[Today's Guide]
○ Domestic and overseas aluminum enterprises suspend operation, less capacity to bring industry to bottom
○ Znti-monopoly in automobile industry to advance, CAS launches precision medical research plan
○ Sevenstar Electronics to acquire NMC Co., Ltd., Golden Concord borrows shell of Xiake Color Spinning
○ Chongqing Road ＆ Bridge to expand into photovoltaic sector, multiple companies propose high share conversion and dividend
[SSN Focus]
○ Domestic and overseas aluminum enterprises suspend operation, less capacity to bring industry to bottom
------
Foreign media reported that Alcoa Inc. (NYSE:AA) will permanently close the Warrick Operations smelter by the end of first quarter. It is the currently biggest aluminum smelter in operation in the U.S. The aluminum output in the U.S. will hit a new low since 1950. Chalco Fushun Aluminum Co., Ltd., formerly known as No. 1 aluminum enterprise in China, suspended operation last October. 14 major domestic aluminum enterprises committed that they will not resume the capacity suspended and the newly established capacity will not put into operation in one year at least.
Comment: Institutes estimate that under the current aluminum prices, about 70 percent of domestic electrolytic aluminum enterprises recorded losses in cash flow. The new capacity in the industry will continue to decrease this year. Under the inevitable trend of capacity cutting and suspension, the aluminum market will fall to the bottom. Xinjiang Joinworld Co., Ltd. (600888.SH), Jiangsu Alcha Aluminium Co., Ltd. (002160.SZ) and other listed aluminum enterprises are actively transforming into logistics, medical treatment and other industries to foster new sources of growth.
◆ Xinjiang Uygur Autonomous Region convened the economic work conference of the region, which will give priority to clearing "zombie enterprises" with overcapacity in the industry. It will curb new capacity in iron and steel, cement and other industries and will also strictly control advanced capacities.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) indicated that March 1 will not be the starting point for the implementation of the registration-based IPO system. It will properly arrange the IPO under the new regulations of the approval-based IPO system.
○ The Shanghai and Shenzhen stock exchanges further implemented relevant regulations on the shareholding reducing by substantial shareholders, directors, supervisors and senior management on Jan. 9 to prevent shareholding reducing through dividing positions.
○ Chen Xiwen, deputy director of the Central Rural Work Leading Group,, indicated on Jan. 10 that the agricultural supply side reform will be the main task in the reform in rural areas this year.
○ The National Science and Technology Award Conference was held on Jan. 8. Quantum communication, silicon substrate LED, Beijing-Shanghai High-speed Rail and other projects won key awards.
○ Zhonghe Co., Ltd. (002070.SZ) released the first announcement on the formatted shareholding reducing. It will reduce the shareholding by no more than 1 percent of its total share capitals in the following three months as a result of the judicial mandatory enforcement.
TOP
[Industry Information]
○ Draft of guideline on anti-monopoly in automobile industry prepared, bans on relocation of second-hand vehicles to lifted
------
www.cnr.cn reported that the draft of the Guideline on Anti-Monopoly in Automobile Industry has been formulated and has started to solicit opinions on relevant processes from manufacturers, distributors and accessories manufacturers. It is reported that draft of the guideline stipulates that manufacturers shall not restrict the supply and circulation of after-sale accessories without good reasons. It is also reported that the cancellation of the restrictions on the relocation of second-hand vehicles is also covered in the guideline and it is expected to be officially introduced in May.
Comment: The exclusive supply of accessories from original manufacturers is the main reason for the abnormal high accessories-complete vehicles ratio. Manufacturers prohibit accessories manufacturers selling accessories out of the system and forbid 4S stores selling accessories and allowing consumers to repair out of the stores. If the anti-monopoly in automobile industry is advanced, Beijing WKW Automotive Parts Co., Ltd. (002662.SZ), Changzhou Xingyu Automotive Lighting Systems Co., Ltd. (601799.SH) and other accessories manufacturers are likely to gain higher market share. Besides, the sales of second-hand and new vehicles in the U.S. is 3:1, while in China it is less than 1:2. If the restrictions on the relocation of second-hand vehicles are cancelled, Wuhu Yaxia Automobile Corporation (002607.SZ) and other distributors will benefit.
