[Today's Guide]
○Industrial capital spares increasing efforts in supporting stock market, capitals favor new economy
○Plans on military engineering and scientific R＆D institutes reform to release, expanding space for industrial integration
○Yibin Paper Industry to acquire Huanhui Tech., Navtech to acquire chip manufacturer
○Tianshan Wool Tex Stock to acquire Jialin Pharmaceutical, 3 firms proposes high share conversion and dividend
[SSN Focus]
○Industrial capital spares increasing efforts in supporting stock market, capitals favor new economy
------
The SSE Composite Index once approached 2,850 points, a low record set earlier, in the morning session on Jan. 14 and then rebounded sharply to above 3,000 points. The ChiNext Board Index, dominated by emerging industries, even surged by over 5 percent. The controlling shareholders of the 28 companies firstly listed on the ChiNext Board, or the "C28 Club", including Huayi Brothers Media Corporation (300027.SZ), promise no shareholding decrease in the following half to one year and take actual actions to stabilize the stock market. Up to now, besides companies involved in the C28 Club, the controlling shareholders of another 25 listed companies promise no shareholding decrease and the important shareholders or senior management of 29 listed companies conduct shareholding increase. A fine is imposed to the shareholders of Zhejiang Jiaxin Silk Corp., Ltd. (002404.SZ) by the China Securities Regulatory Commission (CSRC) due to shareholding decrease against regulations.
Comment: More and more companies promise no shareholding decrease and decide to increase shareholding, showing industrial capital's confidence in the capital market at current situation. As the bearish news troubling investors in the short run gradually disappear, the market demands for recovery after excessive drop. Emerging industries expecting growth such as culture, media and Internet as well as new technologies going to achieve breakthroughs soon, including virtual reality and manless driving, are going to be concerned. The trading volume ranking list today also shows that institutions bought lots of shares of "new economy" companies, such as Ciwen Media Co., Ltd. (002343.SZ) and Chinese All Digital Publishing Group Co., Ltd. (300364.SZ) with quality IP resource, Vtron Technologies Ltd. (002308.SZ) engaged in children education and Xiamen Meiya Pico Information Co., Ltd. (300188.SZ) involved in network security.
[SSN Selection]
○The People's Bank of China carried out a reverse repo of 160 billion yuan on Jan. 14, setting a new high in 11 months.
○The State Administration of Science, Technology and Industry for National Defense indicated that China's lunar probe Chang'e-4 will be launched in 2018 to realize soft landing on the far-side of the moon for the first time.
○The project of China's only floating nuclear power plant with complete independent intellectual property is approved and the construction of demonstration reactor is scheduled to be initiated at the end of this year.
○The Ministry of Foreign Affairs responded to the test flights performed at Yongshu Jiao airfield on the Nansha Islands and remarked that it accorded with international laws and established practices.
○The National Health and Family Planning Commission (NHFPC) indicated that it will formulate the thirteenth five-year plan for the development of traditional Chinese medicine this year and actively advance the lawmaking for traditional Chinese medicine.
TOP
[Industry Information]
○Plans on military engineering and scientific R＆D institutes reform to release, expanding space for industrial integration
------
SSN learnt from authoritative sources that certain plans on the classification and reform of military engineering and scientific research and development institutes have been finalized and submitted for approval. They will be released soon. It is reported that there are various documents on the classification and reform of military engineering and scientific research and development institutes, including the Plan on the Classification of Military Engineering and Scientific Research and Development Institutes, the Plan on the Implementation of Classification and Reform of Military Engineering and Scientific Research And Development Institutes as well as the Supporting Policies on Advancing the Reform and Transformation of Military Engineering and Scientific Research And Development Institutes into Enterprises through Classification. The latter has been submitted to the State Council and is going through procedures for releasing.
Comment: The reform of military engineering and scientific research and development institutes which are regarded as quality assets in military groups involves lots of complicated problems. The formulation of the reform scheme means that the restructuring of military industry, echoing with the military reform, will take an important step forward in 2016. The asset securitization ratio of military engineering groups in China is relatively low and the industry will enjoy huge potential in subsequent integration. In terms of listed companies, TONTEC Technology Investment Group Co., Ltd. (600862.SH) and Beijing Aerospace Changfeng Co., Ltd. (600855.SH) are likely to benefit first from the reform.
