[Today's Guide]
> National planning unveiled for traditional Chinese medicine to guarantee healthy industrial development
> “One Belt and One Road” overlaps with domestic demand, orders on oil and gas pipeline to see explosive growth
> Old-age care service industry supported by three departments, drop of aspartame to boost substitute products
> Handler Special Vehicle to acquire Lianshuo Automation Technology, Funeng to raise RMB3 bln through provate placement to invest in wind power
[XFA Focus]
○ National planning unveiled for traditional Chinese medicine to guarantee healthy industrial development
------
The Protection and Development Planning for Traditional Chinese Medicine (2015-2020), jointly formulated by 12 departments and commissions including the Ministry of Industry and Information Technology (MIIT), the State Administration of Traditional Chinese Medicine, the National Development and Reform Commission (NDRC), etc., was officially released on April 27, becoming the first national planning on the protection and development of traditional Chinese medicine. The planning proposes to achieve the goals that traditional Chinese medicine resource monitoring spots and technical information service network cover more than 80 percent of the county-level traditional Chinese medicine producing areas by 2020; the output of planted traditional Chinese medicine sees an average annual growth of 10 percent. As for guarantee measure, the construction of traditional Chinese medicine production and supporting infrastructure will be covered by agriculture-supporting policies.
Comment: The planning makes it clear to improve the quantity and quality of traditional Chinese medicine. At present, the P/E ratio of traditional Chinese medicine sector ranks the last compared with segmented industries of medicine and biology in A-share market. As the supply and quality of raw material improves in the future, the production of traditional Chinese medicine will be more standardized, large-scale and industrialized; its valuation will be enhanced. As for listed companies, Beijing Tongrentang Co., Ltd. (600085.SH) sees steady performance growth and has set up 110 retailing terminals overseas; the latest announcement of Kangmei Pharmaceutical Co., Ltd. (600518.SH) claims to invest 1 billion yuan in ginsengs under forest business; two injections of Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH) are regarded as promising by institutions.
[XFA Selection]
○ Reuters reports that Chinese central government might directly acquire asset of commercial banks to input base money; RMB spot exchange rate suffers the largest one-day drop in a year.
○ The State-owned Assets Supervision and Administration Commission (SASAC) responds to the rumor that “the number of central enterprises might be cut to 40” and indicates that the news story was written without interviewing or verifying with SASAC.
○ Wang Tianpu, General Manager of China Petrochemical Corporation (Sinopec Group), is suspected of being involved in severe violation of discipline and law and is under investigation.
○ The Ministry of Finance promotes PPP mode in water pollution prevention and treatment area. Favorable policies including financial incentive will be provided to the project.
○ The logistics information platform of the Ministry of Traffic releases the first O2O product applying to logistics parks. Intelligent logistics industry sees quickened expansion.
○ The formulation of the thirteenth five-year plan for energy storage industry is kicked off. The rapid development of new energy will bring huge development space for energy storage industry.
[Industry Information]
○ “One Belt and One Road” overlaps with domestic demand, orders on oil and gas pipeline to see explosive growth
------
The website of the Ministry of Environmental Protection discloses that the Xinjiang Uygur Autonomous Region-Guangdong Province-Zhejiang Province pipeline, seeing an aggregate investment of 159 billion yuan, completes announcement of Environmental Impact Assessment (EIA) recently. Following process will speed up.
Comment: The performance forecasting in the Q1 report shows that benefited from the overlap of “One Belt and One Road” and domestic demand, the performance of the companies engaged in oil and gas pipeline shows signs of picking up. Along with the promotion of domestic significant energy channel construction and the contribution of “One Belt and One Road” strategy, the demand on oil and gas pipeline will see accelerated growth. As for listed companies, Jiangsu Yulong Steel Pipe Co., Ltd. (601028.SH), principally engaged in oil and gas transmission pipeline equipment, benefits from the delivery of overseas orders. The company sees large net profit growth in the first quarter and proposes a 12-for-10 conversion of capital surplus into shares in its 2014 annual report; Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ), principally engaged in oil pipelines, etc., is the supplier of China National Petroleum Corporation, etc.
○ Old-age care service industry supported by three departments, social capital encouraged to enter
------
Three departments including the National Development and Reform Commission (NDRC) jointly release announcement suggesting to further improve the development of old-age care service industry. Governmental input will be increased; at least 50 percent of the public welfare fund from lottery will be guaranteed to be used for old-age care service industry; social capital will be actively guided and encouraged to enter this area; chain operation of old-age care enterprises will be promoted in community services; diversified investment and financing modes will be explored and built; revenue bonds of enterprises and projects, etc., will be promoted.
