[Today's Guide]
> Comprehensive and targeted RRR cuts exercised together, more policies to maintain growth
> Establishment of FTZs counts down, over capacity of cement to see great improvement, Ready Phar. to achieve back-door listing through Xin Jiang Hops
> Ready Phar. to achieve back-door listing through Xin Jiang Hops, E-food to develop tourism
>Talkweb Information to develop online education, Advanced Technology to buy Tian-Long Tungsten & Molybdenum
[XFA Focus]
○ Comprehensive and targeted RRR cuts exercised together, more policies to maintain growth
------
China’s central bank on April 19 decided to lower the reserve requirement ratio (RRR), the minimum level of reserves banks must hold, by one percentage point effective from April 20. Targeted RRR cut measures are also implemented: an additional one-percentage-point RRR cut will be given to rural credit cooperatives, rural banks, etc.; the Agricultural Development Bank of China gets an RRR reduction of two percentage points; the central bank will further lower RRR by 0.5 percentage point for state-owned banks and joint-equity commercial banks that have met the authority’s criteria for lending to agricultural sector or small- and micro- enterprises.
Comment: The implementation time of the RRR cut meets market expectation and the range of RRR cut is beyond expectation. Many banks can enjoy an RRR cut of 1.5 percentage points. According to estimation, the current deposit balance is around 110 trillion yuan and the comprehensive and targeted RRR cuts will release a liquidity of 1.5 trillion yuan. And, the interest rate cut and a series of financial, tax, industries support policies will follow. The bank industry and real estate industries are the most sensitive to the releasing of liquidity. Water conservancy and underground pipe network construction might become important driver to maintain growth. As for listed companies, Anhui Water Resources Development Co., Ltd. (600502.SH) will benefit from the Yangtze River-Huaihe River Water Division Project, which is going to be launched soon; Chongqing Three Gorges Water Conservancy and Electric Power Co., Ltd. (600116.SH) is controlled by China Energy Conservation and Environmental Protection Group, a central enterprise; Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) takes the lead in developing utility tunnel system; Fujian Newchoice Pipe Technology Co., Ltd. (300198.SZ) is principally engaged in the material of urban drain-pipe network.
[XFA Selection]
○ Chinese President Xi Jinping starts visit to Pakistan and Xi will visit Indonesia after Pakistan to attend the Asian-African Summit and activities marking the 60th anniversary of the Bandung Conference, from April 20 to 24.
○ Chinese Premier Li Keqiang hosted forum on April 17 proposing to support small and micro enterprises, actively develop Internet plus finance and launch Shenzhen-Hong Kong Stock Connect program at proper time.
○ The Notice on Promoting the Development of Margin Trading-short was released on April 17. China Securities Regulatory Commission explained on April 18 that it does not mean to encourage short selling.
○ Publicly-offered funds are allowed to participate in margin trading and short selling as well as refinancing business. Ordinary stock-oriented funds and commingled funds can only participate in financing business.
○ The world largest monomer photovoltaic power station, invested by China Minsheng Investment Corp., Ltd. with 15 billion yuan, starts construction on April 18; Apple Inc. discloses that it is constructing solar energy project in China.
○ The People’s Education Press publishes the first set of school football textbook in China and the textbook will go to middle and primary schools in the autumn of this year.
[Industry Information]
○ Establishment of FTZs counts down, port, logistics industries to benefit
------
The State Council Information Office is to convene press conference in the morning of April 20. The Ministry of Commerce, Shanghai Municipality, Guangdong Province, Tianjin Municipality and Fujian Province will introduce the progress of Free Trade Zones (FTZs), respectively, and take the questions from journalists. The State Council released the Opinions on Improving Government Work on Ports to Further Develop Foreign Trade on April 17 and proposed to intensify the construction of port infrastructure.
Comment: The press conference held on April 20 means the counting down of the establishment of FTZs. The construction of FTZs brings obvious benefit to the development of port, logistics, etc., while the document requirement of the State Council on strengthening the infrastructure construction of ports shows direct policy support to port and logistics industries. As for listed companies, Tianjin Port Co., Ltd. (600717.SH) is the largest comprehensive port in the North China and benefits from the construction of Tianjin FTZ; Xiamen International Airport Co., Ltd. (600897.SH), engaged in aviation logistics, will benefit from the construction of Fujian FTZ.