○Institutions intensively investigate synthetic leather industry, pressure for environmental protection pushes industrial upgrading
------
SSN learns that more than 10 institutions intensively investigate the synthetic leather industry since January. Driven by the pressure of environmental protection, industrial upgrading speeds up, and middle and high-end products including ecotypic and microfibre synthetic leather might replace ordinary PVC synthetic leather. The capacity of synthetic leather in Wenzhou City, Zhejiang province takes up around half of national capacity. At present, almost 50 percent of the production in Longwan District and the Economic and Technical Development Zone of Wenzhou has been cut. As the adjustment in relevant enterprises advances, the supply-demand structure of the industry will gradually take a turn for the better.
Comment: Along with the accelerated obsolescence of outdated capacity and the improving penetration rate of high-end products including microfibre synthetic leather, the concentration of synthetic leather market will further increase. Leading enterprises with advantages in technologies and market will gain more orders. As to listed companies, Huafon Microfibre (Shanghai) Co., Ltd. (300180.SZ), a leading domestic manufacturer of microfibre synthetic leather, owns a capacity of 36 million meters. Huafon Microfibre proposes to raise 1.5 billion yuan through private placement to expand the capacity by 37.50 million meters; Anhui Anli Material Technology Co., Ltd. (300218.SZ), a leading company in the production of ecotypic and functional synthetic leather, is able to produce 66.50 million meters a year. A capacity of around 22 million meters will be newly added to the company before end-2016 after more projects put into operation.
TOP
[Announcement Interpretation]
○Yibin Paper Industry to acquire Huanhui Tech. with RMB900 mln to deploy environmental protection industry
------
Yibin Paper Industry Co., Ltd. (600793.SH) proposed to issue 55.32 million shares at 16.27 yuan per share through private placement to acquire 100 percent equities of Huanhui Technology Group Co., Ltd. with 0.9 billion yuan; and meanwhile, it also proposed to raise the supporting fund of the same amount. Based on performance commitment, Huanhui Tech. will gain the net profit after deduction of no less than 60 million yuan, 120 million yuan and 200 million yuan from 2016 to 2018 respectively. The listed company will newly add energy conservation and environment protection businesses through this acquisition, such as central heating which recycles and takes advantage of residual heat resources.
Comment: The first and second largest shareholders of the company propose to transfer its 53.83 percent equities to China Environment State Investment Holding Group Co., Ltd., a state-owned enterprise under the Ministry of Environmental Protection mainly engaging in three businesses of central heating, garbage disposal and sewage treatment.
○Navtech to acquire chip manufacturer with RMB750 mln to deploy integrated circuit
------
Navtech INC. (300456.SZ) proposed to issue 8.58 million shares at 87.38 yuan per share through private placement to raise 750 million yuan for acquiring 100 percent equities of Beijing Ruitong Xinyuan Co., Ltd. so that to indirectly hold the 98 percent equities of Silex; meanwhile, it also proposed to raise supporting fund of 750 million yuan through private placement with 87.38 yuan per share to construct the MEMS production line of the targeted company.
Silex is a global leading MEMS chip manufacturer, representing the first-class manufacturing level for MEMS chips in the world, and based on its performance commitment, it will gain the net profit of 33.34 million SEK, 38 million SEK and 56.65 SEK from 2015 to 2017 respectively.
TOP
○Tianshan Wool Tex Stock to acquire Jialin Pharmaceutical
------
Xinjiang Tianshan Wool Tex Stock Co., Ltd. (000813.SZ) proposed to sell its whole assets and liabilities, and acquire 100 percent equities of Beijing Jialin Pharmaceutical Co., Ltd. with 8,369 million yuan, and assessed appreciation rate is 589 percent. The offering price of shares to be issued for acquiring the assets is 8.65 yuan per share, and that for private placement is 9.93 yuan per share to raise the supporting fund of 1.5 billion yuan, partially, the company proposed to issue employee shareholding plan for this subscription of 30 million yuan.
