[Today’s Guide]
> Beibu Gulf FTZ mulls expansion, Yangtze Economic Belt to see various supports
> NPC discusses information security, ethylene glycol price hike beat expectation
> Goldleaf Jewelry to acquire Fenghui Leasing through private placement, Sky Dragon Printing Ink to develop Internet marketing
> Swan Fiber to inject military communications asset, Maoye Logistics to fully control Changshi Communications
[XFA Focus]
○ Beibu Gulf FTZ mulls expansion and to be listed as third batch of FTZs
------
XFA learnt that Guangxi Zhuang Autonomous Region has adjusted its plan on the application of the Beibu Gulf Free Trade Zone with the area expanded from the original 80 square kilometers to nearly 100 square kilometers. Besides the China-Malaysia Qinzhou Industrial Park, Qinzhou Bonded Port and Qinzhou Economic and Technological Development Park, the bonded areas in Nanning City, Beihai City and Fangchenggang City are also covered in the plan. Qinzhou City also plans to initiate 78 trial items in the first half.
Comment: The four free trade zones approved in the first two rounds are in eastern provinces and municipalities. The central and western parts are likely to have opportunities in the third round. The application of the Beibu Gulf Free Trade Zone started earlier and it is located in the intersection of the China–ASEAN Free Trade Area, the China-Vietnam “Two Corridors and One Ring” and other regional cooperation areas. It enjoys a favorable geographic location and is more likely to be approved. In terms of local companies, Beibuwan Port Co., Ltd. (000582.SZ) plans to establish the most convenient port to the ASEAN in China through the river-sea and sea-railway connectivity. Beibu Gulf Tourism Corporation Limited (603869.SH) has been approved to prepare for the opening of the Beihai-Halong Bay international tourism route. Guangxi Wuzhou Communications Co., Ltd. (600368.SH) has invested in logistics and trade business.
○ Yangtze Economic Belt to see various supports, transport facilities to highlight
------
Zhang Gaoli, Vice Premier of the State Council, required accelerating the development of railway, highway, waterway, airline, pipeline and other transportation means to build an integrated and three-dimensional transportation corridor during his visit to Wuhan City on advancing the Yangtze Economic Belt and deliberating the guideline on the development plan of the Yangtze Economic Belt. In addition, the Xiangjiang New Area in Hunan Province has been approved as the 12th state-level new area and will play a more important role in the construction of the Yangtze Economic Belt.
Comment: Since the Yangtze Economic Belt has been set as a strategic plan at the central economic work conference, many ministries and commissions have releases supporting policies and documents, fully showing the resolve of the state to develop the Yangtze Economic Belt as a new economic growth pillar. Institutes expect that the top design plan on the Yangtze Economic Belt will be introduced in the first half and it will greatly boost the sector. Water transportation enterprises like Nanjing Port Co., Ltd. (002040.SZ), highway enterprises like Hubei Chutian Expressway Co., Ltd. (600035.SH) and railway equipment enterprises like Zhuzhou Times New Material Technology Co., Ltd. (600458.SH) are likely to see more market opportunities.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) initiates special law-enforcement campaigns on cracking down false statements, inside transactions, market manipulations and other illegal and irregular activities.
○ An 8.1-magnitude earthquake hit Nepal. Local media reported that more than 90 percent of old buildings in Kathmandu Valley were destroyed.
○ The expanded area of China (Shanghai) Pilot Free Trade Zone will be officially established on April 27. Lujiazui Financial Area, Jinqiao Development Area and Zhangjiang High-tech Area will be covered by the FTZ.
○ The first tiered fund and the first tiered fund in the banking sector on the Shanghai Stock Exchange will be introduced on April 27 and 28, both of which will be invested in blue-chip stocks.
○ The Economic Observer reported that two central enterprises, namely China Poly Group Corporation and Chinatex Corporation, are negotiating on consolidation. It is expected to be conducted in the second half.
○HEAVEN-SENT Capital Management Group Co., Ltd. will be listed on the National Equities Exchange and Quotations (NEEQ). It indicated that it will continue to follow the “shareholder activism” and invest more in overseas mergers and acquisitions.
