Early Bird

Early Bird 14-April-2015

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2015-04-14 12:37

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[Today’s Guide]
> Urban underground integrated pipeline construction catches officials’ attention and may be new driver to economic growth
> Industry 4.0 to catch global attention, backbone optical fiber to see more updates
> Special Electric Motor to acquire Mige Electric, New Sea Union Telecom Technology to invest in Cloud service and e-commerce
> Fuda to raise stakes in intellectualization with RMB1.2 bln, Bossco bought through four institutional seats
 
 
 [XFA Focus]
○ Urban underground integrated pipeline construction catches officials’ attention and may be new driver to economic growth
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The Ministry of Housing and Urban-Rural Development announced on April 13 that the construction of urban underground integrated pipeline across the country will kick off. Chen Zhenggao, Minister of Housing and Urban-Rural Development, indicated that it will play an essential role in driving economic growth. During his inspection on the Northeastern China, Chinese Premier Li Keqiang also indicated that the urban underground construction is an internal project and only excellent internal projects can bring charming external appearances.
Meanwhile, the General Administration of Customs released the export statistics in March, showing that the export declined 15 percent year on year and the import saw negative growth for five consecutive months and indicating the economic slowdown. The market estimates that the GDP growth in the first quarter to be released on April 15 may fall below 7 percent. More policies on infrastructure construction and promoting foreign trade are expected to be issued.
Comment: It is estimated that the urban underground pipeline construction will bring an investment of 400 billion to 500 billion yuan. Its contribution to boosting economic growth has caught the attention of senior officials. The pipeline materials, safety surveillance and integrated pipeline projects as well as other subdivided industries are expected to expand rapidly. Among A-share companies, Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) has assumed the integrated pipeline construction in Hunnan New District, Shenyang City, Liaoning Province. It is under negotiation with other cities on similar projects. Fujian Newchoice Pipe Technology Co., Ltd. (300198.SZ) is principally engaged in providing materials for urban drainage pipeline. The company is located at Quanzhou City, Fujian Province, which is positioned as a pioneering zone along the maritime Silk Road. Beijing eGOVA Co., Ltd. (300075.SZ) enjoys technological advantages in the digital urban management.
 
 
[XFA Selection]
○ Xinhua News Agency introduced a new column named “New Observation on One Belt and One Road” on April 13. CCTV also introduced a series report named “One Belt and One Road to Bring Prosperity Together”.
 
○ The Ministry of Finance and the State Administration of Taxation announced that the reform and reorganization of enterprises and public institutions meeting certain conditions can be waived from deed taxes for three years.
 
○ The representatives of China, Japan and South Korea signed a joint statement at the Seventh World Water Forum, proposing to strengthen cooperation on water policies innovation.
 
○The Ministry of Agriculture proposes to fight against nonpoint agricultural pollution, control the water consumption and develop water-saving agriculture.
 
○ The Shanghai Municipal Government and Tencent Holdings Limited (00700.HK) entered into a cooperation agreement to support the establishment of a scientific innovation center. The market value of Tencent reached over 200 billion U.S. dollars for the first time.
 
 
[Industry Information]
○Industry 4.0 highlights Hannover Messe opened on April 13,
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The Hannover Messe will be held from April 13 to 17 in Germany with the theme of “Integrated Industry – Join the Network”. The focus of the fair is mechanical networking and other key technologies include integrated plants, 3D printing, coordinated robots, energy efficiency and intelligent power grid. Besides, the German government will release a platform for the development of Industry 4.0.
Comment: The term of Industry 4.0 was officially porposed at the Hannover Messe 2013 and it gained popularity globally soon. The “Made in China 2025” programme also sets the orientation for the development of intelligent manufacturing in China and brings huge market and development potential for industrial chains. Among listed companies, Han’s Laser Technology Industry Group Co., Ltd. (002008.SZ) hjas established two development platforms for the robot industry. The first customized industrial robot automation line of Greatoo Inc. (002031.SZ) has put into operation and its intelligent equipment industrial park is under construction.
 
○ Half backbone optical fiber network to mature, optical fiber manufacturers to see more market demands
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The optical cable procurement for the main optical fiber network project (first batch) in 2015 of China Telecom Corporation Limited (CHA.NYSE; 00728.HK) opened for tender. Fiberhome Telecommunication Technologies Co., Ltd. (600498.SH), Kaile Science and Technology Co., Ltd. Hubei (600260.SH), Jiangsu Zhongtian Technology Co., Ltd. (600522.SH) and other listed companies won the bidding. The tender is for the construction of new optical fiber network. Wei Leping, the Executive Deputy Director of the Ministry of Industry and Information Technology (MIIT) Science & Technology Committee, pointed out that nearly 40 percent of the backbone optical fiber network will reach the designed life of 20 years in 2015.
Comment: The large scale construction of optical fiber network in China initiated in the 1980s and half of the optical fiber in the main line network will mature after the end of 2015. New optical fiber network will be established and the optical fiber with low wastage will enjoy priority. Besides the updating of aged optical fiber, the increasing inflow will also facilitate the establishment of backbone network. The huge demand in the two industries will bring excellent opportunities to domestic optical fiber manufacturers.
 
