[Today’s Guide]
> Various supporting policies to boost Internet plus agriculture
> Rail transportation investment to boom, Biological medicine to see rosy May with supporting policies
> Huanghe Whirlwind to develop intelligent manufacturing, Huaqiang Industry to acquire Xianghai Electronic
> Changjiang Electronics Technology to control Changdian Advanced Packaging, Wohua Phar. to acquire Jishun Phar.
[XFA Focus]
○ Various supporting policies to boost Internet plus agriculture
------
XFA was exclusively told that the first draft of the ‘Instructions on Accelerating the Development of E-business in Rural Areas’ with the participation of the Ministry of Commerce and other more than 20 ministries and commissions has been prepared. It is under the review of the ministries and commissions. The final document will be introduced by the General Office of the State Council. It is the first document on the development of e-business in rural areas across China.
Comment: The e-business in rural areas has received unprecedented policy supports. Three major documents, including the eight state regulations on the e-business, have been released since March. The central government will arrange a special fund of 2 billion yuan in the construction of infrastructure for the e-business in rural areas. Many A-share companies are actively developing the Internet plus agriculture.
◆ Beijing Dabeinong Technology Group Co., Ltd. (002385.SZ) will implement the Intelligent Dabeinong Strategy with the Internet of pigs, the Nxin store, the Nxin finance and the intelligent agriculture access as the focus. It will also introduce the farmer-to-farmer loans in the P2P model in July.
◆ Stanley Fertilizer Co., Ltd. (002588.SZ) is focusing on a comprehensive service platform in rural areas covering the grain, agricultural materials and machinery as well as loans. The platform is expected to cover 300,000 mu this year and 1 million mu next year.
◆ The ‘Agriculture Commerce No. 1’, a platform for agricultural materials e-business invested by a substantial shareholder of Kingenta Ecological Engineering Group Co., Ltd. (002470.SZ) with 2 billion yuan, is under trial operation. It proposes to recordsales revenue of 10 billion yuan in five years. The company will also establish 200 agricultural service centers focusing on big data this year.
[XFA Selection]
○ Li Xiaojia, Chief Executive of the Hong Kong Exchanges and Clearing Limited (00388.HK), indicated on May 20 that the Shenzhen-Hong Kong stock connect is under the final approval and announcement by regulatory authorities. It will be introduced this year.
○ The instruction on boosting Internet speed and reducing charges was released on May 20. Insiders believe that three major operators, namely China Mobile Limited (CHL.NYSE; 00941.HK), China United Network Communications Limited (600050.SH) and China Telecom Corporation Limited (CHA.NYSE; 00728.HK), will increase the 4G investment.
○ Various ministries and commissions promote the cooperation on international capacity and equipment manufacturing. XFA learnt that the project of Hebei Iron And Steel Co., Ltd. (000709.SZ) in Africa and other projects are expected to be launched soon.
○ Qianhai Kaiyuan Fund Management Co., Ltd. proposes to strictly control the risks in the SME Board and the ChiNext. Funds with a net value of less than 1.2 yuan cannot hold more than 10 percent of position in the SME Board and the ChiNext.
○ The Economic Observer reported that the National Equities Exchange and Quotations (NEEQ) will reform in the future. It will cancel the protocol transaction pattern that specifying the declaration of designated counterparties.
[Industry Information]
○ NDRC approves urban rail transportation projects, huge investment expected
------
The National Development and Reform Commission (NDRC) issued the plans on the rail transportation construction in Nanjing City, Nanchang City and Hohhot City on May 20 with a total length of 291 kilometers and a total investment of 215.2 billion yuan. The NDRC also approved the rail transportation construction plans of Chengdu City and Nanning City on May 18.
Comment: The investment in infrastructure is playing a key role in ‘maintaining economic growth’. It is estimated that 38 cities have proposed plans on the rail transportation construction. An average of 926 kilometers of urban rail and metro will be increased in the following five years, which will attract an investment of trillions of yuan in total. Among A-share companies, Beijing Dinghan Technology Co., Ltd. (300011.SZ) ranks first in the power system for the domestic rail market. Zhejiang Yonggui Electric Equipment Co., Ltd. (300351.SZ) develops the connectors for vehicles. Jiangyin Haida Rubber and Plastic Co., Ltd. (300320.SZ) is a leader in the rubber sealing and vibration reduction sub-industries.
