[Today’s Guide]
> Broadband construction to attract an investment of RMB1 trln, credit assets securitization to expand
> Nine ministries and commissions to promote video surveillance for public security, Miao Wei inspects intelligent city construction
> Allwin Telecommunication to acquire Snow Fish, Zanyu Technology to expand to oil-fat chemical industry through private placement
> HengBao to develop Internet finance, Lancy to introduce Korean brands
[XFA Focus]
○ Broadband construction to attract an investment of RMB1 trln, credit assets securitization to expand
------
Chinese Premier Li Keqiang chaired the executive meeting of the State Council on May 13, requiring accelerating the construction of high-speed broadband network and introducing measures to improve the network speed and reduce the charges. The meeting proposes that the average speed in broadband access will increase by over 40 percent and promote the broadband access in rural areas. The network construction will attract an investment of 1 trillion yuan this year. The meeting also determined that the pilot on credit assets securitization will expand by another 500 billion yuan, which will mainly support the improvement of rundown urban area, water conservancy and railway construction in central and western China.
Comment: The proposal on improving the broadband construction of the State Council will facilitate the “Internet Plus” campaign. The network construction, equipment supply and private broadband operation will fully benefit. XFA reported on May 12 that the communication industry will see huge development opportunities driven by the One Belt and One Road initiative and the improvement in the domestic broadband speed. In terms of the credit assets securitization, XFA learnt that the total balance of such products in issue is less than 300 billion yuan. It can vitalize the stock of bands and unleash the ability in granting loans.
[XFA Selection]
○ China’s M2 rose 10.1 percent year on year in April, hitting a new low. More easing monetary policies to promote stable growth are expected.
○ The first local government bond released the tender notice this year. Institutes believe that the inclusion of the local government debt in the range of collateral will benefit the stock and bond markets.
○ The increase of investment in fixed assets in the first four months declined while the investment in wind power and solar energy power generation hiked 78 percent and 64 percent, respectively.
○ China’s A-share market saw a net margin inflow of 857.6 billion yuan last week, hitting a record high.
○ Ningbo City has prepared the plan on the One Belt and One Road initiative with a total investment of 142 billion yuan. It will hold the Central and Eastern European Countries’ Products Fair in June.
[Industry Information]
○ Nine ministries and commissions to promote video surveillance for public security
------
Nine departments, including the National Development and Reform Commission (NDRC), issued opinions on May 13, proposing that China will cover key public areas with video surveillance by 2020. Public areas will be fully covered by cameras and their surveillance information will be shared among authorities all time. The plan aims to enhance public security monitoring, optimize traffic conditions, improve social management and make innovations in social governance.
Comment: The application of video surveillance on public security plays an important role in maintaining national security and social stability as well as preventing and combating violent and terrorist crimes. The application of video surveillance is under high standards, requiring covering 100 percent of key public areas with video surveillance. New and improved high-definition cameras will account for 100 percent, which will undoubtedly improve the market demand for video surveillance equipment and materials. In terms of listed companies, OB Telecom Electronics Co., Ltd. (300270.SZ) is principally engaged in the technology and products for the transmission of video surveillance. Zhejiang Dahua Technology Co., Ltd. (002236.SZ) is engaged in the research and development, production and sale of video surveillance products. It is endeavors to be top three in the global video surveillance industry.
○ Miao Wei inspects intelligent city construction, over RMB2 trln to invest in next decade
------
Miao Wei, Minister of the Ministry of Industry and Information Technology (MIIT), pointed out that the new generation of information technology represented by the Internet is developing rapidly and it is highly integrated with urban construction, operation, management and services as well as leading the development of the new type of urbanization during his visit to Ningxia Hui Autonomous Region on the construction of intelligent city. Miao explained the plans and arrangements of the MIIT on the construction of intelligent cities and the application of information technologies in the future.
Comment: The construction of intelligent cities covers intelligent transportation, public security, digital urban management, intelligent medical treatment and other subdivided markets. Institutes estimate that relevant investment in intelligent city construction in the following decade will be over 2 trillion yuan. In terms of A-share companies, Enjoyor Co., Ltd. (300020.SZ) develops the business model for general contract of intelligent cities and has signed strategic cooperation agreements with various local governments. China TransInfo Technology Co., Ltd. (002373.SZ) focuses on intelligent transportation and is establishing the complete comprehensive transportation business system.
