[Today’s Guide]
> Down payment ratio reducing and business tax exemption to boost property and stock markets
> Belt and Road Initiative cooperation to expand with new Eurasian Land Bridge as priority
> VSF to improve profitability, medical treatment and services program favors distant medical treatment
> Shangfeng Industrial Holdings to acquire Universtar Science & Technology, Hang Zhou Iron & Steel to develop environmental protection
[XFA Focus]
○ Down payment ratio reducing and business tax exemption to boost property and stock markets
------
The central bank, the Ministry of Housing and Urban-Rural Development and the China Banking Regulatory Commission (CBRC) jointly issued a document on March 30 to adjust the loan policies on houses purchasing. The minimum down payment ratio for buyers of second homes will be reduced to 40 percent if they apply purchasing ordinary houses with commercial housing loans for better living conditions with the corresponding loans for the first homes unsettled. The Ministry of Finance announced on the same day that property owners will be exempt from paying a business tax on the transfer of an ordinary home if they have owned it for at least two years, down from the previous minimum of five years.
Comment: Many research institutes believe that the reducing of the down payment levels for second homebuyers and the shortening of period for waiving business taxes are beyond the expectation of the market. It will stimulate and improve the demand for houses purchasing, improve investors’ expectations on the property, banking, building materials and other periodic sectors and boost the booming of the stock market. First-tier cities with net population inflows, such as Beijing, Shanghai and Shenzhen City, are more likely to see more demands. Listed companies with businesses in such areas are worth more attention.
◆The surge of the main contract IF1504 on the closing hours of March 30 drove the market high, showing the optimism of the market.
[XFA Selection]
○ Chinese President Xi Jinping said that China and Australia will strive to sign and approve and implement the agreement on the free trade zone with Australia as soon as possible during a meeting with Australian Governor-General on March 30.
○ Chinese Vice-Premier Wang Yang emphasized on March 30 that China will implement and improve various policies supporting distant water fishing and establish well-known enterprises and products brands.
○ The Ministry of Environmental Protection reinitiated the study on green GDP and will establish a big data platform for the calculation of green GDP.
○ Two departments solicited opinions on the management method for stem cell clinical researches. The industry is likely to see more rapid development with policy supports.
○ Hunan Province released the action plan on the development of the mobile Internet industries in 2015 on March 30, requiring relevant businesses increasing revenues by over 100 percent.
[Industry Information]
○ Belt and Road Initiative cooperation to expand with new Eurasian Land Bridge as priority
------
The Foreign Ministry spokesperson said on March 30 that China has received the written confirmation for joining the Asian Infrastructure Investment Bank (AIIB) from the Republic of Korea (ROK) and the ROK will become an official prospective founding member of the AIIB on April 11. Russia and Brazil as well as other countries also indicated that they want to join the AIIB. XFA learnt that the new Eurasian Land Bridge will enjoy priority in the key projects of the Belt and Road Initiative to be initiated in this and the following years. Lianyungang City and Rizhao City will be starting points of the new Eurasian Land Bridge. The cooperation with Mongolia and Central Asian countries are advancing.
Comment: Signals show that the Belt and Road Initiative is not China’s solo, but a symphony performed by all countries along it. Jiangsu Lianyungang Port Co., Ltd. (601008.SH) and Rizhao Port Co., Ltd. (600017.SH) will give full play to the advantages in the international sea-railway combined transportation. In addition, the investment index with the theme of the Belt and Road Initiative of China Securities Index Co., Ltd. and Shenwan Hongyuan Securities will be issued on April 23, which will facilitate the participation in the theme by more capitals.
○ VSF market sees increases in quantity and prices, improved supply and demand to strengthen profitability
------
The viscose staple fiber (VSF) market saw increases in the quantity and price recently. The quotation of enterprises rose by 200 to 300 yuan or approximately 3 percent per ton on March 30 after increasing by 50 to 100 yuan per ton last week. XFA learnt that the VSF prices remained a low level after years of adjustments and the market supply and demand has improved. The industry capacity increased by only 6.7 percent last year and is below the demand growth. There is even no new capacity this year.
