[Today’s Guide]
> Government work report releases signals, special aero engines projects to introduce soon
> Intelligent manufacturing to benefit from policy supports, recoverability of auto materials catches attention
> Guozhen Environment Protection to invest in sewage treatment, Dr. Peng Telecom & Media to establish household intelligent wireless sensor network with huge capitals
> Toread to acquire Eytour, Beijing Tianli Mobile Service Integration to raise capitals to develop “Internet + Insurance”
[XFA Focus]
○ Government work report releases signals, special aero engine project to introduce soon
------
The aero engine project, which is dubbed as “China’s heart”, was written in the 2015 government work report. The report proposed that China will conduct significant projects in the aero engine and gas turbine industries and step up national defense research and development of new- and high-technology weapons and equipment.
Comment: Based on XFA’s research, key projects mentioned in the annual government work report will receive effective policy supports afterwards. Research institutes estimate that the special aero engine projects are expected to obtain a capital support of one hundred billion yuan driven by the national security strategy and the replacement with homemade ones, which will greatly promote the driving force of the industrial chains. Such ancillary industrial chains as engine parts and high temperature alloys will benefit from the market expansion first. Among A-share companies, Sichuan Chengfa Aero Science & Technology Co., Ltd. (600391.SH) is quite competitive in the blade and bearing industry with globally known aero engine manufacturers as its customers. Beijing Cisri-gaona Materials & Technology Co., Ltd. (300034.SZ) is a leader in the domestic high temperature alloy industry. The company indicated that its products can meet the requirements of the aircraft C919. AVIC Aviation Engine Corporation Plc. (600893.SH) is the engine platform of Aviation Industry Corporation of China. It integrates a majority of aero engine power equipment. AVIC Aero-Engine Controls Co., Ltd. (000738.SZ) is the unique aero engine controlling system manufacturer.
[XFA Selection]
○ The State Council determines 62 key tasks in 12 aspects in the government work if this year and requires expanding public products and services supplies.
○ The securities margins saw a net inflow of 818.7 billion yuan last week, setting a new high in a single week and showing that capitals are speeding up in flowing into the stock market.
○ The housing turnover in first-tier cities hiked 35.9 percent last week. Researchers believe that the housing market in the following two months will see a small surging period.
○ The videophone conference on cracking down infringement and counterfeit was held on March 18. China will improve the long-term mechanism for certified siftware.
○ Chinese scholars have developed the efficient nano-catalyst for altra-thin platinum-nickel alloys, which offers new thoughts in improving the battery performance.
[Industry Information]
○ Intelligent manufacturing to boom with policy supports
------
The Ministry of Industry and Information Technology (MIIT) announced on March 18 on its website that it will conduct a special campaign on the intelligent manufacturing pilots and demonstration in 2015. More than 30 pilots and demonstration projects will be initiated this year. It will also study the medium- and long-term development strategies for intelligent manufacturing and prepare for the convening of the World Robot Conference. Local media in Chongqing Municipality and Jiangsu Province also reported on March 18 that the two regions will put more efforts in the intelligent manufacturing projects.
Comment: The number of robots for every ten thousand workers in China is only equivalent to one fifteenth of that of Japan. Institutes believe that China is likely to reproduce the golden period for the growth of robots in Japan in the 1980s driven by the upgrading of the manufacturing industry, the diminishing demographic dividend and more policy supports. Among A-share companies, Shanghai STEP Electric Corporation (002527.SZ) recently announced that it proposes to acquire 5 percent equities of Shanghai Show-Kyoel Automotive Equipment Co., Ltd at the consideration of 130 million yuan. The net profit of Show-Kyoel Automotive Equipment in this year will be no less than 17 million yuan. The AC servo systems and products of Hiconics Drive Technology Co., Ltd. (300048.SZ) are widely applied in the robot industry.
○ Recoverability of auto materials catches attention, components leaders to see more advantages
------
XFA learnt that the MIIT has formulated the “Requirements on the Management of Hazardous Automobile Substance and Recoverability Rate” and will be released in mid-April at the soonest. It will raise higher requirements on the green manufacturing technology of components enterprises and auto materials suppliers.
