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Early Bird 15-April-2015

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2015-04-15 12:01

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 [Today's Guide]
> Time to eliminate horizontal competition, integration of SINOMA’s cement asset counts down
> MIIT determines frequency bands used by unmanned piloting, market application of pilotless aircraft accelerates
> CAA supports general aviation development, Environment protection control drives caustic soda price up
> TianGuang Fire-Fighting to develop landscape and edible fungi, Substantial shareholder increases shareholding in Bright Oceans Inter-Telecom
 
 [XFA Focus]
○ Time to eliminate horizontal competition, integration of SINOMA’s cement asset counts down
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Sep. 7, 2015 is the deadline promised by China National Materials Group Corporation Ltd. (SINOMA) to eliminate horizontal competition of its cement business. SINOMA made the commitment on Sep. 7, 2010 that “its cement business will be sorted out gradually in five years and integrated into one development platform so as to fundamentally solve the horizontal competition in this area”. The A-share market listed companies under SINOMA that are principally engaged in cement production include Xinjiang Tianshan Cement Co., Ltd. (000877.SZ), Ningxia Building Materials Group Co., Ltd. (600449.SH) and Gansu Qilianshan Cement Group Co., Ltd. (600720.SH).
Comment: Analysts believe that substantial shareholders of SOEs obviously speed up in solving horizontal competition after the State-owned Assets Supervision and Administration Commission and the China Securities Regulatory Commission launched the document on promoting substantial shareholders of SOEs and their controlling listed companies to solve horizontal competition. It’s rare to see a company like SINOMA whose multi listed companies share similar main business any more. Now it is the year to deepen and promote central enterprises reform, combined with the opportunity of mixed ownership reform, the integration of cement asset of SINOMA is worthy of expectation. The above three A-share companies, located in Xinjiang Uygur Autonomous Region, Ningxia Hui Autonomous Region and Gansu Province, all benefit from the infrastructure construction of “One Belt and One Road”. Upon integration, great cooperative effect similar to the integration of China CNR Corporation Limited and China CSR Corporation Limited might occur.
 
○ Premier listens to opinions of four enterprises on economic situation, intelligent manufacturing might play greater role
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Chinese Premier Li Keqiang hosted a forum on April 14 and listened to the opinions and suggestions of several financial experts and the responsible persons of ZTE Corporation, Haier Group, SIASUN Robot & Automation Co., Ltd. and NetEase, Inc. about current economic trend and economy work. Li indicated that measures to stabilize growth and adjust structures like “Internet Plus” action plan, “Made in China 2025”, “going out” of equipment and international capacity cooperation, developing service industry, etc. can release huge potential domestic demand.
Comment: The four enterprises attending the forum are mostly involved in intelligent manufacturing: ZTE explores “Global Plus” strategy by relying on its technology advantage; Haier joins hands with several Internet giants to layout intelligent home; SIASUN Robot & Automation is a leading enterprise in domestic Industry 4.0. It has become a must for enterprises to develop intelligent manufacturing and climb to a higher position of industrial chain if they want to be bigger and stronger. Industries like numerical control equipment, sensor, chip, etc. are expanding new space. Moreover, the growing speed of M2 in March sees a year-on-year decrease of 11.6 percent as announced by the central government, lower than market expectation. Besides macro policies, the structural stimulus aiming at areas like intelligent manufacturing is also worthy of expectation.
 
 
[XFA Selection]
○ The National Development and Reform Commission convened relevant forum recently. The six provinces in central China might submit the proposal for promoting the rising of central China in 10 years in end-Aug.
 
○ The Ministry of Foreign Affairs indicates that China is revising and improving bank industry IT products security guidance and the information security of bank industry is quite necessary.
 
○The formulation of national grapheme standard has been kicked off. It will guide and promote healthy and orderly industrial development.
 
○ 1.68 million A-share accounts were newly opened last week, setting a historical new high; the number of newly opened B-share accounts sees a month-on-month growth of 153 percent.
 
○ Jia Yueting, founder of Beijing Leshi Internet Information & Technology Corp. (300104.SZ) made his first public appearance in nearly one year and launched three flagship cellphones with ecological UI system on the launch event.
 
[Industry Information]
○ MIIT determines frequency bands used by unmanned piloting, market application of pilotless aircraft accelerates
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Information from the website of the Ministry of Industry and Information Technology (MIIT) on April 14 shows that to meet the need of emergency relief, forest fire prevention, environment monitoring, scientific research and experiment, etc. on pilotless aircraft system, three frequency bands are planned for pilotless aircraft system as regulated by relevant documents. Moreover, DJI Technology Co., Ltd., a pilotless aircraft enterprise, joins hands with Tencent on April 15 to launch new pilotless aircraft products.
Comment: The pilotless aircraft industry is on the eve of the outbreak of market application and attracts lots of capital investment. MIIT’s determination of frequency bands used by unmanned piloting undoubtedly further pushes the development course of pilotless aircraft. American institutions predict that the global pilotless aircraft market size will reach 67.3 billion US dollars in next 10 years from 2014. Among listed companies, Shenzhen Rapoo Technology Co., Ltd. (002577.SZ) launched consumption-oriented pilotless aircraft in Feb. and has received orders; Shandong Mining Machinery Group Co., Ltd. (002526.SZ) plans to invest nearly 500 million yuan through financing in the development of pilotless aircraft and complete trial flight before the end of the year.
 