○ CAS launches precision medical research plan, development of the industry to speed up
------
Xinhua News Agency on Jan. 9 reported that the Chinese Academy of Sciences (CAS) has formally launched the population precision medical research plan. CAS will collect DNA samples and a variety of phenotype data from 4,000 volunteers within four years, and conduct precision medical research on 2,000 of them. The research includes complete genome sequence analysis and the establishment of genome health records, which will lay a solid foundation for universal precision medical treatment in the future.
Comment: precision medical science is an important field of human disease early warning and detection. Much importance has been attached to this area home and abroad. Institutions predicted that the global market size of gene sequencing field alone will reach 11,700 million dollars in 2018, representing a compound annual growth rate (CAGR) of 21.1 percent. For participants of the industry, United Electronics Co., Ltd. (002642.SZ) is increasing investment in the construction of biology cloud computing services; the second generation of gene sequencing products of Da An Gene Co., Ltd. of Sun Yat-Sen University (002030.SZ), which will be applied to noninvasive prenatal screening area, have been admitted for national medical device registration.
TOP
[Announcement Interpretation]
○ Sevenstar Electronics to acquire NMC Co., Ltd. with RMB930 mln
------
Beijing Sevenstar Electronics Co., Ltd. (002371.SZ) proposes to buy the entire equity of Beijing NMC Co., Ltd., which is held by, among others, Sevenstar Group, the controlling shareholder of Sevenstar Electronics, at the consideration of 931 million yuan. The capital will be raised by issuing shares at 17.49 yuan per share through private placement. Meanwhile, the company will also raise 931 million yuan of matching fund through private placement to China Integrated Circuit Industry Investment Fund Co., Ltd. (CICIIF) at the same price. According to the commitment of the company, net profits of NMC Co., Ltd. for 2016 will be no less than 63,170,500 yuan. Sevenstar Electronics indicated that this reorganization will enrich the categories of the company's large scale integrated circuit equipment and improve its competitiveness.
○ Golden Concord borrows shell of Xiake Color Spinning, to inject RMB4.5 bln energy asset
------
Xiake Color Spinning Co., Ltd. (002015.SZ) proposes to acquire the entire equity of Golden Concord Holdings Limited (GCL) at the consideration of 4.5 billion yuan, which will be raised through issuing 930 million shares to Shanghai Qichen at 4.83 yuan per share. At the same time, the company plans to raise matching fund of 4 billion yuan by issuing shares through private placement at 6.08 yuan per share. Upon completion of the transaction, Shanghai Qichen will be the controlling shareholder of the company, and Zhu Gongshan will be the new controller.
GCL focuses on the development, investment and operation of green power, including cogeneration and clean energy. GCL's committed net profits for 2016 to 2018 are no less than 406 million yuan, 417 million yuan and 424 million yuan, respectively.
TOP
○ Chongqing Road ＆ Bridge to acquire highway and photovoltaic assets
------
Chongqing Road ＆ Bridge Co., Ltd. (600106.SH) proposes to acquire 37 percent equity of Yu-Fu Highway, which is controlled by the company's indirect controlling shareholder Guoxin Holding Investment Company, as well as 100 percent equity of Changshun Xinhe New Energy at the consideration of 3,198 million yuan, which will be paid by share issuance of 9.1 yuan per share and 1,580 million yuan in cash. Meanwhile, the company intends to raise matching fund of 3,160 million yuan through issuing shares at 9.25 yuan per share. Changshun Xinhe New Energy is primarily engaged in the operation photovoltaic power station, and its nine ground centralized photovoltaic power stations have all been completed and combined to the grid. Chongqing Road ＆ Bridge enters new energy field through this acquisition.