Comment: The automobile inventories in China have been increasing in recent years. The recycling of scrapped vehicles faces increasingly high pressure. Listed companies with the capital and environmental protection strength in the components industry will be more competitive. Zhejiang Yueling Co., Ltd. (002725.SZ) enjoys advantages in the recoverability for its aluminium alloy wheels. Ningbo Jifeng Auto Parts Co., Ltd. (603997.SH) is a leader in the headrest industry.
[Announcement Interpretation]
○ Guozhen Environment Protection to raise RMB500 mln through private placement to invest in sewage treatment
------
Anhui Guozhen Environment Protection Technology Joint Stock Co., Ltd. (300388.SZ) plans to raise 500 million yuan through private placement from specified targets by issuing 12 million shares. All the raised funds will be used to supplement the supporting funds of domestic sewage treatment investment operation project and pay off bank loans. The income of domestic sewage treatment investment operation business accounts for more than 50 percent of the company’s main business income. Its financial strength will be intensified through this private placement so as to continuously improve the high cost-effective sewage treatment system.
○ Dr. Peng Telecom & Media to establish household intelligent wireless sensor network with RMB5 bln
------
Dr. Peng Telecom & Media Group Co., Ltd. (600804.SH) plans to raise 4.99 billion yuan through private placement by issuing shares at 19.95 yuan per share and all the raised funds will be invested in the household intelligent wireless sensor network project. As strategic investors, the Institute for Advanced Research of Shenzhen Guangqi and Shenzhen Guangqi Hezhong Technology Co., Ltd. will subscribe 1,596 million yuan. The company expects that it can achieve an annual sales income of 3.1 billion yuan after the investment in this project and thus, it will transform from traditional broadband operator to Internet platform provider.
○ Toread to acquire Eytour to develop tourism
------
Beijing Toread Outdoor Products Co., Ltd. (300005.SZ) plans to acquire 74.56 percent equities of Eytour International Travel Agency (Beijing) Co., Ltd. through equity transfer and capital increase with 230 million yuan. Eytour promises that its operation revenue will be no less than 1.5 billion yuan, 4 billion yuan and 6 billion yuan, and its gross profit will be no less than 45 million yuan, 120 million yuan and 180 million yuan from 2015 to 2017. The total net profit in these three years will be no less than 35 million yuan.
Positioned as a travel O2O integrated service provider, Eytour now integrates upstream products and downstream retail resources to develop B2B business on the basis of ETS system platform. It aims to meet the procurement and distribution demands of upstream and downstream parties through the informatization construction of industry credit system and tourism product distribution system.
Comment: The investment is another move of Toread in developing outdoor tourism business after acquiring shares of Asiatravel (Singapore), and controlling Beijing Lvye Shijie Information Technology Co., Ltd. and Beijing Jizhimei Travel Agency Co., Ltd.
○ Beijing Tianli Mobile Service Integration to raise RMB350 mln to develop “Internet + Insurance”
------
Beijing Tianli Mobile Service Integration, Inc. (300399.SZ) plans to raise 350 million yuan through private placement by issuing 10 million shares to invest in Internet insurance platform project and supplement working capital. The project includes Internet insurance interactive platform, Internet insurance marketing service center and Internet insurance big data center. After implementation, the project will cooperate with the company’s Zhanyetong business, extended warranty service of vehicles, flight delay insurance service, extended warranty service of mobile phones, etc. in product service, customer resources, marketing channel, user experience, etc.