○ Low-grade cement sure to obsolete, over capacity to see great improvement
------
XFA learns that the Ministry of Industry and Information Technology (MIIT) held a forum on revising the standard for cement this month in Beijing, stressing the possible impact of the cancelation of P.C.32.5 mix cement on the stable operation and structural adjustment of the industry. The P.C.32.5 mix cement is expected to see full removal within the year.
Comment: P.C.32.5 cement is a kind of low-grade cement, the production of which accounts for half of the cement in China. This is an important reason of over capacity. As introduced by staff from Anhui Conch Cement Company Limited, a cement capacity of 700~800 million tons will exit the market if low-grade cement is canceled, obviously enhancing over capacity of cement. The technical level of leading domestic cement enterprises have reached world advanced level and will benefit from the exit of low-grade cement. As for listed companies, Xinjiang Tianshan Cement Co., Ltd. (000877.SZ) is the leading cement enterprise in northern Xinjiang; Ningxia Building Materials Group Co., Ltd. (600449.SH) is the largest cement enterprise in Ningxia Hui Autonomous Region; Gansu Qilianshan Cement Group Co., Ltd. (600720.SH) occupies most of the cement market in Gansu and Qinghai Province.
○ Supporting document of electricity reform to launch, electricity selling companies to transform
------
Lian Weiliang, deputy director of the National Development and Reform Commission (NDRC), indicated on the press conference of the State Council Information Office on April 17 that the price reform of power transmission and distribution is the key to the whole electricity system reform. The NDRC has launched three supporting documents for electricity system reform in succession and will launch new supporting documents later.
Comment: Improving the marketization of power generation, power selling and power using, as the biggest highlight of the electricity reform, will lead to more sufficient competition. Institutions believe that future commercial mode of electricity selling companies will be transformed into a diversified energy service provider that is closer to users and they might enter energy internet area. Sichuan Guangan Aaa Public Co., Ltd. (600979.SH) enjoy obvious monopolistic advantage in the electricity selling business area of Guang’an City; as the leading electricity supplier of Chenzhou area, Hunan Chendian International Development Co., Ltd. (600969.SH) will see broader extensional development space after the electricity reform.
[Announcement Interpretation]
○ Ready Phar. to achieve back-door listing through Xin Jiang Hops
------
Xin Jiang Hops Co., Ltd. (600090.SH) plans to sell the 50 percent equities of Xinjiang Wusu Beer Co., Ltd. held by it to Carlsberg at 544 million yuan. Meanwhile, it plans to acquire 100 percent equities of Ready Pharmaceutical Co., Ltd. with 6.127 billion yuan by issuing shares at 6.39 yuan per share and in cash and raise a supporting fund of 1.6 billion yuan. Ready Phar., principally engaged in the circulation of medicines, sees a net profit of 357 million yuan in 2014.
After the transaction, a back-door listing, the controlling shareholder of the company will be replaced by Ready Phar. and the actual controller of the company will be replaced by Zhang Meihua and Li Qin, a couple.
○ E-food to acquire CAISSA Tongsheng to develop tourism
------
E-food Group Co., Ltd. (000796.SZ) proposes to acquire 51 percent and 49 percent equities of CAISSA Tongsheng (Beijing) Investment Co., Ltd. held by HNA Tourism Group Co., Ltd. and CAISSA Shijia Tourism Management and Consultancy Co., Ltd., which is priced at 2.4 billion yuan, by issuing 432 million shares at 5.55 yuan per share. It also proposes to raise a supporting fund of 800 million yuan by issuing 124 million shares at 6.45 yuan per share for the development of main business of CAISSA Tongsheng Travel Agency.
The counterparty committed that the subject will record a net profit after extraordinary items of no less than 162 million yuan, 208 million yuan and 254 million yuan from 2015 to 2017. The listed company is expected to be a leading outbound tourism industrial operator based on the resources of Hainan Airline Group after the transaction.
○ Talkweb Information to acquire various companies to develop online education
------
Talkweb Information System Co., Ltd. (002261.SZ) plans to acquire 100 percent equities of Sea Sky Land and Changzheng Education as well as the remaining 49 percent and 40 percent equities of Zhuhai Longxing Information Technology Co., Ltd. and Shaanxi Chengzhang Information Consultancy Co., Ltd. with a total price of 1.87 billion yuan by issuing shares through private placement and in cash. The company will fully control Longxing Information and Chengzhang Information after the transaction. It also proposes to raise a supporting fund of 438 million yuan by issuing shares at 16.4 yuan per share through private placement.