Comment: Since the release of the “Opinions by the State Council on Accelerating the Development of Old-Age Care Service Industry”, this area has gained multiple policy support. Some listed companies also achieve new performance growth points by developing old-age care service industry: the apartment for the aged of Jinling Hotel Corporation Ltd. (601007.SH) has been completed. It is expected to be available for sales in the second quarter; the old-age care project of Zhejiang Double Arrow Rubber Co., Ltd. (002381.SZ) will be put into operation in the second quarter. Institutions are optimistic about the replication and expansion of this mode.
○ Cancer-causing aspartame dropped, substitute products to see opportunities
------
Foreign media reported that studies show that aspartame, a type of sweetener, may cause cancer or preterm labor. Pepsi announced that it will no longer use aspartame in its Diet Pepsi from August. The drink will be sweetened with a blend of sucralose and another sweetener known as Ace K.
Comment: Manufacturers of sucralose and Ace K will benefit from it. Insiders estimate that the price of Ace K will hike as a result of the increasing demand in the downstream. In terms of listed companies, the Ace K products of Anhui Jinhe Industrial Co., Ltd. (002597.SZ) have been supplied to Coca-Cola and Pepsi. The sucralose products of Liuzhou Liangmianzhen Co., Ltd. (600249.SH) recorded a revenue of about 340 million yuan last year.
[Announcement Interpretation]
○ Handler Special Vehicle to acquire Lianshuo Automation Technology with RMB260 mln to develop industrial robots
------
Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ) proposes to acquire 100 percent equities of Shenzhen Lianshuo Automation Technology Co., Ltd. at 260 million yuan by issuing 37.90 million shares at 6.86 yuan per share through private placement. It also plans to raise a supporting fund of no more than 160 million yuan, 110 million yuan of which will be invested in Lianshuo Automation Technology. The counter party committed that the net profit after extraordinary items of Lianshuo Automation Technology from 2015 to 2018 will be no less than 21 million yuan, 30 million yuan, 40 million yuan and 52 million yuan, respectively.
Lianshuo Automation Technology is principally engaged in the research and development, production and sale of various industrial automation and intelligent production line as well as automatic optical detection equipment for photoelectric products. Its downstream customers are currently in the LED lighting industry and they will apply the industrial automation and intelligent production line into food packaging, hardware polishing and other industries. In addition, it is quite competitive in the integrated application of industrial robots and software development. Handler Special Vehicle also introduced the equity incentive plan at the same time.
○ Funeng to raise RMB3 bln through provate placement to invest in wind power
------
Fujian Funeng Co., Ltd. (600483.SH) intends to raise 3 billion yuan by issuing 319 million shares at 9.40 yuan per share through private placement. 2.2 billion yuan will be used in the wind power farm project and 800 million yuan will be used in repaying borrowings. The shares will be issued to such subscribers as China (Fujian) Foreign Trade Center (Holdings) Co., Ltd., Fujian Provincial Communication Transportation Group Co., Ltd., Fuzhou Port Group Co., Ltd., SAIC Capital Company Limited, Harvest Fund Management Co., Ltd., Founder Fubon Fund Management Co., Ltd., Fujian Changle Changyuan Textile Co., Ltd. and Ping An Asset Management Co., Ltd. China (Fujian) Foreign Trade Center, the controlling shareholder of Fujian Tiancheng Holdings Corp., Ltd., the existing shareholder of the company, will subscribe 31.91 million yuan with 300 million yuan in cash.
○ Gree Real Estate to raise RMB6 bln through private placement
------
Gree Real Estate Co., Ltd. (600185.SH) plans to raise 6 billion yuan by issuing shares at no less than 24.37 yuan per share through private placement. The proceeds will be used in six projects, including the comprehensive improvement of the Xiangzhou Port and more investments in Zhuhai Haikong Financial Services Co., Ltd. as well as repaying bank loans. The company indicated that it would increase the investment in marine economic industries, port economic industries and modern service industries through the private placement. It will connect various sectors through the Internet, finance and e-business platform. The stock price of the company closed at 27.52 yuan before trading suspension.
