[Today’s Guide]
> Bright Food and Liangyou to consolidate, Shanghai state capital reform see more moves
> Shenyang to hold robots exhibition, instructions on traffic one-card services connectivity to release
> Tongtech to acquire Microvision Technology, Yuanli Active Carbon to control Yuanhe Chemicals
> Europol Steel Logistics to fully control Europol Small-loan, multi securities companies see explosive profit growth in March
[XFA Focus]
○ Bright Food and Liangyou to consolidate, Shanghai state capital reform see more moves
------
XFA learnt that Bright Food (Group) Co., Ltd. and Shanghai Liangyou (Group) Co., Ltd. are preparing for consolidation and reorganization. The State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government (Shanghai SASAC) has solicited opinions on the proposal and will submit it for approval after making further improvements.
Comment: Shanghai has introduced many measures in the state capital reform this year. The stock price of Double Coin Holdings Ltd. (600623.SH) doubled after the assets injection from Shanghai Huayi (Group) Company. At least six state-owned stocks, including Bright Dairy & Food Co., Ltd. (600597.SH) under Bright Food, are preparing for significant events and are under trading suspension. Their stock prices all stood higher than the market. As the assets of Bright Food have been transferred to Shanghai Guosheng Group Co., Ltd., a state-owned assets flow platform, its mixed ownership reform is likely to lead other state-owned enterprises (SOEs). Among the listed companies under Bright Food, Shanghai Maling Aquarius Co., Ltd. (600073.SH) is positioned at a listing platform for comprehensive foods and has similar business with Liangyou. Shanghai Haibo Co., Ltd. (600708.SH) will be driven by the twin engines of real estate and logistics. Shanghai Jinfeng Wine Company Limited (600616.SH) has been seeking mergers and expansion in recent years.
◆ Shanghai Electric Group Company Limited (02727.HK; 601727.SH) and Shanghai Automation Instrumentation Co., Ltd. (600848.SH) jointly hold the shares of Thales Saic Transportation System Limited Company, which will provide the Shanghai Metro Disney line with core technology from China. Automation Instrumentation has conducted equities transfer since the end of last year to follow the trend of assets consolidation of the group.
[XFA Selection]
○ The State Council determined to cut the power pricing for enterprises and the resources tax on iron ores, which will benefit industries with high power consumption and relevant mine enterprises.
○ The revised state version of the recyclable energy quota plan is waiting for the approval of the State Council. The wind power and photovoltaic industries will see more development opportunities.
○ Disperse dyes enterprises raised prices again. Serious punishment on environmental pollution boosts the long-term prosperity of the dyes industry.
○ Hebei Province convened a work conference on the prevention and treatment of air pollution, proposing to complete the upgrading and transformation of de-dusting, desulfurization and denitration for all coal-fired power generator sets this year.
○ The daily limit of the Southbound Trading was used up for the first time on April 8. Chairman of the Hong Kong Exchanges and Clearing Limited (00388.HK) indicated that the limit of the Shanghai-Hong Kong Stock Connect is expected to be raised.
[Industry Information]
○ Shenyang to hold international robots exhibition to boost revitalization of industries in N.E. China
------
The Information Office of Shenyang Municipal Government announced on April 8 that it will hold the first “China Shenyang International Robots Exhibition” from Sept. 1 to 5. The theme of the exhibition will be “Establishing Global Robots Platform to Boost Revitalization of Industries in Northeastern China”.
Comment: Under the general background of the domestic manufacturing industries transformation and upgrading, the robotics industry embraces excellent development opportunities. The sales of industrial robots in China increased 54 percent in 2014. The State Council issued documents, emphasizing that “China will spare more efforts in supporting the development of smart robots and other industries in Northeastern China”. Local governments in Northeastern China also introduced many industrial policies. The exhibition will boost the development of the robot industry. Among A-share companies, Harbin Boshi Automation Co., Ltd. (002698.SZ) is engaged in the development of large-scale set equipment and its high-temperature robot products are under pilot plant test at the fields of users. Dalian Zhiyun Automation Co., Ltd. (300097.SZ) is principally engaged in the manufacturing of automation production lines and equipment. It has developed robot washing machines and other products.