[Industry Information]
○ NPC discusses information security, information industry strives to lead globally
------
The Standing Committee of the 12th National People’s Congress (NPC) held a special seminar with the theme of “Information Technology and Information Security” at the Great Hall of the People. Zhang Dejiang, Chairman of the Standing Committee of the NPC, chaired the seminar. Huai Jinpeng, the lecturer, Vice Minister of the Ministry of Industry and Information Technology (MIIT) and academician of China Academy of Sciences, analyzed the situation faced by the information security. Huai believes that it should promote the improvement of China’s electronic information industry in the global value chain based on significant demands in social and economic development, build multinationals with brand effects and become a country leading the development of the global information security industry.
Comment: Authorities have been supporting information security and the level of the industry is greatly raised with huge development potential. In terms of listed companies, Nsfocus Information Technology Co., Ltd. (300369.SZ) focuses on the information security technology in telecommunication and financial industries. Surfilter Network Technology Co., Ltd. (300311.SZ) is a leading manufacturer in the domestic network contents review and regulation area.
○ PV industry to follow “One Belt and One Road” initiatives, enterprises sign declaration of international cooperation
------
Nearly 100 Chinese enterprises at the downstream of the photovoltaic industrial chain gathered in Shanghai at April 26 to participate at the SNEC 9th (2015) International Photovoltaic Power Generation Conference & Exhibition. Representatives from various photovoltaic enterprises signed the “declaration of international cooperation in the photovoltaic industry” and indicated that they would jointly expand overseas markets to achieve a win-win situation.
Comment: The summit initiated a new journey for Chinese photovoltaic enterprises to develop globally. The photovoltaic capacity in China accounts for 70 percent of the global volume. Chinese photovoltaic enterprises are actively exploring the output of advanced manufacturing technologies and business concepts. It is in line with the strategic plan of the One Belt and One Road. The Asian Infrastructure Investment Bank (AIIB) has set the tone with energy investment as the basis and offers a favorable policy environment for Chinese photovoltaic enterprises to go globally. In terms of listed companies, Shenzhen Rainbow Fine Chemical Industry Co., Ltd. (002256.SZ) owns sufficient photovoltaic power station reserve and its in-grid power capacity will reach 600MW by the end of the year. Jiangsu Akcome Science and Technology Co., Ltd. (002610.SZ) plans to increase the photovoltaic power stations in operation by 80 percent. Its first quarterly report shows that the “Yunfeng” products of Wang Yawei have made huge investments in it.
○ Yangzi Petrochemical explosion further affects industry, ethylene glycol price hike beat expectation
------
The price of ethylene glycol hiked 19 percent in the recent week, ranking first among all chemical products. It has increased by nearly 60 percent in this year and has surpassed the high level in 2014. The explosion of the Sinopec Yangzi Petrochemical Company Limited on April 21 reduced the supply in the ethylene glycol industry by about 5 percent and the supply will be tight in short term.
Comment: the explosion of the Yangzi Petrochemical and a low inventory contributed to the price hike of ethylene glycol. Institutes believe that the oil price recovery and the normal demand for polyester in the downstream supports the ethylene glycol, which is the internal logic of the price hike. In terms of listed companies, Danhua Chemical Technology Co., Ltd. (600844.SH) is principally engaged in coal-based ethylene glycol. The equipment of Tongliao GEM Chemical Co., Ltd. with a capacity of 200,000 tons in the first phase will put into operation and it is likely to increase capacity later. Zhangjiagang Freetrade Science and Technology Co., Ltd. (600794.SH) is principally engaged in the storage and trade of ethylene glycol products and the value of its inventories will hike significantly.
[Announcement Interpretation]
○ Goldleaf Jewelry to acquire Fenghui Leasing to enter financial industry
------
Goldleaf Jewelry Co., Ltd. (000587.SZ) plans to acquire 90 percent equities of Fenghui Leasing Co., Ltd. through private placement at the offering price of 11.92 yuan per share and in cash. It also plans to raise a supporting fund of 1.5 billion yuan through private placement at the same offering price from Shenzhen Qianhai Jiuwu Enterprise Group Co. Ltd., its controlling shareholder. The subject asset is preliminarily estimated as 5,950 million yuan.
90 percent equities of Fenghui Leasing shall bring a net profit of 450 million yuan, 720 million yuan and 900 million yuan, respectively, in next three years, according to the performance commitment. Goldleaf Jewelry will be principally engaged in both leasing business and gold business after the acquisition.