○ The 19th International Software China to convene, independent and controllable technologies to highlight
------
The 19th International Software China organized by the Ministry of Industry and Information Technology (MIIT), the Ministry of Science and Technology (MOST) and other ministries and commissions will be held in Beijing from May 27 to 29. It will focus on improving the software industry and accelerate the development of the industry. MIIT officials indicated on May 13 that China’s software industry recorded business revenue of 880 billion yuan in the first quarter, representing an increase of 17.5 percent year on year and more growth compared with the last quarter of 2014.
Comment: The software system is a key part in the information security. Driven by the trend of homemade products, the operating system, middleware, database and other subdivided industries will see rapid development. In terms of listed companies, Taiji Computer Corporation Limited (002368.SZ) holds 33 percent equities of Beijing BaseSoft Information Technologies Co., Ltd. and is competitive in the database products market. Shanghai Baosight Software Co., Ltd. (600845.SH) accounts for nearly 70 percent of the ERP market in the iron and steel industry and is actively developing the IDC data center project.
[Announcement Interpretation]
○ Allwin Telecommunication to acquire Snow Fish with RMB1.7 bl
------
Allwin Telecommunication Co., Ltd. (002231.SZ) plans to raise 1.77 billion yuan by issuing 181 million shares at 9.78 yuan per share through private placement to Du Fang, its chairman of the board, etc. to acquire 100 percent equities of Shanghai Snow Fish Computer Technology Co., Ltd. and to supplement working capital. The value-added ratio of the subject asset reaches 2217 percent. The counterparty promises that the net profit of Snow Fish from 2015 to 2017 will be no less than 110 million yuan, 143 million yuan and 186 million yuan, respectively.
Snow Fish mainly focuses on the development and operation of mobile games as well as the platform operation of mobile games. The company owns seven fully-owned subsidiaries, all of which are equipped with the CP qualification of telecom operators.
○ Zanyu Technology to expand to oil-fat chemical industry with RMB800 mln through private placement
------
Zhejiang Zanyu Technology Co., Ltd. (002637.SZ) plans to raise 800 million yuan by issuing 50.00 million shares at 16.01 yuan per share to acquire 60 percent equities of PT. Dua Kuda Indonesia and Nantong Kaita Chemical Technology Co., Ltd., respectively, and to pay off loans. Hangzhou Yongyin Investment Partnership Enterprise (Limited Partnership), jointly established by Fang Yinjun, one of the actual controllers of the company, Zou Huanjin, director and deputy general manager of the company, etc., plans to subscribe 35 million shares; Zanyu Technology’s staff shareholding plan will subscribe 15.00 million shares.
The company plans to acquire 60 percent equities of PT. Dua Kuda Indonesia and Nantong Kaita, respectively, with 700 million yuan and to pay off bank loans with 100 million yuan. PT. Dua Kuda Indonesia is mainly engaged in the development, manufacturing and sales of oil-fat chemical products. The counterparty promises that the net profit of PT. Dua Kuda Indonesia from June to December of 2015 and 2016 to 2018 will be no less than 28.00 million yuan, 100 million yuan, 180 million yuan and 210 million yuan, respectively.
○ HengBao to develop Internet finance with RMB1.2 bln
------
HengBao Co., Ltd. (002104.SZ) plans to raise 1.2 billion yuan by issuing 69.20 million shares at 17.34 yuan per share through private placement to five targeted subjects including JT Asset Management Co., Ltd., Ping’an Asset Management Co., Ltd., Tibet Ruihua Investment Development Co., Ltd., Nanjing Juhuiguang Investment Partnership Enterprise (Limited Partnership) and China Galaxy Investment Development Co., Ltd. The raised fund will be used to invest in micro, small and medium-sized business service network and system construction project, acquire 51 percent equities of Shenzhen 1card1 Technology Co., Ltd., invest in the development and industrialization of mPOS overall solutions and to supplement working capital. Taking this opportunity, the company makes planning in the Internet financial service and commercial service system for micro, small and medium-sized business, and strengthens its advantage in financial payment solution area.
○ Lancy to raise RMB1.5 bln through private placement to introduce Korean brands
------
Lancy Co., Ltd. (002612.SZ) plans to raise 1.5 billion yuan by issuing 46.37 million shares at 32.32 yuan per share through private placement to introduce and operate Korean fashion brands, pay off bank loans and supplement working capital. Shen Jinhua, actual controller of the company, will subscribe 700 million yuan.
○ Tianjin Songjiang to raise RMB2.7 bln to develop finance lease
------
Tianjin Songjiang Co., Ltd. (600225.SH) plans to raise 2.7 billion yuan by issuing 322.20 million shares at no less than 8.38 yuan per share to increase capital in Tianjin Hengtai Huijin Finance Lease Co., Ltd., invest in Tianjin Dongjiang port leisure street project, etc., and pay off loans. The private placement can help the company to benefit from the policies of Tianjin Free Trade Zone and push forward its business transformation.
