[Today’s Guide]
> Government work report has high value, investment opportunities lie in reform and innovation
> China Electronics to explore mixed ownership reform and promote assets securitization for integrated circuit
> Online taxi-hailing sees opportunities, new round of disperse dyes prices hike begins
> State-owned assets reform in Hefei progresses, Santai Holding to develop Internet insurance
[XFA Focus]
○ Government work report has high value, investment opportunities lie in reform and innovation
------
When delivering the report of the work of the government on March 5, Li Keqiang, Premier of the State Council, said that the main targets for China’s economic and social development for this year include: increase the GDP by approximately 7 percent; keep the increase of CPI at around 3 percent; create over 10 million jobs in urban areas; ensure that the registered urban unemployment rate does not rise above 4.5 percent; increase imports and exports by around 6 percent; cut energy intensity by more than 3.1 percent, and continue to reduce the emissions of major pollutants.
Comment: Research institutes believe that the economic growth has been reduced to 7 percent as expected, which shows that the government will not be intertwined with growth speed and maintaining economic growth. The reform, innovation and the development of emerging industries will be given priorities in the work of the government. Investors are advised to seek specific investment opportunities from the “new reform, new consumption and new investments”. In terms of the new reform, investors can pay more attention to the power reform and the implementation of the tiered pricing for water and gas in the pricing reform, the central enterprises and local state-owned enterprises (SOEs) reform, the Shenzhen-Hong Kong stock connect program and the delay in the payment of individual income taxes to the withdrawal of pensions in the financial reform. As for the new consumption, the information, medical treatment and the elderly healthcare, sports, culture and education should be paid more attention to. The environmental protection, railway and water projects should be given priorities in new investments.
○ Xiao Gang: new shares to issue evenly each month, no need to worry about over-quick expansion
------
Xiao Gang, Chairman of the China Securities Regulatory Commission (CSRC), said on March 5 that new shares will be issued evenly in each month and the supplies will be reasonably increased this year. The market should not worry about over-quick expansion or be limited to the number of issuers. It shall take into account the financing limits comprehensively. The IPO registration system will be introduced after the revision of the “Securities Law” is completed and implemented. The Shenzhen-Hong Kong stock connect program is under preparation with the same investment limit as the Shanghai-Hong Kong Stock Connect. The plan on the conversion between the National Equities Exchange and Quotations (NEEAQ) and the ChiNext Board is a major task in the reform of this year. It will continue to promote A-share index incorporated into Morgan Stanley Capital International (MSCI) index.
[XFA Selection]
○ Ministry of Industry and Information Technology indicated that it will be a crucial year to promote the development of new energy vehicles and will make more efforts in the construction of charging facilities.
○ National Energy Administration indicated that it will prepare the 13the five-year plan on the energy development this year with the hydro and nuclear power and other clean energy as focuses under discussion.
○ 18 listed securities companies see different results in February based on their financial expresses. Haitong Securities Company Limited (06837.HK; 600837.HK) recorded a profit of 745 million yuan in February.
○ The merger of China CNR Corporation Limited (06199.HK; 601299.SH) and CSR Corporation Limited (01766.SH; 601766.SH) has been approved by the State-owned Assets Supervision and Administration Commission (SASAC) and will be submitted to the shareholder boards for approval on March 9.
○ Shanghai Chengtou Holding Co., Ltd. (600649.SH) and Shanghai Young Sun Investment Co., Ltd (900935.SH) held investor briefing sessions on the progress of their reorganizations, which will offer new samples for the follow-up reform of B shares.
[Companies Hotspot]
○ China Electronics to explore mixed ownership reform and promote assets securitization for integrated circuit
------
XFA learnt from China Electronics Corporation Holdings Company Limited (00085.HK), a central enterprise, that the group will improve the assets securitization rate. It will introduce strategic investors into the shareholding reform through the securities market. The integrated circuit business is a key area for assets securitization, which currently has an assets securitization rate of about 20 percent.
Comment: China Electronics owns five major businesses and 11 A-share companies. It proposes to have one listed company for each business. The consolidation catches much attention. Shanghai Belling Corp., Ltd. (600171.SH) has determined to sell its non-principal businesses assets and focus on the design of integrated circuit. Nanjing Panda Electronics Company Limited (00553.HK; 600775.SH) and IRICO Display Devices Co., Ltd. (600707.SH) both transferred their equities recently.