Comment: With the support of no capacity growth and more demands, the industry will see improvement in the profitability. Nanjing Chemical Fibre Co., Ltd. (600889.SH), Jilin Chemical Fibre Co., Ltd. (000420.SZ), Jiangsu Aoyang Technology Corporation Limited (002172.SZ) and other viscose manufacturers will benefit greatly. Aoyang Technology also proposes to develop medical treatment and health as well as drugs delivery businesses. The other two companies are expected to conduct state capital reform.
○ Guidelines on national medical treatment and services program releases, distant medical treatment become new development orientation
------
The “Guidelines on National Medical Treatment and Health Services System Program (2015—2020)” was released on March 30 on www.gov.cn. Compared with the draft for soliciting opinions released in late October of last year, the formal document separated the “Information Resources Allocation” from “Other Resources Allocation” and set an independent section. It proposes to conduct the healthy China Cloud services and actively promote the development of mobile Internet and distant medical services.
Comment: The slight adjustment to the document shows China’s active attitude over the development of distant medical treatment. It can not only promote the cost reduction and efficiency improvement in the medical system, but also solve the imbalanced allocation of medical resources as well as further subdividing the “Internet Plus”. In terms of listed companies, Guangdong Eastone Century Technology Co., Ltd. (300310.SZ) cooperated with Xinhua News Agency Guangxi Branch in the Guangxi Intelligent Medical Treatment Network and the project will come into use soon. Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) saw benefits from the health packages in the Internet of Things in Dafeng City, Jiangsu Province and it can be reproduced.
[Companies Hotspot]
○ New Culture Media expects further extensional acquisition
------
Yang Zhenhua, president of Shanghai New Culture Media Group Co., Ltd. (300336.SZ), indicated during the interview by several media including Xinhua News Agency on March 30 that now it is a good time for the development of cultural industry and the acquisition market is hot. The company’s acquisition of Tulip Advertising Communication (Shanghai) Co., Ltd. and Shenyang Dakesi Advertisement Co., Ltd. is just a beginning. Besides endogenous growth, the company will also extensionally acquire quality Internet advertisement, big data, and etc. companies in Internet and communication areas.
[Announcement Interpretation]
○ Shangfeng Industrial Holdings to acquire Universtar Science & Technology to develop environmental protection
------
Zhejiang Shangfeng Industrial Holdings Co., Ltd. (000967.SZ) plans to acquire 100 percent equities of Universtar Science & Technology (Shenzhen) Co., Ltd. with 1.7 billion yuan by issuing shares and in cash. It plans to raise 1,318 million yuan by issuing shares at 9.84 yuan per share through private placement and the rest 382 million yuan will be paid in cash. Meanwhile, the company plans to raise a supporting fund of 425 million yuan for paying cash and the development and operation fees of the subject company. The counterparty promises that the net profit of Universtar Science & Technology will be no less than 120 million yuan, 156 million yuan and 210 million yuan from 2015 to 2017.
Universtar Science & Technology is principally engaged in three businesses, namely, environment online monitoring device and system, environment treatment project and the operation of environment treatment facilities. After the transaction, the listed company will transform from traditional manufacturing industry to “environmental-protection-oriented and manufacturing-business-supported” business development direction.