○ Ministry of Transport to promote traffic one-card services, cards making industry to see more opportunities
------
The Ministry of Transport deliberated the “Instructions on Promoting the Sound Development of Traffic One-card Services and Accelerating the Implementation of Connectivity (Draft for Approval)” on the conference convened on April 7. Yang Chuantang, the minister of transport, indicated that the one-card services can better facilitate the development of the integrated, intelligent, green and safe transport.
Comment: Hundreds of cities in China have established the intelligent buses cards systems and more than 450 million cards have been issued so far. The traffic cards are expected to have more functions for living services, such as the electronic wallets and tickets, which will bring new development opportunities to companies with relevant businesses. Among A-share companies, the urban intelligent cards of Shanghai Huahong Jitong Smart System Co., Ltd. (300330.SZ) have covered various cities in the Yangtze River Delta. The major products of Wuhan Tianyu Information Industry Co., Ltd. (300205.SZ) are various intelligent cards, including financial IC cards and citizens cards.
○ Alibaba Group to develop vehicles e-business, Internet plus to improve industrial penetration
------
The official weibo of Alibaba Group Holding Limited (BABA.NYSE) announced on April 8 noon that it will establish a vehicle department to consolidate the big data marketing, vehicle and financial businesses and take advantage of the platform with 60 million vehicle owners to coordinate with partners in the vehicle ecological industrial chains and provide O2O one-stop services for vehicles e-business.
Comment: The vehicle e-business has become a new trend in recent years. Qin Zhi, CEO of Chinese automobile website Autohome, estimates that 15 to 20 percent of vehicles will be sold through the Internet in the following five years in China. A total of 23.49 million vehicles were sold in China in 2014, ranking first in the world for six consecutive years. Such a huge market will draw more attention of capitals after it combined with the Internet. Among A-share companies, Pangda Automobile Trade Co., Ltd. (601258.SH) owns a huge vehicle network. It has raised nearly 3 billion yuan for vehicles financing leases the establishment of an Internet platform. Anhui Huamao Textile Company Limited (000850.SZ) holds 10 percent equities of auto.gasgoo.com, which is a platform for the promotion of domestic and overseas vehicle brands.
[Announcement Interpretation]
○ Tongtech to acquire Microvision Technology to develop information security
------
Beijing Tongtech Co., Ltd. (300379.SZ) proposes to raise 825 million yuan by issuing 11.36 million shares at 72.68 yuan per share through private placement to acquire 100 percent equities of Beijing Microvision Technology Co., Ltd. and to supplement working capital. Being priced at 581 million yuan, the estimated value-added ratio of Microvision Technology is 1116 percent. Its promised net profit from 2015 to 2017 will be no less than 41.50 million yuan, 54.00 million yuan and 70.00 million yuan. The net profit of Tongtech in 2014 is 57.12 million yuan.
Comment: Microvision Technology is a leading domestic information security products and solutions provider. The company can expand big data business and provide Tongtech’s basic big data products with security guarantee after being acquired.
○ Yuanli Active Carbon to control Yuanhe Chemicals
------
Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ) proposes to transfer 51 percent equities of Fujian Nanping Yuanhe Chemicals Co., Ltd. held by Lu Yuanjian, actual controller of the company, with 87.87 million yuan. Full payment of the transfer price will be paid in 5 years. Yuanhe Chemicals is the only Chinese-mainland partner of Evonik Industries Group, a world leading special chemicals enterprise, in precipitated silica area and its net profit in 2014 records 23.92 million yuan.
○ Europol Steel Logistics to fully control Europol Small-loan with RMB300 mln
------
Guangdong Europol Steel Logistics Co., Ltd. (002711.SZ) proposes to acquire 100 percent equities of Europol Small-loan Co., Ltd. with 300 million yuan. The net profit of Europol Small-loan in 2015 and 2016 shall be no less than 30 million yuan and 50 million yuan, according to performance commitment. The acquisition will complete the company’s business mode of “trading platform + finance + logistics”. The company also announces that it has inked agreement with the Development and Economy Promotion Bureau of Lecong County, Shunde District, Foshan City to take the lead in building “Europol Furniture E-commerce Platform”.
