[Today's Guide]
> 2nd batch of FTZs might establish at end of March, stocks in corresponding regions to see investment opportunities again
> Social capital encouraged to participate in water conservancy, construction of smart transformer substations to see multiplied growth
> Auto Electric Power Plant to invest in charging piles network, Longmaster Information to invest RMB1 bln in mobile medical treatment
> Noposion to invest in equities of P2P platform, Zhongheng Huafa and Jiajia Food plan private placement
[XFA Focus]
○ 2nd batch of FTZs might establish in end-March, stocks in corresponding regions to see investment opportunities again
------
XFA learns that the overall scheme of three newly established Free Trade Zones (FTZs) in Guangdong Province, Fujian Province and Tianjin Municipality, , and the deepening reform scheme of Shanghai Free Trade Zone will be submitted to high-level meeting for deliberation, and the establishment time of the FTZs in Guangdong Province, Fujian Province and Tianjin Municipality as well as the expanded area of Shanghai FTZ will be finally determined then. It is learnt that the establishment is tentatively fixed at the end of March.
Comment: FTZ, as a national development strategy, undertakes the responsibility of pioneering reform and will contribute to the improvement and transformation of economic structure. Its innovation might beyond expectation in the future. Market participants consider that some FTZ-related stocks largely underperform indexes since Feb. The theme of FTZ, once popular for a time, might surge again at the news of establishment.
[XFA Selection]
○ The Army-wide Weaponry Procurement Website completed the “first order” on March 19, indicating the substantial breakthrough of military-civil integration.
○ Southern China Aviation Industry Aviation Industry (Group) Co., Ltd. recently achieved breakthrough in the single crystal blade core technology of aero-engine.
○ China used civil unmanned aerial vehicle in the emergency reaction of maritime navigation aid system for the first time on March 19. Advantages in time and money saving are obvious.
○ With net profit in last year growing by nearly 40 percent, Ping An Insurance (Group) Company of China, Ltd. (601318.SH; 02318. HK) proposes a 10-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares.
○ Electronic information manufacturing industry sees a good beginning. The output value of communication equipment, household audio and video equipment and electron devices grows the most.
[Industry Information]
○ Social capital encouraged to participate in water conservancy to share investment opportunities
------
The National Development and Reform Commission (NDRC), the Ministry of Finance and the Ministry of Water Resources (MWR) jointly released the “Guidance on Encouraging Social Capital to Join the Construction and Operation of Major Water Conservancy Projects” on March 19. Document content shows that the management tends to make it profitable for social capital to participate in the construction of water conservancy projects through PPP mechanism, market-oriented pricing of water supply and power generation, and water right trading so as to arouse the enthusiasm of social capital. It is also learnt that China Development Bank and MWR signed Memorandum of Cooperation on March 18 that a loan support of 90 billion yuan will be arranged.
Comment: According to the government work report, 27 major water conservancy projects will be kicked off and the investment scale of major water conservancy projects under construction will exceed 800 billion yuan this year. By Oct, 2014, the total investment in projects under construction is around 600 billion yuan. The rapid growth of investment in water conservancy this year is worthy of expectation. As for companies, Anhui Province, where Anhui Water Resources Development Co., Ltd. (600502.SH) is located, will launch major projects this year; institutions are optimistic about the prosperity of Guangdong No. 2 Hydropower Engineering Company, Ltd. (002060.SZ) in state-owned assets reform.
○ Construction of smart transformer substations to see multiplied growth, equipment providers to benefit
------
The State Grid Corporation of China recently published opinions on the construction of smart power grid projects in 2015 and proposed a series of development goals. XFA finds that the construction of smart transformer substations is put on top priority with 1,400 substations planned to be constructed this year. However, by the end of last year, only around 1,550 smart transformer substations are constructed and around 500 of them were newly built last year, meaning that the number of substations to be constructed this year will increase several times over previous years.