○ Several companies to see increase in shareholding
------
Controlling shareholder of Kunming Yunnei Power Co., Ltd. (000903.SZ) on Jan.8 increased holding 7,640,000 shares of the company, representing 0.96 percent its share capital, and the controlling shareholder will continue to increase shareholding. Nanfang Tongzheng, the controlling shareholder of Hainan Haiyao Co., Ltd. (000566.SZ), proposes to increase shareholding in the company in the coming six months. Shen Hanbiao, actual controller of Guangzhou Holike Creative Home Co., Ltd. (603898.SH), on Jan. 8 increased holding 340,000 shares of the company, and will continue to increase holding of no less than 20 million yuan worth of shares in the company in the next six years.
[Financial Reports Express]
○ SACA Precision Manufacturing, Clou Electronics ＆ Hile Bio-Tech propose high share conversion and dividend
-----
Guangdong SACA Precision Manufacturing Co.,Ltd. (300464.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its annual report. Shenzhen Clou Electronics Co.,Ltd. (002121.SZ) proposes a 10-for-15 conversion of capital surplus into shares according to its annual report. Shanghai Hile Bio-Technology Co.,Ltd. (603718.SH) proposes a 12-for-10 conversion of capital surplus into shares combined with one share and 1 yuan dividend for every 10 shares according to its annual report.
[Trading Trends]
○ Coal sector favored by institutions
------
On Jan. 8, the coal sector surged 8.9 percent with more than 20 coal stocks rising by the daily limit of 10 percent. The trading volume ranking list on Jan. 8 shows that Shanxi Xishan Coal and Electricity Power Co., Ltd. (000983.SZ) was bought by five institutions with a net buy amount of 259 million yuan, accounting for 26.43 percent of its intraday turnover. One institutional seat net sold 13.59 million yuan. Anyuan Coal Industry Group Co.,Ltd. (600397.SH) was bought by three institutions with a net buy amount of 111 million yuan, accounting for 30.25 percent of its intraday turnover.
Comment: Institutions analyze that China has mentioned lots of the supply-side reform. Currently, as the coal industry has suffered the greatest losses, it is of most possible to be reformed. Especially after the 2016 National People's Congress and the Chinese People's Political Consultative Conference, the probability of the supply-side reform will remarkably increase, which is expected to become another growth engine for coal prices.
[Weekly Review]
○ New company, new capital, new policies
------
Recently, there is an interesting phenomenon: that is at the turn of months, new investment opportunities would emerge in the stock market. In early November last year, small-cap sub-new stocks rapidly went up led by the information development sector; in early December last year, new capital from insurance companies bought tremendous shares. The property sector with low P/E ratio, led by China Vanke Co., Ltd. (000002.SZ; 02202.HK), continuously jumped by the daily limit. Early this month, driven by the new policy concerning the supply-side reform, the low-cap iron and steel sector, led by Hunan Valin Steel Co., Ltd. (000932.SZ), performed strongly against the market.
It is a human nature to be fascinated by new things and tired of the old. Chiefs always explore new dishes. Composers always seek for new melodies. It is also true in the stock market. Investors, if want to make successful investment, should seek for opportunities in new themes. A batch of information development companies went public last July, at the time of the market rout. As a result, there were lots of offers than asks in advance. Once the market sentiment improves slight, stocks can be re-priced rapidly. In recent years, insurance companies have seen its premium incomes grow rapidly. Particularly, new black-horse insurance companies, such as Anbang Insurance, hold heavy capital. As long as policies on the insurance sector change slight, it may greatly shore up the blue-chip and other sectors in the A-share market. And once implementation of new policies will have deeper influence on the economy.
New opportunities in the stock market are spark. Once cheap stocks come into sights, the spark will turn into burning flames. There were quite a lot of sub-new stocks listed last year. During the hike in last November, such kind of companies with low market capitalization and promising prospect gained the most. In early December last year, the PE ratio of China Vanke Co., Ltd. (000002.SZ; 02202.HK) is only ten times, and earlier in this January, the price of Hunan Valin Steel Co., Ltd. (000932.SZ) is only 3 yuan, which explain why such stocks have outperformed their respective sectors.