○ Biological medicine to see rosy May with supporting policies, medical devices domestication to speed up
------
The ‘Made in China 2025’ unveiled on May 19 identified 10 industries, including the biological medicine and medical devices with high performance, as state strategies. The plan pointed out that it will develop chemical drugs, traditional Chinese medicines and biotechnology drugs for serious diseases, improve the innovation and industrialization of medical devices and focus on the development of imaging equipment, medical robots and other high-performance diagnostic equipment.
Comment: With the introduction of various new pharmaceutical policies, including the reform of drug prices and public hospitals, the biological medicine industry will see a ‘rosy May’ with various supporting policies. Listed companies are expected to gradually increase the input in the development and application of new medicines. The domestication of medical devices is also likely to speed up. In terms of listed companies, Jiangsu Hengrui Medicine Co., Ltd. (600276.SH) ranks first in the sale of antineoplastic drugs. Shinva Medical Instrument Co., Ltd. (600587.SH) continues the merger and acquisition of companies in the medical devices industry. It recently edged into two high-end industries, namely the in vitro diagnosis and hemodialysis equipment.
○ Institutes visit polyester industrial filament enterprises, industry continues to boom
------
XFA learnt that the price of the polyester industrial filament rose again in May with an average increase of nearly 10 percent, setting a new high in 2015.
Comment: The polyester industrial filament is a material for industrial textiles. The four enterprises with the highest capacity account for nearly 80 percent of market share in total. The market is currently under a tight balance and the bargaining power is better than the upper stream. Based on the information on the interactive platform of the Shenzhen Stock Exchange, institutes have visited polyester industrial filament enterprises in May and the industry is expected to continue to boom. In terms of listed companies, Zhejiang Hailide New Material Co., Ltd. (002206.SZ) owns a capacity of 135,000 tons. Zhejiang Unifull Industrial Fiber Co., Ltd. (002427.SZ) owns an annual capacity of nearly 200,000 tons.
[Announcement Interpretation]
○ Huanghe Whirlwind to develop intelligent manufacturing with RMB420 mln through private placement
------
Henan Huanghe Whirlwind Co., Ltd. (600172.SH) proposes to acquire 100 percent equities of Shanghai Mingjiang Intelligence System Co., Ltd. with 420 million yuan by issuing shares at 7.88 yuan per share to Henan Huanghe Industrial Group Co., Ltd., its substantial shareholder, and other participants. It also plans to raise a supporting fund of 420 million yuan by issuing shares at 9.63 yuan per share to Qiao Qiusheng, the chairman, four directors, namely Liu Jianshe, Du Changhong, Xu Yongjie and Zhang Yongjian, Wang Yuchang, a senior management as well as Chen Jun, a substantial shareholder of Mingjiang Intelligence System through private placement. 330 million yuan of the proceeds will be invested in the gem-grade large crystal diamond industrialization project.
Mingjiang Intelligence System develops intelligent manufacturing and is positioned as an intelligent factory and a provider of industrial automation, integrated application of robots and intelligent production management system. Its net profit after extraordinary items from 2015 to 2017 will be no less than 30 million yuan, 39 million yuan and 50.70 million yuan, respectively.
○ Huaqiang Industry to acquire Xianghai Electronic with RMB1 bln
------
Shenzhen Huaqiang Industry Co., Ltd. (000062.SZ) plans to purchase 100 percent equities of Shenzhen Xianghai Electronic Co., Ltd. with 1,034 million yuan by issuing shares at 18.16 yuan per share through private placement and in cash. It also intends to raise a supporting fund of 258.5 million yuan by issuing shares at 22.44 yuan per share to Huaqiang Group, the controlling shareholder, Hu Xinan, the chairman of the company, Zheng Yi and Wang Ying, two directors of the company and Hui Min and Hou Junjie, business backbones of the company as well as other participants through private placement. Based on the performance commitment, the net profit after extraordinary items of Xianghai Electronic from 2015 to 2017 will be 301 million yuan in total. The transaction will bring more electronic components providers in the upper stream and more clients in the downstream to the company.
○ Changjiang Electronics Technology to fully control Changdian Advanced Packaging
------
Jiangsu Changjiang Electronics Technology Co., Ltd. (600584.SH) intends to acquire 16.2 percent equities of Jiangyin Changdian Advanced Packaging Co., Ltd. held by Xinchao Group, its controlling shareholder, by issuing 28.18 million shares at 11.72 yuan per share. It will fully control Changdian Advanced Packaging after the acquisition. The transaction subject is preliminarily valued at 330 million yuan. Meanwhile, the company plans to raise a supporting fund of 330 million yuan by issuing 23.35 million shares at 14.14 yuan per share to Xinchao Group. The proceeds will be used in the trial middle packaging project for the processing of 480,000 semiconductor chips annually by Changdian Advanced Packaging as well as supplementing the supporting fund of the listed company.