Comment: Under the support of a series of energy policies, the installed capacity of wind energy and photovoltaic power generation sees obviously increasing. Greatly impacted by weather, they are hard to be adapted by traditional power grid and push up the upgrading demand on smart power grid. Smart power transmission and distribution equipment companies including China XD Electric Co., Ltd. (601179.SH), Nari Technology Co., Ltd. (600406.SH), Wiscom System Co., Ltd. (002090.SZ), etc. will benefit.
[Announcement Interpretation]
○ Auto Electric Power Plant to invest RMB400 mln in establishing electric auto charging piles network
------
Shenzhen Auto Electric Power Plant Co., Ltd. (002227.SZ) proposes to raise 422 million yuan by issuing 22.06 million shares at no less than 19.12 yuan per share through private placement. Its controlling shareholder Ouhua Industry will subscribe no less than 10 percent. The proceeds will be used in the research and development of the charging equipment for electric automobiles and the expansion project, the establishment of the marketing and services network for the charging equipment for electric automobiles, the construction and operation of centralized charging facilities for electric automobile in Shenzhen City as well as the Phase I connected online Cloud platform for charging and operation piles for electric automobiles. The latter is driven by the “Internet Plus” model and based on the Internet and the Internet of Things technologies. It closely integrates the charging facilities and the Internet and is a cornerstone for the establishment of the Cloud platform of the national “Internet of Piles”.
○ Longmaster Information to invest RMB1 bln in mobile medical treatment with Wang Ruyuan participated
------
Longmaster Information & Technology Co., Ltd. (300288.SZ) intends to raise about 1 billion yuan by issuing 6.31 million shares at 158.36 yuan per share through private placement. The proceeds will be used in the health management and service platform for wearable and portable equipment, the medicines service O2O platform and for supplementing working capital. Wang Wei, the actual controller of the company, Shanghai Hongliu Investment Management Co., Ltd. and Wu Zhen, a natural person, will contribute 350 million yuan, 350 million and 300 million yuan, respectively to participate in the subscription. Hongliu Investment is a company under the well-known fund manager Wang Ruyuan. The company proposes a 20-for-10 conversion of capital surplus into shares according to its 2014 annual report.
○ Noposion to invest in equities of P2P platform company
------
Shenzhen Noposion Agrochemicals Co., Ltd. (002215.SZ) plans to increase its investments in the Shenzhen Nongjinquan Financial Services Co., Ltd. by 17.50 million shares with its own capitals. It will hold 35 percent of the latter after that. The nongfadai platform (www.nongfadai.com) under Nongjinquan is leading domestic agricultural vertical P2P platform. It selects large and medium quality farming households from major wheat, potato, banana, apple, tea and rice producing areas and lends the capitals raised online by the nongfadai platform to them directly in the form of P2P to meet their demands on agricultural purchase in the planting of the crops.
Comment: Noposion will introduce the agricultural e-business app “Circle of Countryside” soon. It will develop the Internet financial platform resources, which will facilitate the company in providing overall services about the agriculture, rural areas and farmers.
○ Zhongheng Huafa and Jiajia Food plan private placement with controlling shareholders to fully subscribe
------
Shenzhen Zhongheng Huafa Co., Ltd. (000020.SZ) is about to raise nearly 600 million yuan by issuing 87.60 million shares to its controlling shareholder Guangxi Wuzhou Zhongheng Group Co., Ltd. (600252.SH) at 6.84 yuan per share through private placement. 130 million yuan of the proceeds will be used for repaying borrowings and the rest will be used for supplementing working capital.
Jiajia Food Group Co., Ltd. (002650.SZ) proposes to raise 450 million yuan by issuing about 42 million shares to Hunan Zhuoyue Investment Co., Ltd., its controlling shareholder, at 10.63 yuan per share through private placement. The 450 million yuan to be raised will be used for supplementing its working capital.
○ Sanxing Electric and Dima to establish medical companies
------
Ningbo Sanxing Electric Co., Ltd. (601567.SH) will invest 100 million yuan in establishing the new company, Ningbo Aokesi Medical Investment Management Co., Ltd. The new company will be principally engaged in the hospitals entrustment management, medical investment management and consultancy, the sale of medical devices as well as the development of medical technologies.
