[Today's Guide]
○ Stock index slump triggers circuit breaker mechanism, negative sentiments release at one time
○ Xinmei Real Estate proposes to acquire military industrial enterprise, Lixing General Steel Ball proposes to expand main business through private placement
○ Gon Technology proposes high share conversion and dividend, Sanju Environmental Protection ＆ New Materials warns of double digit growth of profits in annual report
○ Media, breeding and PV industries maintain high growth, Five institutes buy Little Swan
[SSN Focus]
○ Stock index slump triggers circuit breaker mechanism, negative sentiments release at one time
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On Jan. 4, the CSI 300 Index plummeted 5 percent firstly and 7 percent then, triggering off the circuit breaker mechanism. Trading of spot stocks and index futures was suspended from 13:33 till the end of the day. The SMEs Board Index and ChiNext Board Index slumped over 8 percent. Only 40 stocks in A-share market closed higher; while nearly 1,500 plunged by the daily limit of 10 percent.
Comment: This week the regulators will lift the ban for substantial shareholders' reducing their holdings which was set on July 8 last year. The market's concern over the upcoming registration-based IPO system and the magnet effect brought by the first day of the circuit breaker mechanism are factors causing the slump. Analysts believe that the slump is likely to be a centralized release of all the recent negative factors, and there is still possibility that the market will inertially fall in a short term; yet the long-term positive factors, including declining risk-free interest rate and asset scarcity. Although the index may hardly have excellent performance, there are still opportunities in concept stocks. As for the market's concern over substantial shareholders' reducing their holdings, some of them may actually get capital by asset injection and alteration of controlling stockholder, which will help improve the company's value.
[TOP]
◆ As of the press time, spot exchange rate of Chinese renmibi (CNY) against the U.S. Dollar plumped 0.64 percent to 6.5351, again hitting the recent low. Market participants believe that the updating of the quota for individual's buying foreign exchange in the new year adds downward pressure on renmibi. But China's central bank is completely capable of using various instruments to hedge the impact of the changing foreign exchange rate on domestic liquidity. It is estimated that there is still of high probability that China will cut reserve ratio requirement before the Spring Festival and is expected to inject capital in the market through open market and SLF operations.
[SSN Selection]
○The General Office of the State Council released the Guidelines on Promoting the Integration of the First, Secondary and Tertiary Industries in Rural Areas, proposing to implement the Internet plus modern agriculture actions.
○Chinese Vice Premier Zhang Gaoli pledged efforts to replace coal with other energies and promote emission reduction for motor vehicles during his inspection on air pollution prevention and control in Beijing.
○China China COSCO Shipping Group, a recognized company of China Ocean Shipping (Group) Company and China Shipping (Group) Company officially sets up on Jan. 4.
○Substantial shareholder of Zhejiang Century Huatong Group Co., Ltd. (002602.SZ) promises not to reduce its shareholding in the company till Jan. 9, 2017.
○The China Securities Regulatory Commission (CSRC) announced on Jan. 4 that three companies have applied for approve for their initial public offerings (IPO) on Jan. 8.
[Announcement Interpretation]
○Xinmei Real Estate proposes to acquire military industrial enterprise
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Shanghai Xinmei Real Estate Co., Ltd.（600732）proposes to acquire the entire equity in Jiangyin Ronghui Mechanical Manufacturing Company Limited at the valuation of 1,150 million yuan, which will be paid by issuing of 138 million shares at 6.68 yuan per share plus cash of 225 million yuan; the company also plans to issue shares to its controlling shareholder through private placement to buy the creditor's right of 193 million yuan entrust loan held by the controlling shareholder; meanwhile, the company intends to raise matching fund of 720 million yuan.
Jiangyin Ronghui is primarily engaged in the development, refit and manufacture of special military utility vehicles. It products are directly applied to national defense and military sectors. It is predicted that its net profits will be 60 million yuan, 106 million yuan, 180 million yuan, 185 million yuan and 190 million yuan, respectively from 2016 to 2020
○Lixing General Steel Ball proposes to expand main business through private placement
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Jiangsu Lixing General Steel Ball Co., ltd. (300421.SZ) proposes to issue 23 million shares through private placement to raise 570 million yuan, which will be used for the investment and construction of 16,000 ton precision taper roller expansion renovation project, bearing steel ball project with annual output of 8,000 tons of U.S. subsidiary JGRB, intelligent steel ball manufacturing technical transformation projects as well as supplementing working capital.
