[Today’s Guide]
> Online sale of prescription drugs to deregulate soon, phar. e-business prepared for huge market
> Phosphate ores prices hike, first BFA forum focuses on rural finance
> Hailun Piano to invest in Internet education, P&S Information Technology to invest in Internet of Things
> Shandong Shengli to raise funds through private placement, Zhongyeda Electric to invest in charging of new energy vehicles and e-commerce
[XFA Focus]
○ Online sale of prescription drugs to deregulate soon, phar. e-business prepared for huge market
------
Media reported that the “Method of Supervision and Management of Internet-based Food and Drugs Operation” has been finalized and is likely to be released soon. Some pharmaceutical e-business operators have started indirect online sale through accepting orders online and delivering drugs by physical drugstores. XFA learnt from insiders and experts engaged in the study of policies in the pharmaceutical industry that it is inevitable to deregulate the online sale of prescription drugs. The coverage of the sales may be limited in the form of positive lists.
Comment: The market share of prescription drugs is more than triple of over-the-counter (OTC) drugs in China. The deregulation of the pharmaceutical e-business will expand the market to 1 trillion yuan from the current 100 billion yuan and even to a big health market with 3 trillion yuan. In terms of listed companies, Jointown Pharmaceutical Group Co., Ltd. (600998.SH) operates with two engines, namely the B2C ehaoyao.com and the O2O urgent drugs delivery services. The latter will cover 30,000 drugstores in two years. Yifeng Pharmacy Chain Co., Ltd. (603939.SH) was bought by institutional seats with a large amount after listing. It enjoys advantages in the supply chains and members brought about by physical stores.
[XFA Selection]
○ China will hold a military parade in Beijing in September to commemorate the 70th anniversary of the victory of the Chinese People’s War of Resistance Against Japanese Aggression and the World Anti-Fascist War.
○ Fidelity Investments Management (HK) Ltd. obtained a QFII quota of 1.2 billion U.S. dollars, showing that the upper limit of the single QFII has been opened.
○ The Hong Kong Exchanges and Clearing Limited will introduce the central tracking system for the Northbound Trading, eliminating the key barrier in investment in A shares by overseas long-term funds.
○ The conference on the establishment of the nationwide market system was convened in Beijing. It requires to channeled great efforts into develop new models and new types of business.
○ The issuance of H shares by GF Securities Co., Ltd. (000776.SZ) was favored with an over subscription of approximately 50 times.
○ Egypt indicated on March 26 that it supports the military interference with the Yemen crisis and will send ground troops to the war if necessary.
[Industry Information]
○ Phosphate fertilizers export to drive phosphate ores prices, companies with resources to benefit
------
XFA learns that the prices of phosphate ores surged for the first time after the Spring Festival by approximately 2 percent on March 26 driven by the booming downstream demand for phosphate fertilizers.
Comment: The policies on the phosphate fertilizers export in China have been loosening in recent years. The tariffs on the fertilizers export were reduced in 2014 and the differentiation between the peak and low seasons has been cancelled and a unified tax rate was introduced. As a result, the export of phosphate fertilizers saw a year-on-year growth in the first two months of this year and the monoammonium phosphate export even grew by 100 percent over the previous year. It will boom the domestic phosphate fertilizers industry and drive the prices of phosphate ores high. In terms of listed companies, Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH) owns a phosphate ores reserve of 130 million tons. Jiangsu Chengxing Phosph-Chemicals Co., Ltd. (600078.SH) ranks high in the phosphate ores reserves.
○ First BFA forum focuses on rural finance, new models to be trials in reform
------
The Boao Forum for Asia (BFA) Annual Conference 2015 was convened on March 26. The “Inclusive Finance: Exploring New Models in Rural Financial Reform” becomes the first sub-forum. Wu Xiaoling, former vice-governor of the central bank, indicated that it has designed a new rural credit cooperative organization in Shandong Province in cooperation with Guo Shuqing, governor of the province. Hainan Rural Credit Cooperatives also introduced local experiences, indicating that more than 60 percent of farmers can obtain small amount loans.