○ Dajin Heavy Industry to develop Internet-based finance with RMB150 mln
------
Dajin Heavy Industry Corporation (002487.SZ) proposes to invest 150 million yuan in Shenzhen Wangjin Financial Information Service Co., Ltd. to obtain 11.76 percent equities of the latter. The www.touna.cn operated by Wangjin Financial Information Service is a leading Internet-based finance platform in China, which mainly provides investment and financing services to small and micro enterprises and individual investors. The platform recorded a turnover of 2.55 billion yuan in 2014 and 1,342 million yuan in the first quarter of this year.
[Financial Reports Express]
○ Jiuding New Material,. Yotrio Group and SPC Environment Protection Tech expects growth in interim report
------
Jiangsu Jiuding New Material Co., Ltd. (002201.SZ) recorded a year-on-year growth of 49 percent in net profit in the first quarter and expects an increase of 300 percent to 350 percent in the interim report thanks to the increase in products sale. Yotrio Group Co., Ltd. (002489.SZ) recorded a year-on-year growth of 136 percent in net profit in the first quarter and expects an increase of 170 percent to 220 percent in the interim report as a result of the results growth boosted by the investment business and financial products. Beijing SPC Environment Protection Tech Co., Ltd. (002573.SZ) recorded a year-on-year growth of 32 percent in net profit in the first quarter and expects an increase of 50 percent to 70 percent in the interim report thanks to tyeh profit growth in the EPC project.
○ Oriental Yuhong proposes high share conversion and dividend
------
Beijing Oriental Yuhong Waterproof Technology Co., Ltd. (002271.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares as its net profit in 2014 hiked 61 percent year on year.
[Trading Trends]
○ Three institutional seats buy Nky Phar.
------
The trading volume ranking list on April 27 shows that three institutional seats bought Boai Nky Pharmaceuticals Ltd. (300109.SZ) with a total of 61.64 million yuan, accounting for 18.6 percent of its intraday turnover. An institutional seat sold it with 6.32 million yuan.
Comment: The PVP capacity of Nky Phar. ranked first in China and third in the world. The business belongs to the chemical industry and will develop stably in the future. The company also actively develops new business and plans to acquire three companies to enter the big health industry. Institutes believe that the targets to be acquired by the company are engaged in early diagnosis of tumor, gene detection and other businesses, which will facilitate the shift in valuation of the company.
> National planning unveiled for traditional Chinese medicine to guarantee healthy industrial development
> “One Belt and One Road” overlaps with domestic demand, orders on oil and gas pipeline to see explosive growth
> Old-age care service industry supported by three departments, drop of aspartame to boost substitute products
> Handler Special Vehicle to acquire Lianshuo Automation Technology, Funeng to raise RMB3 bln through provate placement to invest in wind power
[XFA Focus]
○ National planning unveiled for traditional Chinese medicine to guarantee healthy industrial development
------
The Protection and Development Planning for Traditional Chinese Medicine (2015-2020), jointly formulated by 12 departments and commissions including the Ministry of Industry and Information Technology (MIIT), the State Administration of Traditional Chinese Medicine, the National Development and Reform Commission (NDRC), etc., was officially released on April 27, becoming the first national planning on the protection and development of traditional Chinese medicine. The planning proposes to achieve the goals that traditional Chinese medicine resource monitoring spots and technical information service network cover more than 80 percent of the county-level traditional Chinese medicine producing areas by 2020; the output of planted traditional Chinese medicine sees an average annual growth of 10 percent. As for guarantee measure, the construction of traditional Chinese medicine production and supporting infrastructure will be covered by agriculture-supporting policies.
Comment: The planning makes it clear to improve the quantity and quality of traditional Chinese medicine. At present, the P/E ratio of traditional Chinese medicine sector ranks the last compared with segmented industries of medicine and biology in A-share market. As the supply and quality of raw material improves in the future, the production of traditional Chinese medicine will be more standardized, large-scale and industrialized; its valuation will be enhanced. As for listed companies, Beijing Tongrentang Co., Ltd. (600085.SH) sees steady performance growth and has set up 110 retailing terminals overseas; the latest announcement of Kangmei Pharmaceutical Co., Ltd. (600518.SH) claims to invest 1 billion yuan in ginsengs under forest business; two injections of Jiangsu Kanion Pharmaceutical Co., Ltd. (600557.SH) are regarded as promising by institutions.
[XFA Selection]
○ Reuters reports that Chinese central government might directly acquire asset of commercial banks to input base money; RMB spot exchange rate suffers the largest one-day drop in a year.
○ The State-owned Assets Supervision and Administration Commission (SASAC) responds to the rumor that “the number of central enterprises might be cut to 40” and indicates that the news story was written without interviewing or verifying with SASAC.