○ TransInfo Technology to acquire Aero-com with RMB88 mln
------
China TransInfo Technology Co., Ltd. (002373.SZ) acquires 80 percent equities of Beijing Aero-com Information Technology Co., Ltd. with 88 million yuan. The counterparty promises that the net profit of the original business of Aero-com will be no less than 9 million yuan, 11 million yuan and 13 million yuan from 2015 to 2017. Aero-com is the first domestic enterprise that designs and develops the analysis and application system of Flight Resources Planning (FRP) core production data in aerospace area. It owns huge user groups of domestic commercial airline companies and enjoys a market share of 80 percent.
[Financial Reports Express]
○Three investors of Gf Securities see huge net profit growth in Q1, multi securities companies see explosive profit growth in March
------
Thanks to the large surge of A-share market indexes and trading volume, the net profit of Gf Securities Co., Ltd. (000776.SZ) in March sees a year-on-year growth of 375 percent and expects its net profit in the first quarter to see a year-on-year growth of 199 to 211 percent; Liaoning Cheng Da Co., Ltd. (600739.SH) expects its net profit in the first quarter to see a year-on-year growth of 199 to 211 percent; Jilin Aodong Pharmaceutical Group Co., Ltd. (000623.SZ) expects its net profit in the first quarter to see a year-on-year growth of 147 to 160 percent; Zhongshan Public Utilities Group Co., Ltd. (000685.SZ) expects its net profit in the first quarter to see a year-on-year growth of 136 to 166 percent. The performance growth of above three companies, investors of Gf Securities, is mainly resulted by the large year-on-year performance growth of Gf Securities.
Moreover, the securities companies disclosing March operation performance at the same day also show large performance surge, far exceeding the prediction made by research institutions. The net profit of Western Securities Co., Ltd. (002673.SZ) sees a year-on-year growth of 914 percent; the net profit of The Pacific Securities Co., Ltd. (601099.SH) sees a year-on-year growth of 337 percent; the net profit of Guosen Securities Co., Ltd. (002736.SZ) sees a month-on-month growth of nearly 200 percent.
○ Q1 performance growth of Hatou Investment and Wutong Communications sees big boost
------
Thanks to the reduction of production consumption, Harbin Hatou Investment Co., Ltd. (600864.SH) expects its net profit in the first quarter to see a year-on-year growth of 400 percent; due to the largely increased sales income of new information service products, Jiangsu Wutong Communications Co., Ltd. (300292.SZ) expects its net profit in the first quarter to see a year-on-year growth of 278 to 302 percent.
○ Sotech Machinery and Humon Smelting plan high share conversion and dividend
------
Sotech Machinery Co., Ltd. (300173.SZ) expects its net profit in the first quarter to grow by 10 to 40 percent and it proposes a 20-for-10 conversion of capital surplus into shares in its 2014 annual report. The net profit of Shandong Humon Smelting Co., Ltd. (002237.SZ) sees a year-on-year growth of 24 percent in 2014 and it proposes 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
[Trading Trends]
○ SCI reaches 4000 points during trading hour, trading volume of Shanghai and Shenzhen stock markets explodes
------
The stock indexes see sharp fluctuation on April 8. Shanghai Composite Index (SCI) even reaches 4000 points. The trading volume of Shanghai and Shenzhen stock markets is expanded to 1.55 trillion yuan, creating a new historical record again.
Comment: Latest data shows that the securities margin saw a net inflow of 162.4 billion yuan last week. The weekly number of newly-opened accounts maintains over 1.50 million for the second consecutive week. Institutions believe that policy combinations constantly bring good news recently and OTC capital flows into the stock market continuously. The market pushed by incremental capital into the stock market and asset allocation change this time does not change its direction. Judged from short-term market style, large-cap blue-chip stocks are gradually achieving excess returns.