Comment: The rural inclusive finance has been covered in the Central Document of 2015. As large commercial banks cannot serve the rural markets, the prospects of agricultural and commercial banks and small loans companies catch more attention. In terms of listed companies, Luoniushan Co., Ltd. (000735.SZ) owns the Luoniushan Small Loan Co., Ltd. and holds shares of the Hainan Rural Commercial Bank. Zhejiang Chint Electrics Co., Ltd. (601877.SH) and Zhejiang Huafon Spandex Co., Ltd. (002064.SZ) have small amounts loans companies in Wenzhou City.
○ Various key homemade chips released to support national information security
------
The Xinhua News Agency reported on March 26 that a company under China Electronics Corporation (CEC) introduced that “Smart Bridge” 10,000M network exchange chips, breaking the long-term monopoly by international tycoons. The CEC also introduced the FT-1500A series 64-digit CPUs through independent innovation, which can replace the chips of medium- and high-end servers chips of Intel.
Comment: The chips safety is a key foundation of the national information security. The national industry funds have been expanding since the introduction of relevant supporting policies last year. Shanghai Belling Corp., Ltd. (600171.SH), the only A-share company directly controlled by CEC, has determined to sell its non-principle businesses and assets to focus on the design of integrated circuits. Nantong Fujitsu Microelectronics Co., Ltd. (002156.SZ) is vigorously advancing the replacement of imported server chips in key areas. It has been inspected by tens of institutes recently.
[Data Speaks]
○ Q1 performance disclosed, prosperity of wind power equipment industry improves significantly
------
According to the statistics of XFA, 324 listed companies have disclosed the forecast of their performance in the first quarter, among which, 212 companies, accounting for 65 percent, bring good news including expected growth, small growth, stop loss and continuous profit.
Classified according to industries, the performance growth of Internet-based finance and biological medicine sectors is the most outstanding. Many wind power equipment companies also achieved high performance growth. Thanks to the increasing demand of wind power industry, Shanghai Kangda New Materials Co., Ltd. (002669.SZ) expects its performance in the first quarter to grow by 250~300 percent and Sinoma Science & Technology Co., Ltd. (002080.SZ) is expected to turn losses into profits. The statement about clean energy like wind power in the government work report of this year has changed from “encouraging development” to “striving to develop”. Industrial prosperity might continue to improve.
[Companies Hotspot]
○ Jiuzhou Electronic to launch 4G set-top box
------
XFA learns from the China Content Broadcasting Network (CCBN) that Sichuan Jiuzhou Electronic Co., Ltd. (000801.SZ) has launched 4G set-top box which can share online signal through super WIFI to help broadcasting companies to provide public service. Pilot use of the set-top box has been launched in some provinces.
Comment: The State Administration of Press, Publication, Radio, Film and Television recently set the “Intelligent Press, Publication, Radio, Film and Television” as its goal for transformation and upgrading. The Internet giants are all active in seizing the opportunity. The broadcasting and television equipment business of Jiuzhou Electronic might benefit from “Internet Plus”. Moreover, the substantial shareholder of the company is a large-scale backbone military enterprise engaged in air traffic control system. Institutions are optimistic about the prosperity of the opening –up and asset injection of low-altitude flight.
[Announcement Interpretation]
○ Hailun Piano to invest in intelligent piano and Internet education through private placement
------
Hailun Piano Co., Ltd. (300329.SZ) plans to raise 216 million yuan by issuing 13.50 million shares through private placement to invest in the development of intelligent piano and supporting Internet system as well as the construction of industrialization project (Phase I). The project covers the production lines of intelligent piano and intelligent control system, Internet interactive education platform, etc. Its annual net profit might reach 49.32 million yuan after the project reaches designed capacity.
○ P&S Information Technology to fully control DXYT to invest in Internet of Things
------
Wuhan P&S Information Technology Co., Ltd. (300184.SZ) plans to raise 142 million yuan by issuing 12.39 million shares at 11.44 yuan per share through private placement to acquire 35 percent equities of DXYT Technology. After the transaction, the company will hold 100 percent equities of DXYT. The counterparty promises that the net profit of DXYT will be no less than 37.50 million yuan, 45.00 million yuan and 54.00 million yuan from 2015 to 2017. DXYT is an IC product distributor focusing on comprehensive solutions of “Internet of Things”.
