[Today’s Guide]
○Explore competitive industries in China with international horizon
○Foreign capital increases investment in white spirits, white electronic appliances and TCM
○Economic corridors and strategic support of “One Belt and One Road” preliminarily defined
○ De-capacity of pig breeding industry far exceeds expectation
[XFA View]
Explore competitive industries in China with international horizon
------
While domestic investors are crazy about legendary tales of entrepreneurial firms with an extremely high price/dream ratio, ThyssenKrupp AG, a German industrial behemoth, quietly acquired equities of a company under Angang Steel Company Limited (000898.SZ). Such cases are not rare. Statistics show that QFIIs mainly increased the investment in automobiles, household electric appliance, white spirit, traditional Chinese medicines as well as other industries with low valuation in the first quarter. Considering that the A-share market may be covered by the MSCI’s emerging markets index and the Shenzhen-Hong Kong Stock Connect may launch in June, the domestic capital will speed up in opening to the outside. It is necessary to explore competitive industries in China with an international horizon.
The fourth dimensional mode of thing has become a trend in recent year driven by the money-making effect in the stock market. Investors are enthusiastic about innovation and worry that they will be eliminated. The capital has driven the market value of concept varieties without profit, technology or mode into a height beyond your apprehension. However, a healthy investment should not be the passing of investment but an investment in enterprises creating value. Investors shall share their growth, revenues and operating results. The varieties in which ThyssenKrupp, QFII and international industries and financial capitals show interest in the future shall not be overlooked by domestic investors.
Take the household electric appliance industry as an example. Although the business mode is not unique and it does not intend to change human beings, it is quite competitive in the opinion of international capital. After ten years of reshuffle, the Chinese household electric appliance industry is creating value for shareholders and clients with its increasingly market share and channels and brands. As for the middle- and high-end white spirit industry, the composition of consumers has changed significantly after two years of twists and turns. Individual consumers have dominated the industry. Foreign capitals believe that such enterprises enjoy a rosy future as they have stable consumers and bear no risks of technology replacement. The same logic also applies in the power, heavy machinery and other high-end manufacturing industries in China as well as emerging industries benefiting from the huge domestic market.
It is noteworthy that entrepreneurship and innovation are totally different in the opinion of international capitals. The entrepreneurship does not mean innovation, but the innovation cannot start from scratch and should be passed from the previous. Capitals should be invested in innovation other than the so-called story-telling entrepreneurship. In the current stage, pharmaceuticals and TMT industries are dominated by the U.S. and Japan in terms of the international industrial division and cooperation. Those can go global in the future may be traditional competitive industries under transformation and upgrading to a large extent. (Wen Dao)
[Institutions’ Movement]
Foreign capital increases investment in white spirits, white electronic appliances and TCM
------
XFA’s statistics show that the qualified foreign institutional investors (QFIIs) increased investment in white spirits, white electronic appliances, automobile components, traditional Chinese medicine and other consumer industries in the first quarter based on the amount of increased investment and the industry category of individual stocks.
Specifically speaking, eight individual white electronic appliances stocks saw additional or new investments. Merrill Lynch and UBS increased another 11.39 million shares of Midea Group Co., Ltd. (000333.SZ) and Morgan Stanley acquired another 31.49 million shares of Midea Group in the first quarter. In terms of white spirits stocks, Kweichow Moutai Co., Ltd. (600519.SH) and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (002304.SZ) attracted more investments. Seven traditional Chinese medicine stocks were greatly favored. Two QFIIs bought 7.14 million shares of Dong-e-e-jiao Co., Ltd. (000423.SZ) in total. Ten individual stocks in the automobile component industry are favored by QFIIs in the first quarter. Chongqing Zongshen Power Machinery Co., Ltd. (001696.SZ) and Weifu High-Technology Group Co., Ltd. (000581.SZ) are bought with large amount.
Guohua Life Insurance to explore TV sale and promote growth
------
It is reported that Guohua Life Insurance Co., Ltd., a new company in the Internet-based insurance industry, is negotiating with various local television stations on the distribution of insurance. It will actively explore the TV sale as a new profit growth channel and the first partners include the Shanghai Oriental Shopping Channel. Based on internal estimation, the business will bring a year-on-year growth of no less than 30 percent in 2015. Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ) currently holds 7.14 percent equities of Guohua Life Insurance. It will hold 51 percent equities of Guohua Life Insurance after the private placement and complete the consolidation of financial statements.