○ CNPC meeting emphasizes reform, Xinjiang pilot expected to speed up
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China National Petroleum Corporation (CNPC) convened the fifth session of the first board of directors recently. CNPC Chairman Zhou Jiping emphasized that it shall deepen reform, conduct the reforms arranged by the central government and focus on the implementation of key reform tasks of this year.
Comment: The market has been focusing on the reform of CNPC. It has set Xinjiang as the pilot for the mixed ownership system reform in the exploration and development industry. With the implementation of reform tasks of CNPC, the pilot work in Xinjiang is expected to speed up. Among listed companies, Guangzheng Gas, a subsidiary of Guangzheng Group Co., Ltd. (002524.SZ), has entered into a strategic cooperation agreement with CNPC. The parties will develop the gas terminal business in southern Xinjiang and expand into the liquefied natural gas (LNG) market. Guanghui Energy Co., Ltd. (600256.SH) is competitive in the natural gas industry and it planned to invest 1.5 billion yuan in the development of natural gas terminal market at the beginning of the year.
 
 
 [Announcement Interpretation]
○Special Electric Motor to acquire Mige Electric to develop intelligent manufacturing
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Jiangxi Special Electric Motor Co., Ltd. (002176.SZ) plans to acquire 100 percent equities of Hangzhou Mige Electric Co., Ltd. with 600 million yuan by issuing shares at 13.22 yuan per share through private placement and paying 240 million yuan in cash. The company also plans to raise a supporting fund of 155 million yuan at the same offering price. The counterparty promises that the total net profit of Mige Electric from 2015 to 2017 will be no less than 182 million yuan.
Principally engaged in the manufacturing and sales of mechatronics motor system and control system components, Mige Electric produces servo motor, stepping motor, servo driving controller and matching products of servo system, which are important parts of the motor control system and numerical control system in modern intelligent manufacturing. Its clients have covered multi large-scale enterprises and listed companies in domestic automation area.
 
○ New Sea Union Telecom Technology to invest RMB1.6 bln in Cloud service and e-commerce through private placement
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Suzhou New Sea Union Telecom Technology Co., Ltd. (002089.SZ) plans to raise 1.63 billion yuan by issuing 110 million shares at 14.84 yuan per share through private placement to invest in the construction of Cloud service platform, the development and industrialization of private network communication system and the construction of community healthy beauty O2O service platform, pay off bank loans and supplement working capital. 1 billion yuan will be invested in the construction of Cloud service platform, an average annual profit of 150 million yuan will be achieved after reaching the designed capacity; 121 million yuan will be invested in the private network communication system, it will mainly focus on providing products and services for public security users like army, police, judiciary, city inspectors, fire fighting men, prison, etc. Suzhou Hongrong Investment Co., Ltd., under the management of Zhang Yibin, actual controller of the company, will subscribe 38.00 million shares, Ma Lingzhi, also actual controller of the company, will subscribe 20.00 million shares. Upon completion, the total shareholding proportion of Zhang Yibin and Ma Lingzhi, Zhang’s wife, will be lifted from 34.51 percent to 37.45 percent.
 
○ Fuda to raise RMB1.2 bln through private placement to raise stakes in intellectualization
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Guilin Fuda Co., Ltd. (603166.SH) plans to raise 1.21 billion yuan by issuing 69.70 million shares at no less than 17.36 yuan per share through private placement to invest in the project of purchasing 5000 new vessel engine crankshafts, upgrade the company’s products and supplement working capital. 400 million yuan is planned for the vessel engine crankshaft project. After reaching designed capacity, the average annual profit of the project will be 88.04 million yuan. The company indicates that the private placement will help the company to expand operation area and achieve the intellectualization of technological equipment.
 
○ Hainan Airlines to raise RMB24 bln to invest in Tianjin Airlines
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Hainan Airlines Co., Ltd. (600221.SH) plans to raise 24 billion yuan by issuing 6.6 billion shares at no less than 3.64 yuan per share through private placement to specific targets including HNA Group, controlling shareholder of the company, for introducing 37 airplanes, acquiring 48.21 percent equities of Tianjin Airlines Co., Ltd., increasing capital in projects and paying off bank loans. HNA Group promises to subscribe 30 ~40 percent of the private placement.
 