> Bright Food and Liangyou to consolidate, Shanghai state capital reform see more moves
> Shenyang to hold robots exhibition, instructions on traffic one-card services connectivity to release
> Tongtech to acquire Microvision Technology, Yuanli Active Carbon to control Yuanhe Chemicals
> Europol Steel Logistics to fully control Europol Small-loan, multi securities companies see explosive profit growth in March
[XFA Focus]
○ Bright Food and Liangyou to consolidate, Shanghai state capital reform see more moves
------
XFA learnt that Bright Food (Group) Co., Ltd. and Shanghai Liangyou (Group) Co., Ltd. are preparing for consolidation and reorganization. The State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government (Shanghai SASAC) has solicited opinions on the proposal and will submit it for approval after making further improvements.
Comment: Shanghai has introduced many measures in the state capital reform this year. The stock price of Double Coin Holdings Ltd. (600623.SH) doubled after the assets injection from Shanghai Huayi (Group) Company. At least six state-owned stocks, including Bright Dairy & Food Co., Ltd. (600597.SH) under Bright Food, are preparing for significant events and are under trading suspension. Their stock prices all stood higher than the market. As the assets of Bright Food have been transferred to Shanghai Guosheng Group Co., Ltd., a state-owned assets flow platform, its mixed ownership reform is likely to lead other state-owned enterprises (SOEs). Among the listed companies under Bright Food, Shanghai Maling Aquarius Co., Ltd. (600073.SH) is positioned at a listing platform for comprehensive foods and has similar business with Liangyou. Shanghai Haibo Co., Ltd. (600708.SH) will be driven by the twin engines of real estate and logistics. Shanghai Jinfeng Wine Company Limited (600616.SH) has been seeking mergers and expansion in recent years.
◆ Shanghai Electric Group Company Limited (02727.HK; 601727.SH) and Shanghai Automation Instrumentation Co., Ltd. (600848.SH) jointly hold the shares of Thales Saic Transportation System Limited Company, which will provide the Shanghai Metro Disney line with core technology from China. Automation Instrumentation has conducted equities transfer since the end of last year to follow the trend of assets consolidation of the group.
[XFA Selection]
○ The State Council determined to cut the power pricing for enterprises and the resources tax on iron ores, which will benefit industries with high power consumption and relevant mine enterprises.
○ The revised state version of the recyclable energy quota plan is waiting for the approval of the State Council. The wind power and photovoltaic industries will see more development opportunities.
○ Disperse dyes enterprises raised prices again. Serious punishment on environmental pollution boosts the long-term prosperity of the dyes industry.
○ Hebei Province convened a work conference on the prevention and treatment of air pollution, proposing to complete the upgrading and transformation of de-dusting, desulfurization and denitration for all coal-fired power generator sets this year.
○ The daily limit of the Southbound Trading was used up for the first time on April 8. Chairman of the Hong Kong Exchanges and Clearing Limited (00388.HK) indicated that the limit of the Shanghai-Hong Kong Stock Connect is expected to be raised.
[Industry Information]
○ Shenyang to hold international robots exhibition to boost revitalization of industries in N.E. China
------
The Information Office of Shenyang Municipal Government announced on April 8 that it will hold the first “China Shenyang International Robots Exhibition” from Sept. 1 to 5. The theme of the exhibition will be “Establishing Global Robots Platform to Boost Revitalization of Industries in Northeastern China”.
Comment: Under the general background of the domestic manufacturing industries transformation and upgrading, the robotics industry embraces excellent development opportunities. The sales of industrial robots in China increased 54 percent in 2014. The State Council issued documents, emphasizing that “China will spare more efforts in supporting the development of smart robots and other industries in Northeastern China”. Local governments in Northeastern China also introduced many industrial policies. The exhibition will boost the development of the robot industry. Among A-share companies, Harbin Boshi Automation Co., Ltd. (002698.SZ) is engaged in the development of large-scale set equipment and its high-temperature robot products are under pilot plant test at the fields of users. Dalian Zhiyun Automation Co., Ltd. (300097.SZ) is principally engaged in the manufacturing of automation production lines and equipment. It has developed robot washing machines and other products.
