science and Technology, CEC Environmental Protection and Jinlong Machinery & Electronic propose high share conversion and dividend
------
The net profit of Himile Mechanical Science and Technology (Shandong) Co., Ltd. (002595.SZ) in 2014 sees a year-on-year growth of 50.59 percent. It proposes a 10-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares. Its performance in the first quarter of 2015 expects a year-on-year growth of 30 ~50 percent.
Nanjing CEC Environmental Protection Co., Ltd. (300172.SZ) expects its net profit to see a year-on-year growth of 21 percent in its annual report. Six directors of the company propose a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. Jinlong Machinery & Electronic Co., Ltd. (300032.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014.
[Companies Hotspot]
○ Anhui Xinhua Media sees stable performance growth, cooperation with Disneyland to work
------
Anhui Xinhua Media Co., Ltd. (601801.SH) announces performance express that its revenue and net profit see a year-on-year growth of 25 percent and 15 percent, respectively, last year, recording a new high since listing. Moreover, the animated TV series for Disneyland jointly casted with Shanghai Huakai Culture Communication Co., Ltd. is drawing to a close. It will be broadcasted after being audited. Information shows that the company has quietly expanded to cartoon industry since 2012. TV series, TV cartoons, etc., were incorporated into its business scope in Dec. 2013, indicating that it officially expands to television and cartoon areas.
[Trading Trends]
○ Yifeng Phar. bought through four institutional seats
------
The trading volume ranking list on March 4 shows that Yifeng Pharmacy Chain Co., Ltd. (603939.SH) was bought through four institutional seats with a total of 89.34 million yuan, accounting for 10 percent of its intraday turnover.
Comment: Yifeng Phar., principally engaged in medicine retailing and wholesale, has been trying e-commerce business since 2013. The online mall on its official website has started to operate and it has set up a flagship store on Tmall.com and achieved mobile payment in stores. Institutions believe that medicine e-commerce has just kicked off and medicine sellers enjoy natural advantage in supply chain, memberships, coordinated online and offline business, etc. Along with the deregulation of e-commerce policy, the company might gain new opportunities in O2O market.
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