Jialin Pharmaceutical focuses on the fields of cardio-cerebral-vascular drug and antineoplastic drug with main products of atorvastatin calcium and famciclovir tablets, annually ranking No.3 in the antilipemic agent market from 2012 to 2014. Based on performance commitment, Jialin Pharmaceutical will gain the net profit after deduction of no less than 50 million yuan, 65 million yuan, 78 million yuan and 937 million yuan from 2015 to 2018 respectively.
○Several companies see shareholding increase
------
Hubei Yangfeng Group, controlling shareholder of Hubei Xinyangfeng Fertilizer Co., Ltd. (000902.SZ), increased its shareholding in the company by 6.59 million shares during Jan. 6-14, accounting for 1 percent of the total share capital. CITIC Guoan Co., Ltd., controlling shareholder of CITIC Guoan Information Industry Co., Ltd. (000839.SZ), increased its shareholding by 20.93 million shares on Jan. 14, accounting for 1.33 percent of the total share capital. Yao Jieyuan, director of Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ), increased his shareholding in the company by 1 million shares on Jan. 14. Zuo Zongshen, actual controller of Chongqing Zongshen Power Machinery Co., Ltd. (001696.SZ), increased his shareholding in the company by 1 million shares on Jan. 14. Fujian Sanan Group Co., Ltd., controlling shareholder of Sanan Optoelectronics Co., Ltd. (600703.SH), increased its shareholding in the company by 5.45 million shares on Jan. 14 and may continue to raise 2 percent equity at most in the next 12 months.
Jia Quanchen, actual controller of Qingdao Hengshun Zhongsheng Group Co., Ltd. (300208.SZ), will increase his shareholding in the company by 0.1 percent-2 percent in next 12 months. Some senior management of TDG Holding Co., Ltd. (600330.SH) will increase their shareholding in the company by no less than 20 million yuan in next 3 months. Controlling shareholder of Hengyi Petrochemical Co., Ltd. (000703.SZ) increased his shareholding by 1.51 million shares on Jan. 14 and will purchase no less than 10 million shares in next 12 months.
[Financial Reports Express]
○3 firms proposes high share conversion and dividend
------
Wuhan Zhongyuan Huadian Science ＆ Technology Co., Ltd. (300018.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual report and its net profits are expected to see a year-on-year growth of 30 percent-55 percent in 2015. Feitian Technologies Co., Ltd. (300386.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with dividend in cash for every 10 shares in its annual report. Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares in its annual report.
○Net profits of Guiguan Electric Power and Leike Defense Technology expected to surge
------
Net profits of Guangxi Guiguan Electric Power Co., Ltd. (600236.SH) are expected to surge by 330 percent year on year in 2015 due to remarkable increase in electric energy production and consolidated financial statements with Longtan Hydropower Development Co., Ltd. which it acquired. Net profits of Jiangsu Leike Defense Technology Co., Ltd. (002413.SZ) are expected to soar by 327 percent year on year mainly contributed by consolidated financial statements with Reco Electronic Information Technology Co., Ltd., Beijing Institute of Technology and selling assets of refrigeration business.
[Data Speaks]
○Over 50 pct of employee shareholding plans suffer floating deficit, implying investment opportunities
------
According to SSN statistics, there were totally 134 listed companies in Shanghai and Shenzhen bourses finishing employee shareholding plans in 2015. 76 of these companies are still suffering losses now, accounting for 56.7 percent. 27 among them saw more than 30 percent floating deficit in the employee shareholding plans.
Based on the closing price on Jan. 14, the floating deficit proportion in the employee shareholding plan of Wonders Information Co., Ltd. (300168.SZ) reaches 65 percent, which hold a total of 14.55 million shares. Those of Wuhan Fingu Electronic Technology Co., Ltd. (002194.SZ) and Loncin Motor Co., Ltd. (603766.SH) reach 50 percent, holding 3.63 million shares and 3.5 million shares respectively. Generally speaking, the listed firms have better understandings on its own fundamentals and the purchase costs in their employee shareholding plans is of certain significance for reference, which may imply some investment opportunities.