[Authoritative Voice]
Economic corridors and strategic support of “One Belt and One Road” preliminarily defined
------
XFA disclosed on May 10 that the construction of “One Belt and One Road” will adopt “point-axis” mode: by establishing agriculture, industry, tourism, etc. industrial parks in key cities along axis to form an economic cooperation structure like “a string of beads”. It is further learnt that the future development axis has been further specified as including nine economic corridors covering China-Russia-Mongolia, new Eurasia Land Bridge, China-Iran-Turkey, China-Pakistan, etc. More than 20 key industrial parks will be established along each economic corridor. In addition, besides the unveiled Gwadar Port and Kuantan Port, the strategic supports of maritime Silk Road also include Sihanoukville Port, Jakarta Port, etc.
[Industry Observation]
De-capacity of pig breeding industry far exceeds expectation, pig price might surge
------
Since the “de-capacity” of pig breeding industry goes far beyond expectation, pig price might see improvement. Many breeders exit during this round of down circle, leading to largely shrunken supply. The data published by the Ministry of Agriculture on May 15 shows that the total amount of fertile sows are 39.71 million nationally in April, indicating a year-on-year and a month-on-month drop of 14.9 percent and 1.7 percent, respectively. This is the first time for it to drop below 40.00 million since there is data record and it also indicates a drop for 20 consecutive months. As for price, the latest national pig price is 14.03 yuan per kilo, increasing 21 percent compared with the low point in March. The piglet price surges rapidly after it bottomed out in January this year, meaning a surge as high as 86 percent. Institutions estimate that the supply of pig will be further tightened from June. Since pork is usually greatly demanded in the third and fourth quarters every year, the pig price might see a big surge in the future.
Among A-share companies, Ningbo Tech-bank Co., Ltd. (002124.SZ) took over Aigefei Industry Co., Ltd., a pig breeding company, in 2013 and its breeding cost is ahead of average industrial cost. The fodder business of the company also benefits from the boosting of pig breeding. Chuying Agro-Pastoral Group Co., Ltd. (002477.SZ) is a leading professional pig breeding enterprise. The company further adds stakes in its main business through the just completed private placement. The price hike of pig might contribute to the company’s performance improvement.
[XFA Viewpoint]
Demand on non-ferrous metals gradually increases, zinc and lithium to pick up first
------
As the policies aiming to maintain stable growth are launched in succession in the second quarter, it’s quite possible that China’s economy might stabilize and recover. The industry estimate that the demand on metals also might increase. Moreover, the continuous fluctuation of the U.S. dollar and the price hike of crude oil create conditions for the rebound of non-ferrous metals. The overnight U.S. dollar index closed around 94 points on May 15, continuing the two-month fluctuation. To be more specific, the varieties, seeing improved supply-demand structure and benefiting from boosting industrial chain, might pick up first.
Benefited from shrunken capacity and reducing inventory, zinc is seeing a turning point for supply to fall short of demand. The price of zinc surged 20 percent in two months. It is the variety seeing the largest surge recently and its average price sees a year-on-year growth of around 15 percent compared with last year. Among A-share companies, Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060.SZ) enjoys capacity advantage in domestic lead and zinc industry. The company acquired the second largest lead and zinc mine in Australia in 2009 when the metal market was sluggish. As the price of zinc rebounds, the capacity of this mine might be expanded.
Under continuous policy support, the sales of new energy vehicle might continue explosive growth this year. Lithium-ion power battery, lithium-ion electric equipment, etc. will benefit the most and it also makes it possible for upstream lithium mine to improve supply-demand structure. Under the context of limited supply and increased demand, the price surge of lithium concentrate exceeds 15 percent since this year. Sichuan Tianqi Lithium Industries, Inc. (002466.SZ) is the world largest enterprise extracting lithium from ore. Australian Talison Lithium, acquired by Tianqi Lithium Industries, owns the largest in-production spodumene mine globally, occupying 80 percent of market demand.
[Information Radar]
Nationz Technologies investigated by institutions, dependable computing chip concerned
------
Nationz Technologies Inc. (300077.SZ) recently held an investigation meeting for institutional investors with multiple institutions participated. According to the investigation, the company might see performance improvement since the State increases support on information security and integrated circuit.
In dependable computing area, one chip product of Nationz Technologies has been produced in small scale and might be applied in mobile and PC. In the era of Internet of things and big data, data security counts. Only data stored in equipment with dependable computing chip can avoid being modified. In addition, the company owns abundant cash now. Institutions predict that the company might achieve extensional acquisition in software, information security, etc. in the future.