○ Ministry of Transport to promote traffic one-card services, cards making industry to see more opportunities
------
The Ministry of Transport deliberated the “Instructions on Promoting the Sound Development of Traffic One-card Services and Accelerating the Implementation of Connectivity (Draft for Approval)” on the conference convened on April 7. Yang Chuantang, the minister of transport, indicated that the one-card services can better facilitate the development of the integrated, intelligent, green and safe transport.
Comment: Hundreds of cities in China have established the intelligent buses cards systems and more than 450 million cards have been issued so far. The traffic cards are expected to have more functions for living services, such as the electronic wallets and tickets, which will bring new development opportunities to companies with relevant businesses. Among A-share companies, the urban intelligent cards of Shanghai Huahong Jitong Smart System Co., Ltd. (300330.SZ) have covered various cities in the Yangtze River Delta. The major products of Wuhan Tianyu Information Industry Co., Ltd. (300205.SZ) are various intelligent cards, including financial IC cards and citizens cards.
○ Alibaba Group to develop vehicles e-business, Internet plus to improve industrial penetration
------
The official weibo of Alibaba Group Holding Limited (BABA.NYSE) announced on April 8 noon that it will establish a vehicle department to consolidate the big data marketing, vehicle and financial businesses and take advantage of the platform with 60 million vehicle owners to coordinate with partners in the vehicle ecological industrial chains and provide O2O one-stop services for vehicles e-business.
Comment: The vehicle e-business has become a new trend in recent years. Qin Zhi, CEO of Chinese automobile website Autohome, estimates that 15 to 20 percent of vehicles will be sold through the Internet in the following five years in China. A total of 23.49 million vehicles were sold in China in 2014, ranking first in the world for six consecutive years. Such a huge market will draw more attention of capitals after it combined with the Internet. Among A-share companies, Pangda Automobile Trade Co., Ltd. (601258.SH) owns a huge vehicle network. It has raised nearly 3 billion yuan for vehicles financing leases the establishment of an Internet platform. Anhui Huamao Textile Company Limited (000850.SZ) holds 10 percent equities of auto.gasgoo.com, which is a platform for the promotion of domestic and overseas vehicle brands.
[Announcement Interpretation]
○ Tongtech to acquire Microvision Technology to develop information security
------
Beijing Tongtech Co., Ltd. (300379.SZ) proposes to raise 825 million yuan by issuing 11.36 million shares at 72.68 yuan per share through private placement to acquire 100 percent equities of Beijing Microvision Technology Co., Ltd. and to supplement working capital. Being priced at 581 million yuan, the estimated value-added ratio of Microvision Technology is 1116 percent. Its promised net profit from 2015 to 2017 will be no less than 41.50 million yuan, 54.00 million yuan and 70.00 million yuan. The net profit of Tongtech in 2014 is 57.12 million yuan.
Comment: Microvision Technology is a leading domestic information security products and solutions provider. The company can expand big data business and provide Tongtech’s basic big data products with security guarantee after being acquired.
○ Yuanli Active Carbon to control Yuanhe Chemicals
------
Fujian Yuanli Active Carbon Co., Ltd. (300174.SZ) proposes to transfer 51 percent equities of Fujian Nanping Yuanhe Chemicals Co., Ltd. held by Lu Yuanjian, actual controller of the company, with 87.87 million yuan. Full payment of the transfer price will be paid in 5 years. Yuanhe Chemicals is the only Chinese-mainland partner of Evonik Industries Group, a world leading special chemicals enterprise, in precipitated silica area and its net profit in 2014 records 23.92 million yuan.
○ Europol Steel Logistics to fully control Europol Small-loan with RMB300 mln
------
Guangdong Europol Steel Logistics Co., Ltd. (002711.SZ) proposes to acquire 100 percent equities of Europol Small-loan Co., Ltd. with 300 million yuan. The net profit of Europol Small-loan in 2015 and 2016 shall be no less than 30 million yuan and 50 million yuan, according to performance commitment. The acquisition will complete the company’s business mode of “trading platform + finance + logistics”. The company also announces that it has inked agreement with the Development and Economy Promotion Bureau of Lecong County, Shunde District, Foshan City to take the lead in building “Europol Furniture E-commerce Platform”.