○ Hang Zhou Iron & Steel to develop environmental protection with RMB9.2 bln, Tiantang Guigu to subscribe private placement
------
Hang Zhou Iron & Steel Co., Ltd. (600126.SH) plans to exchange out its current iron and steel asset with 2.42 billion yuan to acquire 100 percent equities of Ningbo Steel Co., Ltd., 87.54 percent equities of Zhejiang Fuchun Ziguang Environmental Protection Co., Ltd., 97 percent equities of Zhejiang New Century Renewable Resources Development Co., Ltd. and 100 percent equities of Zhejiang Deqing Hanggang Fuchun Renewable Technology Co., Ltd. with 9.2 billion yuan, and the balance will be paid by issuing shares at 5.28 yuan per share to Hang Zhou Iron & Steel Group Company, Baosteel Group Corporation, etc. through private placement. The company also plans to raise a supporting fund of 2.8 billion yuan at the same offering price through private placement and Zhejiang Tiantang Guigu Jiurong Equity Investment Limited Partnership will subscribe 123 million shares with 650 million yuan. The supporting funds will be invested in Ziguang environmental protection sewage treatment project, Ningbo Steel energy conservation and environmental protection project, metal trading e-commerce platform, IDC construction project, etc. After the transaction, the company merges iron & steel, environmental protection, renewable resources, etc. businesses and develops e-commerce platform. It will contribute to its transformation and upgrading. The company’s stock price closed at 6.11 yuan per share before trading suspension.
○ Kuangda photovoltaic power station to acquire another station
------
Jiangsu Kuangda Power Investment Co., Ltd., a wholly-owned subsidiary of Jiangsu Kuangda Automobile Textile Group Co., Ltd. (002516.SZ), plans to acquire 100 percent equities of Kezuo Zhongqi Xinsheng Photo-electricity Co., Ltd. held by Hareon Solar Technology Co., Ltd. (600401.SH) and other shareholders with self-raised 350 million yuan. It is learnt that Xinsheng Photo-electricity owns a 100 MW photovoltaic power station project in Tongliao City, Inner Mongolia Autonomous Region and the project has been grid-connected and started power generation.
Comment: The power station project acquired by the company this time is a 100 MW photovoltaic power stations group. It helps to reduce operation cost and the internal rate of return of the project is high. It will contribute to the new profit growth point of the company.
○ Hangzhou Guanghengyu to control East New Energy Development
------
Xinyu Xinlike Technology and Engineering Co., Ltd., controlling shareholder of Dalian East New Energy Development Co., Ltd. (300125.SZ), will transfer 25.82 million shares held by it to Hangzhou Guanghengyu Equity Investment Limited Partnership at 20 yuan per share. After the transaction, Guanghengyu will become the largest shareholder of East New Energy Development and Liu Zhendong will become the actual controller of the company. The company’s stock price closed at 30.7 yuan per share before trading suspension.
Comment: Guanghengyu was established in Jan. 2015. The newly appointed controlling shareholder and actual controller promise that there is no specific plan of changing or adjusting the main business of East New Energy Development within 12 months.
[Financial Reports Express]
○ Hisoar Phar. and Financial Street to expect large growth in Q1
------
Thanks to the consolidated statement of Taizhou Qianjin Chemicals Co., Ltd., Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) expects its performance to grow by 4,215~5,108 percent in the first quarter; due to the completion of expanded projects, Financial Street Holdings Co., Ltd. (000402.SZ) expects its performance to grow by 180~230 percent in the first quarter.
○ Haier, Changgao High Voltage Switchgear and Yutong Bus plan high share conversion and dividend
------
With net profit growing by 20 percent in 2014, Qingdao Haier Co., Ltd. (600690.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 4.92 yuan dividend for every 10 shares in its annual report; with net profit growing by 18 percent in 2014, Hunan Changgao High Voltage Switchgear Group Co., Ltd. (002452.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual report; with net profit growing by 15 percent in 2014, Zhengzhou Yutong Bus Co., Ltd. (600066.SH) proposes a 5-for-10 conversion of capital surplus into shares combined with 10 yuan dividend for every 10 shares in its annual report.
[Trading Trends]
○ Changlin bought through two institutional seats
------
The trading volume ranking list on March 30 shows that Changlin Company Limited (600710.SH) was bought through two institutional seats with a total of 99.80 million yuan, accounting for 34.7 percent of its intraday turnover.
Comment: Changlin, a small market engineering machinery company principally engaged in loader, has 30 percent of its revenue come from overseas and it is covered in the “One Belt and One Road” initiative. Moreover, the substantial shareholder of Changlin is China SINOMACH Heavy Industry Corporation, a central enterprise, thus it is strongly expected to be involved in the SOEs reform.