Based on the commitment on performance, the subject companies will record a total net profit of no less than 118 million yuan and 151 million yuan from 2015 to 2016. Sea Sky Land is a leading education evaluation technology and services supplier in China and it offers online college entrance examination reviewing services in 17 provinces. Changzheng Education boats strong offline channels and contents creation capacities for early childhood education.
○ Advanced Technology to buy 100 pct equities of Tian-Long Tungsten & Molybdenum
------
Advanced Technology & Materials Co., Ltd. (000969.SZ) plans to buy 100 percent equities of Beijing Tian-Long Tungsten & Molybdenum Co., Ltd. by issuing shares through private placement. It also proposes to raise a supporting fund of 342 million yuan by issuing shares at 8.17 yuan per share to its controlling shareholder China Iron & Steel Research Institute Group and the employee stock ownership plan.
Based on the performance commitment, Tian-Long Tungsten & Molybdenum will see a net profit of 110 million yuan, 135 million yuan and 165 million yuan from 2015 to 2017. Advanced Technology will inject the business assets of the branch for refractory materials into Tian-Long Tungsten & Molybdenum and will lead the industrial integration after the acquisition.
○ Datong Gas to acquire equities of two natural gas companies through private placement
------
Sichuan Datong Gas Development Co., Ltd. (000593.SZ) intends to raise 615 million yuan by issuing shares at no less than 7.2 yuan per share to its substantial shareholder Datong Group and the employee stock ownership plan (yet to be established) through private placement. The proceeds will be used in acquiring 88 percent equities of Jingneng Natural Gas and Luojiang Natural Gas as well as supplementing working capital. The substantial shareholder will subscribe no less than 45 percent.
○ China Resources Double-crane Phar. to acquire 100 pct equities of China Resources Saike Phar.
------
China Resources Double-crane Pharmaceutical Co., Ltd. (600062.SH) plans to acquire 100 percent equities of China Resources Saike Pharmaceutical Co., Ltd. at 3.7 billion yuan held by Beijing Pharmaceutical Group, its substantial shareholder, by issuing shares at 19.69 yuan per share and in cash. The shareholding proportion of Beijing Pharmaceutical Group will be increased from 49.12 percent to 60.23 percent after the acquisition.
China Resources Saike Phar. owns three main businesses, namely self-made preparations, active pharmaceutical ingredients and pharmaceutical business. It mainly treats cardiovascular and urinary system diseases. It recorded a net profit of 182 million yuan and 196 million yuan in 2013 and 2014.
○ Jolly Phar. to control 3rd People’s Hospital of Deqing County
------
Zhejiang Jolly Pharmaceutical Co., Ltd. (300181.SZ) proposes to invest another 190 million yuan in the 3rd People’s Hospital of Deqing County with its own capital. It will hold 75 percent contribution of the hospital after that. The hospital is a comprehensive Class-2 hospital. The investment is the participation of the company into the reform of public hospitals as well as a major step in developing the whole medical industry. It will try to bring profit growth through distant treatment, pharmaceutical e-business and other new service models.
[Financial Reports Express]
○ DZH and Do-Fluoride Chemicals expect high growth
------
Shanghai DZH Limited (601519.SH) expects its net profit in the first quarter to increase about 400 percent year on year. It announced that its assets reorganization proposal has been approved by the China Securities Regulatory Commission (CSRC). Do-Fluoride Chemicals Co., Ltd. (002407.SZ) expects its net profit in the first half to see a year-on-year growth of 130 percent to 160 percent.
○ Haimo Technologies proposes high share conversion and dividend
------
Lanzhou Haimo Technologies Co., Ltd. (300084.SZ) saw a year-on-year growth of 78 percent in its 2014 net profit and proposes a 12-for-10 conversion of capital surplus into shares combined with 0.3 yuan dividend for every 10 shares. Fujian Longking Co., Ltd. (600388.SH) saw a year-on-year growth of 1.5 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 3.3 yuan dividend for every 10 shares. China Zhonghua Geotechnical Engineering Co., Ltd. (002542.SZ) saw a year-on-year growth of 84 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.