[Industry Information]
○ Ministry of Transport concerns about public travel, online taxi-hailing sees opportunities
------
Yang Chuantang, Minister of Transport, indicated on March 5 that the taxi-hailing apps and the tailored taxi services provide conveniences to the public, and his family and colleagues often use them. The Ministry of Transport is mulling instructions on the reform of taxies. The instructions will be introduced in the first half and will coordinate the demands of taxies users, operators and Internet operators.
Comment: With the increasing application of the mobile payment and the reform of the taxi industry to be initiated soon, the online taxi-hailing is seeing more development opportunities. The government work report proposed that “it will ensure that new forms of Internet-based spending, which combine online-offline activities, come to thrive”. In terms of listed companies, Tianze Information Industry Inc. (300209.SZ) indicated that the iTaxi, its taxi-hailing app, will be updated in the research and development based on the demand. Taiji Computer Corporation Limited (002368.SZ) independently developed a taxi-hailing app in Beijing.
○ Disperse dyes prices hiked, new round of prices hike begins
------
The black and blue dyes, two major disperse dyes saw an increase of 5,000-10,000 yuan per ton in prices on March 5 with an intraday increase of more than 10 percent.
Comment: This round of prices hike is supported by various factors. Firstly, the environmental protection is becoming increasingly strict. The CPPCC work report at the two sessions this year concerned about the treatment of pollution on Tengger Desert. The industrial park involved has various disperse dyes intermediates enterprises. The capacity for disperse dyes will continue to be insufficient. Secondly, the price hike passed along the industrial chain smoothly. Some downstream printing and dying enterprises have raised their prices after the Spring Festival. Insiders estimate that the dyes prices will jump by another 10 percent around March 25 and may double in the future. Zhejiang Longsheng Group Co., Ltd. (600352.SH) and Zhejiang Runtu Co., Ltd. (002440.SH) are two dominators in the dyes industry. Shanghai Anoky Group Co., Ltd. (300067.SZ) contributed to the establishment of a printing and dying e-business company recently.
[Announcement Interpretation]
○ Equities transferred in large scope, state-owned assets reform in Hefei progresses
------
Hefei Urban Construction Development Co., Ltd. (002208.SZ) announces that according to the overall planning of state-owned assets and SOEs reform in Hefei City, Anhui Province, Hefei State-owned Assets Holding Co., Ltd., the substantial shareholder of the company, plans to transfer 185 million state-owned shares to Hefei Xingtai Holding Group Co., Ltd. for free, thus Xingtai Holding becomes the largest shareholder of the listed company. Xingtai Holding, principally engaged in finance, aims to build a financial holding company, undertakes the responsibility of establishing and perfecting local financial service systems, and is involved in financial and extensive financial areas including bank, securities, insurance, trust, funds, finance lease, pawn, venture capital funds, venture investment, etc.
Moreover, Anhui Guofeng Plastic Industry Co., Ltd. (000859.SZ) and Anhui Guotone Hi-tech Pipes Industry Co., Ltd. (600444.SH) received notices from Anhui Guofeng Group Co., Ltd. that according to the overall planning of state-owned assets and SOEs reform in Hefei City, Guofeng Group will be transferred wholly to Hefei Industry Investment Holding Group which is to be established. 14.58 percent equities of Hefei Department Store Group Co., Ltd. (000417.SZ) will also be incorporated into Hefei Construction Investment and Holding Co., Ltd., the largest shareholder of the company, while the 23.34 percent equities of Whirlpool China Co., Ltd. (600983.SH), which is not controlled by Hefei state-owned assets, will be transferred to Hefei Industry Investment Holding Group.
Comment: The opinions on the reform of local state-owned assets of Hefei were launched last Oct. It requires efforts in developing mixed ownership economy and focuses on strategic emerging industries. As directed by the state-owned assets reform in Anhui, steady reforms will also be carried out on SOEs and land. Relevant stocks include Hefei Fengle Seed Co., Ltd. (000713.SZ), Anhui Water Resources Development Co., Ltd. (600502.SH), Anhui Huilong Agricultural Means Of Production Co., Ltd. (002556.SZ), etc.
○ Santai Holding to fully control Yantai Wei’an to develop Internet insurance
------
Chengdu Santai Holding Group Co., Ltd. (002312.SZ) proposes to acquire 100 percent equities of Yantai Wei’an Information Technology Co., Ltd. with 750 million yuan. The JinBaomeng.com and www.ieche.com under Yantai Wei’an are famous domestic Internet promotion platform of insurance products and one of the first car web portals in China, respectively. According to performance commitment, the net profit of Yantai Wei’an will be no less than 50.50 million yuan, 60.50 million yuan and 72.50 million yuan, respectively, from 2015 to 2017.