> Down payment ratio reducing and business tax exemption to boost property and stock markets
> Belt and Road Initiative cooperation to expand with new Eurasian Land Bridge as priority
> VSF to improve profitability, medical treatment and services program favors distant medical treatment
> Shangfeng Industrial Holdings to acquire Universtar Science & Technology, Hang Zhou Iron & Steel to develop environmental protection
[XFA Focus]
○ Down payment ratio reducing and business tax exemption to boost property and stock markets
------
The central bank, the Ministry of Housing and Urban-Rural Development and the China Banking Regulatory Commission (CBRC) jointly issued a document on March 30 to adjust the loan policies on houses purchasing. The minimum down payment ratio for buyers of second homes will be reduced to 40 percent if they apply purchasing ordinary houses with commercial housing loans for better living conditions with the corresponding loans for the first homes unsettled. The Ministry of Finance announced on the same day that property owners will be exempt from paying a business tax on the transfer of an ordinary home if they have owned it for at least two years, down from the previous minimum of five years.
Comment: Many research institutes believe that the reducing of the down payment levels for second homebuyers and the shortening of period for waiving business taxes are beyond the expectation of the market. It will stimulate and improve the demand for houses purchasing, improve investors’ expectations on the property, banking, building materials and other periodic sectors and boost the booming of the stock market. First-tier cities with net population inflows, such as Beijing, Shanghai and Shenzhen City, are more likely to see more demands. Listed companies with businesses in such areas are worth more attention.
◆The surge of the main contract IF1504 on the closing hours of March 30 drove the market high, showing the optimism of the market.
[XFA Selection]
○ Chinese President Xi Jinping said that China and Australia will strive to sign and approve and implement the agreement on the free trade zone with Australia as soon as possible during a meeting with Australian Governor-General on March 30.
○ Chinese Vice-Premier Wang Yang emphasized on March 30 that China will implement and improve various policies supporting distant water fishing and establish well-known enterprises and products brands.
○ The Ministry of Environmental Protection reinitiated the study on green GDP and will establish a big data platform for the calculation of green GDP.
○ Two departments solicited opinions on the management method for stem cell clinical researches. The industry is likely to see more rapid development with policy supports.
○ Hunan Province released the action plan on the development of the mobile Internet industries in 2015 on March 30, requiring relevant businesses increasing revenues by over 100 percent.
[Industry Information]
○ Belt and Road Initiative cooperation to expand with new Eurasian Land Bridge as priority
------
The Foreign Ministry spokesperson said on March 30 that China has received the written confirmation for joining the Asian Infrastructure Investment Bank (AIIB) from the Republic of Korea (ROK) and the ROK will become an official prospective founding member of the AIIB on April 11. Russia and Brazil as well as other countries also indicated that they want to join the AIIB. XFA learnt that the new Eurasian Land Bridge will enjoy priority in the key projects of the Belt and Road Initiative to be initiated in this and the following years. Lianyungang City and Rizhao City will be starting points of the new Eurasian Land Bridge. The cooperation with Mongolia and Central Asian countries are advancing.
Comment: Signals show that the Belt and Road Initiative is not China’s solo, but a symphony performed by all countries along it. Jiangsu Lianyungang Port Co., Ltd. (601008.SH) and Rizhao Port Co., Ltd. (600017.SH) will give full play to the advantages in the international sea-railway combined transportation. In addition, the investment index with the theme of the Belt and Road Initiative of China Securities Index Co., Ltd. and Shenwan Hongyuan Securities will be issued on April 23, which will facilitate the participation in the theme by more capitals.
○ VSF market sees increases in quantity and prices, improved supply and demand to strengthen profitability
------
The viscose staple fiber (VSF) market saw increases in the quantity and price recently. The quotation of enterprises rose by 200 to 300 yuan or approximately 3 percent per ton on March 30 after increasing by 50 to 100 yuan per ton last week. XFA learnt that the VSF prices remained a low level after years of adjustments and the market supply and demand has improved. The industry capacity increased by only 6.7 percent last year and is below the demand growth. There is even no new capacity this year.
