[Today's Guide]
> Xi emphasizes civil-military integration, civil participation in military industry might achieve new breakthroughs
> SAIC Motor and Alibaba to build Internet car together, industrial chain to see accelerated expansion
> Domestic and overseas railway construction to accelerate, four ministries to support agricultural e-business
> Xilinmen Furniture to acquire video production company, Lepu Medical Technology to develop pharmaceutical e-business
[XFA Focus]
○ Xi emphasizes civil-military integration, civil participation in military industry might achieve new breakthroughs
------
Xi Jinping, General Secretary of the CPC Central Committee, made the remarks while joining a plenary meeting of the People's Liberation Army (PLA) delegation at the third session of the 12th National People's Congress on March 12 that the construction of national defense and army shall be accelerated, decisions made by the Military Commission shall see down-to-earth implementation, and in-depth implementation of civil-military integration strategy shall be practiced to boost army combativeness. He pointed out that the civil-military integration has just entered the transitory stage from preliminary integration to deep integration. Problems like lagging thinking, absence of top-level management system, lagging laws and regulations and operation mechanism, lax execution force, etc. still exist.
Comment: Xi has made a series of important instructions to promote civil-military integration since the Third Plenary Session of the 18th CPC Central Committee. Research institutions believe that it shows the State’s determination in breaking the closed state of original national defense industry system. Further efforts will be spared in the construction of military weapons and the reform on national defense industry so as to achieve orderly competition and sound development of military enterprises and civil economy. Listed companies enjoying technical advantage in segmented areas or complementing with military groups will see more breakthrough opportunities. Among A-share companies, Beijing Highlander Digital Technology Co., Ltd. (300065.SZ) became the supplier of China’s navy in 2004 and is an enterprise focusing on marine electronics and marine defense informatization; Wuhan Guide Infrared Co., Ltd. (002414.SZ) is the first domestic enterprise that breaks the technical monopoly of developed countries and achieves mass production of infrared thermal imaging chips, and it is also the first private enterprise to enter the overall development of complete weapon system.
[XFA Selection]
○ Zhou Xiaochuan, governor of the central bank, points out that the flow of capitals into the stock market also supports the development of real economy; the up-limit of deposit interest rate might be cancelled this year.
○ The State Council approves the establishment of the China (Hangzhou) Cross-border E-commerce Integrated Experimental Area in Hangzhou, Zhejiang province. Trials will be done in technical standard, supervision mode, etc.
○ The China Banking Regulatory Commission encourages commercial banks to promote annexation loan business with the length of maturity extended to seven years and the loan ratio lifted to 60 percent.
○ Disclosure of annual reports of listed companies is kicked off. The net profit of Ping An Bank Co., Ltd. (000001.SZ) in 2014 recorded 19.8 billion yuan, indicating a year-on-year growth of 30 percent.
○ Xinjiang Uygur Autonomous Region releases documents to guide the reduction of 16 percent cultivated area of cotton. The improvement of demand-supply structure of cotton will benefit cotton enterprises.
○ Tianjin releases the 3-year action plan of high-end equipment industry development. Key focus is laid on the complete machine and supporting components of robot.
[Industry Information]
○ SAIC Motor and Alibaba to build Internet car together, industrial chain to see accelerated expansion
------
SAIC Motor Corporation Limited (600104.SH) signs an agreement with Alibaba Group on March 12 that they will jointly establish an Internet car fund of 1 billion yuan. The first “SAIC Motor and Alibaba” car will be available in market in 2016. It is learnt that BYD Company Limited (002594.SZ; 01211.HK) is also trying to produce Internet car. It has independently developed Cloud service car Internet system and unmanned drive technology, and it also considers cooperation with Internet giants later.
Comment: “Internet Plus” action plan is widely responded by various industries. Intellectualization of cars is an irresistible trend for the integration of Internet and car. Supporting industrial chain might see accelerated expansion. Among A-share companies, the NdFeB product of Beijing Zhong Ke San Huan High-Tech Co., Ltd. (000970.SZ) has been applied to brands like Roewe; Ningbo Yunsheng Co., Ltd. (600366.SH) acquires shares of domestic leading enterprise of electric drive system of electro-car; Ningbo Joyson Electronic Corp. (600699.SH) masters the core technology of the electronic control of electro-car; the electronic handling stability system of Zhejiang Asia-pacific Mechanical & Electronic Co., Ltd. (002284.SZ) is gradually achieving industrialization.
○ Domestic and overseas railway construction to accelerate, many companies make plans
------
Xinhua reported on March 12 that the Yangtze River Delta will see a new wave of railway construction this year with a planned investment of 55.9 billion yuan. It will guarantee the opening of six projects and 12 projects will start construction. The South China Morning Post reported on the same day that China Railway Construction Corporation Limited (01186.HK; 601186.SH) and CSR Corporation Limited (01766.HK; 601766.SH) are preparing for participation in the construction of the first high-speed rail project in Southeast Asia, which connects Kuala Lumpur and Singapore. Chinese enterprises are expected to have advantages in the tender.