○ Sky Dragon Printing Ink to acquire Yutang Lianchuang to develop Internet marketing
------
Guangdong Sky Dragon Printing Ink Group Co., Ltd. (300063.SZ) plans to acquire 100 percent equities of Beijing Yutang Lianchuang Information Technology Co., Ltd. with 1.3 billion yuan, among which, 1.17 billion yuan will be paid by issuing 77.07 million shares at 15.18 yuan per share through private placement and 0.13 billion yuan will be paid in cash. The company also plans to raise a supporting fund of 190 million yuan by issuing 12.38 million shares at 15.35 yuan per share through private placement.
Yutang Lianchuang, principally engaged in Internet marketing, ranks as the first five-star agent certified by Baidu and has in-depth cooperation with Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) and Sogou.com Inc. The net profit of Yutang Lianchuang records 64.23 million yuan in 2014. The counterparty promises that its net profit from 2015 to 2017 will be no less than 100 million yuan, 130 million yuan and 169 million yuan, respectively.
○ Swan Fiber to inject military communications asset
------
Swan Fiber Co., Ltd. (000687.SZ) plans to exchange in all military communications and supporting business of China Communication Technology Co., Ltd., its new controlling shareholder, and, exchange out part of its original chemical fiber business. For the asset to be exchanged in, it gained a net profit of 20.73 million yuan and 95.69 million yuan, respectively, in 2013 and 2014. After transaction, Swan Fiber will reserve promising based carbon fiber business and further develop competitive military communications and supporting business.
○ Maoye Logistics to fully control Changshi Communications, a move closer to information industry
------
Maoye Logistics Corporation Ltd. (000889.SZ) plans to acquire 100 percent equities of Guangdong Changshi Communications Co., Ltd. with 1.2 billion yuan. Changshi Communications, engaged in the maintenance and optimization of communications network, records a net profit of 59 million yuan in 2014. According to performance commitment, the net profit of the company from 2015 to 2017 shall reach 90 million yuan, 108 million yuan and 130 million yuan, respectively.
Meanwhile, Zhongzhao Investment Management Co., Ltd., controlling shareholder of the listed company, plans to transfer 32 million shares, accounting for 5.15 percent of the total share capital, to five related parties including Shenyang Maoye Properties Co., Ltd., Shenyang Maoye Department Store, etc. and Zou Jun, actual controller of Changshi Communications. The offering prices are 10.94 yuan per share and 9.78 yuan per share. The company’s stock closed at 9.78 yuan per share before trading suspension.
Comment: Maoye Logistics acquired Beijing TrustMeDu Sci. Tech Co., Ltd., a mobile information intelligent transmission service provider, in last July. Its move in acquiring Changshi Communications shows that it no longer just focuses on retailing business and its following planning is worthy of attentions.
○ Apeloa Phar. to raise RMB700 mln to expand production, shareholders to subscribe more than 80 pct of private placement
------
Apeloa Pharmaceutical Co., Ltd. (000739.SZ) plans to raise 700 million yuan by issuing shares at 8.2 yuan per share through private placement to invest in the construction of production lines producing 3 billion oral solid dosage forms annually and to supplement working capital and pay off bank loans. Hengdian Group Holdings Co., Ltd., controlling shareholder of the company, and Dongyang Pukang Investment Partnership Enterprise (Limited Partnership), Dongyang Pude Investment Partnership Enterprise (Limited Partnership) and Dongyang Puyi Investment Partnership Enterprise (Limited Partnership), controlled by Hengdian Group Holdings, will totally subscribe 600 million yuan of the private placement. The stock of Apeloa Pharmaceutical closed at 10.43 yuan per share before trading suspension.
○ Shenwu Environmental Technology signs contract of RMB 1 bln
------
Tianli Environmental Engineering (Xinjiang) Co., Ltd., a fully-owned subsidiary of Shenwu Environmental Technology Co., Ltd. (300156.SZ), signs the PC contract of the 0.4 million tons/year calcium carbide project with Shanxi Xiangkuang Group Co., Ltd. The aggregate amount of the contract totals more than 1 billion yuan, accounting for 344 percent of its 2014 annual audited revenue.