TOP
○ Domestic and overseas aluminum enterprises suspend operation, less capacity to bring industry to bottom
○ Znti-monopoly in automobile industry to advance, CAS launches precision medical research plan
○ Sevenstar Electronics to acquire NMC Co., Ltd., Golden Concord borrows shell of Xiake Color Spinning
○ Chongqing Road ＆ Bridge to expand into photovoltaic sector, multiple companies propose high share conversion and dividend
[SSN Focus]
○ Domestic and overseas aluminum enterprises suspend operation, less capacity to bring industry to bottom
------
Foreign media reported that Alcoa Inc. (NYSE:AA) will permanently close the Warrick Operations smelter by the end of first quarter. It is the currently biggest aluminum smelter in operation in the U.S. The aluminum output in the U.S. will hit a new low since 1950. Chalco Fushun Aluminum Co., Ltd., formerly known as No. 1 aluminum enterprise in China, suspended operation last October. 14 major domestic aluminum enterprises committed that they will not resume the capacity suspended and the newly established capacity will not put into operation in one year at least.
Comment: Institutes estimate that under the current aluminum prices, about 70 percent of domestic electrolytic aluminum enterprises recorded losses in cash flow. The new capacity in the industry will continue to decrease this year. Under the inevitable trend of capacity cutting and suspension, the aluminum market will fall to the bottom. Xinjiang Joinworld Co., Ltd. (600888.SH), Jiangsu Alcha Aluminium Co., Ltd. (002160.SZ) and other listed aluminum enterprises are actively transforming into logistics, medical treatment and other industries to foster new sources of growth.
◆ Xinjiang Uygur Autonomous Region convened the economic work conference of the region, which will give priority to clearing "zombie enterprises" with overcapacity in the industry. It will curb new capacity in iron and steel, cement and other industries and will also strictly control advanced capacities.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) indicated that March 1 will not be the starting point for the implementation of the registration-based IPO system. It will properly arrange the IPO under the new regulations of the approval-based IPO system.
○ The Shanghai and Shenzhen stock exchanges further implemented relevant regulations on the shareholding reducing by substantial shareholders, directors, supervisors and senior management on Jan. 9 to prevent shareholding reducing through dividing positions.
○ Chen Xiwen, deputy director of the Central Rural Work Leading Group,, indicated on Jan. 10 that the agricultural supply side reform will be the main task in the reform in rural areas this year.
○ The National Science and Technology Award Conference was held on Jan. 8. Quantum communication, silicon substrate LED, Beijing-Shanghai High-speed Rail and other projects won key awards.
○ Zhonghe Co., Ltd. (002070.SZ) released the first announcement on the formatted shareholding reducing. It will reduce the shareholding by no more than 1 percent of its total share capitals in the following three months as a result of the judicial mandatory enforcement.
TOP
[Industry Information]
○ Draft of guideline on anti-monopoly in automobile industry prepared, bans on relocation of second-hand vehicles to lifted
------
www.cnr.cn reported that the draft of the Guideline on Anti-Monopoly in Automobile Industry has been formulated and has started to solicit opinions on relevant processes from manufacturers, distributors and accessories manufacturers. It is reported that draft of the guideline stipulates that manufacturers shall not restrict the supply and circulation of after-sale accessories without good reasons. It is also reported that the cancellation of the restrictions on the relocation of second-hand vehicles is also covered in the guideline and it is expected to be officially introduced in May.
Comment: The exclusive supply of accessories from original manufacturers is the main reason for the abnormal high accessories-complete vehicles ratio. Manufacturers prohibit accessories manufacturers selling accessories out of the system and forbid 4S stores selling accessories and allowing consumers to repair out of the stores. If the anti-monopoly in automobile industry is advanced, Beijing WKW Automotive Parts Co., Ltd. (002662.SZ), Changzhou Xingyu Automotive Lighting Systems Co., Ltd. (601799.SH) and other accessories manufacturers are likely to gain higher market share. Besides, the sales of second-hand and new vehicles in the U.S. is 3:1, while in China it is less than 1:2. If the restrictions on the relocation of second-hand vehicles are cancelled, Wuhu Yaxia Automobile Corporation (002607.SZ) and other distributors will benefit.