TOP
○Industrial capital spares increasing efforts in supporting stock market, capitals favor new economy
○Plans on military engineering and scientific R＆D institutes reform to release, expanding space for industrial integration
○Yibin Paper Industry to acquire Huanhui Tech., Navtech to acquire chip manufacturer
○Tianshan Wool Tex Stock to acquire Jialin Pharmaceutical, 3 firms proposes high share conversion and dividend
[SSN Focus]
○Industrial capital spares increasing efforts in supporting stock market, capitals favor new economy
------
The SSE Composite Index once approached 2,850 points, a low record set earlier, in the morning session on Jan. 14 and then rebounded sharply to above 3,000 points. The ChiNext Board Index, dominated by emerging industries, even surged by over 5 percent. The controlling shareholders of the 28 companies firstly listed on the ChiNext Board, or the "C28 Club", including Huayi Brothers Media Corporation (300027.SZ), promise no shareholding decrease in the following half to one year and take actual actions to stabilize the stock market. Up to now, besides companies involved in the C28 Club, the controlling shareholders of another 25 listed companies promise no shareholding decrease and the important shareholders or senior management of 29 listed companies conduct shareholding increase. A fine is imposed to the shareholders of Zhejiang Jiaxin Silk Corp., Ltd. (002404.SZ) by the China Securities Regulatory Commission (CSRC) due to shareholding decrease against regulations.
Comment: More and more companies promise no shareholding decrease and decide to increase shareholding, showing industrial capital's confidence in the capital market at current situation. As the bearish news troubling investors in the short run gradually disappear, the market demands for recovery after excessive drop. Emerging industries expecting growth such as culture, media and Internet as well as new technologies going to achieve breakthroughs soon, including virtual reality and manless driving, are going to be concerned. The trading volume ranking list today also shows that institutions bought lots of shares of "new economy" companies, such as Ciwen Media Co., Ltd. (002343.SZ) and Chinese All Digital Publishing Group Co., Ltd. (300364.SZ) with quality IP resource, Vtron Technologies Ltd. (002308.SZ) engaged in children education and Xiamen Meiya Pico Information Co., Ltd. (300188.SZ) involved in network security.
[SSN Selection]
○The People's Bank of China carried out a reverse repo of 160 billion yuan on Jan. 14, setting a new high in 11 months.
○The State Administration of Science, Technology and Industry for National Defense indicated that China's lunar probe Chang'e-4 will be launched in 2018 to realize soft landing on the far-side of the moon for the first time.
○The project of China's only floating nuclear power plant with complete independent intellectual property is approved and the construction of demonstration reactor is scheduled to be initiated at the end of this year.
○The Ministry of Foreign Affairs responded to the test flights performed at Yongshu Jiao airfield on the Nansha Islands and remarked that it accorded with international laws and established practices.
○The National Health and Family Planning Commission (NHFPC) indicated that it will formulate the thirteenth five-year plan for the development of traditional Chinese medicine this year and actively advance the lawmaking for traditional Chinese medicine.
TOP
[Industry Information]
○Plans on military engineering and scientific R＆D institutes reform to release, expanding space for industrial integration
------
SSN learnt from authoritative sources that certain plans on the classification and reform of military engineering and scientific research and development institutes have been finalized and submitted for approval. They will be released soon. It is reported that there are various documents on the classification and reform of military engineering and scientific research and development institutes, including the Plan on the Classification of Military Engineering and Scientific Research and Development Institutes, the Plan on the Implementation of Classification and Reform of Military Engineering and Scientific Research And Development Institutes as well as the Supporting Policies on Advancing the Reform and Transformation of Military Engineering and Scientific Research And Development Institutes into Enterprises through Classification. The latter has been submitted to the State Council and is going through procedures for releasing.
Comment: The reform of military engineering and scientific research and development institutes which are regarded as quality assets in military groups involves lots of complicated problems. The formulation of the reform scheme means that the restructuring of military industry, echoing with the military reform, will take an important step forward in 2016. The asset securitization ratio of military engineering groups in China is relatively low and the industry will enjoy huge potential in subsequent integration. In terms of listed companies, TONTEC Technology Investment Group Co., Ltd. (600862.SH) and Beijing Aerospace Changfeng Co., Ltd. (600855.SH) are likely to benefit first from the reform.