Ourpalm Co., Ltd. (300315.SZ) saw a year-on-year growth of 115 percent in its 2014 net profit and proposes a 9-for-10 conversion of capital surplus into shares combined with 0.29 yuan dividend for every 10 shares. Shanghai Taisheng Wind Power Equipment Co., Ltd. (300129.SZ) saw a year-on-year growth of 25 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. Jiangyin Haida Rubber and Plastic Co., Ltd. (300320.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 1.25 yuan dividend for every 10 shares according to its annual report.
[Weekly Review]
○ Name rectification for “flocking together”
------
Chinese often flock together and criticize others for flocking together. The flocking of migrant farmers to coastal areas is dubbed as “blind flow”. The flocking of investment made by government or enterprises is labeled as “repeated construction”. The flocking of new investors in opening accounts is known as “leftover takers”. However, with the passage of time, the “blind flow” has become the labor export with supports; the transportation facilities known as “repeated construction” saw massive vehicles; the new investors with huge investment have become the winners in the stock market.
As a matter fact, there is not right or wrong in flocking together. The success depends on the orientation of flocking follows the development trend. Take cinemas as an example, which saw flocking construction before, the tickets sales saw inevitable surge with the improvement of consumers’ spending ability and the advancing of anti-piracy. Despite the screen excess in short term, it can make profit soon. Based on this trend, XFA reported the Fast & Furious 7 in detail on its debut last week. Wanda Cinema Line Co., Ltd. (002739.SZ), which was mentioned in the report, soared by the daily limit of 10 percent on the following day.
Is it reasonable for investors flocking into the stock market? It shall be admitted that the current economic growth is still sluggish. But we should never ignore the continuous support of the government on mass entrepreneurship, One Belt and One Road initiatives, high-speed rail and nuclear power. The CSRC also supports the reform-driven bullish market. The central bank also indicated that the flowing of capitals into the stock market will also boost the real economy. Based on the driving of capitals, OTC capitals are flocking into the stock market. Compared with the last round of the bullish market, the craziest time is yet to come.
> Comprehensive and targeted RRR cuts exercised together, more policies to maintain growth
> Establishment of FTZs counts down, over capacity of cement to see great improvement, Ready Phar. to achieve back-door listing through Xin Jiang Hops
> Ready Phar. to achieve back-door listing through Xin Jiang Hops, E-food to develop tourism
>Talkweb Information to develop online education, Advanced Technology to buy Tian-Long Tungsten & Molybdenum
[XFA Focus]
○ Comprehensive and targeted RRR cuts exercised together, more policies to maintain growth
------
China’s central bank on April 19 decided to lower the reserve requirement ratio (RRR), the minimum level of reserves banks must hold, by one percentage point effective from April 20. Targeted RRR cut measures are also implemented: an additional one-percentage-point RRR cut will be given to rural credit cooperatives, rural banks, etc.; the Agricultural Development Bank of China gets an RRR reduction of two percentage points; the central bank will further lower RRR by 0.5 percentage point for state-owned banks and joint-equity commercial banks that have met the authority’s criteria for lending to agricultural sector or small- and micro- enterprises.
Comment: The implementation time of the RRR cut meets market expectation and the range of RRR cut is beyond expectation. Many banks can enjoy an RRR cut of 1.5 percentage points. According to estimation, the current deposit balance is around 110 trillion yuan and the comprehensive and targeted RRR cuts will release a liquidity of 1.5 trillion yuan. And, the interest rate cut and a series of financial, tax, industries support policies will follow. The bank industry and real estate industries are the most sensitive to the releasing of liquidity. Water conservancy and underground pipe network construction might become important driver to maintain growth. As for listed companies, Anhui Water Resources Development Co., Ltd. (600502.SH) will benefit from the Yangtze River-Huaihe River Water Division Project, which is going to be launched soon; Chongqing Three Gorges Water Conservancy and Electric Power Co., Ltd. (600116.SH) is controlled by China Energy Conservation and Environmental Protection Group, a central enterprise; Shenyang Blue Silver Industry Automatic Equipment Co., Ltd. (300293.SZ) takes the lead in developing utility tunnel system; Fujian Newchoice Pipe Technology Co., Ltd. (300198.SZ) is principally engaged in the material of urban drain-pipe network.
