[Today's Guide]
○ Five PLA theater commands established to build joint operation system
○ Sodium carbonate price soars 7 pct, outlook of online education bright
○ Dongfang Electric Heating Technology and others propose high share conversion and dividend, controlling shareholder of Elion Clean Energy increases shareholding
○ Jinke Peroxide to tap into film industry, Aier Eye Hospital joins hands with Alipay
[SSN Focus]
○ Five PLA theater commands established to build joint operation system
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The founding conference of theater commands of the People's Liberation Army (PLA) was held in Beijing on Feb. 1. Chinese President Xi Jinping conferred military flags to the five newly-established theater commands. Xi emphasized that the establishment of the Eastern Theater Command, the Southern Theater Command, the Western Theater Command, the Northern Theater Command and the Central Theater Command and the joint operation system among theater commands are the strategic decision made by the CPC Central Committee and the Central Military Commission (CMC). It marks the full implementation of the strategy of strengthening the army through reforms and a historical progress in the establishment of the PLA joint operation system, which is of far-reaching significance in ensuring the PLA can win battles and safeguard national security.
Comment: The cancellation of the command mechanism with seven military regions dominated by ground forces and the establishment of five theater commands with joint commends of multi services will speed up the modernization of the PLA and win information age wars. Institutes believe that fire control, tracking, disturbing, stealth and other electronic functions have become the focus in the design of the new-generation fleet and aircraft. They are rosy that electronic military engineering enterprises will benefit from the military forces regrouping. China Aviation Optical-Electrical Technology Co., Ltd. (002179.SZ) is a leader in military engineering connectors. Fujian Torch Electron Technology Co., Ltd. (603678.SH) is engaged in the production of aerospace MLCC capacitors. The products of Wuhan Guide Infrared Co., Ltd. (002414.SZ) is widely used in investigation, guidance and other industries.
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[SSN Selection]
○ China's manufacturing purchasing managers' index (PMI) came in at 49.4 in January, down by 0.3 from December. The index of finished products inventory hit two-year low, showing that the market is gradually clearing.
○ The statistics of the Hong Kong Exchanges and Clearing Limited show that the Shanghai Stock Connect recorded a net inflow of nearly 3.6 billion yuan in January compared with the net outflow in three previous months.
○ The Industrial Internet-based Industrial Alliance was established on Feb. 1, which will facilitate the implementation of the Internet plus campaigns and Made in China 2025.
○ The pork price raised to 18.63 yuan per kilogram across China as of Jan. 31, close a new high in five years. The pig-raising industry is expected to boom.
○ Reuters reported that China plans to introduce pilots on allowing commercial banks directly hold shares of technology enterprises.
[Industry Information]
○ Capacity cutting speeds up, sodium carbonate price soars 7 pct
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SSN learnt that the sodium carbonate price in Shandong Province and north region raised by 100 yuan per ton on Feb. 1, representing a growth of 7 percent. The price rise was as result of the burst of the slag discharge field of Shandong Haihua Company Limited (000822.SZ), a sodium carbonate leader in China, which caused the temporary production suspension of all production lines. As the capacity of Shandong Haihua accounts for nearly 10 percent of the industry, relevant manufacturers expect that the production suspension may last half a month or even longer and the stock cutting in the industry is expected to speed up.
Comment: As a matter of fact, the sodium carbonate market has been sluggish in recent years. Certain capacities have exited and the total capacity reduced 5.2 percent year on year in 2015. The sodium carbonate price has increased 13 percent in 2016 after the price rise. In terms of listed companies, Tangshan Sanyou Chemical Industries Co., Ltd. (600409.SH) owns an equity capacity of 3.76 million tons of sodium carbonate and Hubei Shuanghuan Science and Technology Stock Co., Ltd. (000707.SZ) owns a capacity of nearly 1.8 million tons. The sodium carbonate business of the two companies accounts for a high proportion of their profit from main businesses and are likely to benefit from the price rise.
○ Koolearn to introduce investment from Tencent and plans to go public, outlook of online education bright
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New Oriental Education ＆ Technology Group on Feb. 1 announced that Tecent Group will inject 320 million yuan to Koolearn, a wholly owned subsidiary of New Oriental, and the investment is expected to complete in the first quarter of 2016. Meanwhile, New Oriental announced that Koolearn plans to list in China, and the progress is depend on the condition of the capital market. The Q2 financial statement of 2016 released by New Oriental lately indicated that net revenue of Koolearn reached 13,300,000 U.S. dollar, up 19.4 year on year. The number of premium user increased 215 percent year on year, and the number of accumulated registered user amounted to 11,900,000.
Comment: the online education sector has witnessed rapid development, becoming another potential growth pole of New Oriental. Being able to attract investment from Tencent also indicates that the internet giant is rosy about the future of Koolearn. In listed companies, Newclasses under Shanghai Xin Nanyang Co., Ltd. (600661.SH) is the largest non-academic education training institution and student academic counselling organization in Shanghai. The company proposes to tap into online education through merger and acquisition funds; Xiamen Insight Investment Co., Ltd. (000526.SZ) and Dongguan Kingsun Optoelectronic Co., Ltd. (002638.SH) propose to acquire Xueda Education Group (XUE.NYSE) and Longwen Education respectively to involve in online education.