Comment: The investment in railway construction hit a new high last year in China. China Railway Corporation also proposes to vigorously advance five overseas projects, including the China-Thailand railway. It is increasingly clear that the domestic and overseas railway construction will speed up. Besides some large central enterprises, many private companies are actively participating in the wave. The adhesives for high-speed rails developed by Hubei Huitian New Materials Co., Ltd. (300041.SZ) have partially replaced the imported products. Beijing Mainstreets Investment Group Corporation (000609.SZ) plans to develop ancillary products to high-speed rails.
○ Four ministries issue documents to support agricultural e-business, industry sees huge growth potential
------
The Ministry of Transport, the Ministry of Agriculture, the All China Federation of Supply and Marketing Cooperatives and the State Post Bureau jointly issued the “Certain Opinions on Jointly Advancing the Sound Development of Rural Logistics and Accelerating in Serving Agricultural Modernization” recently, which will open two-way fast tracks for rural logistics to enter rural and urban areas as well as support the establishment of agricultural e-business platforms.
Comment: The agricultural materials flow market enjoys a huge market. The fertilizer, seeds and fodders have a market of more than 1 trillion yuan. Alibaba Group Holding Limited (BABA.NYSE) has announced its “one thousand towns and ten thousand countries” plan to invest 10 billion in the expansion of the e-business network. The agricultural materials e-business industry is expected to hike. Among A-share companies, Shenzhen Noposion Agrochemicals Co., Ltd. (002215.SZ) is developing the “Tiantian Circle”, a mobile app on agricultural materials e-business. Anhui Sierte Fertilizer Industry Ltd., Company (002538.SZ) intends to invest in the establishment of an O2O agricultural materials e-business services platform. Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) has merged Beijing Jinhe Tiancheng Technology Co., Ltd., a company focusing on agricultural informationization.
[Announcement Interpretation]
○ Xilinmen Furniture to fully control Greentown Culture & Media to develop culture and media business
------
Xilinmen Furniture Co., Ltd. (603008.SH) proposes to purchase 100 percent equities of Zhejiang Greentown Culture & Media Co., Ltd. held by Zhou Weicheng and Lanjiang in cash. The transaction is priced at 720 million yuan. The subject asset is a video production company. It committed that its audited net profit for 2015 to 2017 will be no less than 68.50 million yuan, 92.00 million yuan and 120 million yuan, respectively. Its net profit in 2013 was 120 million yuan.
○ Lepu Medical Technology to acquire Hushengtang to develop pharmaceutical e-business
------
Lepu Medical Technology (Beijing) Co., Ltd. (300003.SZ) intends to fully acquire Beijing Hushengtang Drugstore, which has 11 chain drugstores, two clinics as well as the “Certification for Online Drugs Transactions and Services” and the “Certification for Online Drugs Information Services”. Lepu Medical Technology will quickly develop the pharmaceutical e-business platform and connect the online and offline businesses after the acquisition.
Hushengtang is a chain enterprise with the integration of drugs sale and illness treatment. Its business scope covers drugs, medical devices, food, cosmetics and dietary supplements with more than 6,000 varieties. It also opened traditional Chinese medicine specialist clinics, traditional Chinese and western medicine clinics and various drug counters.
○ Lummy Phar.’s new medicine approved for clinic trials
------
The Tamibarotene active pharmaceutical ingredients (APIs) and tablets, a new medicine of Chongqing Lummy Pharmaceutical Co., Ltd. (300006.SZ), were approved to conduct clinic trials. The medicine is an antineoplastic medicine for the treatment relapsing or incurable acute promyelocytic leukemia.
○ Haige Communications and Orient Landscape obtain big orders
------
Guangzhou Haige Communications Group Incorporated Company (002465.SZ) and a special institutional client entered into a procurement contract with a value of 127 million yuan. Major subjects of the contract are the BeiDou Navigation and radio stations as well as other projects.
Beijing Orient Landscape & Ecology Co., Ltd. (002310.SZ) won the bidding as a PPP partner in the urbanization construction project in Hexin Town, Luyuan District, Changchun City. The total investment in the project is 7 billion yuan with 2 billion yuan in the first phase. The first phase will account for 40.21 percent of the business revenue of the company in 2013.
[Trading Alarms]
○ Dingli Machinery starts issuance on March 13
------
Zhejiang Dingli Machinery Co., Ltd. (732338.SH) issues shares at 29.56 yuan per share with an upper subscription limit of 6,000 shares for each account. The company is principally engaged in aerial work machinery.