○ Environment protection control cuts down capacity supply, price of caustic soda picks up
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Data shows that the price of liquid caustic soda sees an average surge of 2 percent in the market in Jiangsu Province and Zhejiang Province on April 13, setting a new high for this year. Impacted by stricter environment protection control and steady downstream demand, the market price of caustic soda in the East China and the North China continuously warms up recently.
Comment: Promoted by environment protection inspection, the work load of caustic soda devices in some enterprises in Hebei Province, Shandong Province, etc. decreases and capacity supply reduces along with. Moreover, steady demand from downstream aluminium oxide market, etc. also provides support to the caustic soda market. Under the reversed push of environment protection, combined with factors including device maintenance and increasing export, domestic caustic soda price will embrace opportunity to surge. As for listed companies, Tangshan Sanyou Chemical Industries Co., Ltd. (600409.SH) owns a caustic soda capacity of nearly 500,000 tons and sees increasing profit of rayon staple products; Fangda Jinhua Chemical Technology Co., Ltd. (000818.SZ) expects to produce 410,000 tons of caustic soda this year, contributing a lot to the profit of main business.
 
○ CAA supports general aviation development, supporting meeting to convene soon
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The 2015 Asian Business Aviation Conference & Exhibition (ABACE) kicked off on April 14. Wang Zhiqing, Deputy Administrator of the Civil Aviation Administration (CAA), indicated that the general aviation development leading group meeting will be convened soon. It will focus on promoting the development of civil aviation and guarantee breakthroughs in the low altitude reform this year.
Comment: As a key breakthrough in the civil and military integration, the general aviation is expected to see huge development with the supporting of various policies. Institutes estimate that as the market conditions mature, the domestic aviation market demand will succeed 600 billion yuan with an annual growth of nearly 30 percent in the following decade. It will promote the expansion of the aircraft manufacturing, operation, maintenance, training and other industries. In terms of listed companies, CITIC Offshore Helicopter Co., Ltd. (000099.SZ) is principally engaged in transportation and maintenance. Weihai Guangtai Airport Equipment Co., Ltd. (002111.SZ) is competitive in the airport equipment market.
 
 
[Announcement Interpretation]
○ TianGuang Fire-Fighting to acquire landscape and edible fungi companies with RMB2.5 bln
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TianGuang Fire-Fighting Co., Ltd. (002509.SZ) proposes to acquire 100 percent equities of Guangzhou Zhongmao Landscape Construction Engineering Co., Ltd. and Dianbai Zhongmao Biology Technology Co., Ltd. by issuing 249 million shares through private placement. The two subject companies are totally priced at 2.5 billion yuan. Meanwhile, the company also plans to raise a supporting fund of 100 million yuan by issuing 10 million shares to two senior management to supplement the working capital of Zhongmao Landscape.
Zhongmao Landscape is a comprehensive landscape company engaged in the landscape design, projects construction, greens maintenance, seedlings nurturing and ecological restoration. Zhongmao Biology is engaged in the research and development of edible fungi and the batch planting and sale. Its major products include needle mushrooms, Pleurotus eryngii and other edible fungi. The transferor committed that the net profit of Zhongmao Landscape from 2015 to 2018 will be 127 million yuan, 177 million yuan, 197 million yuan and 218 million yuan, respectively and the net profit of Zhongmao Biology will be 99.57 million yuan, 147 million yuan, 178 million yuan and 200 million yuan, respectively.
 
○ Substantial shareholder increases shareholding in Bright Oceans Inter-Telecom
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The substantial shareholder of Bright Oceans Inter-Telecom Corporation (600289.SH) plans to subscribe the trust plan with 50 million from the self-raised funds and will entrust the plan to finance 150 million yuan through Guosen Securities Co., Ltd. (002736.SZ). Securities companies can increase their shareholdings in the company through the secondary market. The increase in shareholding has been completed on April 14 with a total of 11,717,000 shares bought at an average price of 17.08 yuan per share. The shareholding of the substantial shareholder increased to 25.22 percent after the increase in shareholding. Securities companies will receive a fixed financing revenue of 150 million yuan in the above plan and the trust plan will receive the floating revenue from the increased shares. The latest closing price of the company is 16.94 yuan per share.
 
○ Sungrow Power Supply to develop new energy vehicles through private placement
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Sungrow Power Supply Co., Ltd. (300274.SZ) intends to raise 3.3 billion yuan by issuing 120 million shares through private placement. Among the proceeds, 500 million yuan will be invested in the photovoltaic inverter complete equipment project with an annual capacity of 5 million kilowatt, 2.09 billion yuan will be used in the 200MW photovoltaic power station, 160 million yuan will be used in the new energy vehicle engine controlling products and the remaining 550 million yuan will supplement the working capital. The company recorded a net profit of 283 million yuan in 2014, representing a year-on-year growth of over 50 percent.
 