○ Jieshun Science and Technology to fully control Brother Gao Deng Technology to obtain financial payment license
------
Shenzhen Jieshun Science and Technology Industry Co., Ltd. (002609.SZ) plans to acquire 100 percent equities of Shenzhen Brother Gao Deng Technology Co., Ltd. with its own capital and the transaction price is undetermined yet. Brother Gao Deng Technology, with registered capital of 110 million yuan, is principally engaged in financial integration solutions including the issuance and acceptance of universal prepaid card, membership card management, credits exchange, etc. and has hundreds of merchants on its client list, including Wal-Mart Stores, Inc.(China), Shirble Department Store, Suning Commerce, Gome, etc. Brother Gao Deng Technology obtained the payment license authorized by the People’s Bank of China in July, 2013 and was approved to develop the issuance and acceptance business of prepaid cards in Beijing, Shanghai and Guangdong Province.
Comment: Jieshun Science and Technology failed in applying for payment license earlier. This acquisition will help it to catch up in payment business and to build the general platform of “Jie Life”.
[Financial Reports Express]
○ Net profit increases by 90 pct, Kingdomway plans high share dividend
------
With net profit in 2014 seeing a year-on-year growth of 90.48 percent, Xiamen Kingdomway Group Company (002626.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares in its annual report.
○ Huapont-nutrichem expects large performance growth in Q1
------
Due to the performance consolidation after acquiring equities of Shandong Fuer Co., Ltd., Shandong Kaisheng New Materials Co., Ltd. and Tibet Linzhi Baisheng Pharmaceutical Co., Ltd., Huapont-nutrichem Co., Ltd. (002004.SZ) expects its net profit in the first quarter to be 177 million yuan to 199 million yuan, representing a year-on-year growth of 140~170 percent.
[Trading Trends]
○ TransInfo Technology bought through five institutional seats
------
Public trading information on March 18 shows that China TransInfo Technology Co., Ltd. (002373.SZ) was bought through five institutional seats with a total of 94.76 million yuan, accounting for 44 percent of its intraday turnover. Another institutional seat sold 6.71 million yuan.
Comment: Research institutions believe that TransInfo Technology has accumulated abundant data resources in road transport area. The company recently joined hands with China TravelSky Holding Company in integrating flight and airport information data to help the company achieve the goal of integrated air and land transport as soon as possible. The value of traffic data operation platform will be further highlighted.
> Government work report releases signals, special aero engines projects to introduce soon
> Intelligent manufacturing to benefit from policy supports, recoverability of auto materials catches attention
> Guozhen Environment Protection to invest in sewage treatment, Dr. Peng Telecom & Media to establish household intelligent wireless sensor network with huge capitals
> Toread to acquire Eytour, Beijing Tianli Mobile Service Integration to raise capitals to develop “Internet + Insurance”
[XFA Focus]
○ Government work report releases signals, special aero engine project to introduce soon
------
The aero engine project, which is dubbed as “China’s heart”, was written in the 2015 government work report. The report proposed that China will conduct significant projects in the aero engine and gas turbine industries and step up national defense research and development of new- and high-technology weapons and equipment.
Comment: Based on XFA’s research, key projects mentioned in the annual government work report will receive effective policy supports afterwards. Research institutes estimate that the special aero engine projects are expected to obtain a capital support of one hundred billion yuan driven by the national security strategy and the replacement with homemade ones, which will greatly promote the driving force of the industrial chains. Such ancillary industrial chains as engine parts and high temperature alloys will benefit from the market expansion first. Among A-share companies, Sichuan Chengfa Aero Science & Technology Co., Ltd. (600391.SH) is quite competitive in the blade and bearing industry with globally known aero engine manufacturers as its customers. Beijing Cisri-gaona Materials & Technology Co., Ltd. (300034.SZ) is a leader in the domestic high temperature alloy industry. The company indicated that its products can meet the requirements of the aircraft C919. AVIC Aviation Engine Corporation Plc. (600893.SH) is the engine platform of Aviation Industry Corporation of China. It integrates a majority of aero engine power equipment. AVIC Aero-Engine Controls Co., Ltd. (000738.SZ) is the unique aero engine controlling system manufacturer.
[XFA Selection]
○ The State Council determines 62 key tasks in 12 aspects in the government work if this year and requires expanding public products and services supplies.
