[Today’s Guide]
> One Belt and One Road to boost broadband, communication industry to see opportunities
> LED lighting industry to boom,
> Gong Da High-Tech to acquire information security enterprise, Zhongtai Bridge Steel Structure to transform into education
> Batian Ecotypic Engineering joins hands with DJI, GI Technologies acquires peer company
[XFA Focus]
○ One Belt and One Road to boost broadband, communication industry to see opportunities
------
The ‘Certain Opinions on Accelerating Fostering New Competitive Industries in Foreign Trade of the State Council’ was released on May 12. It requires fully enhancing the economic and trade cooperation with countries along the One Belt and One Road and expanding cooperation in optical cable communication and other industries. The Ministry of Industry and Information Technology (MIIT) also released the ‘Opinions on the Implementation of “Broadband China” 2015 Campaign’ recently, proposing to make another 40 million broadband users get access to the optical fiber. Officials of the MIIT indicated that the investment in broadband communication construction will reach 430 billion yuan this year.
Comment: Based on the report on the development of global Internet, the average Internet speed in China ranks 82nd globally. Chinese Premier Li Keqiang urged improving the Internet speed and reducing network fees at the seminar on economic conditions in April. Certain countries along the One Belt and One Road are in urgent need for communication facilities. The China Pakistan Economic Corridor covers the operation in the construction of optical cable channels. Institutes are rosy about ZTE Corporation (00763.HK; 000063.SZ) and other network constructors, Sunsea Telecommunications Co., Ltd. (002313.SZ), Suzhou TFC Optical Communication Co., Ltd. (300394.SZ) and other suppliers of access equipment as well as Sunwave Communications Co., Ltd. (002115.SZ) and other network improvement services providers.
◆ The ‘Certain Opinions on Accelerating Fostering New Competitive Industries in Foreign Trade of the State Council’ also proposes to greatly promote the development of cross-border e-business. Institutes estimate that the import of cross-border e-business in China will reach 6.5 trillion yuan. Investors are advised to pay attention to Sinotrans Air Transportation Development Co., Ltd. (600270.SH), CTS International Logistics Corporation Limited (603128.SH) and other companies.
[XFA Selection]
○ Reuters reported that in order to solve the problem of local government debt replacement, China will allow the local government debt into the central treasury and allow local commercial bank debt included in the range of collateral.
○ The pork price has jumped by over 2 percent since mid-April across China and the number of reproductive sow in China hit a new low.
○ The State Grid Corporation of China initiated the construction of the extra-high voltage power transmission project with the longest distance so far and the investment will reach 24.2 billion yuan.
○ Three ministries and commissions announced on May 12 that China will officially conduct the pilot on individual income tax on commercial health insurance.
○The seventh round of negotiations regarding the China-Japan-South Korea Free Trade Zone was held on 12 May in Seoul and the negotiation will last for two days.
[Industry Information]
○ LED lighting industry to boom, market capacity may see huge growth
------
The latest statistics of LEDinside, the LED industry information platform, shows that the retail price of LED bulbs to replace 40W incandescents jumped by 4 percent and the LED bulbs to replace 60W incandescents also increased slightly. The LED enterprises in Taiwan released the business revenue in April, showing that the industry is flourishing and the business revenue of leading enterprises, including Unity Opto Technology Co., Ltd. and Edison Opto Corporation, hit a new high.
Comment: The LED lighting products are accounting an increasingly high market share in the world. It is estimated that the LED lighting products will replace the traditional lighting and bulbs market with more than 10 years’ history in the following three to five years and the market capacity is expected to see huge growth. Experts estimate that as a result of the prohibition on the sale of incandescents and the improvement in the cost performance of LED lighting products, the LED market is expected to increase by 28.5 percent year on year. In terms of listed companies, Zhejiang Yankon Group Co., Ltd. (600261.SH) enjoys advantages in the LED sale channels in China and has increased the input in and promotion of its own brands. Shanghai Feilo Acoustics Co., Ltd. (600651.SH) has acquired three major LED enterprises and has covered the full industrial chain in the LED lighting business. The company set a business revenue target of 5 billion yuan for this year, increasing over 100 percent year on year.
○ 2nd term of China Cyber Security Week to launch soon
------
Cyberspace Administration of China indicated on May 12 that the 2nd term of China Cyber Security Week themed as “build cyber security together, enjoy cyberspace civilization together” will be held from June 1 to 7 with 7 themes, which are start-up, finance, telecommunications, governmental affairs, technology, rule of law and teenager. Cyber security promotion activities will be developed in various forms.