○ Kunshan Kinglai Hygienic Material bought by “Perfume King” Zhou Xingang to limit
------
Kunshan Kinglai Hygienic Materials Co., Ltd. (300260.SZ) was bought by Zhou Xingang, “Perfume King”, through secondary market acquisition to the 5 percent limit. Zhou Xingang and Zhou Chen, person acting in concert with Zhou Xingang, respectively bought 0.19 million and 0.11 million shares of Kunshan Kinglai Hygienic Materials through call auction transaction on March 3. They totally newly bought 0.3 percent equities of the company and the shares held by them reaches 5.09 million, accounting for 5.09 percent equities of the total share capital of the listed company.
Comment: Zhou Xingang, called as “Perfume King”, together with Li Xin, Zhou’s wife, and Zhou Chen, Zhou’s daughter, are quite active in the secondary market. Zhou Xingang family prefers small-cap listed companies. Trading suspension and reorganization usually follow.
○ Aishida Electric to acquire shares of reinsurance company with implementation of employee and distributor shareholding through private placement
------
Zhejiang Aishida Electric Co., Ltd. (002403.SZ) plans to raise 325 million yuan to supplement working capital by issuing 30 million shares at 10.85 yuan per share through private placement. Participants include Phase I employee shareholding plan, distributors and core persons. The company plans to participate in the establishment of Qianhai Reinsurance Company with 435 million yuan, accounting for 14.5 percent of the total share capital, during its trading suspension.
[Financial Reports Express]
○ Water Business Doctor, Fuxing Xiaocheng Electronic Technology and Jingsheng Mechanical & Electrical propose high share conversion and dividend
------
Beijing Water Business Doctor Co., Ltd. (300055.SZ) proposes a 20-for-10 conversion of capital surplus into shares combined with 0.6 yuan dividend for every 10 shares for the distribution in 2014. Its annual report indicates a year-on-year growth of 36 percent in its 2014 net profit and it expects a performance growth of 373 percent to 403 percent in the first quarter of 2015. Beijing Fuxing Xiaocheng Electronic Technology Stock Co., Ltd. (300139.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014. Due to rapid growth of overseas performance, it expects a performance growth of 57 percent to 75 percent in the first quarter of 2015. Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. (300136.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014. The company announced that its net profit in 2014 will see a year-on-year growth of 52 percent earlier.
> Government work report has high value, investment opportunities lie in reform and innovation
> China Electronics to explore mixed ownership reform and promote assets securitization for integrated circuit
> Online taxi-hailing sees opportunities, new round of disperse dyes prices hike begins
> State-owned assets reform in Hefei progresses, Santai Holding to develop Internet insurance
[XFA Focus]
○ Government work report has high value, investment opportunities lie in reform and innovation
------
When delivering the report of the work of the government on March 5, Li Keqiang, Premier of the State Council, said that the main targets for China’s economic and social development for this year include: increase the GDP by approximately 7 percent; keep the increase of CPI at around 3 percent; create over 10 million jobs in urban areas; ensure that the registered urban unemployment rate does not rise above 4.5 percent; increase imports and exports by around 6 percent; cut energy intensity by more than 3.1 percent, and continue to reduce the emissions of major pollutants.
Comment: Research institutes believe that the economic growth has been reduced to 7 percent as expected, which shows that the government will not be intertwined with growth speed and maintaining economic growth. The reform, innovation and the development of emerging industries will be given priorities in the work of the government. Investors are advised to seek specific investment opportunities from the “new reform, new consumption and new investments”. In terms of the new reform, investors can pay more attention to the power reform and the implementation of the tiered pricing for water and gas in the pricing reform, the central enterprises and local state-owned enterprises (SOEs) reform, the Shenzhen-Hong Kong stock connect program and the delay in the payment of individual income taxes to the withdrawal of pensions in the financial reform. As for the new consumption, the information, medical treatment and the elderly healthcare, sports, culture and education should be paid more attention to. The environmental protection, railway and water projects should be given priorities in new investments.
○ Xiao Gang: new shares to issue evenly each month, no need to worry about over-quick expansion
------
Xiao Gang, Chairman of the China Securities Regulatory Commission (CSRC), said on March 5 that new shares will be issued evenly in each month and the supplies will be reasonably increased this year. The market should not worry about over-quick expansion or be limited to the number of issuers. It shall take into account the financing limits comprehensively. The IPO registration system will be introduced after the revision of the “Securities Law” is completed and implemented. The Shenzhen-Hong Kong stock connect program is under preparation with the same investment limit as the Shanghai-Hong Kong Stock Connect. The plan on the conversion between the National Equities Exchange and Quotations (NEEAQ) and the ChiNext Board is a major task in the reform of this year. It will continue to promote A-share index incorporated into Morgan Stanley Capital International (MSCI) index.