○Explore competitive industries in China with international horizon
○Foreign capital increases investment in white spirits, white electronic appliances and TCM
○Economic corridors and strategic support of “One Belt and One Road” preliminarily defined
○ De-capacity of pig breeding industry far exceeds expectation
[XFA View]
Explore competitive industries in China with international horizon
------
While domestic investors are crazy about legendary tales of entrepreneurial firms with an extremely high price/dream ratio, ThyssenKrupp AG, a German industrial behemoth, quietly acquired equities of a company under Angang Steel Company Limited (000898.SZ). Such cases are not rare. Statistics show that QFIIs mainly increased the investment in automobiles, household electric appliance, white spirit, traditional Chinese medicines as well as other industries with low valuation in the first quarter. Considering that the A-share market may be covered by the MSCI’s emerging markets index and the Shenzhen-Hong Kong Stock Connect may launch in June, the domestic capital will speed up in opening to the outside. It is necessary to explore competitive industries in China with an international horizon.
The fourth dimensional mode of thing has become a trend in recent year driven by the money-making effect in the stock market. Investors are enthusiastic about innovation and worry that they will be eliminated. The capital has driven the market value of concept varieties without profit, technology or mode into a height beyond your apprehension. However, a healthy investment should not be the passing of investment but an investment in enterprises creating value. Investors shall share their growth, revenues and operating results. The varieties in which ThyssenKrupp, QFII and international industries and financial capitals show interest in the future shall not be overlooked by domestic investors.
Take the household electric appliance industry as an example. Although the business mode is not unique and it does not intend to change human beings, it is quite competitive in the opinion of international capital. After ten years of reshuffle, the Chinese household electric appliance industry is creating value for shareholders and clients with its increasingly market share and channels and brands. As for the middle- and high-end white spirit industry, the composition of consumers has changed significantly after two years of twists and turns. Individual consumers have dominated the industry. Foreign capitals believe that such enterprises enjoy a rosy future as they have stable consumers and bear no risks of technology replacement. The same logic also applies in the power, heavy machinery and other high-end manufacturing industries in China as well as emerging industries benefiting from the huge domestic market.
It is noteworthy that entrepreneurship and innovation are totally different in the opinion of international capitals. The entrepreneurship does not mean innovation, but the innovation cannot start from scratch and should be passed from the previous. Capitals should be invested in innovation other than the so-called story-telling entrepreneurship. In the current stage, pharmaceuticals and TMT industries are dominated by the U.S. and Japan in terms of the international industrial division and cooperation. Those can go global in the future may be traditional competitive industries under transformation and upgrading to a large extent. (Wen Dao)
[Institutions’ Movement]
Foreign capital increases investment in white spirits, white electronic appliances and TCM
------
XFA’s statistics show that the qualified foreign institutional investors (QFIIs) increased investment in white spirits, white electronic appliances, automobile components, traditional Chinese medicine and other consumer industries in the first quarter based on the amount of increased investment and the industry category of individual stocks.
Specifically speaking, eight individual white electronic appliances stocks saw additional or new investments. Merrill Lynch and UBS increased another 11.39 million shares of Midea Group Co., Ltd. (000333.SZ) and Morgan Stanley acquired another 31.49 million shares of Midea Group in the first quarter. In terms of white spirits stocks, Kweichow Moutai Co., Ltd. (600519.SH) and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (002304.SZ) attracted more investments. Seven traditional Chinese medicine stocks were greatly favored. Two QFIIs bought 7.14 million shares of Dong-e-e-jiao Co., Ltd. (000423.SZ) in total. Ten individual stocks in the automobile component industry are favored by QFIIs in the first quarter. Chongqing Zongshen Power Machinery Co., Ltd. (001696.SZ) and Weifu High-Technology Group Co., Ltd. (000581.SZ) are bought with large amount.
Guohua Life Insurance to explore TV sale and promote growth
------
It is reported that Guohua Life Insurance Co., Ltd., a new company in the Internet-based insurance industry, is negotiating with various local television stations on the distribution of insurance. It will actively explore the TV sale as a new profit growth channel and the first partners include the Shanghai Oriental Shopping Channel. Based on internal estimation, the business will bring a year-on-year growth of no less than 30 percent in 2015. Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ) currently holds 7.14 percent equities of Guohua Life Insurance. It will hold 51 percent equities of Guohua Life Insurance after the private placement and complete the consolidation of financial statements.