Comment: Information security has been lifted as national strategy. This term of cyber security week, seeing far larger promotion force and scope compared with last term, is jointly hosted by 10 departments including the Office of the Central Leading Group for Cyberspace Affairs. As Internet sees more and more popular application, cyber security problems are also developing and bring increasingly threat to national security, economic development and social stability. This forces huge demand on information security market. As for listed companies, Xiamen Meiya Pico Information Co., Ltd. (300188.SZ), principally engaged in electronic data forensic products and providing network identity certification service; Surfilter Network Technology Co., Ltd. (300311.SZ) masters advanced technology in Internet content supervision area. The company is exploring supervision products in large scale in communication, military, etc. industries.
[Announcement Interpretation]
○ Gong Da High-Tech to acquire information security enterprise
------
Harbin Gong Da High-Tech Enterprise Development Co., Ltd. (600701.SH) plans to acquire 100 percent equities of Opzoon Technology Co., Ltd. with 2.5 billion yuan by issuing shares at 6.05 yuan per share through private placement and to raise a supporting fund at the same offering price through private placement. Opzoon Technology is a well-known domestic enterprise in information security, basic network, cloud computing data center areas. The counterparty promises that the net profit of the subject asset will be no less than 185 million yuan this, indicating a P/E ratio of 13.5 times. The company’s stock price closed at 6.07 yuan per share before trading suspension.
○ Zhongtai Bridge Steel Structure to transform into education
------
Jiangsu Zhongtai Bridge Steel Structure Co., Ltd. (002659.SZ) plans to raise 1.75 billion yuan by issuing shares at 9.33 yuan per share through private placement from Badachu Holdings Co., Ltd., Huaxuan (Shanghai) Equity Investment Fund Co., Ltd. and Zheng Yaping to acquire 84.27 percent equities of Beijing Wenkaixing Education Investment Co., Ltd. and to construct international school project. Upon completion, the actual controller of the company will be modified as the State-owned Assets Supervision and Administration Commission (SASAC) of Haidian District, Beijing. The company’s stock price closed at 9.98 yuan per share before trading suspension. It is measured that the construction of the project will last for 2 years. The enrollment rate will reach 100 percent 5 years after the project is put into operation. By then, the net profit of the project will be 430 million yuan.
○ Batian Ecotypic Engineering joins hands with DJI
------
Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) reaches strategic cooperation with DJI-Innovations Technology Co., Ltd. to build “agriculture unmanned aerial vehicle (UAV) application service system”. The application covers but not limited to: the spray-seeding of basic agricultural material; the collection and monitoring of agricultural information and the plantation management system; training system for the operation and management of UAV agriculture; the financial leasing service of UAV.
○ GI Technologies acquires peer company
------
GI Technologies (Beijing) Co., Ltd. (300309.SZ) plans to acquire 100 percent equities of Tianjin Anbu Shengli Petroleum Engineering Technology Co., Ltd. with 800 million yuan. The subject company focuses on oilfield drilling engineering service and aims at overseas market including Kazakhstan. According to performance commitment, the net profit of the subject company this year shall be no less than 94.44 million yuan, meaning a P/E ratio of 8.5 times.
○ Suntront Technology to launch stock ownership incentive
------
Suntront Technology Co., Ltd. (300259.SZ) plans to issue limited stocks to incentive object at 12 yuan per share. The condition for unlocking is that compared with the net profit in 2014, the net profit of the company in next three years from this year shall grow by 20 percent, 40 percent and 60 percent.
○ M&A of Aoyang Technology and Motic Electric approved
------
The asset acquisition through private placement of Jiangsu Aoyang Technology Corporation Limited (002172.SZ) and Motic（Xiamen）Electric Group Co., Ltd. (300341.SZ) is unconditionally approved by the Merger & Acquisition and Reorganization Committee. They will resume trading on May 13.
[News Tracking]
○ Rural e-commerce to gain big policy support again
------
XFA learns from the Ministry of Commerce that the first special action plan “Internet +Circulation”, since “Internet Plus” is proposed, will be released on May 15. Promoting rural e-commerce is ranked as the first item among six key work tasks.
Comment: The State Council just proposed in last week to actively develop rural e-commerce, study and map out opinions promoting the development of rural e-commerce, and launch supportive policy and measures. Institutions are optimistic that rural material e-commerce including chemical fertilizer, pesticide, etc. will become the new blue ocean of e-commerce industry. Stanley Fertilizer Co., Ltd. (002588.SZ), Anhui Sierte Fertilizer Industry Co., Ltd. (002538.SZ), etc. have already made planning in e-commerce area.