> Xi emphasizes civil-military integration, civil participation in military industry might achieve new breakthroughs
> SAIC Motor and Alibaba to build Internet car together, industrial chain to see accelerated expansion
> Domestic and overseas railway construction to accelerate, four ministries to support agricultural e-business
> Xilinmen Furniture to acquire video production company, Lepu Medical Technology to develop pharmaceutical e-business
[XFA Focus]
○ Xi emphasizes civil-military integration, civil participation in military industry might achieve new breakthroughs
------
Xi Jinping, General Secretary of the CPC Central Committee, made the remarks while joining a plenary meeting of the People's Liberation Army (PLA) delegation at the third session of the 12th National People's Congress on March 12 that the construction of national defense and army shall be accelerated, decisions made by the Military Commission shall see down-to-earth implementation, and in-depth implementation of civil-military integration strategy shall be practiced to boost army combativeness. He pointed out that the civil-military integration has just entered the transitory stage from preliminary integration to deep integration. Problems like lagging thinking, absence of top-level management system, lagging laws and regulations and operation mechanism, lax execution force, etc. still exist.
Comment: Xi has made a series of important instructions to promote civil-military integration since the Third Plenary Session of the 18th CPC Central Committee. Research institutions believe that it shows the State’s determination in breaking the closed state of original national defense industry system. Further efforts will be spared in the construction of military weapons and the reform on national defense industry so as to achieve orderly competition and sound development of military enterprises and civil economy. Listed companies enjoying technical advantage in segmented areas or complementing with military groups will see more breakthrough opportunities. Among A-share companies, Beijing Highlander Digital Technology Co., Ltd. (300065.SZ) became the supplier of China’s navy in 2004 and is an enterprise focusing on marine electronics and marine defense informatization; Wuhan Guide Infrared Co., Ltd. (002414.SZ) is the first domestic enterprise that breaks the technical monopoly of developed countries and achieves mass production of infrared thermal imaging chips, and it is also the first private enterprise to enter the overall development of complete weapon system.
[XFA Selection]
○ Zhou Xiaochuan, governor of the central bank, points out that the flow of capitals into the stock market also supports the development of real economy; the up-limit of deposit interest rate might be cancelled this year.
○ The State Council approves the establishment of the China (Hangzhou) Cross-border E-commerce Integrated Experimental Area in Hangzhou, Zhejiang province. Trials will be done in technical standard, supervision mode, etc.
○ The China Banking Regulatory Commission encourages commercial banks to promote annexation loan business with the length of maturity extended to seven years and the loan ratio lifted to 60 percent.
○ Disclosure of annual reports of listed companies is kicked off. The net profit of Ping An Bank Co., Ltd. (000001.SZ) in 2014 recorded 19.8 billion yuan, indicating a year-on-year growth of 30 percent.
○ Xinjiang Uygur Autonomous Region releases documents to guide the reduction of 16 percent cultivated area of cotton. The improvement of demand-supply structure of cotton will benefit cotton enterprises.
○ Tianjin releases the 3-year action plan of high-end equipment industry development. Key focus is laid on the complete machine and supporting components of robot.
[Industry Information]
○ SAIC Motor and Alibaba to build Internet car together, industrial chain to see accelerated expansion
------
SAIC Motor Corporation Limited (600104.SH) signs an agreement with Alibaba Group on March 12 that they will jointly establish an Internet car fund of 1 billion yuan. The first “SAIC Motor and Alibaba” car will be available in market in 2016. It is learnt that BYD Company Limited (002594.SZ; 01211.HK) is also trying to produce Internet car. It has independently developed Cloud service car Internet system and unmanned drive technology, and it also considers cooperation with Internet giants later.
Comment: “Internet Plus” action plan is widely responded by various industries. Intellectualization of cars is an irresistible trend for the integration of Internet and car. Supporting industrial chain might see accelerated expansion. Among A-share companies, the NdFeB product of Beijing Zhong Ke San Huan High-Tech Co., Ltd. (000970.SZ) has been applied to brands like Roewe; Ningbo Yunsheng Co., Ltd. (600366.SH) acquires shares of domestic leading enterprise of electric drive system of electro-car; Ningbo Joyson Electronic Corp. (600699.SH) masters the core technology of the electronic control of electro-car; the electronic handling stability system of Zhejiang Asia-pacific Mechanical & Electronic Co., Ltd. (002284.SZ) is gradually achieving industrialization.
○ Domestic and overseas railway construction to accelerate, many companies make plans
------
Xinhua reported on March 12 that the Yangtze River Delta will see a new wave of railway construction this year with a planned investment of 55.9 billion yuan. It will guarantee the opening of six projects and 12 projects will start construction. The South China Morning Post reported on the same day that China Railway Construction Corporation Limited (01186.HK; 601186.SH) and CSR Corporation Limited (01766.HK; 601766.SH) are preparing for participation in the construction of the first high-speed rail project in Southeast Asia, which connects Kuala Lumpur and Singapore. Chinese enterprises are expected to have advantages in the tender.