Tibet Donghe and Greenleaf Medical, two subsidiaries under Chongqing Dima Industry Co., Ltd. (600565.SH), will jointly contribute to the establishment of the Shanghai Greenleaf Dongyuan Medical Management Co., Ltd. Tibet Donghe will contribute 70 million yuan, accounting for 35 percent of the registered capital. The new company will be engaged in the medical investment management, the technologies development, consultancy and services in the medical industry.
Comment: The development of medical treatment by the two companies is to take the investment opportunities in the big health to expand the business turnover and strengthen the ability of sustainable operation.
[Financial Reports Express]
○ Inspur Electronic Information, Beijing New Building Materials and Bluefocus Communication propose high share conversion and dividend
------
Inspur Electronic Information Industry Co., Ltd. (000977.SZ) saw a year-on-year increase of 134 percent in its 2014 net profit and proposes a 7-for-10 conversion of capital surplus into shares with another 3 shares combined with 0.8 yuan dividend for every 10 shares. Beijing New Building Materials Public Limited Company (000786.SZ) saw a year-on-year increase of 22 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 4.25 yuan dividend for every 10 shares. Bluefocus Communication Group Co., Ltd. (300058.SZ) saw a year-on-year increase of 66 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares.
[Trading Trends]
○ Three institutional seats buy Nsfocus Information Technology
------
The trading volume ranking list on March 9 shows three institutional seats bought Nsfocus Information Technology Co., Ltd. (300369.SZ) with a total of 72.65 million yuan, accounting for 14 percent of its intraday turnover. One institutional seat sold 13.86 million yuan.
Comment: Research institutes believe that the company is a leading enterprise in network safety in China. The information security has been raised to the national strategy and the network safety accidents force enterprises to increase investments in security. The company has made plans on the talents, market, products and mergers and will share the big cake in the overall information safety industry.
> 2nd batch of FTZs might establish at end of March, stocks in corresponding regions to see investment opportunities again
> Social capital encouraged to participate in water conservancy, construction of smart transformer substations to see multiplied growth
> Auto Electric Power Plant to invest in charging piles network, Longmaster Information to invest RMB1 bln in mobile medical treatment
> Noposion to invest in equities of P2P platform, Zhongheng Huafa and Jiajia Food plan private placement
[XFA Focus]
○ 2nd batch of FTZs might establish in end-March, stocks in corresponding regions to see investment opportunities again
------
XFA learns that the overall scheme of three newly established Free Trade Zones (FTZs) in Guangdong Province, Fujian Province and Tianjin Municipality, , and the deepening reform scheme of Shanghai Free Trade Zone will be submitted to high-level meeting for deliberation, and the establishment time of the FTZs in Guangdong Province, Fujian Province and Tianjin Municipality as well as the expanded area of Shanghai FTZ will be finally determined then. It is learnt that the establishment is tentatively fixed at the end of March.
Comment: FTZ, as a national development strategy, undertakes the responsibility of pioneering reform and will contribute to the improvement and transformation of economic structure. Its innovation might beyond expectation in the future. Market participants consider that some FTZ-related stocks largely underperform indexes since Feb. The theme of FTZ, once popular for a time, might surge again at the news of establishment.
[XFA Selection]
○ The Army-wide Weaponry Procurement Website completed the “first order” on March 19, indicating the substantial breakthrough of military-civil integration.
○ Southern China Aviation Industry Aviation Industry (Group) Co., Ltd. recently achieved breakthrough in the single crystal blade core technology of aero-engine.
○ China used civil unmanned aerial vehicle in the emergency reaction of maritime navigation aid system for the first time on March 19. Advantages in time and money saving are obvious.
○ With net profit in last year growing by nearly 40 percent, Ping An Insurance (Group) Company of China, Ltd. (601318.SH; 02318. HK) proposes a 10-for-10 conversion of capital surplus into shares combined with 5 yuan dividend for every 10 shares.