○ Wang Tianpu, General Manager of China Petrochemical Corporation (Sinopec Group), is suspected of being involved in severe violation of discipline and law and is under investigation.
○ The Ministry of Finance promotes PPP mode in water pollution prevention and treatment area. Favorable policies including financial incentive will be provided to the project.
○ The logistics information platform of the Ministry of Traffic releases the first O2O product applying to logistics parks. Intelligent logistics industry sees quickened expansion.
○ The formulation of the thirteenth five-year plan for energy storage industry is kicked off. The rapid development of new energy will bring huge development space for energy storage industry.
[Industry Information]
○ “One Belt and One Road” overlaps with domestic demand, orders on oil and gas pipeline to see explosive growth
------
The website of the Ministry of Environmental Protection discloses that the Xinjiang Uygur Autonomous Region-Guangdong Province-Zhejiang Province pipeline, seeing an aggregate investment of 159 billion yuan, completes announcement of Environmental Impact Assessment (EIA) recently. Following process will speed up.
Comment: The performance forecasting in the Q1 report shows that benefited from the overlap of “One Belt and One Road” and domestic demand, the performance of the companies engaged in oil and gas pipeline shows signs of picking up. Along with the promotion of domestic significant energy channel construction and the contribution of “One Belt and One Road” strategy, the demand on oil and gas pipeline will see accelerated growth. As for listed companies, Jiangsu Yulong Steel Pipe Co., Ltd. (601028.SH), principally engaged in oil and gas transmission pipeline equipment, benefits from the delivery of overseas orders. The company sees large net profit growth in the first quarter and proposes a 12-for-10 conversion of capital surplus into shares in its 2014 annual report; Jiangsu Changbao Steeltube Co., Ltd. (002478.SZ), principally engaged in oil pipelines, etc., is the supplier of China National Petroleum Corporation, etc.
○ Old-age care service industry supported by three departments, social capital encouraged to enter
------
Three departments including the National Development and Reform Commission (NDRC) jointly release announcement suggesting to further improve the development of old-age care service industry. Governmental input will be increased; at least 50 percent of the public welfare fund from lottery will be guaranteed to be used for old-age care service industry; social capital will be actively guided and encouraged to enter this area; chain operation of old-age care enterprises will be promoted in community services; diversified investment and financing modes will be explored and built; revenue bonds of enterprises and projects, etc., will be promoted.
Comment: Since the release of the “Opinions by the State Council on Accelerating the Development of Old-Age Care Service Industry”, this area has gained multiple policy support. Some listed companies also achieve new performance growth points by developing old-age care service industry: the apartment for the aged of Jinling Hotel Corporation Ltd. (601007.SH) has been completed. It is expected to be available for sales in the second quarter; the old-age care project of Zhejiang Double Arrow Rubber Co., Ltd. (002381.SZ) will be put into operation in the second quarter. Institutions are optimistic about the replication and expansion of this mode.
○ Cancer-causing aspartame dropped, substitute products to see opportunities
------
Foreign media reported that studies show that aspartame, a type of sweetener, may cause cancer or preterm labor. Pepsi announced that it will no longer use aspartame in its Diet Pepsi from August. The drink will be sweetened with a blend of sucralose and another sweetener known as Ace K.
Comment: Manufacturers of sucralose and Ace K will benefit from it. Insiders estimate that the price of Ace K will hike as a result of the increasing demand in the downstream. In terms of listed companies, the Ace K products of Anhui Jinhe Industrial Co., Ltd. (002597.SZ) have been supplied to Coca-Cola and Pepsi. The sucralose products of Liuzhou Liangmianzhen Co., Ltd. (600249.SH) recorded a revenue of about 340 million yuan last year.
[Announcement Interpretation]
○ Handler Special Vehicle to acquire Lianshuo Automation Technology with RMB260 mln to develop industrial robots
------
Xuzhou Handler Special Vehicle Co., Ltd. (300201.SZ) proposes to acquire 100 percent equities of Shenzhen Lianshuo Automation Technology Co., Ltd. at 260 million yuan by issuing 37.90 million shares at 6.86 yuan per share through private placement. It also plans to raise a supporting fund of no more than 160 million yuan, 110 million yuan of which will be invested in Lianshuo Automation Technology. The counter party committed that the net profit after extraordinary items of Lianshuo Automation Technology from 2015 to 2018 will be no less than 21 million yuan, 30 million yuan, 40 million yuan and 52 million yuan, respectively.