○ Beite Technology to raise RMB840 mln to add stakes in its main business
------
Shanghai Beite Technology Co., Ltd. (603009.SH) plans to raise 840 million yuan by issuing 33.53 million shares at no less than 25.05 yuan per share to invest in the industrialization project of high-precision automobile steering device and damper components, the expansion project of high-precision damper components, etc. and to pay off bank loans. Jin Xiaotang, general manager and son of the actual controller of the company, plans to subscribe 10 percent of the total private placement. The locking period of the stocks will last for 36 months.
○ Changjiang Securities to raise RMB12 bln through private placement
------
Changjiang Securities Company Limited (000783.SZ) plans to raise 12 billion yuan by issuing 787 million shares at 15.25 yuan per share through private placement to increase the company’s capital fund, including expanding the business scale of transaction with credit, developing Internet finance business, increasing the investment in subsidiaries, adding the reserve fund for underwriting, expanding securities asset management business, etc.
Comment: Changjiang Securities indicates that relevant parties do not clearly claim to participate in the private placement. Subscribers will be determined according to principles like price priority, etc. Therefore, the private placement is not an action for the State-owned Assets Supervision and Administration Commission of Hubei Province, the second largest shareholder of the company, to compete against Liu Yiqian, the new largest shareholder. It mainly aims to implement the financing plan proposed in 2014 annual report. Peaceful coexistence of shareholders will contribute to the company’s future development.
[Trading Trends]
○ Visual China bought by four institutions
------
The trading volume ranking list on May 13 shows that Visual China Group Co., Ltd. (000681.SZ) was bought by four institutions with a total of 146 million yuan, accounting for 15 percent of its intraday turnover.
Comment: Visual China recently announces that Shenzhen Advance Intelligent Technology Co., Ltd., its subsidiary, has signed strategic cooperation agreement with Luoke Interactive Entertainment Intelligent Technology Co., Ltd. to jointly develop large-scale interior and outdoor theme parks under Tencent’s Roco Kingdom and theme parks in community commercial centers, and provide Roco interactive entertainment with overall solutions concerning the construction of theme parks. Institutions believe that the company owns huge amount of visual material resources, actively pushes forward intelligent tourism platform business and it will see huge growth potential.
> Broadband construction to attract an investment of RMB1 trln, credit assets securitization to expand
> Nine ministries and commissions to promote video surveillance for public security, Miao Wei inspects intelligent city construction
> Allwin Telecommunication to acquire Snow Fish, Zanyu Technology to expand to oil-fat chemical industry through private placement
> HengBao to develop Internet finance, Lancy to introduce Korean brands
[XFA Focus]
○ Broadband construction to attract an investment of RMB1 trln, credit assets securitization to expand
------
Chinese Premier Li Keqiang chaired the executive meeting of the State Council on May 13, requiring accelerating the construction of high-speed broadband network and introducing measures to improve the network speed and reduce the charges. The meeting proposes that the average speed in broadband access will increase by over 40 percent and promote the broadband access in rural areas. The network construction will attract an investment of 1 trillion yuan this year. The meeting also determined that the pilot on credit assets securitization will expand by another 500 billion yuan, which will mainly support the improvement of rundown urban area, water conservancy and railway construction in central and western China.
Comment: The proposal on improving the broadband construction of the State Council will facilitate the “Internet Plus” campaign. The network construction, equipment supply and private broadband operation will fully benefit. XFA reported on May 12 that the communication industry will see huge development opportunities driven by the One Belt and One Road initiative and the improvement in the domestic broadband speed. In terms of the credit assets securitization, XFA learnt that the total balance of such products in issue is less than 300 billion yuan. It can vitalize the stock of bands and unleash the ability in granting loans.
[XFA Selection]
○ China’s M2 rose 10.1 percent year on year in April, hitting a new low. More easing monetary policies to promote stable growth are expected.
○ The first local government bond released the tender notice this year. Institutes believe that the inclusion of the local government debt in the range of collateral will benefit the stock and bond markets.
○ The increase of investment in fixed assets in the first four months declined while the investment in wind power and solar energy power generation hiked 78 percent and 64 percent, respectively.
○ China’s A-share market saw a net margin inflow of 857.6 billion yuan last week, hitting a record high.
○ Ningbo City has prepared the plan on the One Belt and One Road initiative with a total investment of 142 billion yuan. It will hold the Central and Eastern European Countries’ Products Fair in June.