[TOP]
○Rapoo Technology to develop mini drone by joint efforts with Tencent
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Zerotech, subsidiary of Shenzhen Rapoo Technology Co., Ltd. (00257.SZ) entered into Tencent and Zerotech drone cooperation agreement with Tencent Computer Systems Company Limited and Tecent Technology., to cooperate on mini drone. Zerotech is responsible for the research and development, manufacturing and management and warehouse and logistics, etc. Tencent Technology is in charge of the product and marketing planning of collaborative products.
○Dymatic Chemicals increases Shareholding of Tianyuan Group
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Dymatic Chemicals, Inc. (002054.SZ) announced that as of Jan. 4, 2016, the company has increased holding 1,800,000 shares of Yibin Tianyuan Group Co., Ltd. (002386.SZ), accounting for 0.27 percent of the share capital of Tianyuan Group. The average price of shares bought was 8.26 yuan per share. The latest closing price of Tianyuan Group is 7.14 yuan per share.
[Financial Reports Express]
○Gon Technology proposes high share conversion and dividend
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Controlling shareholder of Qingdao Gon Technology Co., Ltd. (002768.SZ) proposes a distribution plan of 20-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares.
○Sanju Environmental Protection ＆ New Materials warns of profits
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Beijing Sanju Environmental Protection ＆ New Materials Co., ltd. (300072.SZ) predicted that its net profits for 2015 will increase by 99 percent to 104 percent year on year, primarily attributed to the increase of orders. The company's distribution plan is 10-for-5 conversion of capital surplus into shares combined with 2 yuan dividend for every 5 shares.
[TOP]
[Data Speaks]
○ Media, breeding and PV industries maintain high growth
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Based on the statistics of SSN, 1,110 listed companies have released their results for 2015 as of the closing of Jan. 4, 61 percent of which expect growth. The media, pig breeding, photovoltaic and other industries saw booming performance. Statistics show that the total net profit in the media, agriculture, forestry, animal husbandry and fishery industries in 2015 surged over 50 percent from last year. As for the reasons for growth, the media industry mainly relied on assets acquisition to achieve intensive growth while the pigs breeding and PV industry were driven by the booming industry.
In addition, based on the lower limit of the net profit growth, 18 listed companies have recorded an average growth of over 30 percent in recent three years. Suzhou Chunxing Precision Mechanical Co., Ltd. (002547.SZ), Beijing SPC Environment Protection Tech Co., Ltd. (002573.SZ), Xinjiang Goldwind Science And Technology Co., Ltd. (02208.HK; 002202.SZ) and Zhejiang Jingxin Pharmaceutical Co., Ltd. (002020.SZ) all recorded a growth of over 50 percent in performance in recent years, which are generally contributed by the growth in main businesses.
[TOP]
[Industry Information]
○ Facebook CEO to develop artificial intelligent technology to boost intelligent household industry
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Sina Tech reported on Jan. 4 that Facebook CEO Mark Zuckerberg announced its challenge target in 2016 recently. It will develop an artificial intelligent technology that can control the household environment. Besides, the 2016 International Consumer Electronics Show (CES) will be held in Las Vegas in the U.S. on Jan. 6 to 9. Samsung and Intel, Inc. (NYSE:INTC) will introduce the new generation of intelligent household products.
Comment: The announcement of Zuckerberg on the development of an artificial intelligent technology that can control the household environment will boost the development of the intelligent household industry. Institutes believe that driven by the Internet of Things, cloud computing and other technologies, the intelligent household industry is at the critical point between the market access and growth. It is estimated that the potential market of the intelligent household industry in China is 1 trillion yuan. It enjoys a huge potential with household electric appliances accounting for the biggest market share.
[Trading Trends]
○ Five institutes buy Little Swan
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The trading volume ranking list on Jan. 4 shows that five institutes bought Wuxi Little Swan Company Limited (000418.SZ) with 89.72 million yuan, accounting for 27.3 percent of its intraday turnover. One institute sold it with 17.53 million yuan.
Comment: Institutes estimate that the company recorded a growth of about 30 percent in performance in 2015. Thanks to the synergy with Midea Group Co., Ltd. (000333.SZ) and the improvement in the competitiveness of its products in recent two years, it is expected to maintain an increase of 15 to 20 percent in performance. In addition, the company owns sufficient cash on hand. Its dividend rate is expected to improve with great safety margin. It is one of the quality white household appliance targets in the relatively weak market.
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