[Today's Guide]
○Definition of hi-tech enterprises widens, China reduces tax again
○NDRC improves pricing mechanism of refined oil, U.S. may support driverless vehicles
○Hatou Investment to acquire Jianghai Securities, Yazhong Logistics Network conducts backdoor listing through Dazhou Xingye Holdings
○Net profits of Xinmin Textile Science ＆ Technology expected to up by over 10 times, Bode Energy Equipment proposes high share conversion
[SSN Focus]
○Definition of hi-tech enterprises widens, China reduces tax again
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The executive meeting of the State Council held on Jan. 13 determined to revise the current Management Method on Defining Hi-tech Enterprises, proposing to ease the requirements, simplify the process, shorten the time of publicity and expand applicable fields, and provide more support in inclusive policies for technology enterprises, especially small and medium ones. Industries newly included in the supporting scope cover additive manufacturing and application (3D printing), inspection, testing ＆ identification, cultural innovation, e-commerce and modern logistics.
Comment: Tax administration experts believe that it will be a significant change for the definition of Hi-tech enterprises. According to tax preference policy, the income tax rate will be cut to 15 percent from 25 percent once the enterprises are defined as hi-tech enterprises, indicating a considerable impact on net profit. At the same time, cancelling rigorous requirements that employees with education background above junior college should account for over 30 percent and that enterprises should gain intellectual property of three years and exclusive license of five years also enables a series of listed companies to meet the requirements.
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○CSRC introduces reform progress of registration-based IPO system
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The China Securities Regulatory Commission (CSRC) issued answers to reporters' request on Jan. 13. It indicated that March 1 is not the official initiation of the registration-based IPO system reform, and detailed time to implement the reform will be announced after formulation of relevant regulations and rules. The reform will not cause large-scale expansion of new shares. Currently, besides preparation work for the registration-based IPO system, CSRC will continue to execute the existing rules, and carry out approval work for issuing new shares. Process for issuing new shares will not be suspended.
[SSN Selection]
○The CCP meeting of the State Council held on Jan. 13 proposed various measures to safeguard fiscal and financial security and to severely punish behaviors against the laws and regulations in the finance field.
○The export and import data of last December released by the General Administration of Customs is better than market expectation, with trade surplus recording 60 billion U.S. dollars again.
○The State Administration of Foreign Exchange responded to the rumor that "banks will restrict foreign exchange purchase recently" and indicated that the quota of 50,000 U.S. dollars for individual purchase of foreign exchange will remain unchanged.
○The State Administration of Science, Technology and Industry for National Defense indicated that 2016 is a key year to deepen the reform of technology and industry for national defense. It will focus on formulation and issuance of "13th Five-Year Plan", initiate and carry out the plan.
○China First Heavy Industries (601106.SH) and Harbin Electric Corporation Jiamusi Electric Machine Co., Ltd. (000922.SZ) responded on the restructuring rumor of China First Heavy Industries Corporation and Harbin Electric Corporation that both parties have not received related documents from upper departments.
[Industry Information]
○NDRC improves pricing mechanism of refined oil, helping to advance development of energy conservation and emission reduction
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The National Development and Reform Commission (NDRC) further improves the pricing mechanism of refined oil on Jan. 13 and set the lower limit of domestic refined oil price at 40 U.S. dollars per barrel. Meanwhile, the risk reserve fund for oil price adjustment is established. The unadjusted part of the oil price will all be covered by the risk reserve fund when international oil price goes below the lower limit and be saved in a special account. The money will be mainly used in energy conservation and emission reduction, improving oil quality and guaranteeing secure supply of oil.
Comment: Analysts believe that the oil extraction cost of domestic oilfields averages around 45-53 U.S. dollars per barrel. Setting lower limit of oil price can help to keep domestic oil and gas companies motivated in exploitation and decrease the dependence on foreign crude. Besides, the establishment of the risk reserve fund will greatly support industries involved in energy conservation and emission reduction as well as the upgrading of oil products. As to listed companies, the industrial-use isooctane, a kind of oil additive, produced by Dymatic Chemicals, Inc. (002054.SZ) can cut the discharging of pollutants in automobile exhaust; Shandong Sunway Petrochemical Engineering Co., Ltd. (002469.SZ) is a leading contractor engaged in recycling Sulphur of petrochemical industry.
○Driverless vehicles enjoy huge potential, U.S. may release various supporting policies
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Sina Technology reported on Jan. 13 that the Obama administration will announce various plans to support the development of driverless vehicles on Jan. 14. Besides, Google Inc. (NASDAQ: GOOG) announced on Jan. 12 that it would establish more partnership with traditional vehicles manufacturers and components suppliers to speed up in promoting driverless vehicles. At the CES 2016 held in early January in the U.S., many vehicles manufacturers released products and technologies on driverless vehicles.