[Financial Reports Express]
○ Hengshun Zhongsheng and Goldwind Science & Technology to expect large surge of net profit in semiyearly report
------
Thanks to the large growth of orders being executed, Qingdao Hengshun Zhongsheng Group Co., Ltd. (300208.SZ) expects its net profit from Jan. to June to grow by 1058~1123 percent from year on year; due to the year-on-year growth of the selling capacity of draught fans, the net profit of Xinjiang Goldwind Science & Technology Co., Ltd. (002202.SZ; 02208.HK) grows by 390 percent in Q1 report and expects to grow by 200~250 percent in semiyearly report.
○ Yili Industrial, Luolai Home Textile, etc. plan high share conversion and dividend
------
With net profit in 2014 seeing a year-on-year growth of 30 percent, Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 8 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 19 percent, Luolai Home Textile Co., Ltd. (002293.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 10 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 66 percent, Emei Shan Tourism Company Limited (000888.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1.8 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 22 percent, Nsfocus Information Technology Co., Ltd. (300369.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 2.1 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 175 percent, OB Telecom Electronics Co., Ltd. (300270.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.
[Weekly Review]
○ Not easy to hold stocks
------
The Shanghai composite index ended positively for the eighth consecutive week and the Chinext Board recorded a new high last week. Analysis afterwards shows that the index is very healthy. XFA played a good role of outpost: it reminded in the Weekly Review on April 19 that “compared with last round of bullish market, the craziest moment has not come yet”; it reminded in the XFA Focus on April 23 that “there is no need to exaggerate the impact of accelerated issuance of new stocks”. But telling from the situation around us, it’s not unusual to see people selling low and buying high.
Though many people do understand that “holding stocks is the king” in a bullish market, few of them can keep calm in continuously emerging information. Many people regret that “if I hold XXXX stock till now, I would have gained a profit of X times”. Still, many people keep selling stocks just because these stocks do not surge quick enough.
Expectation on performance growth can be one factor firming the confidence in holding stocks. The disclosure of Q1 reports in 2015 will be ended at end-April. Spend time studying on the reports and figure out industries seeing growth in the first quarter and companies seeing relatively low valuation. Every dog has its day in a bullish market and the areas with low valuation will surely be improved by funds.
> Beibu Gulf FTZ mulls expansion, Yangtze Economic Belt to see various supports
> NPC discusses information security, ethylene glycol price hike beat expectation
> Goldleaf Jewelry to acquire Fenghui Leasing through private placement, Sky Dragon Printing Ink to develop Internet marketing
> Swan Fiber to inject military communications asset, Maoye Logistics to fully control Changshi Communications
[XFA Focus]
○ Beibu Gulf FTZ mulls expansion and to be listed as third batch of FTZs
------
XFA learnt that Guangxi Zhuang Autonomous Region has adjusted its plan on the application of the Beibu Gulf Free Trade Zone with the area expanded from the original 80 square kilometers to nearly 100 square kilometers. Besides the China-Malaysia Qinzhou Industrial Park, Qinzhou Bonded Port and Qinzhou Economic and Technological Development Park, the bonded areas in Nanning City, Beihai City and Fangchenggang City are also covered in the plan. Qinzhou City also plans to initiate 78 trial items in the first half.
Comment: The four free trade zones approved in the first two rounds are in eastern provinces and municipalities. The central and western parts are likely to have opportunities in the third round. The application of the Beibu Gulf Free Trade Zone started earlier and it is located in the intersection of the China–ASEAN Free Trade Area, the China-Vietnam “Two Corridors and One Ring” and other regional cooperation areas. It enjoys a favorable geographic location and is more likely to be approved. In terms of local companies, Beibuwan Port Co., Ltd. (000582.SZ) plans to establish the most convenient port to the ASEAN in China through the river-sea and sea-railway connectivity. Beibu Gulf Tourism Corporation Limited (603869.SH) has been approved to prepare for the opening of the Beihai-Halong Bay international tourism route. Guangxi Wuzhou Communications Co., Ltd. (600368.SH) has invested in logistics and trade business.
○ Yangtze Economic Belt to see various supports, transport facilities to highlight
------
Zhang Gaoli, Vice Premier of the State Council, required accelerating the development of railway, highway, waterway, airline, pipeline and other transportation means to build an integrated and three-dimensional transportation corridor during his visit to Wuhan City on advancing the Yangtze Economic Belt and deliberating the guideline on the development plan of the Yangtze Economic Belt. In addition, the Xiangjiang New Area in Hunan Province has been approved as the 12th state-level new area and will play a more important role in the construction of the Yangtze Economic Belt.