Comment: The investment in railway construction hit a new high last year in China. China Railway Corporation also proposes to vigorously advance five overseas projects, including the China-Thailand railway. It is increasingly clear that the domestic and overseas railway construction will speed up. Besides some large central enterprises, many private companies are actively participating in the wave. The adhesives for high-speed rails developed by Hubei Huitian New Materials Co., Ltd. (300041.SZ) have partially replaced the imported products. Beijing Mainstreets Investment Group Corporation (000609.SZ) plans to develop ancillary products to high-speed rails.
○ Four ministries issue documents to support agricultural e-business, industry sees huge growth potential
------
The Ministry of Transport, the Ministry of Agriculture, the All China Federation of Supply and Marketing Cooperatives and the State Post Bureau jointly issued the “Certain Opinions on Jointly Advancing the Sound Development of Rural Logistics and Accelerating in Serving Agricultural Modernization” recently, which will open two-way fast tracks for rural logistics to enter rural and urban areas as well as support the establishment of agricultural e-business platforms.
Comment: The agricultural materials flow market enjoys a huge market. The fertilizer, seeds and fodders have a market of more than 1 trillion yuan. Alibaba Group Holding Limited (BABA.NYSE) has announced its “one thousand towns and ten thousand countries” plan to invest 10 billion in the expansion of the e-business network. The agricultural materials e-business industry is expected to hike. Among A-share companies, Shenzhen Noposion Agrochemicals Co., Ltd. (002215.SZ) is developing the “Tiantian Circle”, a mobile app on agricultural materials e-business. Anhui Sierte Fertilizer Industry Ltd., Company (002538.SZ) intends to invest in the establishment of an O2O agricultural materials e-business services platform. Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) has merged Beijing Jinhe Tiancheng Technology Co., Ltd., a company focusing on agricultural informationization.
[Announcement Interpretation]
○ Xilinmen Furniture to fully control Greentown Culture & Media to develop culture and media business
------
Xilinmen Furniture Co., Ltd. (603008.SH) proposes to purchase 100 percent equities of Zhejiang Greentown Culture & Media Co., Ltd. held by Zhou Weicheng and Lanjiang in cash. The transaction is priced at 720 million yuan. The subject asset is a video production company. It committed that its audited net profit for 2015 to 2017 will be no less than 68.50 million yuan, 92.00 million yuan and 120 million yuan, respectively. Its net profit in 2013 was 120 million yuan.
○ Lepu Medical Technology to acquire Hushengtang to develop pharmaceutical e-business
------
Lepu Medical Technology (Beijing) Co., Ltd. (300003.SZ) intends to fully acquire Beijing Hushengtang Drugstore, which has 11 chain drugstores, two clinics as well as the “Certification for Online Drugs Transactions and Services” and the “Certification for Online Drugs Information Services”. Lepu Medical Technology will quickly develop the pharmaceutical e-business platform and connect the online and offline businesses after the acquisition.
Hushengtang is a chain enterprise with the integration of drugs sale and illness treatment. Its business scope covers drugs, medical devices, food, cosmetics and dietary supplements with more than 6,000 varieties. It also opened traditional Chinese medicine specialist clinics, traditional Chinese and western medicine clinics and various drug counters.
○ Lummy Phar.’s new medicine approved for clinic trials
------
The Tamibarotene active pharmaceutical ingredients (APIs) and tablets, a new medicine of Chongqing Lummy Pharmaceutical Co., Ltd. (300006.SZ), were approved to conduct clinic trials. The medicine is an antineoplastic medicine for the treatment relapsing or incurable acute promyelocytic leukemia.
○ Haige Communications and Orient Landscape obtain big orders
------
Guangzhou Haige Communications Group Incorporated Company (002465.SZ) and a special institutional client entered into a procurement contract with a value of 127 million yuan. Major subjects of the contract are the BeiDou Navigation and radio stations as well as other projects.
Beijing Orient Landscape & Ecology Co., Ltd. (002310.SZ) won the bidding as a PPP partner in the urbanization construction project in Hexin Town, Luyuan District, Changchun City. The total investment in the project is 7 billion yuan with 2 billion yuan in the first phase. The first phase will account for 40.21 percent of the business revenue of the company in 2013.
[Trading Alarms]
○ Dingli Machinery starts issuance on March 13
------
Zhejiang Dingli Machinery Co., Ltd. (732338.SH) issues shares at 29.56 yuan per share with an upper subscription limit of 6,000 shares for each account. The company is principally engaged in aerial work machinery.
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