[XFA Selection]
○ Chinese President Xi Jinping starts visit to Pakistan and Xi will visit Indonesia after Pakistan to attend the Asian-African Summit and activities marking the 60th anniversary of the Bandung Conference, from April 20 to 24.
○ Chinese Premier Li Keqiang hosted forum on April 17 proposing to support small and micro enterprises, actively develop Internet plus finance and launch Shenzhen-Hong Kong Stock Connect program at proper time.
○ The Notice on Promoting the Development of Margin Trading-short was released on April 17. China Securities Regulatory Commission explained on April 18 that it does not mean to encourage short selling.
○ Publicly-offered funds are allowed to participate in margin trading and short selling as well as refinancing business. Ordinary stock-oriented funds and commingled funds can only participate in financing business.
○ The world largest monomer photovoltaic power station, invested by China Minsheng Investment Corp., Ltd. with 15 billion yuan, starts construction on April 18; Apple Inc. discloses that it is constructing solar energy project in China.
○ The People’s Education Press publishes the first set of school football textbook in China and the textbook will go to middle and primary schools in the autumn of this year.
[Industry Information]
○ Establishment of FTZs counts down, port, logistics industries to benefit
------
The State Council Information Office is to convene press conference in the morning of April 20. The Ministry of Commerce, Shanghai Municipality, Guangdong Province, Tianjin Municipality and Fujian Province will introduce the progress of Free Trade Zones (FTZs), respectively, and take the questions from journalists. The State Council released the Opinions on Improving Government Work on Ports to Further Develop Foreign Trade on April 17 and proposed to intensify the construction of port infrastructure.
Comment: The press conference held on April 20 means the counting down of the establishment of FTZs. The construction of FTZs brings obvious benefit to the development of port, logistics, etc., while the document requirement of the State Council on strengthening the infrastructure construction of ports shows direct policy support to port and logistics industries. As for listed companies, Tianjin Port Co., Ltd. (600717.SH) is the largest comprehensive port in the North China and benefits from the construction of Tianjin FTZ; Xiamen International Airport Co., Ltd. (600897.SH), engaged in aviation logistics, will benefit from the construction of Fujian FTZ.
○ Low-grade cement sure to obsolete, over capacity to see great improvement
------
XFA learns that the Ministry of Industry and Information Technology (MIIT) held a forum on revising the standard for cement this month in Beijing, stressing the possible impact of the cancelation of P.C.32.5 mix cement on the stable operation and structural adjustment of the industry. The P.C.32.5 mix cement is expected to see full removal within the year.
Comment: P.C.32.5 cement is a kind of low-grade cement, the production of which accounts for half of the cement in China. This is an important reason of over capacity. As introduced by staff from Anhui Conch Cement Company Limited, a cement capacity of 700~800 million tons will exit the market if low-grade cement is canceled, obviously enhancing over capacity of cement. The technical level of leading domestic cement enterprises have reached world advanced level and will benefit from the exit of low-grade cement. As for listed companies, Xinjiang Tianshan Cement Co., Ltd. (000877.SZ) is the leading cement enterprise in northern Xinjiang; Ningxia Building Materials Group Co., Ltd. (600449.SH) is the largest cement enterprise in Ningxia Hui Autonomous Region; Gansu Qilianshan Cement Group Co., Ltd. (600720.SH) occupies most of the cement market in Gansu and Qinghai Province.
○ Supporting document of electricity reform to launch, electricity selling companies to transform
------
Lian Weiliang, deputy director of the National Development and Reform Commission (NDRC), indicated on the press conference of the State Council Information Office on April 17 that the price reform of power transmission and distribution is the key to the whole electricity system reform. The NDRC has launched three supporting documents for electricity system reform in succession and will launch new supporting documents later.
Comment: Improving the marketization of power generation, power selling and power using, as the biggest highlight of the electricity reform, will lead to more sufficient competition. Institutions believe that future commercial mode of electricity selling companies will be transformed into a diversified energy service provider that is closer to users and they might enter energy internet area. Sichuan Guangan Aaa Public Co., Ltd. (600979.SH) enjoy obvious monopolistic advantage in the electricity selling business area of Guang’an City; as the leading electricity supplier of Chenzhou area, Hunan Chendian International Development Co., Ltd. (600969.SH) will see broader extensional development space after the electricity reform.