Comment: With the support of no capacity growth and more demands, the industry will see improvement in the profitability. Nanjing Chemical Fibre Co., Ltd. (600889.SH), Jilin Chemical Fibre Co., Ltd. (000420.SZ), Jiangsu Aoyang Technology Corporation Limited (002172.SZ) and other viscose manufacturers will benefit greatly. Aoyang Technology also proposes to develop medical treatment and health as well as drugs delivery businesses. The other two companies are expected to conduct state capital reform.
○ Guidelines on national medical treatment and services program releases, distant medical treatment become new development orientation
------
The “Guidelines on National Medical Treatment and Health Services System Program (2015—2020)” was released on March 30 on www.gov.cn. Compared with the draft for soliciting opinions released in late October of last year, the formal document separated the “Information Resources Allocation” from “Other Resources Allocation” and set an independent section. It proposes to conduct the healthy China Cloud services and actively promote the development of mobile Internet and distant medical services.
Comment: The slight adjustment to the document shows China’s active attitude over the development of distant medical treatment. It can not only promote the cost reduction and efficiency improvement in the medical system, but also solve the imbalanced allocation of medical resources as well as further subdividing the “Internet Plus”. In terms of listed companies, Guangdong Eastone Century Technology Co., Ltd. (300310.SZ) cooperated with Xinhua News Agency Guangxi Branch in the Guangxi Intelligent Medical Treatment Network and the project will come into use soon. Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) saw benefits from the health packages in the Internet of Things in Dafeng City, Jiangsu Province and it can be reproduced.
[Companies Hotspot]
○ New Culture Media expects further extensional acquisition
------
Yang Zhenhua, president of Shanghai New Culture Media Group Co., Ltd. (300336.SZ), indicated during the interview by several media including Xinhua News Agency on March 30 that now it is a good time for the development of cultural industry and the acquisition market is hot. The company’s acquisition of Tulip Advertising Communication (Shanghai) Co., Ltd. and Shenyang Dakesi Advertisement Co., Ltd. is just a beginning. Besides endogenous growth, the company will also extensionally acquire quality Internet advertisement, big data, and etc. companies in Internet and communication areas.
[Announcement Interpretation]
○ Shangfeng Industrial Holdings to acquire Universtar Science & Technology to develop environmental protection
------
Zhejiang Shangfeng Industrial Holdings Co., Ltd. (000967.SZ) plans to acquire 100 percent equities of Universtar Science & Technology (Shenzhen) Co., Ltd. with 1.7 billion yuan by issuing shares and in cash. It plans to raise 1,318 million yuan by issuing shares at 9.84 yuan per share through private placement and the rest 382 million yuan will be paid in cash. Meanwhile, the company plans to raise a supporting fund of 425 million yuan for paying cash and the development and operation fees of the subject company. The counterparty promises that the net profit of Universtar Science & Technology will be no less than 120 million yuan, 156 million yuan and 210 million yuan from 2015 to 2017.
Universtar Science & Technology is principally engaged in three businesses, namely, environment online monitoring device and system, environment treatment project and the operation of environment treatment facilities. After the transaction, the listed company will transform from traditional manufacturing industry to “environmental-protection-oriented and manufacturing-business-supported” business development direction.