[Authoritative Voice]
Economic corridors and strategic support of “One Belt and One Road” preliminarily defined
------
XFA disclosed on May 10 that the construction of “One Belt and One Road” will adopt “point-axis” mode: by establishing agriculture, industry, tourism, etc. industrial parks in key cities along axis to form an economic cooperation structure like “a string of beads”. It is further learnt that the future development axis has been further specified as including nine economic corridors covering China-Russia-Mongolia, new Eurasia Land Bridge, China-Iran-Turkey, China-Pakistan, etc. More than 20 key industrial parks will be established along each economic corridor. In addition, besides the unveiled Gwadar Port and Kuantan Port, the strategic supports of maritime Silk Road also include Sihanoukville Port, Jakarta Port, etc.
[Industry Observation]
De-capacity of pig breeding industry far exceeds expectation, pig price might surge
------
Since the “de-capacity” of pig breeding industry goes far beyond expectation, pig price might see improvement. Many breeders exit during this round of down circle, leading to largely shrunken supply. The data published by the Ministry of Agriculture on May 15 shows that the total amount of fertile sows are 39.71 million nationally in April, indicating a year-on-year and a month-on-month drop of 14.9 percent and 1.7 percent, respectively. This is the first time for it to drop below 40.00 million since there is data record and it also indicates a drop for 20 consecutive months. As for price, the latest national pig price is 14.03 yuan per kilo, increasing 21 percent compared with the low point in March. The piglet price surges rapidly after it bottomed out in January this year, meaning a surge as high as 86 percent. Institutions estimate that the supply of pig will be further tightened from June. Since pork is usually greatly demanded in the third and fourth quarters every year, the pig price might see a big surge in the future.
Among A-share companies, Ningbo Tech-bank Co., Ltd. (002124.SZ) took over Aigefei Industry Co., Ltd., a pig breeding company, in 2013 and its breeding cost is ahead of average industrial cost. The fodder business of the company also benefits from the boosting of pig breeding. Chuying Agro-Pastoral Group Co., Ltd. (002477.SZ) is a leading professional pig breeding enterprise. The company further adds stakes in its main business through the just completed private placement. The price hike of pig might contribute to the company’s performance improvement.
[XFA Viewpoint]
Demand on non-ferrous metals gradually increases, zinc and lithium to pick up first
------
As the policies aiming to maintain stable growth are launched in succession in the second quarter, it’s quite possible that China’s economy might stabilize and recover. The industry estimate that the demand on metals also might increase. Moreover, the continuous fluctuation of the U.S. dollar and the price hike of crude oil create conditions for the rebound of non-ferrous metals. The overnight U.S. dollar index closed around 94 points on May 15, continuing the two-month fluctuation. To be more specific, the varieties, seeing improved supply-demand structure and benefiting from boosting industrial chain, might pick up first.
Benefited from shrunken capacity and reducing inventory, zinc is seeing a turning point for supply to fall short of demand. The price of zinc surged 20 percent in two months. It is the variety seeing the largest surge recently and its average price sees a year-on-year growth of around 15 percent compared with last year. Among A-share companies, Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060.SZ) enjoys capacity advantage in domestic lead and zinc industry. The company acquired the second largest lead and zinc mine in Australia in 2009 when the metal market was sluggish. As the price of zinc rebounds, the capacity of this mine might be expanded.
Under continuous policy support, the sales of new energy vehicle might continue explosive growth this year. Lithium-ion power battery, lithium-ion electric equipment, etc. will benefit the most and it also makes it possible for upstream lithium mine to improve supply-demand structure. Under the context of limited supply and increased demand, the price surge of lithium concentrate exceeds 15 percent since this year. Sichuan Tianqi Lithium Industries, Inc. (002466.SZ) is the world largest enterprise extracting lithium from ore. Australian Talison Lithium, acquired by Tianqi Lithium Industries, owns the largest in-production spodumene mine globally, occupying 80 percent of market demand.
[Information Radar]
Nationz Technologies investigated by institutions, dependable computing chip concerned
------
Nationz Technologies Inc. (300077.SZ) recently held an investigation meeting for institutional investors with multiple institutions participated. According to the investigation, the company might see performance improvement since the State increases support on information security and integrated circuit.
In dependable computing area, one chip product of Nationz Technologies has been produced in small scale and might be applied in mobile and PC. In the era of Internet of things and big data, data security counts. Only data stored in equipment with dependable computing chip can avoid being modified. In addition, the company owns abundant cash now. Institutions predict that the company might achieve extensional acquisition in software, information security, etc. in the future.
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