Comment: Since the Yangtze Economic Belt has been set as a strategic plan at the central economic work conference, many ministries and commissions have releases supporting policies and documents, fully showing the resolve of the state to develop the Yangtze Economic Belt as a new economic growth pillar. Institutes expect that the top design plan on the Yangtze Economic Belt will be introduced in the first half and it will greatly boost the sector. Water transportation enterprises like Nanjing Port Co., Ltd. (002040.SZ), highway enterprises like Hubei Chutian Expressway Co., Ltd. (600035.SH) and railway equipment enterprises like Zhuzhou Times New Material Technology Co., Ltd. (600458.SH) are likely to see more market opportunities.
[XFA Selection]
○ The China Securities Regulatory Commission (CSRC) initiates special law-enforcement campaigns on cracking down false statements, inside transactions, market manipulations and other illegal and irregular activities.
○ An 8.1-magnitude earthquake hit Nepal. Local media reported that more than 90 percent of old buildings in Kathmandu Valley were destroyed.
○ The expanded area of China (Shanghai) Pilot Free Trade Zone will be officially established on April 27. Lujiazui Financial Area, Jinqiao Development Area and Zhangjiang High-tech Area will be covered by the FTZ.
○ The first tiered fund and the first tiered fund in the banking sector on the Shanghai Stock Exchange will be introduced on April 27 and 28, both of which will be invested in blue-chip stocks.
○ The Economic Observer reported that two central enterprises, namely China Poly Group Corporation and Chinatex Corporation, are negotiating on consolidation. It is expected to be conducted in the second half.
○HEAVEN-SENT Capital Management Group Co., Ltd. will be listed on the National Equities Exchange and Quotations (NEEQ). It indicated that it will continue to follow the “shareholder activism” and invest more in overseas mergers and acquisitions.
[Industry Information]
○ NPC discusses information security, information industry strives to lead globally
------
The Standing Committee of the 12th National People’s Congress (NPC) held a special seminar with the theme of “Information Technology and Information Security” at the Great Hall of the People. Zhang Dejiang, Chairman of the Standing Committee of the NPC, chaired the seminar. Huai Jinpeng, the lecturer, Vice Minister of the Ministry of Industry and Information Technology (MIIT) and academician of China Academy of Sciences, analyzed the situation faced by the information security. Huai believes that it should promote the improvement of China’s electronic information industry in the global value chain based on significant demands in social and economic development, build multinationals with brand effects and become a country leading the development of the global information security industry.
Comment: Authorities have been supporting information security and the level of the industry is greatly raised with huge development potential. In terms of listed companies, Nsfocus Information Technology Co., Ltd. (300369.SZ) focuses on the information security technology in telecommunication and financial industries. Surfilter Network Technology Co., Ltd. (300311.SZ) is a leading manufacturer in the domestic network contents review and regulation area.
○ PV industry to follow “One Belt and One Road” initiatives, enterprises sign declaration of international cooperation
------
Nearly 100 Chinese enterprises at the downstream of the photovoltaic industrial chain gathered in Shanghai at April 26 to participate at the SNEC 9th (2015) International Photovoltaic Power Generation Conference & Exhibition. Representatives from various photovoltaic enterprises signed the “declaration of international cooperation in the photovoltaic industry” and indicated that they would jointly expand overseas markets to achieve a win-win situation.
Comment: The summit initiated a new journey for Chinese photovoltaic enterprises to develop globally. The photovoltaic capacity in China accounts for 70 percent of the global volume. Chinese photovoltaic enterprises are actively exploring the output of advanced manufacturing technologies and business concepts. It is in line with the strategic plan of the One Belt and One Road. The Asian Infrastructure Investment Bank (AIIB) has set the tone with energy investment as the basis and offers a favorable policy environment for Chinese photovoltaic enterprises to go globally. In terms of listed companies, Shenzhen Rainbow Fine Chemical Industry Co., Ltd. (002256.SZ) owns sufficient photovoltaic power station reserve and its in-grid power capacity will reach 600MW by the end of the year. Jiangsu Akcome Science and Technology Co., Ltd. (002610.SZ) plans to increase the photovoltaic power stations in operation by 80 percent. Its first quarterly report shows that the “Yunfeng” products of Wang Yawei have made huge investments in it.