[Announcement Interpretation]
○ Ready Phar. to achieve back-door listing through Xin Jiang Hops
------
Xin Jiang Hops Co., Ltd. (600090.SH) plans to sell the 50 percent equities of Xinjiang Wusu Beer Co., Ltd. held by it to Carlsberg at 544 million yuan. Meanwhile, it plans to acquire 100 percent equities of Ready Pharmaceutical Co., Ltd. with 6.127 billion yuan by issuing shares at 6.39 yuan per share and in cash and raise a supporting fund of 1.6 billion yuan. Ready Phar., principally engaged in the circulation of medicines, sees a net profit of 357 million yuan in 2014.
After the transaction, a back-door listing, the controlling shareholder of the company will be replaced by Ready Phar. and the actual controller of the company will be replaced by Zhang Meihua and Li Qin, a couple.
○ E-food to acquire CAISSA Tongsheng to develop tourism
------
E-food Group Co., Ltd. (000796.SZ) proposes to acquire 51 percent and 49 percent equities of CAISSA Tongsheng (Beijing) Investment Co., Ltd. held by HNA Tourism Group Co., Ltd. and CAISSA Shijia Tourism Management and Consultancy Co., Ltd., which is priced at 2.4 billion yuan, by issuing 432 million shares at 5.55 yuan per share. It also proposes to raise a supporting fund of 800 million yuan by issuing 124 million shares at 6.45 yuan per share for the development of main business of CAISSA Tongsheng Travel Agency.
The counterparty committed that the subject will record a net profit after extraordinary items of no less than 162 million yuan, 208 million yuan and 254 million yuan from 2015 to 2017. The listed company is expected to be a leading outbound tourism industrial operator based on the resources of Hainan Airline Group after the transaction.
○ Talkweb Information to acquire various companies to develop online education
------
Talkweb Information System Co., Ltd. (002261.SZ) plans to acquire 100 percent equities of Sea Sky Land and Changzheng Education as well as the remaining 49 percent and 40 percent equities of Zhuhai Longxing Information Technology Co., Ltd. and Shaanxi Chengzhang Information Consultancy Co., Ltd. with a total price of 1.87 billion yuan by issuing shares through private placement and in cash. The company will fully control Longxing Information and Chengzhang Information after the transaction. It also proposes to raise a supporting fund of 438 million yuan by issuing shares at 16.4 yuan per share through private placement.
Based on the commitment on performance, the subject companies will record a total net profit of no less than 118 million yuan and 151 million yuan from 2015 to 2016. Sea Sky Land is a leading education evaluation technology and services supplier in China and it offers online college entrance examination reviewing services in 17 provinces. Changzheng Education boats strong offline channels and contents creation capacities for early childhood education.
○ Advanced Technology to buy 100 pct equities of Tian-Long Tungsten & Molybdenum
------
Advanced Technology & Materials Co., Ltd. (000969.SZ) plans to buy 100 percent equities of Beijing Tian-Long Tungsten & Molybdenum Co., Ltd. by issuing shares through private placement. It also proposes to raise a supporting fund of 342 million yuan by issuing shares at 8.17 yuan per share to its controlling shareholder China Iron & Steel Research Institute Group and the employee stock ownership plan.
Based on the performance commitment, Tian-Long Tungsten & Molybdenum will see a net profit of 110 million yuan, 135 million yuan and 165 million yuan from 2015 to 2017. Advanced Technology will inject the business assets of the branch for refractory materials into Tian-Long Tungsten & Molybdenum and will lead the industrial integration after the acquisition.
○ Datong Gas to acquire equities of two natural gas companies through private placement
------
Sichuan Datong Gas Development Co., Ltd. (000593.SZ) intends to raise 615 million yuan by issuing shares at no less than 7.2 yuan per share to its substantial shareholder Datong Group and the employee stock ownership plan (yet to be established) through private placement. The proceeds will be used in acquiring 88 percent equities of Jingneng Natural Gas and Luojiang Natural Gas as well as supplementing working capital. The substantial shareholder will subscribe no less than 45 percent.
○ China Resources Double-crane Phar. to acquire 100 pct equities of China Resources Saike Phar.