[XFA Selection]
○ Ministry of Industry and Information Technology indicated that it will be a crucial year to promote the development of new energy vehicles and will make more efforts in the construction of charging facilities.
○ National Energy Administration indicated that it will prepare the 13the five-year plan on the energy development this year with the hydro and nuclear power and other clean energy as focuses under discussion.
○ 18 listed securities companies see different results in February based on their financial expresses. Haitong Securities Company Limited (06837.HK; 600837.HK) recorded a profit of 745 million yuan in February.
○ The merger of China CNR Corporation Limited (06199.HK; 601299.SH) and CSR Corporation Limited (01766.SH; 601766.SH) has been approved by the State-owned Assets Supervision and Administration Commission (SASAC) and will be submitted to the shareholder boards for approval on March 9.
○ Shanghai Chengtou Holding Co., Ltd. (600649.SH) and Shanghai Young Sun Investment Co., Ltd (900935.SH) held investor briefing sessions on the progress of their reorganizations, which will offer new samples for the follow-up reform of B shares.
[Companies Hotspot]
○ China Electronics to explore mixed ownership reform and promote assets securitization for integrated circuit
------
XFA learnt from China Electronics Corporation Holdings Company Limited (00085.HK), a central enterprise, that the group will improve the assets securitization rate. It will introduce strategic investors into the shareholding reform through the securities market. The integrated circuit business is a key area for assets securitization, which currently has an assets securitization rate of about 20 percent.
Comment: China Electronics owns five major businesses and 11 A-share companies. It proposes to have one listed company for each business. The consolidation catches much attention. Shanghai Belling Corp., Ltd. (600171.SH) has determined to sell its non-principal businesses assets and focus on the design of integrated circuit. Nanjing Panda Electronics Company Limited (00553.HK; 600775.SH) and IRICO Display Devices Co., Ltd. (600707.SH) both transferred their equities recently.
[Industry Information]
○ Ministry of Transport concerns about public travel, online taxi-hailing sees opportunities
------
Yang Chuantang, Minister of Transport, indicated on March 5 that the taxi-hailing apps and the tailored taxi services provide conveniences to the public, and his family and colleagues often use them. The Ministry of Transport is mulling instructions on the reform of taxies. The instructions will be introduced in the first half and will coordinate the demands of taxies users, operators and Internet operators.
Comment: With the increasing application of the mobile payment and the reform of the taxi industry to be initiated soon, the online taxi-hailing is seeing more development opportunities. The government work report proposed that “it will ensure that new forms of Internet-based spending, which combine online-offline activities, come to thrive”. In terms of listed companies, Tianze Information Industry Inc. (300209.SZ) indicated that the iTaxi, its taxi-hailing app, will be updated in the research and development based on the demand. Taiji Computer Corporation Limited (002368.SZ) independently developed a taxi-hailing app in Beijing.
○ Disperse dyes prices hiked, new round of prices hike begins
------
The black and blue dyes, two major disperse dyes saw an increase of 5,000-10,000 yuan per ton in prices on March 5 with an intraday increase of more than 10 percent.
Comment: This round of prices hike is supported by various factors. Firstly, the environmental protection is becoming increasingly strict. The CPPCC work report at the two sessions this year concerned about the treatment of pollution on Tengger Desert. The industrial park involved has various disperse dyes intermediates enterprises. The capacity for disperse dyes will continue to be insufficient. Secondly, the price hike passed along the industrial chain smoothly. Some downstream printing and dying enterprises have raised their prices after the Spring Festival. Insiders estimate that the dyes prices will jump by another 10 percent around March 25 and may double in the future. Zhejiang Longsheng Group Co., Ltd. (600352.SH) and Zhejiang Runtu Co., Ltd. (002440.SH) are two dominators in the dyes industry. Shanghai Anoky Group Co., Ltd. (300067.SZ) contributed to the establishment of a printing and dying e-business company recently.
[Announcement Interpretation]
○ Equities transferred in large scope, state-owned assets reform in Hefei progresses
------
Hefei Urban Construction Development Co., Ltd. (002208.SZ) announces that according to the overall planning of state-owned assets and SOEs reform in Hefei City, Anhui Province, Hefei State-owned Assets Holding Co., Ltd., the substantial shareholder of the company, plans to transfer 185 million state-owned shares to Hefei Xingtai Holding Group Co., Ltd. for free, thus Xingtai Holding becomes the largest shareholder of the listed company. Xingtai Holding, principally engaged in finance, aims to build a financial holding company, undertakes the responsibility of establishing and perfecting local financial service systems, and is involved in financial and extensive financial areas including bank, securities, insurance, trust, funds, finance lease, pawn, venture capital funds, venture investment, etc.