○ Yangzi Petrochemical explosion further affects industry, ethylene glycol price hike beat expectation
------
The price of ethylene glycol hiked 19 percent in the recent week, ranking first among all chemical products. It has increased by nearly 60 percent in this year and has surpassed the high level in 2014. The explosion of the Sinopec Yangzi Petrochemical Company Limited on April 21 reduced the supply in the ethylene glycol industry by about 5 percent and the supply will be tight in short term.
Comment: the explosion of the Yangzi Petrochemical and a low inventory contributed to the price hike of ethylene glycol. Institutes believe that the oil price recovery and the normal demand for polyester in the downstream supports the ethylene glycol, which is the internal logic of the price hike. In terms of listed companies, Danhua Chemical Technology Co., Ltd. (600844.SH) is principally engaged in coal-based ethylene glycol. The equipment of Tongliao GEM Chemical Co., Ltd. with a capacity of 200,000 tons in the first phase will put into operation and it is likely to increase capacity later. Zhangjiagang Freetrade Science and Technology Co., Ltd. (600794.SH) is principally engaged in the storage and trade of ethylene glycol products and the value of its inventories will hike significantly.
[Announcement Interpretation]
○ Goldleaf Jewelry to acquire Fenghui Leasing to enter financial industry
------
Goldleaf Jewelry Co., Ltd. (000587.SZ) plans to acquire 90 percent equities of Fenghui Leasing Co., Ltd. through private placement at the offering price of 11.92 yuan per share and in cash. It also plans to raise a supporting fund of 1.5 billion yuan through private placement at the same offering price from Shenzhen Qianhai Jiuwu Enterprise Group Co. Ltd., its controlling shareholder. The subject asset is preliminarily estimated as 5,950 million yuan.
90 percent equities of Fenghui Leasing shall bring a net profit of 450 million yuan, 720 million yuan and 900 million yuan, respectively, in next three years, according to the performance commitment. Goldleaf Jewelry will be principally engaged in both leasing business and gold business after the acquisition.
○ Sky Dragon Printing Ink to acquire Yutang Lianchuang to develop Internet marketing
------
Guangdong Sky Dragon Printing Ink Group Co., Ltd. (300063.SZ) plans to acquire 100 percent equities of Beijing Yutang Lianchuang Information Technology Co., Ltd. with 1.3 billion yuan, among which, 1.17 billion yuan will be paid by issuing 77.07 million shares at 15.18 yuan per share through private placement and 0.13 billion yuan will be paid in cash. The company also plans to raise a supporting fund of 190 million yuan by issuing 12.38 million shares at 15.35 yuan per share through private placement.
Yutang Lianchuang, principally engaged in Internet marketing, ranks as the first five-star agent certified by Baidu and has in-depth cooperation with Qihoo 360 Technology Co. Ltd. (NYSE: QIHU) and Sogou.com Inc. The net profit of Yutang Lianchuang records 64.23 million yuan in 2014. The counterparty promises that its net profit from 2015 to 2017 will be no less than 100 million yuan, 130 million yuan and 169 million yuan, respectively.
○ Swan Fiber to inject military communications asset
------
Swan Fiber Co., Ltd. (000687.SZ) plans to exchange in all military communications and supporting business of China Communication Technology Co., Ltd., its new controlling shareholder, and, exchange out part of its original chemical fiber business. For the asset to be exchanged in, it gained a net profit of 20.73 million yuan and 95.69 million yuan, respectively, in 2013 and 2014. After transaction, Swan Fiber will reserve promising based carbon fiber business and further develop competitive military communications and supporting business.
○ Maoye Logistics to fully control Changshi Communications, a move closer to information industry
------
Maoye Logistics Corporation Ltd. (000889.SZ) plans to acquire 100 percent equities of Guangdong Changshi Communications Co., Ltd. with 1.2 billion yuan. Changshi Communications, engaged in the maintenance and optimization of communications network, records a net profit of 59 million yuan in 2014. According to performance commitment, the net profit of the company from 2015 to 2017 shall reach 90 million yuan, 108 million yuan and 130 million yuan, respectively.