------
China Resources Double-crane Pharmaceutical Co., Ltd. (600062.SH) plans to acquire 100 percent equities of China Resources Saike Pharmaceutical Co., Ltd. at 3.7 billion yuan held by Beijing Pharmaceutical Group, its substantial shareholder, by issuing shares at 19.69 yuan per share and in cash. The shareholding proportion of Beijing Pharmaceutical Group will be increased from 49.12 percent to 60.23 percent after the acquisition.
China Resources Saike Phar. owns three main businesses, namely self-made preparations, active pharmaceutical ingredients and pharmaceutical business. It mainly treats cardiovascular and urinary system diseases. It recorded a net profit of 182 million yuan and 196 million yuan in 2013 and 2014.
○ Jolly Phar. to control 3rd People’s Hospital of Deqing County
------
Zhejiang Jolly Pharmaceutical Co., Ltd. (300181.SZ) proposes to invest another 190 million yuan in the 3rd People’s Hospital of Deqing County with its own capital. It will hold 75 percent contribution of the hospital after that. The hospital is a comprehensive Class-2 hospital. The investment is the participation of the company into the reform of public hospitals as well as a major step in developing the whole medical industry. It will try to bring profit growth through distant treatment, pharmaceutical e-business and other new service models.
[Financial Reports Express]
○ DZH and Do-Fluoride Chemicals expect high growth
------
Shanghai DZH Limited (601519.SH) expects its net profit in the first quarter to increase about 400 percent year on year. It announced that its assets reorganization proposal has been approved by the China Securities Regulatory Commission (CSRC). Do-Fluoride Chemicals Co., Ltd. (002407.SZ) expects its net profit in the first half to see a year-on-year growth of 130 percent to 160 percent.
○ Haimo Technologies proposes high share conversion and dividend
------
Lanzhou Haimo Technologies Co., Ltd. (300084.SZ) saw a year-on-year growth of 78 percent in its 2014 net profit and proposes a 12-for-10 conversion of capital surplus into shares combined with 0.3 yuan dividend for every 10 shares. Fujian Longking Co., Ltd. (600388.SH) saw a year-on-year growth of 1.5 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 3.3 yuan dividend for every 10 shares. China Zhonghua Geotechnical Engineering Co., Ltd. (002542.SZ) saw a year-on-year growth of 84 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.
Ourpalm Co., Ltd. (300315.SZ) saw a year-on-year growth of 115 percent in its 2014 net profit and proposes a 9-for-10 conversion of capital surplus into shares combined with 0.29 yuan dividend for every 10 shares. Shanghai Taisheng Wind Power Equipment Co., Ltd. (300129.SZ) saw a year-on-year growth of 25 percent in its 2014 net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. Jiangyin Haida Rubber and Plastic Co., Ltd. (300320.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 1.25 yuan dividend for every 10 shares according to its annual report.
[Weekly Review]
○ Name rectification for “flocking together”
------
Chinese often flock together and criticize others for flocking together. The flocking of migrant farmers to coastal areas is dubbed as “blind flow”. The flocking of investment made by government or enterprises is labeled as “repeated construction”. The flocking of new investors in opening accounts is known as “leftover takers”. However, with the passage of time, the “blind flow” has become the labor export with supports; the transportation facilities known as “repeated construction” saw massive vehicles; the new investors with huge investment have become the winners in the stock market.
As a matter fact, there is not right or wrong in flocking together. The success depends on the orientation of flocking follows the development trend. Take cinemas as an example, which saw flocking construction before, the tickets sales saw inevitable surge with the improvement of consumers’ spending ability and the advancing of anti-piracy. Despite the screen excess in short term, it can make profit soon. Based on this trend, XFA reported the Fast & Furious 7 in detail on its debut last week. Wanda Cinema Line Co., Ltd. (002739.SZ), which was mentioned in the report, soared by the daily limit of 10 percent on the following day.
Is it reasonable for investors flocking into the stock market? It shall be admitted that the current economic growth is still sluggish. But we should never ignore the continuous support of the government on mass entrepreneurship, One Belt and One Road initiatives, high-speed rail and nuclear power. The CSRC also supports the reform-driven bullish market. The central bank also indicated that the flowing of capitals into the stock market will also boost the real economy. Based on the driving of capitals, OTC capitals are flocking into the stock market. Compared with the last round of the bullish market, the craziest time is yet to come.
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