 
[Financial Reports Express]
○ CIMC, Lanzhou Huanghe Enterprise, Tagen Group and Huamao Textile see large performance surge in Q1
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Thanks to the expansion of business scale, China International Marine Containers (Group) Co., Ltd. (CIMC) (000039.SZ; 02039.HK) expects its net profit in the first quarter to see a year-on-year growth of 250 ~300 percent; due to the large return of securities investment, Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ) expects its net profit in the first quarter to see a year-on-year growth of 2769 ~2963 percent; resulted by the profit growth of sales of commercial housing and construction settlement, Shenzhen Tagen Group Co., Ltd. (000090.SZ) expects its net profit in the first quarter to see a year-on-year growth of 300 percent; due to the large investment return achieved by selling the shares of Gf Securities Co., Ltd. (000776.SZ), Anhui Huamao Textile Company Limited (000850.SZ) expects its net profit in the first quarter to see a year-on-year growth of 305~362 percent.
 
○ Fuanna, Jianxin Chemical and Souyute Fashion plan high share conversion and dividend
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With the net profit in 2014 growing by 20 percent year on year, Shenzhen Fuanna Bedding and Furnishing Co., Ltd. (002327.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares; with the net profit in 2014 seeing a year-on-year growth of 12 percent, Hebei Jianxin Chemical Co., Ltd. (300107.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares; with the net profit in 2014 decreasing by 55 percent year on year and the net profit in the first quarter this year increasing by 48 percent year on year, Dongguan Souyute Fashion Co., Ltd. (002503.SZ) plans a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares.
 
 
[Trading Trends]
○ Bossco bought through four institutional seats
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The trading volume ranking list on April 13 shows that Guangxi Bossco Environmental Protection Technology Co., Ltd. (300422.SZ), a sub-new stock, was bought through four institutional seats with a total of 79.11 million yuan, accounting for 35.5 percent of its intraday turnover
Comment: Bossco provides whole solution of water pollution control. The research report made by China International Capital Corporation Limited (CICC) believes that the company holds abundant orders and sees an increasing scale of new orders in recent three years. Moreover, gradually expanding from industrial wastewater treatment to municipal water, exhaust gas, etc., the company will see its order scale reaching a new level. In addition, with expectation of high share conversion and dividend, sub-new stocks sector was favored by the market recently.
 
 
[Trading Alarms]
○ 15 new stocks including Cosunter Phar. start subscription on April 14
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Fujian Cosunter Pharmaceutical Co., Ltd. (300436.SZ) issues shares at 21.47 yuan per share with an up-limit per account of 7,000 shares; Nanjing Quanxin Cable Technology Co., Ltd. (300447.SZ) issues shares at 12.91 yuan per share with an up-limit per account of 8,000 shares; Laobaixing Pharmacy Chain Joint Stock Company (732883.SH) issues shares at 16.41 yuan per share with an up-limit per account of 26,000 shares; QuMei Furniture Group Co., Ltd. (732818.SH) issues shares at 8.98 yuan per share with an up-limit per account of 24,000 shares; Shenzhen Ellassay Fashion Co., Ltd. (732808.SH) issues shares at 19.16 yuan per share with an up-limit per account of 16,000 shares; Xingguang Agricultural Machinery Co., Ltd. (732789.SH) issues shares at 11.23 yuan per share with an up-limit per account of 20,000 shares; Zhejiang Shengyang Science and Technology Co., Ltd. (732703.SH) issues shares at 11.32 yuan per share with an up-limit per account of 9,000 shares; HeiLongJiang ZBD Pharmaceutical Co., Ltd. (732567.SH) issues shares at 23.6 yuan per share with an up-limit per account of 18,000 shares; Dalian Energas Gas-System Co., Ltd. (732318.SH) issues shares at 6.52 yuan per share with an up-limit per account of 12,000 shares; Beijing Dahao Technology Corporation Limited (732025.SH) issues shares at 11.17 yuan per share with an up-limit per account of 15,000 shares; Beijing ConST Instruments Technology Inc. (300445.SZ) issues shares at 18.12 yuan per share with an up-limit per account of 4,000 shares; Shandong Laiwu Jinlei Wind Power Technology Co., Ltd. (300443.SZ) issues shares at 31.94 yuan per share with an up-limit per account of 5,500 shares; Ningbo Medicalsystem Biotechnology Co., Ltd. (300439.SZ) issues shares at 27.51 yuan per share with an up-limit per account of 10,000 shares; Guangzhou Hangxin Aviation Technology Co., Ltd. (300424.SZ) issues shares at 11.68 yuan per share with an up-limit per account of 13,000 shares; ShengXing Group Co., Ltd. (002752.SZ) issues shares at 5.74 yuan per share with an up-limit per account of 18,000 shares;
Maximum subscription of all stocks needs 2.98 million yuan. Institutions recommend Fujian Cosunter Pharmaceutical Co., Ltd. (300436.SZ), producing anti-HBV medicines, and Nanjing Quanxin Cable Technology Co., Ltd. (300447.SZ), engaged in cables for national defense and military industry, as first choices.
 
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