Lianshuo Automation Technology is principally engaged in the research and development, production and sale of various industrial automation and intelligent production line as well as automatic optical detection equipment for photoelectric products. Its downstream customers are currently in the LED lighting industry and they will apply the industrial automation and intelligent production line into food packaging, hardware polishing and other industries. In addition, it is quite competitive in the integrated application of industrial robots and software development. Handler Special Vehicle also introduced the equity incentive plan at the same time.
○ Funeng to raise RMB3 bln through provate placement to invest in wind power
------
Fujian Funeng Co., Ltd. (600483.SH) intends to raise 3 billion yuan by issuing 319 million shares at 9.40 yuan per share through private placement. 2.2 billion yuan will be used in the wind power farm project and 800 million yuan will be used in repaying borrowings. The shares will be issued to such subscribers as China (Fujian) Foreign Trade Center (Holdings) Co., Ltd., Fujian Provincial Communication Transportation Group Co., Ltd., Fuzhou Port Group Co., Ltd., SAIC Capital Company Limited, Harvest Fund Management Co., Ltd., Founder Fubon Fund Management Co., Ltd., Fujian Changle Changyuan Textile Co., Ltd. and Ping An Asset Management Co., Ltd. China (Fujian) Foreign Trade Center, the controlling shareholder of Fujian Tiancheng Holdings Corp., Ltd., the existing shareholder of the company, will subscribe 31.91 million yuan with 300 million yuan in cash.
○ Gree Real Estate to raise RMB6 bln through private placement
------
Gree Real Estate Co., Ltd. (600185.SH) plans to raise 6 billion yuan by issuing shares at no less than 24.37 yuan per share through private placement. The proceeds will be used in six projects, including the comprehensive improvement of the Xiangzhou Port and more investments in Zhuhai Haikong Financial Services Co., Ltd. as well as repaying bank loans. The company indicated that it would increase the investment in marine economic industries, port economic industries and modern service industries through the private placement. It will connect various sectors through the Internet, finance and e-business platform. The stock price of the company closed at 27.52 yuan before trading suspension.
○ Dajin Heavy Industry to develop Internet-based finance with RMB150 mln
------
Dajin Heavy Industry Corporation (002487.SZ) proposes to invest 150 million yuan in Shenzhen Wangjin Financial Information Service Co., Ltd. to obtain 11.76 percent equities of the latter. The www.touna.cn operated by Wangjin Financial Information Service is a leading Internet-based finance platform in China, which mainly provides investment and financing services to small and micro enterprises and individual investors. The platform recorded a turnover of 2.55 billion yuan in 2014 and 1,342 million yuan in the first quarter of this year.
[Financial Reports Express]
○ Jiuding New Material,. Yotrio Group and SPC Environment Protection Tech expects growth in interim report
------
Jiangsu Jiuding New Material Co., Ltd. (002201.SZ) recorded a year-on-year growth of 49 percent in net profit in the first quarter and expects an increase of 300 percent to 350 percent in the interim report thanks to the increase in products sale. Yotrio Group Co., Ltd. (002489.SZ) recorded a year-on-year growth of 136 percent in net profit in the first quarter and expects an increase of 170 percent to 220 percent in the interim report as a result of the results growth boosted by the investment business and financial products. Beijing SPC Environment Protection Tech Co., Ltd. (002573.SZ) recorded a year-on-year growth of 32 percent in net profit in the first quarter and expects an increase of 50 percent to 70 percent in the interim report thanks to tyeh profit growth in the EPC project.
○ Oriental Yuhong proposes high share conversion and dividend
------
Beijing Oriental Yuhong Waterproof Technology Co., Ltd. (002271.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares as its net profit in 2014 hiked 61 percent year on year.
[Trading Trends]
○ Three institutional seats buy Nky Phar.
------
The trading volume ranking list on April 27 shows that three institutional seats bought Boai Nky Pharmaceuticals Ltd. (300109.SZ) with a total of 61.64 million yuan, accounting for 18.6 percent of its intraday turnover. An institutional seat sold it with 6.32 million yuan.
Comment: The PVP capacity of Nky Phar. ranked first in China and third in the world. The business belongs to the chemical industry and will develop stably in the future. The company also actively develops new business and plans to acquire three companies to enter the big health industry. Institutes believe that the targets to be acquired by the company are engaged in early diagnosis of tumor, gene detection and other businesses, which will facilitate the shift in valuation of the company.
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