Meanwhile, Zhongzhao Investment Management Co., Ltd., controlling shareholder of the listed company, plans to transfer 32 million shares, accounting for 5.15 percent of the total share capital, to five related parties including Shenyang Maoye Properties Co., Ltd., Shenyang Maoye Department Store, etc. and Zou Jun, actual controller of Changshi Communications. The offering prices are 10.94 yuan per share and 9.78 yuan per share. The company’s stock closed at 9.78 yuan per share before trading suspension.
Comment: Maoye Logistics acquired Beijing TrustMeDu Sci. Tech Co., Ltd., a mobile information intelligent transmission service provider, in last July. Its move in acquiring Changshi Communications shows that it no longer just focuses on retailing business and its following planning is worthy of attentions.
○ Apeloa Phar. to raise RMB700 mln to expand production, shareholders to subscribe more than 80 pct of private placement
------
Apeloa Pharmaceutical Co., Ltd. (000739.SZ) plans to raise 700 million yuan by issuing shares at 8.2 yuan per share through private placement to invest in the construction of production lines producing 3 billion oral solid dosage forms annually and to supplement working capital and pay off bank loans. Hengdian Group Holdings Co., Ltd., controlling shareholder of the company, and Dongyang Pukang Investment Partnership Enterprise (Limited Partnership), Dongyang Pude Investment Partnership Enterprise (Limited Partnership) and Dongyang Puyi Investment Partnership Enterprise (Limited Partnership), controlled by Hengdian Group Holdings, will totally subscribe 600 million yuan of the private placement. The stock of Apeloa Pharmaceutical closed at 10.43 yuan per share before trading suspension.
○ Shenwu Environmental Technology signs contract of RMB 1 bln
------
Tianli Environmental Engineering (Xinjiang) Co., Ltd., a fully-owned subsidiary of Shenwu Environmental Technology Co., Ltd. (300156.SZ), signs the PC contract of the 0.4 million tons/year calcium carbide project with Shanxi Xiangkuang Group Co., Ltd. The aggregate amount of the contract totals more than 1 billion yuan, accounting for 344 percent of its 2014 annual audited revenue.
[Financial Reports Express]
○ Hengshun Zhongsheng and Goldwind Science & Technology to expect large surge of net profit in semiyearly report
------
Thanks to the large growth of orders being executed, Qingdao Hengshun Zhongsheng Group Co., Ltd. (300208.SZ) expects its net profit from Jan. to June to grow by 1058~1123 percent from year on year; due to the year-on-year growth of the selling capacity of draught fans, the net profit of Xinjiang Goldwind Science & Technology Co., Ltd. (002202.SZ; 02208.HK) grows by 390 percent in Q1 report and expects to grow by 200~250 percent in semiyearly report.
○ Yili Industrial, Luolai Home Textile, etc. plan high share conversion and dividend
------
With net profit in 2014 seeing a year-on-year growth of 30 percent, Inner Mongolia Yili Industrial Group Co., Ltd. (600887.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with 8 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 19 percent, Luolai Home Textile Co., Ltd. (002293.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 10 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 66 percent, Emei Shan Tourism Company Limited (000888.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1.8 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 22 percent, Nsfocus Information Technology Co., Ltd. (300369.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 2.1 yuan dividend for every 10 shares; with net profit in 2014 seeing a year-on-year growth of 175 percent, OB Telecom Electronics Co., Ltd. (300270.SZ) proposes a 12-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.
[Weekly Review]
○ Not easy to hold stocks
------
The Shanghai composite index ended positively for the eighth consecutive week and the Chinext Board recorded a new high last week. Analysis afterwards shows that the index is very healthy. XFA played a good role of outpost: it reminded in the Weekly Review on April 19 that “compared with last round of bullish market, the craziest moment has not come yet”; it reminded in the XFA Focus on April 23 that “there is no need to exaggerate the impact of accelerated issuance of new stocks”. But telling from the situation around us, it’s not unusual to see people selling low and buying high.
Though many people do understand that “holding stocks is the king” in a bullish market, few of them can keep calm in continuously emerging information. Many people regret that “if I hold XXXX stock till now, I would have gained a profit of X times”. Still, many people keep selling stocks just because these stocks do not surge quick enough.
Expectation on performance growth can be one factor firming the confidence in holding stocks. The disclosure of Q1 reports in 2015 will be ended at end-April. Spend time studying on the reports and figure out industries seeing growth in the first quarter and companies seeing relatively low valuation. Every dog has its day in a bullish market and the areas with low valuation will surely be improved by funds.
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