○ Shandong Shengli to raise RMB1.1 bln yuan through private placement to invest in natural gas
------
Shandong Shengli Co., Ltd. (000407.SZ) plans to raise 1.15 billion yuan by issuing 188 million shares at 6.13 yuan per share through private placement to supplement the working capital needed by the strategic business transformation of natural gas and to pay off bank loans. Participants of the subscription are Shandong Shengli Investment Co., Ltd., Sunshine Life Insurance Corporation Limited, Ping An Dahua Fund Management Co., Ltd., Ping An Asset Management Co., Ltd., Shenzhen Huashide Investment Enterprise (Limited Partnership) and Beijing Cashflowcap Asset Management Co., Ltd.
Comment: Investors participated in the subscription, which are either strategic investors owning oil and gas resources or financial investors, help the company to accelerate industrial transformation. Previously, Shengli Investment, the substantial shareholder, injected its natural gas asset in Qingdao City into Shandong Shengli and subscribed supporting funds. Its subscription of the private placement with 100 million yuan in cash shows its confidence in the company's transformation.
○ Zhongyeda Electric to invest in charging of new energy vehicles and e-commerce with RMB1 bln
------
Zhongyeda Electric Co., Ltd. (002441.SZ) plans to raise 1 billion yuan by issuing 43 million shares at no less than 23.51 yuan per share through private placement, among which, 425 million yuan will be invested in the construction of prefabricated charging system of pure electric bus, 286 million yuan will be invested in the construction of e-commerce platform and 300 million yuan will be used to supplement working capital. The company announced the equity incentive scheme, awarding 2.32 million restricted shares at 13.06 yuan per share, on that same day. Based on the net profit in 2014, the growth of net profit from 2015 to 2018 shall be no less than 10 percent, 20 percent, 35 percent and 50 percent. The company proposes a 10-for-10 conversion of capital surplus into shares for distribution in 2014.
○ Shanghai Maling Aquarius to acquire breeding asset of Bright Foods Group
------
Shanghai Maling Aquarius Co., Ltd. (600073.SH) plans to acquire beef cattle breeding, food circulation, fodder, etc. assets from Shanghai Dairy Group, a wholly-owned subsidiary of Bright Foods (Group) Co., Ltd., and acquire pig breeding assets from Shanghai Farm and Shanghai Chuandong Farm. Meanwhile, the company plans to sell 100 percent equities of Shanghai Aquarius Drinking Water Co., Ltd. to Shanghai YiMin No.1 Foods (Group) Co., Ltd., its largest shareholder.
[Financial Reports Express]
○ Fenda Technology to expect performance growth in Q1
------
Thanks to the steady growth of main business and the financial consolidation of acquired OPD Technology (Shenzhen) Co., Ltd. since Feb, the net profit of Shenzhen Fenda Technology Co., Ltd. (002681.SZ) in the first quarter sees a year-on-year growth of 40~60 percent.
○ Universal Scientific Industrial and Sunwoda Electronic plan high share conversion and dividend
------
The net profit of Universal Scientific Industrial (Shanghai) Co., Ltd. sees a year-on-year growth of 24 percent in 2014 and it proposes a 10-for-10 conversion of capital surplus into shares combined with 1.94 yuan dividend for every 10 shares. The net profit of Sunwoda Electronic Co., Ltd. (300207.SZ) sees a year-on-year growth of 107 percent in 2014 and it proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. The net profit of the company in the first quarter sees a year-on-year growth of 20~50 percent.
[Trading Trends]
○ Kingdream Public bought through four institutional seats
------
The trading volume ranking list on March 26 shows that Kingdream Public Limited Company (000852.SZ) was bought through four institutional seats with a total of 127 million yuan, accounting for 20 percent of its intraday turnover
Comment: Kingdream Public will become a petroleum machinery listed company that has the largest scale of its kind, the most complete product line and the most outstanding comprehensive strength in China after reorganization. Analysts believe that the company is expected to be involved in SOEs reform. Based on adjustment of product structure and optimization of management, the profitability of the company might be improved greatly.