[Industry Information]
○ Nine ministries and commissions to promote video surveillance for public security
------
Nine departments, including the National Development and Reform Commission (NDRC), issued opinions on May 13, proposing that China will cover key public areas with video surveillance by 2020. Public areas will be fully covered by cameras and their surveillance information will be shared among authorities all time. The plan aims to enhance public security monitoring, optimize traffic conditions, improve social management and make innovations in social governance.
Comment: The application of video surveillance on public security plays an important role in maintaining national security and social stability as well as preventing and combating violent and terrorist crimes. The application of video surveillance is under high standards, requiring covering 100 percent of key public areas with video surveillance. New and improved high-definition cameras will account for 100 percent, which will undoubtedly improve the market demand for video surveillance equipment and materials. In terms of listed companies, OB Telecom Electronics Co., Ltd. (300270.SZ) is principally engaged in the technology and products for the transmission of video surveillance. Zhejiang Dahua Technology Co., Ltd. (002236.SZ) is engaged in the research and development, production and sale of video surveillance products. It is endeavors to be top three in the global video surveillance industry.
○ Miao Wei inspects intelligent city construction, over RMB2 trln to invest in next decade
------
Miao Wei, Minister of the Ministry of Industry and Information Technology (MIIT), pointed out that the new generation of information technology represented by the Internet is developing rapidly and it is highly integrated with urban construction, operation, management and services as well as leading the development of the new type of urbanization during his visit to Ningxia Hui Autonomous Region on the construction of intelligent city. Miao explained the plans and arrangements of the MIIT on the construction of intelligent cities and the application of information technologies in the future.
Comment: The construction of intelligent cities covers intelligent transportation, public security, digital urban management, intelligent medical treatment and other subdivided markets. Institutes estimate that relevant investment in intelligent city construction in the following decade will be over 2 trillion yuan. In terms of A-share companies, Enjoyor Co., Ltd. (300020.SZ) develops the business model for general contract of intelligent cities and has signed strategic cooperation agreements with various local governments. China TransInfo Technology Co., Ltd. (002373.SZ) focuses on intelligent transportation and is establishing the complete comprehensive transportation business system.
○ The 19th International Software China to convene, independent and controllable technologies to highlight
------
The 19th International Software China organized by the Ministry of Industry and Information Technology (MIIT), the Ministry of Science and Technology (MOST) and other ministries and commissions will be held in Beijing from May 27 to 29. It will focus on improving the software industry and accelerate the development of the industry. MIIT officials indicated on May 13 that China’s software industry recorded business revenue of 880 billion yuan in the first quarter, representing an increase of 17.5 percent year on year and more growth compared with the last quarter of 2014.
Comment: The software system is a key part in the information security. Driven by the trend of homemade products, the operating system, middleware, database and other subdivided industries will see rapid development. In terms of listed companies, Taiji Computer Corporation Limited (002368.SZ) holds 33 percent equities of Beijing BaseSoft Information Technologies Co., Ltd. and is competitive in the database products market. Shanghai Baosight Software Co., Ltd. (600845.SH) accounts for nearly 70 percent of the ERP market in the iron and steel industry and is actively developing the IDC data center project.
[Announcement Interpretation]
○ Allwin Telecommunication to acquire Snow Fish with RMB1.7 bl
------
Allwin Telecommunication Co., Ltd. (002231.SZ) plans to raise 1.77 billion yuan by issuing 181 million shares at 9.78 yuan per share through private placement to Du Fang, its chairman of the board, etc. to acquire 100 percent equities of Shanghai Snow Fish Computer Technology Co., Ltd. and to supplement working capital. The value-added ratio of the subject asset reaches 2217 percent. The counterparty promises that the net profit of Snow Fish from 2015 to 2017 will be no less than 110 million yuan, 143 million yuan and 186 million yuan, respectively.
Snow Fish mainly focuses on the development and operation of mobile games as well as the platform operation of mobile games. The company owns seven fully-owned subsidiaries, all of which are equipped with the CP qualification of telecom operators.
○ Zanyu Technology to expand to oil-fat chemical industry with RMB800 mln through private placement
------
Zhejiang Zanyu Technology Co., Ltd. (002637.SZ) plans to raise 800 million yuan by issuing 50.00 million shares at 16.01 yuan per share to acquire 60 percent equities of PT. Dua Kuda Indonesia and Nantong Kaita Chemical Technology Co., Ltd., respectively, and to pay off loans. Hangzhou Yongyin Investment Partnership Enterprise (Limited Partnership), jointly established by Fang Yinjun, one of the actual controllers of the company, Zou Huanjin, director and deputy general manager of the company, etc., plans to subscribe 35 million shares; Zanyu Technology’s staff shareholding plan will subscribe 15.00 million shares.