○ Wohua Phar. to control Jishun Phar.
------
Shandong Wohua Pharmaceutical Co., Ltd. (002107.SZ) proposes to invest part of the proceeds raised in 2008 through private placement in the acquisition of 51 percent equities of Nanchang Jishun Pharmaceutical Co., Ltd. with 120 million yuan. The Hedan Tablet, a leading product of Jishun Phar., is a variety of traditional Chinese medicines under the state protection and mainly for hyperlipemia. It recorded a net profit of 6.04 million yuan in 2014. The counterparty committed that the net profit of the subject company from 2015 to 2017 will be no less than 9.48 million yuan, 14.61 million yuan and 19.51 million yuan, respectively.
○ Luolai Home Textile to develop smart home
------
Nantong Luolai Business Consulting Co., Ltd., a subsidiary of Luolai Home Textile Co., Ltd. (002293.SZ), invested 29.32 million yuan in Shenzhen Medica Technology & Development Co., Ltd. and became the biggest shareholder of the latter with 21.38 percent shares after the investment. Medica Technology & Development is a high-tech enterprises principally engaged in intelligent sleeping health products, sleeping improvement solutions and the integrated technology for the health information system. Its RestOn sleeping monitor is the first mobile Internet-based sleeping monitoring product in China, which is unnecessary to wear. Luolai Business Consulting also plans to establish a subsidiary named ‘Nantong Luolai Smart Home Technology Co., Ltd.’ with 50 million yuan from its own capital.
○ Reorganization of Microgate Technology and other two companies approved
------
The acquisition of assets by Shenzhen Microgate Technology Co., Ltd. (300319.SZ), Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) and Xiamen 35.com Technology Co., Ltd. (300051.SZ), through issuing shares were approved by the China Securities Regulatory Commission (CSRC). Xiamen 35.com Technology was conditionally approved.
[Trading Alarms]
○ Shida Shenghua Chemical issues shares on May 21
------
Shandong Shida Shenghua Chemical Group Co., Ltd. (732026.SH), principally engaged in the production of dimethyl carbonate and other chemical products, issues shares at 6.51 yuan per share with an upper subscription limit of 18,000 shares for each account.
> Various supporting policies to boost Internet plus agriculture
> Rail transportation investment to boom, Biological medicine to see rosy May with supporting policies
> Huanghe Whirlwind to develop intelligent manufacturing, Huaqiang Industry to acquire Xianghai Electronic
> Changjiang Electronics Technology to control Changdian Advanced Packaging, Wohua Phar. to acquire Jishun Phar.
[XFA Focus]
○ Various supporting policies to boost Internet plus agriculture
------
XFA was exclusively told that the first draft of the ‘Instructions on Accelerating the Development of E-business in Rural Areas’ with the participation of the Ministry of Commerce and other more than 20 ministries and commissions has been prepared. It is under the review of the ministries and commissions. The final document will be introduced by the General Office of the State Council. It is the first document on the development of e-business in rural areas across China.
Comment: The e-business in rural areas has received unprecedented policy supports. Three major documents, including the eight state regulations on the e-business, have been released since March. The central government will arrange a special fund of 2 billion yuan in the construction of infrastructure for the e-business in rural areas. Many A-share companies are actively developing the Internet plus agriculture.
◆ Beijing Dabeinong Technology Group Co., Ltd. (002385.SZ) will implement the Intelligent Dabeinong Strategy with the Internet of pigs, the Nxin store, the Nxin finance and the intelligent agriculture access as the focus. It will also introduce the farmer-to-farmer loans in the P2P model in July.
◆ Stanley Fertilizer Co., Ltd. (002588.SZ) is focusing on a comprehensive service platform in rural areas covering the grain, agricultural materials and machinery as well as loans. The platform is expected to cover 300,000 mu this year and 1 million mu next year.
◆ The ‘Agriculture Commerce No. 1’, a platform for agricultural materials e-business invested by a substantial shareholder of Kingenta Ecological Engineering Group Co., Ltd. (002470.SZ) with 2 billion yuan, is under trial operation. It proposes to recordsales revenue of 10 billion yuan in five years. The company will also establish 200 agricultural service centers focusing on big data this year.
[XFA Selection]
○ Li Xiaojia, Chief Executive of the Hong Kong Exchanges and Clearing Limited (00388.HK), indicated on May 20 that the Shenzhen-Hong Kong stock connect is under the final approval and announcement by regulatory authorities. It will be introduced this year.
