[Today’s Guide]
>Guidance on public hospitals reform approved, medical informationization companies to benefit in long term
> State Council executive meeting highlights e-business and support cross-border e-business and other new types of business
> Environment monitoring market to see huge growth, oil upgrading may implement in advance
> Zhongsheng Phar. to acquire Xianqiang Phar., Huaze Cobalt & Nickel Material to develop new material through private placement
[XFA Focus]
○ Guidance on public hospitals reform approved, medical informationization companies to benefit in long term
------
The “Guidance on the Trial of Comprehensive Reform in Urban Public Hospitals” was deliberated and approved at the 11th meeting of the central leading group for deepening overall reform convened on April 1. The meeting emphasizes that it shall follow the basic positioning of public hospitals for public welfare and abolish the profit-seeking mechanism in public hospitals. It encourages exploration and innovation in reforming the management system in public hospitals, strengthening the payment and monitoring of medical insurances, establishing a service system with the coordinated development of various medical institutes and accelerating the application of information technologies in the medical treatment and health industry.
Comment: Many research institutes believe that the government will make more medical investment in such key areas as the application of information technologies. It is estimated that the medical treatment informationization market will reach 30 billion yuan in 2015 and is expected to grow at over 15 percent in the following three years. Among A-share companies, Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) has acquired the equities of Rongda Information and proposes to purchase 100 percent equities of Beijing MedEx to develop the medical treatment informationization. Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) received orders totaled 2 billion yuan in the establishment of hospitals in 2014. The company announced in March that it would increase input in the application of information technologies.
[XFA Selection]
○ China’s official Manufacturing Purchasing Managers Index (PMI) beat the estimation and recovered to 50.1 percent in March, the first time of hiking since the beginning of the year.
○ Securities margin saw a net inflow of 39.4 billion yuan last week and a total net inflow of 482.1 billion yuan has been recorded by March 27 in the month.
○ The State-owned Assets Supervision and Administration recently made arrangements on the work of central enterprises in 2015, requiring high-speed railways, nuclear power, extra-high voltage and 4G industries vigorously going globally.
○ The integration of customs clearance at the customs areas in northeastern region and along the Silk Road Economic Belt will be launched on May 1.
○ Hunan, Jiangxi and other provinces entered the flood season from April 1. Experts expect that regional floods may hit the middle and lower reaches of the Yangtze.
[Industry Information]
○ State Council to accelerate e-business development and support cross-border e-business
------
The executive meeting of the State Council convened on April 1 emphasized that the development of e-business and other emerging services plays a key role in the “Internet Plus” action. It requires to facilitate the interactive development of the e-business and trade flows, industrial manufacturing, financial services and other related industries, innovate and expand services for agriculture, rural areas and farmers, promote online shopping, online manufacturing, operation and management, cross-border e-business as well as other new types of business.
Comment: The e-business is of significance in facilitating the integration of traditional and emerging industries, stimulating entrepreneurship and expanding employment, driving consumption and improving people’s livelihood. The cross-border e-business in particular sees various bullish policies. Hangzhou City becomes the first comprehensive cross-border e-business trial zone. Fujian and Guangdong Provinces will establish cross-border e-business logistics parks in the free trade zones. In terms of listed companies, Zhejiang China Commodities City Group Co., Ltd. (600415.SH) launched the “Global Cooperation Plan” of the YiwuBuy. Haining China Leather Market Co., Ltd. (002344.SZ) will establish a cross-border e-business platform for Korean products with the Korean side.
○ MEP targets fake air quality data, monitoring market to see huge growth
------
Some local governments make monitoring stations fabricate or tamper with air quality data, said Wu Xiaoqing, Vice-Minister of the Ministry of Environmental Protection (MEP), on April 1. Wu indicated that the central government officials are deeply concerned about the truthfulness of monitoring data. The ministry will launch a two-year inspection campaign on monitoring data. It also reinitiated the study on green GDP, which has been suspended for 11 years.