○ TransInfo Technology to acquire Aero-com with RMB88 mln
------
China TransInfo Technology Co., Ltd. (002373.SZ) acquires 80 percent equities of Beijing Aero-com Information Technology Co., Ltd. with 88 million yuan. The counterparty promises that the net profit of the original business of Aero-com will be no less than 9 million yuan, 11 million yuan and 13 million yuan from 2015 to 2017. Aero-com is the first domestic enterprise that designs and develops the analysis and application system of Flight Resources Planning (FRP) core production data in aerospace area. It owns huge user groups of domestic commercial airline companies and enjoys a market share of 80 percent.
[Financial Reports Express]
○Three investors of Gf Securities see huge net profit growth in Q1, multi securities companies see explosive profit growth in March
------
Thanks to the large surge of A-share market indexes and trading volume, the net profit of Gf Securities Co., Ltd. (000776.SZ) in March sees a year-on-year growth of 375 percent and expects its net profit in the first quarter to see a year-on-year growth of 199 to 211 percent; Liaoning Cheng Da Co., Ltd. (600739.SH) expects its net profit in the first quarter to see a year-on-year growth of 199 to 211 percent; Jilin Aodong Pharmaceutical Group Co., Ltd. (000623.SZ) expects its net profit in the first quarter to see a year-on-year growth of 147 to 160 percent; Zhongshan Public Utilities Group Co., Ltd. (000685.SZ) expects its net profit in the first quarter to see a year-on-year growth of 136 to 166 percent. The performance growth of above three companies, investors of Gf Securities, is mainly resulted by the large year-on-year performance growth of Gf Securities.
Moreover, the securities companies disclosing March operation performance at the same day also show large performance surge, far exceeding the prediction made by research institutions. The net profit of Western Securities Co., Ltd. (002673.SZ) sees a year-on-year growth of 914 percent; the net profit of The Pacific Securities Co., Ltd. (601099.SH) sees a year-on-year growth of 337 percent; the net profit of Guosen Securities Co., Ltd. (002736.SZ) sees a month-on-month growth of nearly 200 percent.
○ Q1 performance growth of Hatou Investment and Wutong Communications sees big boost
------
Thanks to the reduction of production consumption, Harbin Hatou Investment Co., Ltd. (600864.SH) expects its net profit in the first quarter to see a year-on-year growth of 400 percent; due to the largely increased sales income of new information service products, Jiangsu Wutong Communications Co., Ltd. (300292.SZ) expects its net profit in the first quarter to see a year-on-year growth of 278 to 302 percent.
○ Sotech Machinery and Humon Smelting plan high share conversion and dividend
------
Sotech Machinery Co., Ltd. (300173.SZ) expects its net profit in the first quarter to grow by 10 to 40 percent and it proposes a 20-for-10 conversion of capital surplus into shares in its 2014 annual report. The net profit of Shandong Humon Smelting Co., Ltd. (002237.SZ) sees a year-on-year growth of 24 percent in 2014 and it proposes 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
[Trading Trends]
○ SCI reaches 4000 points during trading hour, trading volume of Shanghai and Shenzhen stock markets explodes
------
The stock indexes see sharp fluctuation on April 8. Shanghai Composite Index (SCI) even reaches 4000 points. The trading volume of Shanghai and Shenzhen stock markets is expanded to 1.55 trillion yuan, creating a new historical record again.
Comment: Latest data shows that the securities margin saw a net inflow of 162.4 billion yuan last week. The weekly number of newly-opened accounts maintains over 1.50 million for the second consecutive week. Institutions believe that policy combinations constantly bring good news recently and OTC capital flows into the stock market continuously. The market pushed by incremental capital into the stock market and asset allocation change this time does not change its direction. Judged from short-term market style, large-cap blue-chip stocks are gradually achieving excess returns.
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