○ The securities margins saw a net inflow of 818.7 billion yuan last week, setting a new high in a single week and showing that capitals are speeding up in flowing into the stock market.
○ The housing turnover in first-tier cities hiked 35.9 percent last week. Researchers believe that the housing market in the following two months will see a small surging period.
○ The videophone conference on cracking down infringement and counterfeit was held on March 18. China will improve the long-term mechanism for certified siftware.
○ Chinese scholars have developed the efficient nano-catalyst for altra-thin platinum-nickel alloys, which offers new thoughts in improving the battery performance.
[Industry Information]
○ Intelligent manufacturing to boom with policy supports
------
The Ministry of Industry and Information Technology (MIIT) announced on March 18 on its website that it will conduct a special campaign on the intelligent manufacturing pilots and demonstration in 2015. More than 30 pilots and demonstration projects will be initiated this year. It will also study the medium- and long-term development strategies for intelligent manufacturing and prepare for the convening of the World Robot Conference. Local media in Chongqing Municipality and Jiangsu Province also reported on March 18 that the two regions will put more efforts in the intelligent manufacturing projects.
Comment: The number of robots for every ten thousand workers in China is only equivalent to one fifteenth of that of Japan. Institutes believe that China is likely to reproduce the golden period for the growth of robots in Japan in the 1980s driven by the upgrading of the manufacturing industry, the diminishing demographic dividend and more policy supports. Among A-share companies, Shanghai STEP Electric Corporation (002527.SZ) recently announced that it proposes to acquire 5 percent equities of Shanghai Show-Kyoel Automotive Equipment Co., Ltd at the consideration of 130 million yuan. The net profit of Show-Kyoel Automotive Equipment in this year will be no less than 17 million yuan. The AC servo systems and products of Hiconics Drive Technology Co., Ltd. (300048.SZ) are widely applied in the robot industry.
○ Recoverability of auto materials catches attention, components leaders to see more advantages
------
XFA learnt that the MIIT has formulated the “Requirements on the Management of Hazardous Automobile Substance and Recoverability Rate” and will be released in mid-April at the soonest. It will raise higher requirements on the green manufacturing technology of components enterprises and auto materials suppliers.
Comment: The automobile inventories in China have been increasing in recent years. The recycling of scrapped vehicles faces increasingly high pressure. Listed companies with the capital and environmental protection strength in the components industry will be more competitive. Zhejiang Yueling Co., Ltd. (002725.SZ) enjoys advantages in the recoverability for its aluminium alloy wheels. Ningbo Jifeng Auto Parts Co., Ltd. (603997.SH) is a leader in the headrest industry.
[Announcement Interpretation]
○ Guozhen Environment Protection to raise RMB500 mln through private placement to invest in sewage treatment
------
Anhui Guozhen Environment Protection Technology Joint Stock Co., Ltd. (300388.SZ) plans to raise 500 million yuan through private placement from specified targets by issuing 12 million shares. All the raised funds will be used to supplement the supporting funds of domestic sewage treatment investment operation project and pay off bank loans. The income of domestic sewage treatment investment operation business accounts for more than 50 percent of the company’s main business income. Its financial strength will be intensified through this private placement so as to continuously improve the high cost-effective sewage treatment system.
○ Dr. Peng Telecom & Media to establish household intelligent wireless sensor network with RMB5 bln
------
Dr. Peng Telecom & Media Group Co., Ltd. (600804.SH) plans to raise 4.99 billion yuan through private placement by issuing shares at 19.95 yuan per share and all the raised funds will be invested in the household intelligent wireless sensor network project. As strategic investors, the Institute for Advanced Research of Shenzhen Guangqi and Shenzhen Guangqi Hezhong Technology Co., Ltd. will subscribe 1,596 million yuan. The company expects that it can achieve an annual sales income of 3.1 billion yuan after the investment in this project and thus, it will transform from traditional broadband operator to Internet platform provider.