The company plans to acquire 60 percent equities of PT. Dua Kuda Indonesia and Nantong Kaita, respectively, with 700 million yuan and to pay off bank loans with 100 million yuan. PT. Dua Kuda Indonesia is mainly engaged in the development, manufacturing and sales of oil-fat chemical products. The counterparty promises that the net profit of PT. Dua Kuda Indonesia from June to December of 2015 and 2016 to 2018 will be no less than 28.00 million yuan, 100 million yuan, 180 million yuan and 210 million yuan, respectively.
○ HengBao to develop Internet finance with RMB1.2 bln
------
HengBao Co., Ltd. (002104.SZ) plans to raise 1.2 billion yuan by issuing 69.20 million shares at 17.34 yuan per share through private placement to five targeted subjects including JT Asset Management Co., Ltd., Ping’an Asset Management Co., Ltd., Tibet Ruihua Investment Development Co., Ltd., Nanjing Juhuiguang Investment Partnership Enterprise (Limited Partnership) and China Galaxy Investment Development Co., Ltd. The raised fund will be used to invest in micro, small and medium-sized business service network and system construction project, acquire 51 percent equities of Shenzhen 1card1 Technology Co., Ltd., invest in the development and industrialization of mPOS overall solutions and to supplement working capital. Taking this opportunity, the company makes planning in the Internet financial service and commercial service system for micro, small and medium-sized business, and strengthens its advantage in financial payment solution area.
○ Lancy to raise RMB1.5 bln through private placement to introduce Korean brands
------
Lancy Co., Ltd. (002612.SZ) plans to raise 1.5 billion yuan by issuing 46.37 million shares at 32.32 yuan per share through private placement to introduce and operate Korean fashion brands, pay off bank loans and supplement working capital. Shen Jinhua, actual controller of the company, will subscribe 700 million yuan.
○ Tianjin Songjiang to raise RMB2.7 bln to develop finance lease
------
Tianjin Songjiang Co., Ltd. (600225.SH) plans to raise 2.7 billion yuan by issuing 322.20 million shares at no less than 8.38 yuan per share to increase capital in Tianjin Hengtai Huijin Finance Lease Co., Ltd., invest in Tianjin Dongjiang port leisure street project, etc., and pay off loans. The private placement can help the company to benefit from the policies of Tianjin Free Trade Zone and push forward its business transformation.
○ Beite Technology to raise RMB840 mln to add stakes in its main business
------
Shanghai Beite Technology Co., Ltd. (603009.SH) plans to raise 840 million yuan by issuing 33.53 million shares at no less than 25.05 yuan per share to invest in the industrialization project of high-precision automobile steering device and damper components, the expansion project of high-precision damper components, etc. and to pay off bank loans. Jin Xiaotang, general manager and son of the actual controller of the company, plans to subscribe 10 percent of the total private placement. The locking period of the stocks will last for 36 months.
○ Changjiang Securities to raise RMB12 bln through private placement
------
Changjiang Securities Company Limited (000783.SZ) plans to raise 12 billion yuan by issuing 787 million shares at 15.25 yuan per share through private placement to increase the company’s capital fund, including expanding the business scale of transaction with credit, developing Internet finance business, increasing the investment in subsidiaries, adding the reserve fund for underwriting, expanding securities asset management business, etc.
Comment: Changjiang Securities indicates that relevant parties do not clearly claim to participate in the private placement. Subscribers will be determined according to principles like price priority, etc. Therefore, the private placement is not an action for the State-owned Assets Supervision and Administration Commission of Hubei Province, the second largest shareholder of the company, to compete against Liu Yiqian, the new largest shareholder. It mainly aims to implement the financing plan proposed in 2014 annual report. Peaceful coexistence of shareholders will contribute to the company’s future development.
[Trading Trends]
○ Visual China bought by four institutions
------
The trading volume ranking list on May 13 shows that Visual China Group Co., Ltd. (000681.SZ) was bought by four institutions with a total of 146 million yuan, accounting for 15 percent of its intraday turnover.
Comment: Visual China recently announces that Shenzhen Advance Intelligent Technology Co., Ltd., its subsidiary, has signed strategic cooperation agreement with Luoke Interactive Entertainment Intelligent Technology Co., Ltd. to jointly develop large-scale interior and outdoor theme parks under Tencent’s Roco Kingdom and theme parks in community commercial centers, and provide Roco interactive entertainment with overall solutions concerning the construction of theme parks. Institutions believe that the company owns huge amount of visual material resources, actively pushes forward intelligent tourism platform business and it will see huge growth potential.
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