> One Belt and One Road to boost broadband, communication industry to see opportunities
> LED lighting industry to boom,
> Gong Da High-Tech to acquire information security enterprise, Zhongtai Bridge Steel Structure to transform into education
> Batian Ecotypic Engineering joins hands with DJI, GI Technologies acquires peer company
[XFA Focus]
○ One Belt and One Road to boost broadband, communication industry to see opportunities
------
The ‘Certain Opinions on Accelerating Fostering New Competitive Industries in Foreign Trade of the State Council’ was released on May 12. It requires fully enhancing the economic and trade cooperation with countries along the One Belt and One Road and expanding cooperation in optical cable communication and other industries. The Ministry of Industry and Information Technology (MIIT) also released the ‘Opinions on the Implementation of “Broadband China” 2015 Campaign’ recently, proposing to make another 40 million broadband users get access to the optical fiber. Officials of the MIIT indicated that the investment in broadband communication construction will reach 430 billion yuan this year.
Comment: Based on the report on the development of global Internet, the average Internet speed in China ranks 82nd globally. Chinese Premier Li Keqiang urged improving the Internet speed and reducing network fees at the seminar on economic conditions in April. Certain countries along the One Belt and One Road are in urgent need for communication facilities. The China Pakistan Economic Corridor covers the operation in the construction of optical cable channels. Institutes are rosy about ZTE Corporation (00763.HK; 000063.SZ) and other network constructors, Sunsea Telecommunications Co., Ltd. (002313.SZ), Suzhou TFC Optical Communication Co., Ltd. (300394.SZ) and other suppliers of access equipment as well as Sunwave Communications Co., Ltd. (002115.SZ) and other network improvement services providers.
◆ The ‘Certain Opinions on Accelerating Fostering New Competitive Industries in Foreign Trade of the State Council’ also proposes to greatly promote the development of cross-border e-business. Institutes estimate that the import of cross-border e-business in China will reach 6.5 trillion yuan. Investors are advised to pay attention to Sinotrans Air Transportation Development Co., Ltd. (600270.SH), CTS International Logistics Corporation Limited (603128.SH) and other companies.
[XFA Selection]
○ Reuters reported that in order to solve the problem of local government debt replacement, China will allow the local government debt into the central treasury and allow local commercial bank debt included in the range of collateral.
○ The pork price has jumped by over 2 percent since mid-April across China and the number of reproductive sow in China hit a new low.
○ The State Grid Corporation of China initiated the construction of the extra-high voltage power transmission project with the longest distance so far and the investment will reach 24.2 billion yuan.
○ Three ministries and commissions announced on May 12 that China will officially conduct the pilot on individual income tax on commercial health insurance.
○The seventh round of negotiations regarding the China-Japan-South Korea Free Trade Zone was held on 12 May in Seoul and the negotiation will last for two days.
[Industry Information]
○ LED lighting industry to boom, market capacity may see huge growth
------
The latest statistics of LEDinside, the LED industry information platform, shows that the retail price of LED bulbs to replace 40W incandescents jumped by 4 percent and the LED bulbs to replace 60W incandescents also increased slightly. The LED enterprises in Taiwan released the business revenue in April, showing that the industry is flourishing and the business revenue of leading enterprises, including Unity Opto Technology Co., Ltd. and Edison Opto Corporation, hit a new high.
Comment: The LED lighting products are accounting an increasingly high market share in the world. It is estimated that the LED lighting products will replace the traditional lighting and bulbs market with more than 10 years’ history in the following three to five years and the market capacity is expected to see huge growth. Experts estimate that as a result of the prohibition on the sale of incandescents and the improvement in the cost performance of LED lighting products, the LED market is expected to increase by 28.5 percent year on year. In terms of listed companies, Zhejiang Yankon Group Co., Ltd. (600261.SH) enjoys advantages in the LED sale channels in China and has increased the input in and promotion of its own brands. Shanghai Feilo Acoustics Co., Ltd. (600651.SH) has acquired three major LED enterprises and has covered the full industrial chain in the LED lighting business. The company set a business revenue target of 5 billion yuan for this year, increasing over 100 percent year on year.
○ 2nd term of China Cyber Security Week to launch soon
------
Cyberspace Administration of China indicated on May 12 that the 2nd term of China Cyber Security Week themed as “build cyber security together, enjoy cyberspace civilization together” will be held from June 1 to 7 with 7 themes, which are start-up, finance, telecommunications, governmental affairs, technology, rule of law and teenager. Cyber security promotion activities will be developed in various forms.