○ Electronic information manufacturing industry sees a good beginning. The output value of communication equipment, household audio and video equipment and electron devices grows the most.
[Industry Information]
○ Social capital encouraged to participate in water conservancy to share investment opportunities
------
The National Development and Reform Commission (NDRC), the Ministry of Finance and the Ministry of Water Resources (MWR) jointly released the “Guidance on Encouraging Social Capital to Join the Construction and Operation of Major Water Conservancy Projects” on March 19. Document content shows that the management tends to make it profitable for social capital to participate in the construction of water conservancy projects through PPP mechanism, market-oriented pricing of water supply and power generation, and water right trading so as to arouse the enthusiasm of social capital. It is also learnt that China Development Bank and MWR signed Memorandum of Cooperation on March 18 that a loan support of 90 billion yuan will be arranged.
Comment: According to the government work report, 27 major water conservancy projects will be kicked off and the investment scale of major water conservancy projects under construction will exceed 800 billion yuan this year. By Oct, 2014, the total investment in projects under construction is around 600 billion yuan. The rapid growth of investment in water conservancy this year is worthy of expectation. As for companies, Anhui Province, where Anhui Water Resources Development Co., Ltd. (600502.SH) is located, will launch major projects this year; institutions are optimistic about the prosperity of Guangdong No. 2 Hydropower Engineering Company, Ltd. (002060.SZ) in state-owned assets reform.
○ Construction of smart transformer substations to see multiplied growth, equipment providers to benefit
------
The State Grid Corporation of China recently published opinions on the construction of smart power grid projects in 2015 and proposed a series of development goals. XFA finds that the construction of smart transformer substations is put on top priority with 1,400 substations planned to be constructed this year. However, by the end of last year, only around 1,550 smart transformer substations are constructed and around 500 of them were newly built last year, meaning that the number of substations to be constructed this year will increase several times over previous years.
Comment: Under the support of a series of energy policies, the installed capacity of wind energy and photovoltaic power generation sees obviously increasing. Greatly impacted by weather, they are hard to be adapted by traditional power grid and push up the upgrading demand on smart power grid. Smart power transmission and distribution equipment companies including China XD Electric Co., Ltd. (601179.SH), Nari Technology Co., Ltd. (600406.SH), Wiscom System Co., Ltd. (002090.SZ), etc. will benefit.
[Announcement Interpretation]
○ Auto Electric Power Plant to invest RMB400 mln in establishing electric auto charging piles network
------
Shenzhen Auto Electric Power Plant Co., Ltd. (002227.SZ) proposes to raise 422 million yuan by issuing 22.06 million shares at no less than 19.12 yuan per share through private placement. Its controlling shareholder Ouhua Industry will subscribe no less than 10 percent. The proceeds will be used in the research and development of the charging equipment for electric automobiles and the expansion project, the establishment of the marketing and services network for the charging equipment for electric automobiles, the construction and operation of centralized charging facilities for electric automobile in Shenzhen City as well as the Phase I connected online Cloud platform for charging and operation piles for electric automobiles. The latter is driven by the “Internet Plus” model and based on the Internet and the Internet of Things technologies. It closely integrates the charging facilities and the Internet and is a cornerstone for the establishment of the Cloud platform of the national “Internet of Piles”.
○ Longmaster Information to invest RMB1 bln in mobile medical treatment with Wang Ruyuan participated
------
Longmaster Information & Technology Co., Ltd. (300288.SZ) intends to raise about 1 billion yuan by issuing 6.31 million shares at 158.36 yuan per share through private placement. The proceeds will be used in the health management and service platform for wearable and portable equipment, the medicines service O2O platform and for supplementing working capital. Wang Wei, the actual controller of the company, Shanghai Hongliu Investment Management Co., Ltd. and Wu Zhen, a natural person, will contribute 350 million yuan, 350 million and 300 million yuan, respectively to participate in the subscription. Hongliu Investment is a company under the well-known fund manager Wang Ruyuan. The company proposes a 20-for-10 conversion of capital surplus into shares according to its 2014 annual report.