○Institutions intensively investigate synthetic leather industry, pressure for environmental protection pushes industrial upgrading
------
SSN learns that more than 10 institutions intensively investigate the synthetic leather industry since January. Driven by the pressure of environmental protection, industrial upgrading speeds up, and middle and high-end products including ecotypic and microfibre synthetic leather might replace ordinary PVC synthetic leather. The capacity of synthetic leather in Wenzhou City, Zhejiang province takes up around half of national capacity. At present, almost 50 percent of the production in Longwan District and the Economic and Technical Development Zone of Wenzhou has been cut. As the adjustment in relevant enterprises advances, the supply-demand structure of the industry will gradually take a turn for the better.
Comment: Along with the accelerated obsolescence of outdated capacity and the improving penetration rate of high-end products including microfibre synthetic leather, the concentration of synthetic leather market will further increase. Leading enterprises with advantages in technologies and market will gain more orders. As to listed companies, Huafon Microfibre (Shanghai) Co., Ltd. (300180.SZ), a leading domestic manufacturer of microfibre synthetic leather, owns a capacity of 36 million meters. Huafon Microfibre proposes to raise 1.5 billion yuan through private placement to expand the capacity by 37.50 million meters; Anhui Anli Material Technology Co., Ltd. (300218.SZ), a leading company in the production of ecotypic and functional synthetic leather, is able to produce 66.50 million meters a year. A capacity of around 22 million meters will be newly added to the company before end-2016 after more projects put into operation.
TOP
[Announcement Interpretation]
○Yibin Paper Industry to acquire Huanhui Tech. with RMB900 mln to deploy environmental protection industry
------
Yibin Paper Industry Co., Ltd. (600793.SH) proposed to issue 55.32 million shares at 16.27 yuan per share through private placement to acquire 100 percent equities of Huanhui Technology Group Co., Ltd. with 0.9 billion yuan; and meanwhile, it also proposed to raise the supporting fund of the same amount. Based on performance commitment, Huanhui Tech. will gain the net profit after deduction of no less than 60 million yuan, 120 million yuan and 200 million yuan from 2016 to 2018 respectively. The listed company will newly add energy conservation and environment protection businesses through this acquisition, such as central heating which recycles and takes advantage of residual heat resources.
Comment: The first and second largest shareholders of the company propose to transfer its 53.83 percent equities to China Environment State Investment Holding Group Co., Ltd., a state-owned enterprise under the Ministry of Environmental Protection mainly engaging in three businesses of central heating, garbage disposal and sewage treatment.
○Navtech to acquire chip manufacturer with RMB750 mln to deploy integrated circuit
------
Navtech INC. (300456.SZ) proposed to issue 8.58 million shares at 87.38 yuan per share through private placement to raise 750 million yuan for acquiring 100 percent equities of Beijing Ruitong Xinyuan Co., Ltd. so that to indirectly hold the 98 percent equities of Silex; meanwhile, it also proposed to raise supporting fund of 750 million yuan through private placement with 87.38 yuan per share to construct the MEMS production line of the targeted company.
Silex is a global leading MEMS chip manufacturer, representing the first-class manufacturing level for MEMS chips in the world, and based on its performance commitment, it will gain the net profit of 33.34 million SEK, 38 million SEK and 56.65 SEK from 2015 to 2017 respectively.
TOP
○Tianshan Wool Tex Stock to acquire Jialin Pharmaceutical
------
Xinjiang Tianshan Wool Tex Stock Co., Ltd. (000813.SZ) proposed to sell its whole assets and liabilities, and acquire 100 percent equities of Beijing Jialin Pharmaceutical Co., Ltd. with 8,369 million yuan, and assessed appreciation rate is 589 percent. The offering price of shares to be issued for acquiring the assets is 8.65 yuan per share, and that for private placement is 9.93 yuan per share to raise the supporting fund of 1.5 billion yuan, partially, the company proposed to issue employee shareholding plan for this subscription of 30 million yuan.