○ The instruction on boosting Internet speed and reducing charges was released on May 20. Insiders believe that three major operators, namely China Mobile Limited (CHL.NYSE; 00941.HK), China United Network Communications Limited (600050.SH) and China Telecom Corporation Limited (CHA.NYSE; 00728.HK), will increase the 4G investment.
○ Various ministries and commissions promote the cooperation on international capacity and equipment manufacturing. XFA learnt that the project of Hebei Iron And Steel Co., Ltd. (000709.SZ) in Africa and other projects are expected to be launched soon.
○ Qianhai Kaiyuan Fund Management Co., Ltd. proposes to strictly control the risks in the SME Board and the ChiNext. Funds with a net value of less than 1.2 yuan cannot hold more than 10 percent of position in the SME Board and the ChiNext.
○ The Economic Observer reported that the National Equities Exchange and Quotations (NEEQ) will reform in the future. It will cancel the protocol transaction pattern that specifying the declaration of designated counterparties.
[Industry Information]
○ NDRC approves urban rail transportation projects, huge investment expected
------
The National Development and Reform Commission (NDRC) issued the plans on the rail transportation construction in Nanjing City, Nanchang City and Hohhot City on May 20 with a total length of 291 kilometers and a total investment of 215.2 billion yuan. The NDRC also approved the rail transportation construction plans of Chengdu City and Nanning City on May 18.
Comment: The investment in infrastructure is playing a key role in ‘maintaining economic growth’. It is estimated that 38 cities have proposed plans on the rail transportation construction. An average of 926 kilometers of urban rail and metro will be increased in the following five years, which will attract an investment of trillions of yuan in total. Among A-share companies, Beijing Dinghan Technology Co., Ltd. (300011.SZ) ranks first in the power system for the domestic rail market. Zhejiang Yonggui Electric Equipment Co., Ltd. (300351.SZ) develops the connectors for vehicles. Jiangyin Haida Rubber and Plastic Co., Ltd. (300320.SZ) is a leader in the rubber sealing and vibration reduction sub-industries.
○ Biological medicine to see rosy May with supporting policies, medical devices domestication to speed up
------
The ‘Made in China 2025’ unveiled on May 19 identified 10 industries, including the biological medicine and medical devices with high performance, as state strategies. The plan pointed out that it will develop chemical drugs, traditional Chinese medicines and biotechnology drugs for serious diseases, improve the innovation and industrialization of medical devices and focus on the development of imaging equipment, medical robots and other high-performance diagnostic equipment.
Comment: With the introduction of various new pharmaceutical policies, including the reform of drug prices and public hospitals, the biological medicine industry will see a ‘rosy May’ with various supporting policies. Listed companies are expected to gradually increase the input in the development and application of new medicines. The domestication of medical devices is also likely to speed up. In terms of listed companies, Jiangsu Hengrui Medicine Co., Ltd. (600276.SH) ranks first in the sale of antineoplastic drugs. Shinva Medical Instrument Co., Ltd. (600587.SH) continues the merger and acquisition of companies in the medical devices industry. It recently edged into two high-end industries, namely the in vitro diagnosis and hemodialysis equipment.
○ Institutes visit polyester industrial filament enterprises, industry continues to boom
------
XFA learnt that the price of the polyester industrial filament rose again in May with an average increase of nearly 10 percent, setting a new high in 2015.
Comment: The polyester industrial filament is a material for industrial textiles. The four enterprises with the highest capacity account for nearly 80 percent of market share in total. The market is currently under a tight balance and the bargaining power is better than the upper stream. Based on the information on the interactive platform of the Shenzhen Stock Exchange, institutes have visited polyester industrial filament enterprises in May and the industry is expected to continue to boom. In terms of listed companies, Zhejiang Hailide New Material Co., Ltd. (002206.SZ) owns a capacity of 135,000 tons. Zhejiang Unifull Industrial Fiber Co., Ltd. (002427.SZ) owns an annual capacity of nearly 200,000 tons.
[Announcement Interpretation]
○ Huanghe Whirlwind to develop intelligent manufacturing with RMB420 mln through private placement
------
Henan Huanghe Whirlwind Co., Ltd. (600172.SH) proposes to acquire 100 percent equities of Shanghai Mingjiang Intelligence System Co., Ltd. with 420 million yuan by issuing shares at 7.88 yuan per share to Henan Huanghe Industrial Group Co., Ltd., its substantial shareholder, and other participants. It also plans to raise a supporting fund of 420 million yuan by issuing shares at 9.63 yuan per share to Qiao Qiusheng, the chairman, four directors, namely Liu Jianshe, Du Changhong, Xu Yongjie and Zhang Yongjian, Wang Yuchang, a senior management as well as Chen Jun, a substantial shareholder of Mingjiang Intelligence System through private placement. 330 million yuan of the proceeds will be invested in the gem-grade large crystal diamond industrialization project.