○ Toread to acquire Eytour to develop tourism
------
Beijing Toread Outdoor Products Co., Ltd. (300005.SZ) plans to acquire 74.56 percent equities of Eytour International Travel Agency (Beijing) Co., Ltd. through equity transfer and capital increase with 230 million yuan. Eytour promises that its operation revenue will be no less than 1.5 billion yuan, 4 billion yuan and 6 billion yuan, and its gross profit will be no less than 45 million yuan, 120 million yuan and 180 million yuan from 2015 to 2017. The total net profit in these three years will be no less than 35 million yuan.
Positioned as a travel O2O integrated service provider, Eytour now integrates upstream products and downstream retail resources to develop B2B business on the basis of ETS system platform. It aims to meet the procurement and distribution demands of upstream and downstream parties through the informatization construction of industry credit system and tourism product distribution system.
Comment: The investment is another move of Toread in developing outdoor tourism business after acquiring shares of Asiatravel (Singapore), and controlling Beijing Lvye Shijie Information Technology Co., Ltd. and Beijing Jizhimei Travel Agency Co., Ltd.
○ Beijing Tianli Mobile Service Integration to raise RMB350 mln to develop “Internet + Insurance”
------
Beijing Tianli Mobile Service Integration, Inc. (300399.SZ) plans to raise 350 million yuan through private placement by issuing 10 million shares to invest in Internet insurance platform project and supplement working capital. The project includes Internet insurance interactive platform, Internet insurance marketing service center and Internet insurance big data center. After implementation, the project will cooperate with the company’s Zhanyetong business, extended warranty service of vehicles, flight delay insurance service, extended warranty service of mobile phones, etc. in product service, customer resources, marketing channel, user experience, etc.
○ Jieshun Science and Technology to fully control Brother Gao Deng Technology to obtain financial payment license
------
Shenzhen Jieshun Science and Technology Industry Co., Ltd. (002609.SZ) plans to acquire 100 percent equities of Shenzhen Brother Gao Deng Technology Co., Ltd. with its own capital and the transaction price is undetermined yet. Brother Gao Deng Technology, with registered capital of 110 million yuan, is principally engaged in financial integration solutions including the issuance and acceptance of universal prepaid card, membership card management, credits exchange, etc. and has hundreds of merchants on its client list, including Wal-Mart Stores, Inc.(China), Shirble Department Store, Suning Commerce, Gome, etc. Brother Gao Deng Technology obtained the payment license authorized by the People’s Bank of China in July, 2013 and was approved to develop the issuance and acceptance business of prepaid cards in Beijing, Shanghai and Guangdong Province.
Comment: Jieshun Science and Technology failed in applying for payment license earlier. This acquisition will help it to catch up in payment business and to build the general platform of “Jie Life”.
[Financial Reports Express]
○ Net profit increases by 90 pct, Kingdomway plans high share dividend
------
With net profit in 2014 seeing a year-on-year growth of 90.48 percent, Xiamen Kingdomway Group Company (002626.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares in its annual report.
○ Huapont-nutrichem expects large performance growth in Q1
------
Due to the performance consolidation after acquiring equities of Shandong Fuer Co., Ltd., Shandong Kaisheng New Materials Co., Ltd. and Tibet Linzhi Baisheng Pharmaceutical Co., Ltd., Huapont-nutrichem Co., Ltd. (002004.SZ) expects its net profit in the first quarter to be 177 million yuan to 199 million yuan, representing a year-on-year growth of 140~170 percent.
[Trading Trends]
○ TransInfo Technology bought through five institutional seats
------
Public trading information on March 18 shows that China TransInfo Technology Co., Ltd. (002373.SZ) was bought through five institutional seats with a total of 94.76 million yuan, accounting for 44 percent of its intraday turnover. Another institutional seat sold 6.71 million yuan.
Comment: Research institutions believe that TransInfo Technology has accumulated abundant data resources in road transport area. The company recently joined hands with China TravelSky Holding Company in integrating flight and airport information data to help the company achieve the goal of integrated air and land transport as soon as possible. The value of traffic data operation platform will be further highlighted.
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