> Online sale of prescription drugs to deregulate soon, phar. e-business prepared for huge market
> Phosphate ores prices hike, first BFA forum focuses on rural finance
> Hailun Piano to invest in Internet education, P&S Information Technology to invest in Internet of Things
> Shandong Shengli to raise funds through private placement, Zhongyeda Electric to invest in charging of new energy vehicles and e-commerce
[XFA Focus]
○ Online sale of prescription drugs to deregulate soon, phar. e-business prepared for huge market
------
Media reported that the “Method of Supervision and Management of Internet-based Food and Drugs Operation” has been finalized and is likely to be released soon. Some pharmaceutical e-business operators have started indirect online sale through accepting orders online and delivering drugs by physical drugstores. XFA learnt from insiders and experts engaged in the study of policies in the pharmaceutical industry that it is inevitable to deregulate the online sale of prescription drugs. The coverage of the sales may be limited in the form of positive lists.
Comment: The market share of prescription drugs is more than triple of over-the-counter (OTC) drugs in China. The deregulation of the pharmaceutical e-business will expand the market to 1 trillion yuan from the current 100 billion yuan and even to a big health market with 3 trillion yuan. In terms of listed companies, Jointown Pharmaceutical Group Co., Ltd. (600998.SH) operates with two engines, namely the B2C ehaoyao.com and the O2O urgent drugs delivery services. The latter will cover 30,000 drugstores in two years. Yifeng Pharmacy Chain Co., Ltd. (603939.SH) was bought by institutional seats with a large amount after listing. It enjoys advantages in the supply chains and members brought about by physical stores.
[XFA Selection]
○ China will hold a military parade in Beijing in September to commemorate the 70th anniversary of the victory of the Chinese People’s War of Resistance Against Japanese Aggression and the World Anti-Fascist War.
○ Fidelity Investments Management (HK) Ltd. obtained a QFII quota of 1.2 billion U.S. dollars, showing that the upper limit of the single QFII has been opened.
○ The Hong Kong Exchanges and Clearing Limited will introduce the central tracking system for the Northbound Trading, eliminating the key barrier in investment in A shares by overseas long-term funds.
○ The conference on the establishment of the nationwide market system was convened in Beijing. It requires to channeled great efforts into develop new models and new types of business.
○ The issuance of H shares by GF Securities Co., Ltd. (000776.SZ) was favored with an over subscription of approximately 50 times.
○ Egypt indicated on March 26 that it supports the military interference with the Yemen crisis and will send ground troops to the war if necessary.
[Industry Information]
○ Phosphate fertilizers export to drive phosphate ores prices, companies with resources to benefit
------
XFA learns that the prices of phosphate ores surged for the first time after the Spring Festival by approximately 2 percent on March 26 driven by the booming downstream demand for phosphate fertilizers.
Comment: The policies on the phosphate fertilizers export in China have been loosening in recent years. The tariffs on the fertilizers export were reduced in 2014 and the differentiation between the peak and low seasons has been cancelled and a unified tax rate was introduced. As a result, the export of phosphate fertilizers saw a year-on-year growth in the first two months of this year and the monoammonium phosphate export even grew by 100 percent over the previous year. It will boom the domestic phosphate fertilizers industry and drive the prices of phosphate ores high. In terms of listed companies, Hubei Xingfa Chemicals Group Co., Ltd. (600141.SH) owns a phosphate ores reserve of 130 million tons. Jiangsu Chengxing Phosph-Chemicals Co., Ltd. (600078.SH) ranks high in the phosphate ores reserves.
○ First BFA forum focuses on rural finance, new models to be trials in reform
------
The Boao Forum for Asia (BFA) Annual Conference 2015 was convened on March 26. The “Inclusive Finance: Exploring New Models in Rural Financial Reform” becomes the first sub-forum. Wu Xiaoling, former vice-governor of the central bank, indicated that it has designed a new rural credit cooperative organization in Shandong Province in cooperation with Guo Shuqing, governor of the province. Hainan Rural Credit Cooperatives also introduced local experiences, indicating that more than 60 percent of farmers can obtain small amount loans.