Mingjiang Intelligence System develops intelligent manufacturing and is positioned as an intelligent factory and a provider of industrial automation, integrated application of robots and intelligent production management system. Its net profit after extraordinary items from 2015 to 2017 will be no less than 30 million yuan, 39 million yuan and 50.70 million yuan, respectively.
○ Huaqiang Industry to acquire Xianghai Electronic with RMB1 bln
------
Shenzhen Huaqiang Industry Co., Ltd. (000062.SZ) plans to purchase 100 percent equities of Shenzhen Xianghai Electronic Co., Ltd. with 1,034 million yuan by issuing shares at 18.16 yuan per share through private placement and in cash. It also intends to raise a supporting fund of 258.5 million yuan by issuing shares at 22.44 yuan per share to Huaqiang Group, the controlling shareholder, Hu Xinan, the chairman of the company, Zheng Yi and Wang Ying, two directors of the company and Hui Min and Hou Junjie, business backbones of the company as well as other participants through private placement. Based on the performance commitment, the net profit after extraordinary items of Xianghai Electronic from 2015 to 2017 will be 301 million yuan in total. The transaction will bring more electronic components providers in the upper stream and more clients in the downstream to the company.
○ Changjiang Electronics Technology to fully control Changdian Advanced Packaging
------
Jiangsu Changjiang Electronics Technology Co., Ltd. (600584.SH) intends to acquire 16.2 percent equities of Jiangyin Changdian Advanced Packaging Co., Ltd. held by Xinchao Group, its controlling shareholder, by issuing 28.18 million shares at 11.72 yuan per share. It will fully control Changdian Advanced Packaging after the acquisition. The transaction subject is preliminarily valued at 330 million yuan. Meanwhile, the company plans to raise a supporting fund of 330 million yuan by issuing 23.35 million shares at 14.14 yuan per share to Xinchao Group. The proceeds will be used in the trial middle packaging project for the processing of 480,000 semiconductor chips annually by Changdian Advanced Packaging as well as supplementing the supporting fund of the listed company.
○ Wohua Phar. to control Jishun Phar.
------
Shandong Wohua Pharmaceutical Co., Ltd. (002107.SZ) proposes to invest part of the proceeds raised in 2008 through private placement in the acquisition of 51 percent equities of Nanchang Jishun Pharmaceutical Co., Ltd. with 120 million yuan. The Hedan Tablet, a leading product of Jishun Phar., is a variety of traditional Chinese medicines under the state protection and mainly for hyperlipemia. It recorded a net profit of 6.04 million yuan in 2014. The counterparty committed that the net profit of the subject company from 2015 to 2017 will be no less than 9.48 million yuan, 14.61 million yuan and 19.51 million yuan, respectively.
○ Luolai Home Textile to develop smart home
------
Nantong Luolai Business Consulting Co., Ltd., a subsidiary of Luolai Home Textile Co., Ltd. (002293.SZ), invested 29.32 million yuan in Shenzhen Medica Technology & Development Co., Ltd. and became the biggest shareholder of the latter with 21.38 percent shares after the investment. Medica Technology & Development is a high-tech enterprises principally engaged in intelligent sleeping health products, sleeping improvement solutions and the integrated technology for the health information system. Its RestOn sleeping monitor is the first mobile Internet-based sleeping monitoring product in China, which is unnecessary to wear. Luolai Business Consulting also plans to establish a subsidiary named ‘Nantong Luolai Smart Home Technology Co., Ltd.’ with 50 million yuan from its own capital.
○ Reorganization of Microgate Technology and other two companies approved
------
The acquisition of assets by Shenzhen Microgate Technology Co., Ltd. (300319.SZ), Taiyuan Twin Tower Aluminum Oxide Co., Ltd. (000795.SZ) and Xiamen 35.com Technology Co., Ltd. (300051.SZ), through issuing shares were approved by the China Securities Regulatory Commission (CSRC). Xiamen 35.com Technology was conditionally approved.
[Trading Alarms]
○ Shida Shenghua Chemical issues shares on May 21
------
Shandong Shida Shenghua Chemical Group Co., Ltd. (732026.SH), principally engaged in the production of dimethyl carbonate and other chemical products, issues shares at 6.51 yuan per share with an upper subscription limit of 18,000 shares for each account.
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