Comment: The data monitoring will see more inputs in the future to master the actual conditions of the environment. With the implementation of the ten regulations of air pollution and the new environmental protection law, the ten regulations of water and soil pollution will be released soon. The environmental monitoring market will see sustainable and high growth. A-share listed environmental monitoring companies include Focused Photonics (Hangzhou), Inc. (300203.SZ), Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ) and Create Technology & Science Co., Ltd. (000551.SZ).
○ Vehicles become primary pollution source in four cities, oil upgrading may implement in advance
------
The Ministry of Environmental Protection (MEP) disclosed on April 1 that it has completed the source apportionment on nine cities with severe air pollution. The primary source of pollution in Beijing, Hangzhou City, Guangzhou City and Shenzhen City are vehicles. China Business News reported that the National-V standards on gasoline and diesel for vehicles will be implemented in end-2016, one year ahead of schedule. The Standardization Administration will initiate the revision on the National-VI standards as soon as possible.
Comment: Supporting policies on the reduction of vehicle exhaust emission are expected to be released after vehicles being recognized as primary source of pollution. The petroleum and petrochemical industries have been increasing input in upgrading petroleum products. Among A-share companies, Shandong Sunway Petrochemical Engineering Co., Ltd. (002469.SZ) received orders from China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) for various sulfur recovery equipment. Suzhou Thvow Technology Co., Ltd. (002564.SZ) once obtained orders for the upgrading and transformation of Sinopec’s petroleum products.
○ High materials prices and more downstream production drive high ethylene oxide price
------
The price of ethylene oxide surged by 8 percent in recent week and has hiked over 25 percent in March. The market demand for ethylene oxide greatly increased and the supply in the market tends to be tight.
Comment: The demand for ethylene oxide has entered the peak season and more surface active agent and other enterprises in the downstream opened production gradually. In addition, more imported ethylene devices are under overhauling, which drives the ethylene price high and increases the cost to ethylene oxide. The value of the ethylene oxide inventories of Qianjiang Yongan Pharmaceutical Co., Ltd. (002365.SZ) and Liao Ning Oxiranchem, Inc. (300082.SZ) will improve.
[Announcement Interpretation]
○ Zhongsheng Phar. to acquire Xianqiang Phar.
------
Guangdong Zhongsheng Pharmaceutical Co., Ltd. (002317.SZ) plans to acquire 97.69 percent equities of Guangdong Xianqiang Pharmaceutical Co., Ltd. with 1.27 billion yuan in cash. The counterparty promises that the net profit of Xianqiang Pharmaceutical will be no less than 80 million yuan, 96 million yuan and 115 million yuan from 2015 to 2017.
Xianqiang Pharmaceutical, principally engaged in the development and sales of chemical medicines, holds the state-approved certificates of 54 varieties of six dosage forms including small-volume injection, freeze-dried powder injection, etc., and three varieties of which are selected by 2012 national essential medicines list. The company will soon set foot in antiviral and antibiotic chemical medicines therefrom.
○ Huaze Cobalt & Nickel Material to raise RMB5 bln to develop new material
------
Chengdu Huaze Cobalt & Nickel Material Co., Ltd. (000693.SZ) plans to raise 5 billion yuan by issuing 264 million shares at no less than 18.96 yuan per share through private placement, among which, 2.57 billion yuan will be invested in the alloy new material project, 1.46 billion yuan will be invested in the new energy battery material project producing 20,000 ton annually and the rest will be used to pay off bank loans and to supplement working capital. Xingwang Investment Holding Co., Ltd., controlled by the actual controller of the company, will subscribe 20 percent of the private placement.
○ Shuangliang Eco-Energy exchanges in new energy equipment asset
------
Shuangliang Eco-Energy Systems Co., Ltd. (600481.SH) plans to exchange out 75 percent equities of Jiangsu Leasty Chemical Co., Ltd. for 85 percent equities of Jiangsu Shuangliang New Energy Equipment Co., Ltd. held by Jiangsu Shuangliang Technology Co., Ltd. and Jiangsu Lichuang New Energy Co., Ltd. The estimated values of both assets are 364 million yuan. By this move, the company removes chemical asset and the injected Shuangliang New Energy Equipment is principally engaged in energy recovery equipment, polycrystalline silicon equipment, chemical equipment, etc. Based on the current energy and water conservation business and the energy conservation operation business, new energy equipment business is newly introduced to the company and it will intensify its strategic position of focusing on low-carbon economy as well as energy conservation and environmental protection new energy industrial chain.