○ Noposion to invest in equities of P2P platform company
------
Shenzhen Noposion Agrochemicals Co., Ltd. (002215.SZ) plans to increase its investments in the Shenzhen Nongjinquan Financial Services Co., Ltd. by 17.50 million shares with its own capitals. It will hold 35 percent of the latter after that. The nongfadai platform (www.nongfadai.com) under Nongjinquan is leading domestic agricultural vertical P2P platform. It selects large and medium quality farming households from major wheat, potato, banana, apple, tea and rice producing areas and lends the capitals raised online by the nongfadai platform to them directly in the form of P2P to meet their demands on agricultural purchase in the planting of the crops.
Comment: Noposion will introduce the agricultural e-business app “Circle of Countryside” soon. It will develop the Internet financial platform resources, which will facilitate the company in providing overall services about the agriculture, rural areas and farmers.
○ Zhongheng Huafa and Jiajia Food plan private placement with controlling shareholders to fully subscribe
------
Shenzhen Zhongheng Huafa Co., Ltd. (000020.SZ) is about to raise nearly 600 million yuan by issuing 87.60 million shares to its controlling shareholder Guangxi Wuzhou Zhongheng Group Co., Ltd. (600252.SH) at 6.84 yuan per share through private placement. 130 million yuan of the proceeds will be used for repaying borrowings and the rest will be used for supplementing working capital.
Jiajia Food Group Co., Ltd. (002650.SZ) proposes to raise 450 million yuan by issuing about 42 million shares to Hunan Zhuoyue Investment Co., Ltd., its controlling shareholder, at 10.63 yuan per share through private placement. The 450 million yuan to be raised will be used for supplementing its working capital.
○ Sanxing Electric and Dima to establish medical companies
------
Ningbo Sanxing Electric Co., Ltd. (601567.SH) will invest 100 million yuan in establishing the new company, Ningbo Aokesi Medical Investment Management Co., Ltd. The new company will be principally engaged in the hospitals entrustment management, medical investment management and consultancy, the sale of medical devices as well as the development of medical technologies.
Tibet Donghe and Greenleaf Medical, two subsidiaries under Chongqing Dima Industry Co., Ltd. (600565.SH), will jointly contribute to the establishment of the Shanghai Greenleaf Dongyuan Medical Management Co., Ltd. Tibet Donghe will contribute 70 million yuan, accounting for 35 percent of the registered capital. The new company will be engaged in the medical investment management, the technologies development, consultancy and services in the medical industry.
Comment: The development of medical treatment by the two companies is to take the investment opportunities in the big health to expand the business turnover and strengthen the ability of sustainable operation.
[Financial Reports Express]
○ Inspur Electronic Information, Beijing New Building Materials and Bluefocus Communication propose high share conversion and dividend
------
Inspur Electronic Information Industry Co., Ltd. (000977.SZ) saw a year-on-year increase of 134 percent in its 2014 net profit and proposes a 7-for-10 conversion of capital surplus into shares with another 3 shares combined with 0.8 yuan dividend for every 10 shares. Beijing New Building Materials Public Limited Company (000786.SZ) saw a year-on-year increase of 22 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 4.25 yuan dividend for every 10 shares. Bluefocus Communication Group Co., Ltd. (300058.SZ) saw a year-on-year increase of 66 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares.
[Trading Trends]
○ Three institutional seats buy Nsfocus Information Technology
------
The trading volume ranking list on March 9 shows three institutional seats bought Nsfocus Information Technology Co., Ltd. (300369.SZ) with a total of 72.65 million yuan, accounting for 14 percent of its intraday turnover. One institutional seat sold 13.86 million yuan.
Comment: Research institutes believe that the company is a leading enterprise in network safety in China. The information security has been raised to the national strategy and the network safety accidents force enterprises to increase investments in security. The company has made plans on the talents, market, products and mergers and will share the big cake in the overall information safety industry.
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