○ Fuxing Science and Technology to raise RMB3 bln for real estate business
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HuBei Fuxing Science and Technology Co., Ltd. (000926.SZ) proposes to raise 3 billion yuan by issuing 288 million shares at 10.43 yuan per share through private placement. 2.2 billion yuan will be used in the Donghu City K1 project and 800 million yuan will be used in the Coast International K2 project. Each potential investor can subscribe a maximum of 58 million shares. The total investment in the Donghu City K1 project is 4.47 billion yuan and it is expected to record a net profit of 640 million yuan. The total investment in the Coast International K2 project is 2.08 billion yuan and it is expected to record a net profit of 450 million yuan.
 
 
[Financial Reports Express]
○ China Nonferrous Metal, Three Gorges Water Conservancy and Hubei Golden Ring Q1 results to syrge
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China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. (000758.SZ) expects its net profit to increase 150 percent to 200 percent in the first quarter, which is mainly attribute to the continuous improvement of the contract projects and the prices recovery of rare earth products. Thanks to the significant increase in the on-grid power generated from the low-cost self-generated hydropower, Chongqing Three Gorges Water Conservancy and Electric Power Co., Ltd. (600116.SH) expects its net profit to increase 1,000 percent to 1,400 percent in the first quarter year on year. Hubei Golden Ring Co., Ltd. (000615.SZ) expects its net profit to increase 29,662 percent to 415,667percent in the first quarter year on year as a result of the significant growth in investment revenues from the sale of 10 million shares of Changjiang Securities Company Limited (000783.SZ).
As a result of the significant growth in products sale, Henan Mingtai Al. Industrial Co., Ltd. (601677.SH) expects its net profit to increase 400 percent to 430 percent in the first quarter year on year. Zhejiang Dragon Pipe Manufacturing Co., Ltd. (002619.SZ) expects its net profit to increase 330 percent to 380 percent in the first quarter year on year as a result of the consolidation of EGLS from February. Thanks to the land compensation of 182 million yuan from the Dalian municipal government, Dalian Friendship (Group) Co., Ltd. (000679.SZ) expects its net profit to increase 450 percent to 550 percent in the first quarter year on year.
 
○ RAAS Blood Products expects interim results to hike
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Shanghai RAAS Blood Products Co., Ltd. (002252.SZ) recorded a year-on-year growth of 473 percent in the net profit for the first quarter. It expects its net profit from January to June, 2015 to increase 310 percent to 340 percent year on year.
 
 
 [Trading Trends]
○Three institutes buy Longyuan Power Technology
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The trading volume ranking list on April 14 shows three institutional seats bought Yantai Longyuan Power Technology Co., Ltd. (300105.SZ) with a total of 79,427,000 yuan, accounting for 16 percent of its intraday turnover.
Comment: Longyuan Power Technology is principally engaged in power generation equipment. It also owns plasma energy saving and environmental protection equipment and other environmental protection equipment. With the twin businesses of “energy saving plus emission reduction”, China Merchants Securities Co., Ltd. (600999.HK) believes that the company will benefit from energy saving and denitration in the upgrading and transformation of energy saving and emission reduction. Besides, the company is also the platform for “energy-saving boilers” under China Guodian Corporation. It is expected to see more excellent development opportunities the reform of central enterprises.
 
 
 [Trade Alarms]
○ Nine new shares for subscription on April 14, including Jiangsu Broadcast & Television Info-Network
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Jiangsu Broadcast & Television Info-Network Co., Ltd. (730959.SH) issues shares at 5.47 yuan per share with an upper subscription limit of 177,000 shares for each account. Liaoning Fu-An Heavy Industry Co., Ltd. (732315.SH) issues shares at 10.77 yuan per share with an upper subscription limit of 10,000 shares for each account. Shandong Huapeng Glass Co., Ltd. (732021.SH) issues shares at 8.73 yuan per share with an upper subscription limit of 10,000 shares for each account. Guangzhou Haoyun Security Technologies Co., Ltd. (300448.SZ) issues shares at 15.79 yuan per share with an upper subscription limit of 8,000 shares for each account. Baoding Lucky Innovative Materials Co., Ltd. issues shares at 8.85 yuan per share with an upper subscription limit of 6,000 shares for each account. Beijing Sojo Electric Co., Ltd. (300444.SZ) issues shares at 12.05 yuan per share with an upper subscription limit of 13,000 shares for each account. Ningbo BaoSi Energy Equipment Co., Ltd. (300441.SZ) issues shares at 9.81 yuan per share with an upper subscription limit of 8,000 shares for each account. Chengdu Yunda Technology Co., Ltd. (300440.SZ) issues shares at 21.7 yuan per share with an upper subscription limit of 11,000 shares for each account. Henan Qing Shui Yuan Technology Co., Ltd. (300437.SZ) issues shares at 10.53 yuan per share with an upper subscription limit of 6,500 shares for each account.
Full subscription of these shares needs 1.47 million yuan in total. Jiangsu Broadcast & Television Info-Network is expected to have high odds of success as a result its large issuance size. Institutes also favor Haoyun Security Technologies, which is engaged in financial security industry.
 
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