○ Dima Industry to develop military-civil integration technology together with UESTC
------
Chongqing Dima Industry Co., Ltd. (600565.SH) signs an industry-university-research cooperation agreement with the University of Electronic Science and Technology of China (UESTC), planning to cooperate in man-machine coupling technology and mobile car platform technology and to jointly apply for national significant technology project and projects like the development of major military weapon equipment type. UESTC will support Dima Industry in critical technology breakthrough and products development areas like communications, aerospace, etc. Both parties will cooperate in the industrial applications like rehabilitation therapy, car information commanding and controlling platform, the aircraft (including unmanned aerial vehicle) measurement and control of car defense system, navigation, command and control technology, space communication information technology and equipment, etc.
Comment: The company is principally engaged in real estate business, but strives to develop military-civil integration business. Man-machine coupling technology represents the frontier technology of artificial intelligent exoskeleton in the world. For military purpose, it is mainly applied in "individual combat system platform"; for civil purpose, it is mainly applied in walking assistance system.
○ Chenming Paper Holdings to invest RMB350 mln in capital market
------
Shandong Chenming Paper Holdings Limited (000488.SZ; 01812.HK) plans to acquire 30 percent equities of the newly registered capital of Shanghai Zhongneng Enterprises Development Co., Ltd. to invest in capital market with its own 300 million yuan. The company also plans to jointly establish Zhuhai Dechen National Equities Exchange and Quotations (NEEQ) Equity Investment Funds Enterprise with Zhuhai Qichenxing Investment Consultation Enterprise (General Partnership), Shenzhen Qianhai Financial Development Ltd. and Zhang Guangquan with its own 500 million yuan.
Comment: With its principal business of paper seeing sluggish growth, the company invests in capital market to gain better profit. Shanghai Zhongneng, the partner, is a large-scale private enterprise and it has successfully invested in several listed companies and will continue to invest in listed companies with good operation and growth potential as well as companies planning to be listed.
[Financial Reports Express]
○ Boamax Technologies sees multiplied performance growth in Q1
------
Thanks to the consolidated financial statements of Nanjing YZwisdom Co., Ltd. and Elpanneteknik (Shanghai) Co., Ltd., Suzhou Boamax Technologies Group Co., Ltd. (002514.SZ) expects its performance in the first quarter to see a year-on-year growth of 100~150 percent.
○ Tongguang Electronic Wire & Cable plans high share conversion and dividend
------
The net profit of Jiangsu Tongguang Electronic Wire & Cable Co., Ltd. (300265.SZ) in 2014 sees a year-on-year decrease of 24 percent. It proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares.
[Data Speaks]
○ Financial statements of acquired asset consolidated, Q1 performance of four companies might grow largely
------
Due to the large performance growth of 4,200 to 5,100 percent in the first quarter resulted by consolidated financial statement of reorganized assets, the stock price of Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) soared to the daily 10 percent limit consecutively. Acquisition and reorganization is a powerful tool for listed companies to lift extensional growth of their performance. The market is usually highly interested in such kind of extensional performance growth.
Statistics of XFA shows that Beijing Xinwei Telecom Technology Group Co., Ltd. (600485.SH), Shanghai Xin Nanyang Co., Ltd. (600661.SH), Xingyuan Environment Technology Co., Ltd. (300266.SZ), and Founder Technology Group Corp. (600601.SH), etc. completed reorganization last year and achieved multiplied profit growth at the same year. It is quite possible that they will continue the high growth in the first quarter. The performance forecasts have yet to be disclosed.