○ Hang Zhou Iron & Steel to develop environmental protection with RMB9.2 bln, Tiantang Guigu to subscribe private placement
------
Hang Zhou Iron & Steel Co., Ltd. (600126.SH) plans to exchange out its current iron and steel asset with 2.42 billion yuan to acquire 100 percent equities of Ningbo Steel Co., Ltd., 87.54 percent equities of Zhejiang Fuchun Ziguang Environmental Protection Co., Ltd., 97 percent equities of Zhejiang New Century Renewable Resources Development Co., Ltd. and 100 percent equities of Zhejiang Deqing Hanggang Fuchun Renewable Technology Co., Ltd. with 9.2 billion yuan, and the balance will be paid by issuing shares at 5.28 yuan per share to Hang Zhou Iron & Steel Group Company, Baosteel Group Corporation, etc. through private placement. The company also plans to raise a supporting fund of 2.8 billion yuan at the same offering price through private placement and Zhejiang Tiantang Guigu Jiurong Equity Investment Limited Partnership will subscribe 123 million shares with 650 million yuan. The supporting funds will be invested in Ziguang environmental protection sewage treatment project, Ningbo Steel energy conservation and environmental protection project, metal trading e-commerce platform, IDC construction project, etc. After the transaction, the company merges iron & steel, environmental protection, renewable resources, etc. businesses and develops e-commerce platform. It will contribute to its transformation and upgrading. The company’s stock price closed at 6.11 yuan per share before trading suspension.
○ Kuangda photovoltaic power station to acquire another station
------
Jiangsu Kuangda Power Investment Co., Ltd., a wholly-owned subsidiary of Jiangsu Kuangda Automobile Textile Group Co., Ltd. (002516.SZ), plans to acquire 100 percent equities of Kezuo Zhongqi Xinsheng Photo-electricity Co., Ltd. held by Hareon Solar Technology Co., Ltd. (600401.SH) and other shareholders with self-raised 350 million yuan. It is learnt that Xinsheng Photo-electricity owns a 100 MW photovoltaic power station project in Tongliao City, Inner Mongolia Autonomous Region and the project has been grid-connected and started power generation.
Comment: The power station project acquired by the company this time is a 100 MW photovoltaic power stations group. It helps to reduce operation cost and the internal rate of return of the project is high. It will contribute to the new profit growth point of the company.
○ Hangzhou Guanghengyu to control East New Energy Development
------
Xinyu Xinlike Technology and Engineering Co., Ltd., controlling shareholder of Dalian East New Energy Development Co., Ltd. (300125.SZ), will transfer 25.82 million shares held by it to Hangzhou Guanghengyu Equity Investment Limited Partnership at 20 yuan per share. After the transaction, Guanghengyu will become the largest shareholder of East New Energy Development and Liu Zhendong will become the actual controller of the company. The company’s stock price closed at 30.7 yuan per share before trading suspension.
Comment: Guanghengyu was established in Jan. 2015. The newly appointed controlling shareholder and actual controller promise that there is no specific plan of changing or adjusting the main business of East New Energy Development within 12 months.
[Financial Reports Express]
○ Hisoar Phar. and Financial Street to expect large growth in Q1
------
Thanks to the consolidated statement of Taizhou Qianjin Chemicals Co., Ltd., Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) expects its performance to grow by 4,215~5,108 percent in the first quarter; due to the completion of expanded projects, Financial Street Holdings Co., Ltd. (000402.SZ) expects its performance to grow by 180~230 percent in the first quarter.
○ Haier, Changgao High Voltage Switchgear and Yutong Bus plan high share conversion and dividend
------
With net profit growing by 20 percent in 2014, Qingdao Haier Co., Ltd. (600690.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 4.92 yuan dividend for every 10 shares in its annual report; with net profit growing by 18 percent in 2014, Hunan Changgao High Voltage Switchgear Group Co., Ltd. (002452.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual report; with net profit growing by 15 percent in 2014, Zhengzhou Yutong Bus Co., Ltd. (600066.SH) proposes a 5-for-10 conversion of capital surplus into shares combined with 10 yuan dividend for every 10 shares in its annual report.
[Trading Trends]
○ Changlin bought through two institutional seats
------
The trading volume ranking list on March 30 shows that Changlin Company Limited (600710.SH) was bought through two institutional seats with a total of 99.80 million yuan, accounting for 34.7 percent of its intraday turnover.
Comment: Changlin, a small market engineering machinery company principally engaged in loader, has 30 percent of its revenue come from overseas and it is covered in the “One Belt and One Road” initiative. Moreover, the substantial shareholder of Changlin is China SINOMACH Heavy Industry Corporation, a central enterprise, thus it is strongly expected to be involved in the SOEs reform.
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