[Today's Guide]
○ Premier Li requires cutting overcapacity, starting from iron ＆ steel and coal sectors
○ Action plan on green ecology issued to boost renewable resources recycling
○ Kinetic Medical to acquire medical devices companies, Sunsea Telecom to acquire Jiantong Surveying
○ By-health proposes high share conversion and dividend, Taiya Shoes substantially raises its net profits in annual report
[SSN Focus]
○ Premier Li requires cutting overcapacity, starting from iron ＆ steel and coal sectors
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Premier Li Keqiang required stepping up new and hard measures to stabilize economic growth and adjust economic structure at a State Council seminar on Jan 20. On the one hand, China should continue to cultivate new growth engine and transform and upgrade traditional engine. It should make breakthroughs first in the iron and steel and coal industries by combining with policies while focusing on resolving over-capacity, digesting unreasonable inventories, lowering enterprise costs and improving enterprise efficiency.
Comment: Since Premier Li's tour in the steel factory and coal mines in Shanxi Province at the beginning of the year, the over-supplied iron and steel and coal industries have taken a series of actions. The Ministry of Finance recently summoned a meeting for heads of domestic coal companies in Shenyang, Liaoning Province to deliberate on the plan for reduce over-capacity. Shanxi Jincheng Anthracite Mining Group and Yankuang Group successively announced downsizing and diversion. The iron and steel industry also sees a remarkable increase in blast furnace overhaul. Industrial insiders indicate that the current coal price level is detrimental to mid and small-size coal mines. A great number of coal companies have given their employees an earlier start to holidays due to poor profit. Institutes are bullish about the outlook of some small-cap and poor-performing companies that plan to transform, including Anyuan Coal Industry Group Co., Ltd. (600397.SH), Shanxi Coal International Energy Group Co., Ltd. (600546.SH) and Xinjiang Ba yi Iron ＆ Steel Co., Ltd. (600581.SH).
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[SSN Selection]
○ The People's Bank of China (PBOC) again conducts Medium Term Lending Facility operation worth 352.5 billion yuan and reverse repurchase (repo) worth 400 billion on Jan. 21. It also said that it would provide ample liquidity support to the banking system.
○ The National Development and Reform Commission (NDRC) and the Ministry of Industry and Information Technology (MIIT) decided to launch tiered power pricing policies on cement enterprises. This move is expected to eliminate about 10 percent capacities in the cement production below the energy consumption standards
○ The NDRC on Jan. 20 held a working conference on the preparation of the development plan for the Northeast China eastern economic belt and clarified major tasks such as facility interconnection and opening-up.
○ Shanghai Municipal Government held a press conference on Jan. 21, indicating that the State Administration of Taxation has issued ten measures to support the construction of Shanghai Technology Innovation Center.
○ The shareholder of Shenyang Commercial City Co., Ltd. (600306.SH) announced withdrawal of its shareholding reduction plan as announced last week for the reason that it has to stabilize the market under the current market conditions.
[Industry Information]
○ Action plan on green ecology issued to boost renewable resources recycling
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The National Development and Reform Commission (NDRC) on Jan. 21 disclosed the Three-year Action Implementation Plan on "Internet Plus" Green Ecology on its official website today. It emphasizes improving the recycling of used resource and the online trade system, formulating the Action Plan on "Internet Plus" Resources Recycling (2016-2020), drawing up and releasing the Opinions on Promoting the Transformation and Upgrading of the Renewable Resources Recycling Industry, supporting the recycling industry to carry out information collection, data analysis and flow monitoring through the Internet of Thins and big data and promoting the "Internet Plus" recycling model.
Star:
Comment: China is experiencing high growth in the output of waste. The average growth in the scrappage of electric and electronic products in the following five years is expected to reach 20 percent. In addition, China also sees peak scrappage of automobiles from 2015. Institutes expect that total recovery of renewable mental resources in 2020 will be 2.4 times of that of 2010. It enjoys huge potential. Among listed companies, Suzhou Boamax Technologies Group Co., Ltd. (002514.SZ) proposes to acquire 100 percent equities of Shenzhen Jie Chi Technology Co., Ltd. to develop renewable resources business. Miracle Automation Engineering Co., Ltd. (002009.SZ) speeds up in the development of automobiles recovery and disassembling through the acquisition of equities of two companies.
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[Announcement Interpretation]
○ Kinetic Medical to fully control two medical devices companies with RMB480 mln
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Shanghai Kinetic Medical Co., Ltd. (300326.SZ) plans to acquire 20 percent equities of Jiangsu IDEAL Medical Science ＆ Technology Co., Ltd. at 158 million yuan by issuing shares and in cash. It also proposes to acquire 43.05 percent equities of Essen Technology (Beijing) Co., Ltd. with 323 million yuan by issuing shares. Meanwhile, it will raise a supporting fund of 480 million yuan by issuing shares at 18.96 yuan per share through private placement. Kinetic Medical will hold 100 percent equities of the above two companies after the transactions. The acquisitions will diversify the production lines of the company in orthopaedics, cardiovascular and other high-consumption medical devices industries.