Comment: The rural inclusive finance has been covered in the Central Document of 2015. As large commercial banks cannot serve the rural markets, the prospects of agricultural and commercial banks and small loans companies catch more attention. In terms of listed companies, Luoniushan Co., Ltd. (000735.SZ) owns the Luoniushan Small Loan Co., Ltd. and holds shares of the Hainan Rural Commercial Bank. Zhejiang Chint Electrics Co., Ltd. (601877.SH) and Zhejiang Huafon Spandex Co., Ltd. (002064.SZ) have small amounts loans companies in Wenzhou City.
○ Various key homemade chips released to support national information security
------
The Xinhua News Agency reported on March 26 that a company under China Electronics Corporation (CEC) introduced that “Smart Bridge” 10,000M network exchange chips, breaking the long-term monopoly by international tycoons. The CEC also introduced the FT-1500A series 64-digit CPUs through independent innovation, which can replace the chips of medium- and high-end servers chips of Intel.
Comment: The chips safety is a key foundation of the national information security. The national industry funds have been expanding since the introduction of relevant supporting policies last year. Shanghai Belling Corp., Ltd. (600171.SH), the only A-share company directly controlled by CEC, has determined to sell its non-principle businesses and assets to focus on the design of integrated circuits. Nantong Fujitsu Microelectronics Co., Ltd. (002156.SZ) is vigorously advancing the replacement of imported server chips in key areas. It has been inspected by tens of institutes recently.
[Data Speaks]
○ Q1 performance disclosed, prosperity of wind power equipment industry improves significantly
------
According to the statistics of XFA, 324 listed companies have disclosed the forecast of their performance in the first quarter, among which, 212 companies, accounting for 65 percent, bring good news including expected growth, small growth, stop loss and continuous profit.
Classified according to industries, the performance growth of Internet-based finance and biological medicine sectors is the most outstanding. Many wind power equipment companies also achieved high performance growth. Thanks to the increasing demand of wind power industry, Shanghai Kangda New Materials Co., Ltd. (002669.SZ) expects its performance in the first quarter to grow by 250~300 percent and Sinoma Science & Technology Co., Ltd. (002080.SZ) is expected to turn losses into profits. The statement about clean energy like wind power in the government work report of this year has changed from “encouraging development” to “striving to develop”. Industrial prosperity might continue to improve.
[Companies Hotspot]
○ Jiuzhou Electronic to launch 4G set-top box
------
XFA learns from the China Content Broadcasting Network (CCBN) that Sichuan Jiuzhou Electronic Co., Ltd. (000801.SZ) has launched 4G set-top box which can share online signal through super WIFI to help broadcasting companies to provide public service. Pilot use of the set-top box has been launched in some provinces.
Comment: The State Administration of Press, Publication, Radio, Film and Television recently set the “Intelligent Press, Publication, Radio, Film and Television” as its goal for transformation and upgrading. The Internet giants are all active in seizing the opportunity. The broadcasting and television equipment business of Jiuzhou Electronic might benefit from “Internet Plus”. Moreover, the substantial shareholder of the company is a large-scale backbone military enterprise engaged in air traffic control system. Institutions are optimistic about the prosperity of the opening –up and asset injection of low-altitude flight.
[Announcement Interpretation]
○ Hailun Piano to invest in intelligent piano and Internet education through private placement
------
Hailun Piano Co., Ltd. (300329.SZ) plans to raise 216 million yuan by issuing 13.50 million shares through private placement to invest in the development of intelligent piano and supporting Internet system as well as the construction of industrialization project (Phase I). The project covers the production lines of intelligent piano and intelligent control system, Internet interactive education platform, etc. Its annual net profit might reach 49.32 million yuan after the project reaches designed capacity.
○ P&S Information Technology to fully control DXYT to invest in Internet of Things
------
Wuhan P&S Information Technology Co., Ltd. (300184.SZ) plans to raise 142 million yuan by issuing 12.39 million shares at 11.44 yuan per share through private placement to acquire 35 percent equities of DXYT Technology. After the transaction, the company will hold 100 percent equities of DXYT. The counterparty promises that the net profit of DXYT will be no less than 37.50 million yuan, 45.00 million yuan and 54.00 million yuan from 2015 to 2017. DXYT is an IC product distributor focusing on comprehensive solutions of “Internet of Things”.