>Guidance on public hospitals reform approved, medical informationization companies to benefit in long term
> State Council executive meeting highlights e-business and support cross-border e-business and other new types of business
> Environment monitoring market to see huge growth, oil upgrading may implement in advance
> Zhongsheng Phar. to acquire Xianqiang Phar., Huaze Cobalt & Nickel Material to develop new material through private placement
[XFA Focus]
○ Guidance on public hospitals reform approved, medical informationization companies to benefit in long term
------
The “Guidance on the Trial of Comprehensive Reform in Urban Public Hospitals” was deliberated and approved at the 11th meeting of the central leading group for deepening overall reform convened on April 1. The meeting emphasizes that it shall follow the basic positioning of public hospitals for public welfare and abolish the profit-seeking mechanism in public hospitals. It encourages exploration and innovation in reforming the management system in public hospitals, strengthening the payment and monitoring of medical insurances, establishing a service system with the coordinated development of various medical institutes and accelerating the application of information technologies in the medical treatment and health industry.
Comment: Many research institutes believe that the government will make more medical investment in such key areas as the application of information technologies. It is estimated that the medical treatment informationization market will reach 30 billion yuan in 2015 and is expected to grow at over 15 percent in the following three years. Among A-share companies, Winsan (Shanghai) Industrial Corporation Ltd. (600767.SH) has acquired the equities of Rongda Information and proposes to purchase 100 percent equities of Beijing MedEx to develop the medical treatment informationization. Zhuhai Hokai Medical Instruments Co., Ltd. (300273.SZ) received orders totaled 2 billion yuan in the establishment of hospitals in 2014. The company announced in March that it would increase input in the application of information technologies.
[XFA Selection]
○ China’s official Manufacturing Purchasing Managers Index (PMI) beat the estimation and recovered to 50.1 percent in March, the first time of hiking since the beginning of the year.
○ Securities margin saw a net inflow of 39.4 billion yuan last week and a total net inflow of 482.1 billion yuan has been recorded by March 27 in the month.
○ The State-owned Assets Supervision and Administration recently made arrangements on the work of central enterprises in 2015, requiring high-speed railways, nuclear power, extra-high voltage and 4G industries vigorously going globally.
○ The integration of customs clearance at the customs areas in northeastern region and along the Silk Road Economic Belt will be launched on May 1.
○ Hunan, Jiangxi and other provinces entered the flood season from April 1. Experts expect that regional floods may hit the middle and lower reaches of the Yangtze.
[Industry Information]
○ State Council to accelerate e-business development and support cross-border e-business
------
The executive meeting of the State Council convened on April 1 emphasized that the development of e-business and other emerging services plays a key role in the “Internet Plus” action. It requires to facilitate the interactive development of the e-business and trade flows, industrial manufacturing, financial services and other related industries, innovate and expand services for agriculture, rural areas and farmers, promote online shopping, online manufacturing, operation and management, cross-border e-business as well as other new types of business.
Comment: The e-business is of significance in facilitating the integration of traditional and emerging industries, stimulating entrepreneurship and expanding employment, driving consumption and improving people’s livelihood. The cross-border e-business in particular sees various bullish policies. Hangzhou City becomes the first comprehensive cross-border e-business trial zone. Fujian and Guangdong Provinces will establish cross-border e-business logistics parks in the free trade zones. In terms of listed companies, Zhejiang China Commodities City Group Co., Ltd. (600415.SH) launched the “Global Cooperation Plan” of the YiwuBuy. Haining China Leather Market Co., Ltd. (002344.SZ) will establish a cross-border e-business platform for Korean products with the Korean side.
○ MEP targets fake air quality data, monitoring market to see huge growth
------
Some local governments make monitoring stations fabricate or tamper with air quality data, said Wu Xiaoqing, Vice-Minister of the Ministry of Environmental Protection (MEP), on April 1. Wu indicated that the central government officials are deeply concerned about the truthfulness of monitoring data. The ministry will launch a two-year inspection campaign on monitoring data. It also reinitiated the study on green GDP, which has been suspended for 11 years.