Jialin Pharmaceutical focuses on the fields of cardio-cerebral-vascular drug and antineoplastic drug with main products of atorvastatin calcium and famciclovir tablets, annually ranking No.3 in the antilipemic agent market from 2012 to 2014. Based on performance commitment, Jialin Pharmaceutical will gain the net profit after deduction of no less than 50 million yuan, 65 million yuan, 78 million yuan and 937 million yuan from 2015 to 2018 respectively.
○Several companies see shareholding increase
------
Hubei Yangfeng Group, controlling shareholder of Hubei Xinyangfeng Fertilizer Co., Ltd. (000902.SZ), increased its shareholding in the company by 6.59 million shares during Jan. 6-14, accounting for 1 percent of the total share capital. CITIC Guoan Co., Ltd., controlling shareholder of CITIC Guoan Information Industry Co., Ltd. (000839.SZ), increased its shareholding by 20.93 million shares on Jan. 14, accounting for 1.33 percent of the total share capital. Yao Jieyuan, director of Jiangsu Dewei Advanced Materials Co., Ltd. (300325.SZ), increased his shareholding in the company by 1 million shares on Jan. 14. Zuo Zongshen, actual controller of Chongqing Zongshen Power Machinery Co., Ltd. (001696.SZ), increased his shareholding in the company by 1 million shares on Jan. 14. Fujian Sanan Group Co., Ltd., controlling shareholder of Sanan Optoelectronics Co., Ltd. (600703.SH), increased its shareholding in the company by 5.45 million shares on Jan. 14 and may continue to raise 2 percent equity at most in the next 12 months.
Jia Quanchen, actual controller of Qingdao Hengshun Zhongsheng Group Co., Ltd. (300208.SZ), will increase his shareholding in the company by 0.1 percent-2 percent in next 12 months. Some senior management of TDG Holding Co., Ltd. (600330.SH) will increase their shareholding in the company by no less than 20 million yuan in next 3 months. Controlling shareholder of Hengyi Petrochemical Co., Ltd. (000703.SZ) increased his shareholding by 1.51 million shares on Jan. 14 and will purchase no less than 10 million shares in next 12 months.
[Financial Reports Express]
○3 firms proposes high share conversion and dividend
------
Wuhan Zhongyuan Huadian Science ＆ Technology Co., Ltd. (300018.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares in its annual report and its net profits are expected to see a year-on-year growth of 30 percent-55 percent in 2015. Feitian Technologies Co., Ltd. (300386.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with dividend in cash for every 10 shares in its annual report. Zhejiang Hisoar Pharmaceutical Co., Ltd. (002099.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares in its annual report.
○Net profits of Guiguan Electric Power and Leike Defense Technology expected to surge
------
Net profits of Guangxi Guiguan Electric Power Co., Ltd. (600236.SH) are expected to surge by 330 percent year on year in 2015 due to remarkable increase in electric energy production and consolidated financial statements with Longtan Hydropower Development Co., Ltd. which it acquired. Net profits of Jiangsu Leike Defense Technology Co., Ltd. (002413.SZ) are expected to soar by 327 percent year on year mainly contributed by consolidated financial statements with Reco Electronic Information Technology Co., Ltd., Beijing Institute of Technology and selling assets of refrigeration business.
[Data Speaks]
○Over 50 pct of employee shareholding plans suffer floating deficit, implying investment opportunities
------
According to SSN statistics, there were totally 134 listed companies in Shanghai and Shenzhen bourses finishing employee shareholding plans in 2015. 76 of these companies are still suffering losses now, accounting for 56.7 percent. 27 among them saw more than 30 percent floating deficit in the employee shareholding plans.
Based on the closing price on Jan. 14, the floating deficit proportion in the employee shareholding plan of Wonders Information Co., Ltd. (300168.SZ) reaches 65 percent, which hold a total of 14.55 million shares. Those of Wuhan Fingu Electronic Technology Co., Ltd. (002194.SZ) and Loncin Motor Co., Ltd. (603766.SH) reach 50 percent, holding 3.63 million shares and 3.5 million shares respectively. Generally speaking, the listed firms have better understandings on its own fundamentals and the purchase costs in their employee shareholding plans is of certain significance for reference, which may imply some investment opportunities.
TOP
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