○ CAS launches precision medical research plan, development of the industry to speed up
------
Xinhua News Agency on Jan. 9 reported that the Chinese Academy of Sciences (CAS) has formally launched the population precision medical research plan. CAS will collect DNA samples and a variety of phenotype data from 4,000 volunteers within four years, and conduct precision medical research on 2,000 of them. The research includes complete genome sequence analysis and the establishment of genome health records, which will lay a solid foundation for universal precision medical treatment in the future.
Comment: precision medical science is an important field of human disease early warning and detection. Much importance has been attached to this area home and abroad. Institutions predicted that the global market size of gene sequencing field alone will reach 11,700 million dollars in 2018, representing a compound annual growth rate (CAGR) of 21.1 percent. For participants of the industry, United Electronics Co., Ltd. (002642.SZ) is increasing investment in the construction of biology cloud computing services; the second generation of gene sequencing products of Da An Gene Co., Ltd. of Sun Yat-Sen University (002030.SZ), which will be applied to noninvasive prenatal screening area, have been admitted for national medical device registration.
TOP
[Announcement Interpretation]
○ Sevenstar Electronics to acquire NMC Co., Ltd. with RMB930 mln
------
Beijing Sevenstar Electronics Co., Ltd. (002371.SZ) proposes to buy the entire equity of Beijing NMC Co., Ltd., which is held by, among others, Sevenstar Group, the controlling shareholder of Sevenstar Electronics, at the consideration of 931 million yuan. The capital will be raised by issuing shares at 17.49 yuan per share through private placement. Meanwhile, the company will also raise 931 million yuan of matching fund through private placement to China Integrated Circuit Industry Investment Fund Co., Ltd. (CICIIF) at the same price. According to the commitment of the company, net profits of NMC Co., Ltd. for 2016 will be no less than 63,170,500 yuan. Sevenstar Electronics indicated that this reorganization will enrich the categories of the company's large scale integrated circuit equipment and improve its competitiveness.
○ Golden Concord borrows shell of Xiake Color Spinning, to inject RMB4.5 bln energy asset
------
Xiake Color Spinning Co., Ltd. (002015.SZ) proposes to acquire the entire equity of Golden Concord Holdings Limited (GCL) at the consideration of 4.5 billion yuan, which will be raised through issuing 930 million shares to Shanghai Qichen at 4.83 yuan per share. At the same time, the company plans to raise matching fund of 4 billion yuan by issuing shares through private placement at 6.08 yuan per share. Upon completion of the transaction, Shanghai Qichen will be the controlling shareholder of the company, and Zhu Gongshan will be the new controller.
GCL focuses on the development, investment and operation of green power, including cogeneration and clean energy. GCL's committed net profits for 2016 to 2018 are no less than 406 million yuan, 417 million yuan and 424 million yuan, respectively.
TOP
○ Chongqing Road ＆ Bridge to acquire highway and photovoltaic assets
------
Chongqing Road ＆ Bridge Co., Ltd. (600106.SH) proposes to acquire 37 percent equity of Yu-Fu Highway, which is controlled by the company's indirect controlling shareholder Guoxin Holding Investment Company, as well as 100 percent equity of Changshun Xinhe New Energy at the consideration of 3,198 million yuan, which will be paid by share issuance of 9.1 yuan per share and 1,580 million yuan in cash. Meanwhile, the company intends to raise matching fund of 3,160 million yuan through issuing shares at 9.25 yuan per share. Changshun Xinhe New Energy is primarily engaged in the operation photovoltaic power station, and its nine ground centralized photovoltaic power stations have all been completed and combined to the grid. Chongqing Road ＆ Bridge enters new energy field through this acquisition.