Comment: The data monitoring will see more inputs in the future to master the actual conditions of the environment. With the implementation of the ten regulations of air pollution and the new environmental protection law, the ten regulations of water and soil pollution will be released soon. The environmental monitoring market will see sustainable and high growth. A-share listed environmental monitoring companies include Focused Photonics (Hangzhou), Inc. (300203.SZ), Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ) and Create Technology & Science Co., Ltd. (000551.SZ).
○ Vehicles become primary pollution source in four cities, oil upgrading may implement in advance
------
The Ministry of Environmental Protection (MEP) disclosed on April 1 that it has completed the source apportionment on nine cities with severe air pollution. The primary source of pollution in Beijing, Hangzhou City, Guangzhou City and Shenzhen City are vehicles. China Business News reported that the National-V standards on gasoline and diesel for vehicles will be implemented in end-2016, one year ahead of schedule. The Standardization Administration will initiate the revision on the National-VI standards as soon as possible.
Comment: Supporting policies on the reduction of vehicle exhaust emission are expected to be released after vehicles being recognized as primary source of pollution. The petroleum and petrochemical industries have been increasing input in upgrading petroleum products. Among A-share companies, Shandong Sunway Petrochemical Engineering Co., Ltd. (002469.SZ) received orders from China Petroleum & Chemical Corporation (Sinopec, SNP.NYSE; SNP.LSE; 00386.HK; 600028.SH) for various sulfur recovery equipment. Suzhou Thvow Technology Co., Ltd. (002564.SZ) once obtained orders for the upgrading and transformation of Sinopec’s petroleum products.
○ High materials prices and more downstream production drive high ethylene oxide price
------
The price of ethylene oxide surged by 8 percent in recent week and has hiked over 25 percent in March. The market demand for ethylene oxide greatly increased and the supply in the market tends to be tight.
Comment: The demand for ethylene oxide has entered the peak season and more surface active agent and other enterprises in the downstream opened production gradually. In addition, more imported ethylene devices are under overhauling, which drives the ethylene price high and increases the cost to ethylene oxide. The value of the ethylene oxide inventories of Qianjiang Yongan Pharmaceutical Co., Ltd. (002365.SZ) and Liao Ning Oxiranchem, Inc. (300082.SZ) will improve.
[Announcement Interpretation]
○ Zhongsheng Phar. to acquire Xianqiang Phar.
------
Guangdong Zhongsheng Pharmaceutical Co., Ltd. (002317.SZ) plans to acquire 97.69 percent equities of Guangdong Xianqiang Pharmaceutical Co., Ltd. with 1.27 billion yuan in cash. The counterparty promises that the net profit of Xianqiang Pharmaceutical will be no less than 80 million yuan, 96 million yuan and 115 million yuan from 2015 to 2017.
Xianqiang Pharmaceutical, principally engaged in the development and sales of chemical medicines, holds the state-approved certificates of 54 varieties of six dosage forms including small-volume injection, freeze-dried powder injection, etc., and three varieties of which are selected by 2012 national essential medicines list. The company will soon set foot in antiviral and antibiotic chemical medicines therefrom.
○ Huaze Cobalt & Nickel Material to raise RMB5 bln to develop new material
------
Chengdu Huaze Cobalt & Nickel Material Co., Ltd. (000693.SZ) plans to raise 5 billion yuan by issuing 264 million shares at no less than 18.96 yuan per share through private placement, among which, 2.57 billion yuan will be invested in the alloy new material project, 1.46 billion yuan will be invested in the new energy battery material project producing 20,000 ton annually and the rest will be used to pay off bank loans and to supplement working capital. Xingwang Investment Holding Co., Ltd., controlled by the actual controller of the company, will subscribe 20 percent of the private placement.