Comment: Information security has been lifted as national strategy. This term of cyber security week, seeing far larger promotion force and scope compared with last term, is jointly hosted by 10 departments including the Office of the Central Leading Group for Cyberspace Affairs. As Internet sees more and more popular application, cyber security problems are also developing and bring increasingly threat to national security, economic development and social stability. This forces huge demand on information security market. As for listed companies, Xiamen Meiya Pico Information Co., Ltd. (300188.SZ), principally engaged in electronic data forensic products and providing network identity certification service; Surfilter Network Technology Co., Ltd. (300311.SZ) masters advanced technology in Internet content supervision area. The company is exploring supervision products in large scale in communication, military, etc. industries.
[Announcement Interpretation]
○ Gong Da High-Tech to acquire information security enterprise
------
Harbin Gong Da High-Tech Enterprise Development Co., Ltd. (600701.SH) plans to acquire 100 percent equities of Opzoon Technology Co., Ltd. with 2.5 billion yuan by issuing shares at 6.05 yuan per share through private placement and to raise a supporting fund at the same offering price through private placement. Opzoon Technology is a well-known domestic enterprise in information security, basic network, cloud computing data center areas. The counterparty promises that the net profit of the subject asset will be no less than 185 million yuan this, indicating a P/E ratio of 13.5 times. The company’s stock price closed at 6.07 yuan per share before trading suspension.
○ Zhongtai Bridge Steel Structure to transform into education
------
Jiangsu Zhongtai Bridge Steel Structure Co., Ltd. (002659.SZ) plans to raise 1.75 billion yuan by issuing shares at 9.33 yuan per share through private placement from Badachu Holdings Co., Ltd., Huaxuan (Shanghai) Equity Investment Fund Co., Ltd. and Zheng Yaping to acquire 84.27 percent equities of Beijing Wenkaixing Education Investment Co., Ltd. and to construct international school project. Upon completion, the actual controller of the company will be modified as the State-owned Assets Supervision and Administration Commission (SASAC) of Haidian District, Beijing. The company’s stock price closed at 9.98 yuan per share before trading suspension. It is measured that the construction of the project will last for 2 years. The enrollment rate will reach 100 percent 5 years after the project is put into operation. By then, the net profit of the project will be 430 million yuan.
○ Batian Ecotypic Engineering joins hands with DJI
------
Shenzhen Batian Ecotypic Engineering Co., Ltd. (002170.SZ) reaches strategic cooperation with DJI-Innovations Technology Co., Ltd. to build “agriculture unmanned aerial vehicle (UAV) application service system”. The application covers but not limited to: the spray-seeding of basic agricultural material; the collection and monitoring of agricultural information and the plantation management system; training system for the operation and management of UAV agriculture; the financial leasing service of UAV.
○ GI Technologies acquires peer company
------
GI Technologies (Beijing) Co., Ltd. (300309.SZ) plans to acquire 100 percent equities of Tianjin Anbu Shengli Petroleum Engineering Technology Co., Ltd. with 800 million yuan. The subject company focuses on oilfield drilling engineering service and aims at overseas market including Kazakhstan. According to performance commitment, the net profit of the subject company this year shall be no less than 94.44 million yuan, meaning a P/E ratio of 8.5 times.
○ Suntront Technology to launch stock ownership incentive
------
Suntront Technology Co., Ltd. (300259.SZ) plans to issue limited stocks to incentive object at 12 yuan per share. The condition for unlocking is that compared with the net profit in 2014, the net profit of the company in next three years from this year shall grow by 20 percent, 40 percent and 60 percent.
○ M&A of Aoyang Technology and Motic Electric approved
------
The asset acquisition through private placement of Jiangsu Aoyang Technology Corporation Limited (002172.SZ) and Motic（Xiamen）Electric Group Co., Ltd. (300341.SZ) is unconditionally approved by the Merger & Acquisition and Reorganization Committee. They will resume trading on May 13.
[News Tracking]
○ Rural e-commerce to gain big policy support again
------
XFA learns from the Ministry of Commerce that the first special action plan “Internet +Circulation”, since “Internet Plus” is proposed, will be released on May 15. Promoting rural e-commerce is ranked as the first item among six key work tasks.
Comment: The State Council just proposed in last week to actively develop rural e-commerce, study and map out opinions promoting the development of rural e-commerce, and launch supportive policy and measures. Institutions are optimistic that rural material e-commerce including chemical fertilizer, pesticide, etc. will become the new blue ocean of e-commerce industry. Stanley Fertilizer Co., Ltd. (002588.SZ), Anhui Sierte Fertilizer Industry Co., Ltd. (002538.SZ), etc. have already made planning in e-commerce area.
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