Comment: Currently, driverless vehicles are still in the initial stage of industrialization. Driven by automobile intelligentization, 5G technology and Internet giants, the industry will see huge development potential. The sub-sectors of aided driving and laser radar are expected to first benefit from it. As to listed companies, Hangzhou Great Star Industrial Co., Ltd. (002444.SZ) acquired 65 percent equities of Changzhou Huada Kejie Opto-Electro Instrument Co., Ltd. which has an excellent technological foundation in laser radar for automobile use; Zhejiang Vie Science ＆ Technology Co., Ltd. (002590.SZ) proposes to add stakes in the construction of advanced driver assistance system (ADAS) through private placement.
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[Announcement Interpretation]
○Hatou Investment acquires Jianghai Securities with nearly RMB10 bln
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Harbin Hatou Investment Co., Ltd. (600864.SH) proposes to acquire 99.946 percent equities of Jianghai Securities Co., Ltd. by issuing shares at 9.53 yuan per share to Hatou Investment Group Co., Ltd. and others and acquire the rest equities by paying in cash. The transaction will totally cost 9,839 million yuan. In the meantime, a supporting fund of 5 billion yuan will be raised. Upon completion of the transaction, Jianghai Securities will become a fully-owned subsidiary under Harbin Hatou Investment, thus the principal business of the latter will expand to securities service business. Jianghai Securities realized a net profit of 110 million yuan, 389 million yuan and 763 million yuan in 2013, 2014 and the Jan.-Sep. period of 2015, respectively.
Comment: The market expects earlier that Hatou Investment Group strives to establish a financial holding group and finally achieve listing. The listing of Jianghai Securities, as part of the financial asset under Hatou Investment Group, shows that the integration of financial asset under Hatou Investment Group is further accelerated.
○Yazhong Logistics Network conducts backdoor listing through Dazhou Xingye Holdings with Guanghui Industry Investment Group as controlling shareholder
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Dazhou Xingye Holdings Co., Ltd. (600603.SH) plans to purchase 100 percent equity of Xinjiang Yazhong Logistics Network Co., Ltd. through asset exchange and issuing 365 million shares at a price of 11.95 yuan per share through private placement and raise a supporting fund of 2.4 billion yuan through private placement at the same price from Xinjiang Guanghui Industry Investment Group Company Limited and other companies. According to performance commitment, net profits of Yazhong Logistics Network will not be less than 250 million yuan, 400 million yuan and 550 million yuan during 2016-2018, respectively.
After the deal, the listed company will transform its business into commercial logistics. Guanghui Industry Investment Group and its persons acting in concert will become the controlling shareholders of the listed company with totally holding 45.47 percent equity and Sun Guangxi will become the new actual controller. This means that there is a another new company under Guanghui Industry Investment Group listed in the A-share market following Guanghui Energy Co., Ltd. (600256.SH) and China Grand Automotive Services Co., Ltd. (600297.SH).
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○Several companies see shareholding increase
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Related parties of Aotecar New Energy Technology Co., Ltd. (002239.SZ) totally increased their shareholdings by more than 8.4 million shares during Jan. 6-13 and will continue to buy more shares. Lai Ganfeng, actual controller of Hunan Tianrun Enterprises Holding Co., Ltd. (002113.SZ), increased his shareholding in the company by more than 2.21 million shares during Jan. 12-13. Sunshine Kaidi New Energy Group Co., Ltd., controlling shareholder of Kaidi Ecological and Environmental Technology Co., Ltd. (000939.SZ), increased its shareholding in the company by 7.57 million shares on Jan. 13. Grand China Air Co., Ltd., controlling shareholder of Hainan Airlines Co., Ltd. (600221.SH), has totally increased its shareholding in the company by 61.14 million shares as of Jan. 13.
In addition, Chen Yihe, actual controller of Petrochina Jinhong Energy Investment Co., Ltd. (000669.SZ), will increase his shareholding in the company by no more than 2 percent of the company's total share capital in next six months. Wang Jing, controlling shareholding of Beijing Xinwei Telecom Technology Group Co., Ltd. (600485.SH), will increase his shareholding in the company by 1 percent of the company's total share capital in next one month.
[Financial Reports Express]
○Net profits of Xinmin Textile Science ＆ Technology expected to up by over 10 times
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Net profit of Jiangsu Xinmin Textile Science ＆ Technology Co., Ltd. (002127.SZ) is expected to rise by 1,388-1,532 percent in 2015 due to integrating financial statement with Nanji E-commerce (Shanghai) Co., Ltd. Net profit of Shanghai SMI Holding Co., Ltd. (600649.SH) is expected to grow by 70-100 percent due to selling financial assets. Harbin Pharmaceutical Group Co., Ltd. (600664.SH) is expected to see an increase of 120-150 percent in net profits mainly resulting from reducing selling costs. Shenzhen Woer Heat-Shrinkable Material Co., Ltd. (002130.SZ) adjusted and raised the expected growth of its net profits from 195-225 percent to 310-340 percent.
○Bode Energy Equipment proposes high share conversion
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Bode Energy Equipment Co., Ltd. (300023.SZ) proposes a 15-for-10 conversion of capital surplus into shares in its annual report.
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