Moreover, Anhui Guofeng Plastic Industry Co., Ltd. (000859.SZ) and Anhui Guotone Hi-tech Pipes Industry Co., Ltd. (600444.SH) received notices from Anhui Guofeng Group Co., Ltd. that according to the overall planning of state-owned assets and SOEs reform in Hefei City, Guofeng Group will be transferred wholly to Hefei Industry Investment Holding Group which is to be established. 14.58 percent equities of Hefei Department Store Group Co., Ltd. (000417.SZ) will also be incorporated into Hefei Construction Investment and Holding Co., Ltd., the largest shareholder of the company, while the 23.34 percent equities of Whirlpool China Co., Ltd. (600983.SH), which is not controlled by Hefei state-owned assets, will be transferred to Hefei Industry Investment Holding Group.
Comment: The opinions on the reform of local state-owned assets of Hefei were launched last Oct. It requires efforts in developing mixed ownership economy and focuses on strategic emerging industries. As directed by the state-owned assets reform in Anhui, steady reforms will also be carried out on SOEs and land. Relevant stocks include Hefei Fengle Seed Co., Ltd. (000713.SZ), Anhui Water Resources Development Co., Ltd. (600502.SH), Anhui Huilong Agricultural Means Of Production Co., Ltd. (002556.SZ), etc.
○ Santai Holding to fully control Yantai Wei’an to develop Internet insurance
------
Chengdu Santai Holding Group Co., Ltd. (002312.SZ) proposes to acquire 100 percent equities of Yantai Wei’an Information Technology Co., Ltd. with 750 million yuan. The JinBaomeng.com and www.ieche.com under Yantai Wei’an are famous domestic Internet promotion platform of insurance products and one of the first car web portals in China, respectively. According to performance commitment, the net profit of Yantai Wei’an will be no less than 50.50 million yuan, 60.50 million yuan and 72.50 million yuan, respectively, from 2015 to 2017.
○ Kunshan Kinglai Hygienic Material bought by “Perfume King” Zhou Xingang to limit
------
Kunshan Kinglai Hygienic Materials Co., Ltd. (300260.SZ) was bought by Zhou Xingang, “Perfume King”, through secondary market acquisition to the 5 percent limit. Zhou Xingang and Zhou Chen, person acting in concert with Zhou Xingang, respectively bought 0.19 million and 0.11 million shares of Kunshan Kinglai Hygienic Materials through call auction transaction on March 3. They totally newly bought 0.3 percent equities of the company and the shares held by them reaches 5.09 million, accounting for 5.09 percent equities of the total share capital of the listed company.
Comment: Zhou Xingang, called as “Perfume King”, together with Li Xin, Zhou’s wife, and Zhou Chen, Zhou’s daughter, are quite active in the secondary market. Zhou Xingang family prefers small-cap listed companies. Trading suspension and reorganization usually follow.
○ Aishida Electric to acquire shares of reinsurance company with implementation of employee and distributor shareholding through private placement
------
Zhejiang Aishida Electric Co., Ltd. (002403.SZ) plans to raise 325 million yuan to supplement working capital by issuing 30 million shares at 10.85 yuan per share through private placement. Participants include Phase I employee shareholding plan, distributors and core persons. The company plans to participate in the establishment of Qianhai Reinsurance Company with 435 million yuan, accounting for 14.5 percent of the total share capital, during its trading suspension.
[Financial Reports Express]
○ Water Business Doctor, Fuxing Xiaocheng Electronic Technology and Jingsheng Mechanical & Electrical propose high share conversion and dividend
------
Beijing Water Business Doctor Co., Ltd. (300055.SZ) proposes a 20-for-10 conversion of capital surplus into shares combined with 0.6 yuan dividend for every 10 shares for the distribution in 2014. Its annual report indicates a year-on-year growth of 36 percent in its 2014 net profit and it expects a performance growth of 373 percent to 403 percent in the first quarter of 2015. Beijing Fuxing Xiaocheng Electronic Technology Stock Co., Ltd. (300139.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014. Due to rapid growth of overseas performance, it expects a performance growth of 57 percent to 75 percent in the first quarter of 2015. Zhejiang Jingsheng Mechanical & Electrical Co., Ltd. (300136.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares for the distribution in 2014. The company announced that its net profit in 2014 will see a year-on-year growth of 52 percent earlier.
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