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[Financial Reports Express]
○ Dongfang Electric Heating Technology proposes high share conversion and dividend
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Actual controller of Zhenjiang Dongfang Electric Heating Technology Co., Ltd. (300217.SZ) proposes 18-for-10 conversion of capital surplus into shares combined with cash dividend in the annual report. Actual controller of Henan Kedi Dairy Co., Ltd. (002770.SZ) proposes 10-for-10 conversion of capital surplus into shares combined with cash dividend in the annual report. Controlling shareholder of Gansu Jingyuan Coal Industry And Electricity Power Co., Ltd. (000552.SZ) proposes 9-for-10 conversion of capital surplus into shares combined with 1 stock dividend and 0.4 yuan for every 10 shares according to its annual report.
Besides, Glarun Technology Co., ltd. (600562.SH) announced 28 percent growth in its annual report and proposes 8-for-10 conversion of capital surplus into shares combined with cash dividend of 2.18 yuan for every 8 shares.
[Announcement Interpretation]
○ Controlling shareholder of Elion Clean Energy increases shareholding
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Elion Resources Group, controlling shareholder of Elion Clean Energy Company Limited (600277.SH), on Feb. 1 increased holding of 14,690,000 shares in Elion Clean Energy, and plans to continue increase holding in the next 12 months with a total of 600 to 700 million yuan. Longyue Investment, controlling shareholder of Shandong Qixing Iron Tower Co., Ltd. (002359.SZ), on Feb. 1 increased shareholding of 2,158,000 shares in Qixing Iron Tower. Taiyuan Chemical Industry Group Co., Ltd, controlling shareholder of Taiyuan Chemical Industry Co., Ltd. (600281.SH), on Feb. 1continued to increase shareholding one million shares in the company. Binjiang Group, controlling shareholder of Hangzhou Binjiang Real Estate Group Co., Ltd. (002244.SZ), on Feb. 1 continued to increase holding of 2,020,000 shares in the company. Yuan Yafei, actual controller of Nanjing Xinjiekou Department Store Co., Ltd. (600682.SH), on Feb. 1 increased holding 8,770,000 shares of the company.
In addition, senior management of Shanghai Zhongji Investment Holding Co., Ltd. (600634.SH) proposes to increase holding shares in the company with a total of no less than 500 million yuan at the price of no more than 20 yuan per share.
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○ Jinke Peroxide to invest RMB 100mln in film industry
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Zhejiang Jinke Peroxides Co., Ltd. (300459.SZ) proposes to contribute100 million yuan to set up Yingcaiyuan Partnership Company where it will own 20 percent equities, so as to participate equity investment in Wanda Media Co., Ltd. and Qingdao Wanda Film Investment Co., Ltd. The company is mainly engaged in chemicals manufacturing. Its involvement in film and television will a new engine for its profit growth.
○ Aier Eye Hospital to develop mobile medical service with Alipay
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Aier Eye Hospital Group Co., Ltd. (300015.SZ) has reached a framework agreement with Alipay in strategic cooperation in service window, face-to-face payment, ecological construction in business cycle, exploration of medical treatment market in rural areas, public welfare, financial innovation and insurance. Aier Eye Hospital will carry out high-level cooperation with Internet giants Baidu Inc. (Nasdaq:BIDU), Alibaba Group Holding Limited (NYSE: BABA) and Tencent Holdings Ltd. (00700.HK). SSN reported on Feb. 1 that Aier Eye Hospital is expected to conduct in-depth cooperation with Internet giants.
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○ A couple of companies to expand main business through private placement
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Beijing Jiaxun Feihong Electrical Co., Ltd. (300213.SZ) proposes to raise 676 million yuan by issuing 33 million shares through private placement. The proceeds will be used to build LTE-based bandwidth wireless command and dispatching system and supplement working capital. Its controlling shareholder Lin Jing will at least subscribe 100 million yuan.
Hunan Mendale Hometextile Co., Ltd. (002397.SZ) will raise 1,114 million yuan to raise 151 million shares at prices no less than 7.39 yuan per share through private placement. The proceeds will be invested in the construction of its intelligent factory, O2O marketing platform and working capital supplementary. The latest stock price of the company closed at 6.36 yuan per share, over 10 percent lower than the private placement price.
[Data Speaks]
○ Over 2,000 firms pre-announce 2015 performance, new energy vehicle and environmental protection sectors boom
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According to SSN's statistics, as of Feb. 1, a total of 2,061 listed companies in Shanghai and Shenzhen stock exchanges have pre-announced their financial results for 2015. Data shows that 928 companies forecast growth, 168 turning losses to profits and 172 continuing to grow. A total of 1,260 companies, or 61.14 percent companies, forecast growth. Specifically, the new-energy vehicle and environmental protection sectors have boomed.
As for companies, Do-Fluoride Chemicals Co., Ltd. (002407.SZ) forecasts its 2015 performance to growth 8 to 8.5 times due to short supply of power lithium battery and lithium hexafluorophate. Guangzhou Tinci Materials Technology Co., Ltd. (002709.SZ) revised up its 2015 performance to an increase of 44 to 60 percent on a year on year basis. As the lithium battery material industry continued to benefit from the robust demands for new energy vehicles, the sales of electrolyte continued to expand year on year. In addition, both Beijing Originwater Technology Co., Ltd. (300070.SZ) and Yonker Environmental Protection Co., Ltd. (300187.SZ) announced their performance growth due to their main business in the environmental protection sector.
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