○ Shuangliang Eco-Energy exchanges in new energy equipment asset
------
Shuangliang Eco-Energy Systems Co., Ltd. (600481.SH) plans to exchange out 75 percent equities of Jiangsu Leasty Chemical Co., Ltd. for 85 percent equities of Jiangsu Shuangliang New Energy Equipment Co., Ltd. held by Jiangsu Shuangliang Technology Co., Ltd. and Jiangsu Lichuang New Energy Co., Ltd. The estimated values of both assets are 364 million yuan. By this move, the company removes chemical asset and the injected Shuangliang New Energy Equipment is principally engaged in energy recovery equipment, polycrystalline silicon equipment, chemical equipment, etc. Based on the current energy and water conservation business and the energy conservation operation business, new energy equipment business is newly introduced to the company and it will intensify its strategic position of focusing on low-carbon economy as well as energy conservation and environmental protection new energy industrial chain.
○ Dima Industry to develop military-civil integration technology together with UESTC
------
Chongqing Dima Industry Co., Ltd. (600565.SH) signs an industry-university-research cooperation agreement with the University of Electronic Science and Technology of China (UESTC), planning to cooperate in man-machine coupling technology and mobile car platform technology and to jointly apply for national significant technology project and projects like the development of major military weapon equipment type. UESTC will support Dima Industry in critical technology breakthrough and products development areas like communications, aerospace, etc. Both parties will cooperate in the industrial applications like rehabilitation therapy, car information commanding and controlling platform, the aircraft (including unmanned aerial vehicle) measurement and control of car defense system, navigation, command and control technology, space communication information technology and equipment, etc.
Comment: The company is principally engaged in real estate business, but strives to develop military-civil integration business. Man-machine coupling technology represents the frontier technology of artificial intelligent exoskeleton in the world. For military purpose, it is mainly applied in "individual combat system platform"; for civil purpose, it is mainly applied in walking assistance system.
○ Chenming Paper Holdings to invest RMB350 mln in capital market
------
Shandong Chenming Paper Holdings Limited (000488.SZ; 01812.HK) plans to acquire 30 percent equities of the newly registered capital of Shanghai Zhongneng Enterprises Development Co., Ltd. to invest in capital market with its own 300 million yuan. The company also plans to jointly establish Zhuhai Dechen National Equities Exchange and Quotations (NEEQ) Equity Investment Funds Enterprise with Zhuhai Qichenxing Investment Consultation Enterprise (General Partnership), Shenzhen Qianhai Financial Development Ltd. and Zhang Guangquan with its own 500 million yuan.
Comment: With its principal business of paper seeing sluggish growth, the company invests in capital market to gain better profit. Shanghai Zhongneng, the partner, is a large-scale private enterprise and it has successfully invested in several listed companies and will continue to invest in listed companies with good operation and growth potential as well as companies planning to be listed.
[Financial Reports Express]
○ Boamax Technologies sees multiplied performance growth in Q1
------
Thanks to the consolidated financial statements of Nanjing YZwisdom Co., Ltd. and Elpanneteknik (Shanghai) Co., Ltd., Suzhou Boamax Technologies Group Co., Ltd. (002514.SZ) expects its performance in the first quarter to see a year-on-year growth of 100~150 percent.
○ Tongguang Electronic Wire & Cable plans high share conversion and dividend
------
The net profit of Jiangsu Tongguang Electronic Wire & Cable Co., Ltd. (300265.SZ) in 2014 sees a year-on-year decrease of 24 percent. It proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares.
[Data Speaks]
○ Financial statements of acquired asset consolidated, Q1 performance of four companies might grow largely
------
Due to the large performance growth of 4,200 to 5,100 percent in the first quarter resulted by consolidated financial statement of reorganized assets, the stock price of Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) soared to the daily 10 percent limit consecutively. Acquisition and reorganization is a powerful tool for listed companies to lift extensional growth of their performance. The market is usually highly interested in such kind of extensional performance growth.
Statistics of XFA shows that Beijing Xinwei Telecom Technology Group Co., Ltd. (600485.SH), Shanghai Xin Nanyang Co., Ltd. (600661.SH), Xingyuan Environment Technology Co., Ltd. (300266.SZ), and Founder Technology Group Corp. (600601.SH), etc. completed reorganization last year and achieved multiplied profit growth at the same year. It is quite possible that they will continue the high growth in the first quarter. The performance forecasts have yet to be disclosed.
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