○ Shandong Shengli to raise RMB1.1 bln yuan through private placement to invest in natural gas
------
Shandong Shengli Co., Ltd. (000407.SZ) plans to raise 1.15 billion yuan by issuing 188 million shares at 6.13 yuan per share through private placement to supplement the working capital needed by the strategic business transformation of natural gas and to pay off bank loans. Participants of the subscription are Shandong Shengli Investment Co., Ltd., Sunshine Life Insurance Corporation Limited, Ping An Dahua Fund Management Co., Ltd., Ping An Asset Management Co., Ltd., Shenzhen Huashide Investment Enterprise (Limited Partnership) and Beijing Cashflowcap Asset Management Co., Ltd.
Comment: Investors participated in the subscription, which are either strategic investors owning oil and gas resources or financial investors, help the company to accelerate industrial transformation. Previously, Shengli Investment, the substantial shareholder, injected its natural gas asset in Qingdao City into Shandong Shengli and subscribed supporting funds. Its subscription of the private placement with 100 million yuan in cash shows its confidence in the company's transformation.
○ Zhongyeda Electric to invest in charging of new energy vehicles and e-commerce with RMB1 bln
------
Zhongyeda Electric Co., Ltd. (002441.SZ) plans to raise 1 billion yuan by issuing 43 million shares at no less than 23.51 yuan per share through private placement, among which, 425 million yuan will be invested in the construction of prefabricated charging system of pure electric bus, 286 million yuan will be invested in the construction of e-commerce platform and 300 million yuan will be used to supplement working capital. The company announced the equity incentive scheme, awarding 2.32 million restricted shares at 13.06 yuan per share, on that same day. Based on the net profit in 2014, the growth of net profit from 2015 to 2018 shall be no less than 10 percent, 20 percent, 35 percent and 50 percent. The company proposes a 10-for-10 conversion of capital surplus into shares for distribution in 2014.
○ Shanghai Maling Aquarius to acquire breeding asset of Bright Foods Group
------
Shanghai Maling Aquarius Co., Ltd. (600073.SH) plans to acquire beef cattle breeding, food circulation, fodder, etc. assets from Shanghai Dairy Group, a wholly-owned subsidiary of Bright Foods (Group) Co., Ltd., and acquire pig breeding assets from Shanghai Farm and Shanghai Chuandong Farm. Meanwhile, the company plans to sell 100 percent equities of Shanghai Aquarius Drinking Water Co., Ltd. to Shanghai YiMin No.1 Foods (Group) Co., Ltd., its largest shareholder.
[Financial Reports Express]
○ Fenda Technology to expect performance growth in Q1
------
Thanks to the steady growth of main business and the financial consolidation of acquired OPD Technology (Shenzhen) Co., Ltd. since Feb, the net profit of Shenzhen Fenda Technology Co., Ltd. (002681.SZ) in the first quarter sees a year-on-year growth of 40~60 percent.
○ Universal Scientific Industrial and Sunwoda Electronic plan high share conversion and dividend
------
The net profit of Universal Scientific Industrial (Shanghai) Co., Ltd. sees a year-on-year growth of 24 percent in 2014 and it proposes a 10-for-10 conversion of capital surplus into shares combined with 1.94 yuan dividend for every 10 shares. The net profit of Sunwoda Electronic Co., Ltd. (300207.SZ) sees a year-on-year growth of 107 percent in 2014 and it proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. The net profit of the company in the first quarter sees a year-on-year growth of 20~50 percent.
[Trading Trends]
○ Kingdream Public bought through four institutional seats
------
The trading volume ranking list on March 26 shows that Kingdream Public Limited Company (000852.SZ) was bought through four institutional seats with a total of 127 million yuan, accounting for 20 percent of its intraday turnover
Comment: Kingdream Public will become a petroleum machinery listed company that has the largest scale of its kind, the most complete product line and the most outstanding comprehensive strength in China after reorganization. Analysts believe that the company is expected to be involved in SOEs reform. Based on adjustment of product structure and optimization of management, the profitability of the company might be improved greatly.
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