○ Sunsea Telecom. to acquire Jiantong Surveying
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Sunsea Telecommunications Co., Ltd. (002313.SZ) intends to acquire 100 percent equities of Guangzhou Jiantong Surveying, Mapping and Geoinformation Technology Co., Ltd. with 600 million yuan by issuing 46.15 million shares at 13 yuan per share through private placement to develop geographical information industry. Meanwhile, it plans to raise 580 million yuan by issuing 44.62 million shares at 13 yuan per share through private placement. The proceeds will be used in the construction of charging piles projects and supplementing working capital. The counterparty committed that the net profit of Jiantong Surveying will be no less than 35 million yuan, 53 million yuan and 78.60 million yuan from 2016 to 2018.
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○ Skyworth Digital to acquire LCD Liquid Crystal Device with RMB900 mln
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Skyworth Digital Co., Ltd. (000810.SZ) proposes to acquire 100 percent equities of Skyworth LCD Liquid Crystal Device (Shenzhen) Co., Ltd., a connected party under it, with 899 million yuan by issuing share at 12.32 yuan per share through private placement and in cash. Based on the commitment, the net profit after extraordinary items of LCD Liquid Crystal Device will reach 77.97 million yuan, 82.61 million yuan, and 87.45 million yuan in 2016-2018. The target company is principally engaged in medium- and small-sized LCD display modules and the entrusted processing of digital devices and hardware processing. Its products are applied in smart mobile phones and tablets.
○ Zhiyun Automation obtains order for intelligent lithium battery equipment
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Shenzhen Geesun Automation Technology Co., Ltd., a subsidiary controlled by Dalian Zhiyun Automation Co., Ltd. (300097.SZ), and Hefei Guoxuan High-Tech Power Energy Co., Ltd. signed an equipment supply contract for ternary battery production lines. The contracted amount is 110 million yuan, accounting for 50 percent of the audited business revenue of the company in 2014. The project is significant in strengthening the competitiveness of Geesun Automation Technology in the integration of power lithium battery intelligent manufacturing.
○ Youngy applies for cancelling special treatment
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The performance of Youngy Co., Ltd. (002192.SZ) turned losses into profits in 2015 and proposes a 5-for-10 conversion of capital surplus into shares. It has completed business transformation and strategic adjustments through private placement. The company has submitted the application for cancelling warnings on delisting of the stocks to Shenzhen Stock Exchange.
[Financial Reports Express]
○ Multiple companies propose high share conversion and dividend
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By-health Co., Ltd. (300146.SZ) proposes a distribution plan of a 10-for-10 conversion of capital surplus into shares combined with 6 yuan dividend for every 10 shares according to its annual report. Beijing Strong Biotechnologies, Inc. (300406.SZ) proposes a distribution plan of 10-for-10 conversion of capital surplus into shares combined with 2.5 yuan dividend for every 10 shares according to its annual report. Guangzhou Wondfo Biotech Co., Ltd. (300482.SZ) expects 20 percent to 35 percent growth in its annual report, and the actual controller proposes a distribution plan of a 10-for-10 conversion of capital surplus into shares. Europol Intelligent Network Co., Ltd. (002711.SZ) proposes a distribution plan of a 10-for-10 conversion of capital surplus into shares with cash dividend according to its annual report. .
○ Taiya Shoes substantially raises its net profits in annual report
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Taiya Shoes Co., Ltd. (002571.SZ) sharply raises its net profits from previously estimated 0 to 6 million yuan to 640 million yuan to 680 million yuan. The company was originally engaged in footwear business; after restructuring, the company becomes an online game developer.
Besides, Fujian Sunnada Communication Co., ltd. (002417.SZ) disclosed an announcement in connection with the revision of annual results of 2015, which was increased from 0 to 20 million yuan to 20 million yuan to 40 million yuan, primarily due to the company has received one-off registration reward subsidy of 20 million yuan from the government.
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[Trading Trends]
○ Price hike of Vitamins highly expected, related stocks bought by institutions
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The trading volume ranking list on Jan. 21 shows that vitamin price hike related stocks such as Xiamen Kingdomway Group Company (002626.SZ), Yifan Xinfu Pharmaceutical Co., Ltd. (002019.SZ) and Hubei Guangji Pharmaceutical Co., Ltd (000953.SZ) saw net purchases by institutions. Kingdomway Group was bought by four institutions with a total of 89,940,000 yuan, accounting for 19.68 percent of intraday turnover; another two institutions sold with an amount of 24,140,000 yuan. Yifan Xinfu Pharmaceutical was bought by three institutions with a total of 248 million yuan, accounting for 22.09 percent of intraday turnover. Guangji Pharmaceutical was bought by two institutions with a total of 80,600,000 yuan, representing 17.81 percent of intraday trading turnover; another institution sold 16,400,000 yuan.
Comment: SSN on Jan. 20 reported that it is highly probable that the price of vitamin A will rise. Besides, calcium pantothenate (Vitamin B5), the main product of Yifan Xinfu Pharmaceutical has risen since December 2015. Institutions are confident that the logic behind price increase of dye may reappear in the vitamin market. The supply of vitamin B2, main product of Guangji Pharmaceutical, is limited due to stricter environment regulation on the industry, thus its price is expected to continue to go up.
[Trading Alarms]
○ Goaland Energy Conservation Tech to unveil IPO on Jan. 22
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The Issuing price of Guangzhou Goaland Energy Conservation Tech Co., Ltd (300499.SZ) is 15.52 yuan per share with a cap of subscription of 16,500 shares and PE ratio of 23 times. After application, investors should ensure there is sufficient money in the account for payment on Jan. 26 according to his/her successful application.
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