○ Several companies to see increase in shareholding
------
Controlling shareholder of Kunming Yunnei Power Co., Ltd. (000903.SZ) on Jan.8 increased holding 7,640,000 shares of the company, representing 0.96 percent its share capital, and the controlling shareholder will continue to increase shareholding. Nanfang Tongzheng, the controlling shareholder of Hainan Haiyao Co., Ltd. (000566.SZ), proposes to increase shareholding in the company in the coming six months. Shen Hanbiao, actual controller of Guangzhou Holike Creative Home Co., Ltd. (603898.SH), on Jan. 8 increased holding 340,000 shares of the company, and will continue to increase holding of no less than 20 million yuan worth of shares in the company in the next six years.
[Financial Reports Express]
○ SACA Precision Manufacturing, Clou Electronics ＆ Hile Bio-Tech propose high share conversion and dividend
-----
Guangdong SACA Precision Manufacturing Co.,Ltd. (300464.SZ) proposes a 15-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its annual report. Shenzhen Clou Electronics Co.,Ltd. (002121.SZ) proposes a 10-for-15 conversion of capital surplus into shares according to its annual report. Shanghai Hile Bio-Technology Co.,Ltd. (603718.SH) proposes a 12-for-10 conversion of capital surplus into shares combined with one share and 1 yuan dividend for every 10 shares according to its annual report.
[Trading Trends]
○ Coal sector favored by institutions
------
On Jan. 8, the coal sector surged 8.9 percent with more than 20 coal stocks rising by the daily limit of 10 percent. The trading volume ranking list on Jan. 8 shows that Shanxi Xishan Coal and Electricity Power Co., Ltd. (000983.SZ) was bought by five institutions with a net buy amount of 259 million yuan, accounting for 26.43 percent of its intraday turnover. One institutional seat net sold 13.59 million yuan. Anyuan Coal Industry Group Co.,Ltd. (600397.SH) was bought by three institutions with a net buy amount of 111 million yuan, accounting for 30.25 percent of its intraday turnover.
Comment: Institutions analyze that China has mentioned lots of the supply-side reform. Currently, as the coal industry has suffered the greatest losses, it is of most possible to be reformed. Especially after the 2016 National People's Congress and the Chinese People's Political Consultative Conference, the probability of the supply-side reform will remarkably increase, which is expected to become another growth engine for coal prices.
[Weekly Review]
○ New company, new capital, new policies
------
Recently, there is an interesting phenomenon: that is at the turn of months, new investment opportunities would emerge in the stock market. In early November last year, small-cap sub-new stocks rapidly went up led by the information development sector; in early December last year, new capital from insurance companies bought tremendous shares. The property sector with low P/E ratio, led by China Vanke Co., Ltd. (000002.SZ; 02202.HK), continuously jumped by the daily limit. Early this month, driven by the new policy concerning the supply-side reform, the low-cap iron and steel sector, led by Hunan Valin Steel Co., Ltd. (000932.SZ), performed strongly against the market.
It is a human nature to be fascinated by new things and tired of the old. Chiefs always explore new dishes. Composers always seek for new melodies. It is also true in the stock market. Investors, if want to make successful investment, should seek for opportunities in new themes. A batch of information development companies went public last July, at the time of the market rout. As a result, there were lots of offers than asks in advance. Once the market sentiment improves slight, stocks can be re-priced rapidly. In recent years, insurance companies have seen its premium incomes grow rapidly. Particularly, new black-horse insurance companies, such as Anbang Insurance, hold heavy capital. As long as policies on the insurance sector change slight, it may greatly shore up the blue-chip and other sectors in the A-share market. And once implementation of new policies will have deeper influence on the economy.
New opportunities in the stock market are spark. Once cheap stocks come into sights, the spark will turn into burning flames. There were quite a lot of sub-new stocks listed last year. During the hike in last November, such kind of companies with low market capitalization and promising prospect gained the most. In early December last year, the PE ratio of China Vanke Co., Ltd. (000002.SZ; 02202.HK) is only ten times, and earlier in this January, the price of Hunan Valin Steel Co., Ltd. (000932.SZ) is only 3 yuan, which explain why such stocks have outperformed their respective sectors.
TOP
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