[Today’s Guide]
○ New round of rural power grid transformation and upgrading to kick off with investment of over RMB700 bln
○ TSMC approved to establish plant in mainland with 3 bln USD, demands for materials and equipment to expand
○ Shentong Valve to invest in nuclear power equipment through private placement, Changyuan Group to expand intelligent power grid
○ Shares of Haixin Group bought to over 5 pct, Shouhang Resources Saving researches and develops thorium-based nuclear power reactor
[SSN Focus]
○ New round of rural power grid transformation and upgrading to kick off with investment of over RMB700 bln
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The executive meeting of the State Council convened on Feb. 3 determined to implement a new round of rural power grid transformation and upgrading. China will speed up in the transformation and upgrading of rural power grid in western and poverty regions, improve the acceptability of distributed new energy power generation, facilitate the full coverage of pumping well power consumption in villages on the plain and increase the efforts in the transformation of central villages. The total investment is expected to exceed 700 billion yuan.
Comment: Under the current power system, the investment and construction play a key role in promoting social consumption in the power distribution industry close to users. The current power distribution facilities in rural and remote areas are less developed. The power grid transformation and upgrading will facilitate the marketing of household appliances in rural areas and the development of agricultural facilities. Institutes are optimistic that low-voltage switch, protection and surveillance, distribution network automation and other electric equipment industries will benefit. The A-share companies to benefit include Shanghai Zhixin Electric Co., Ltd. (600517.SH), Beijing Creative Distribution Automation Co., Ltd. (002350.SZ) and Beijing Hezong Science & Technology Co., Ltd. (300477.SZ).
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[SSN Selection]
○ The State Council released the opinions on cutting the steel overcapacity to achieve the development of the steel industry on Feb. 4. China plans to cut steel production capacity by 100 million tonnes to 150 million tonnes over the next five years
○ The State Administration of Foreign Exchange (SAFE) issued a document on Feb. 4 to extend the upper limit of QFII quota to expand the opening of the onshore capital market.
○ The comprehensive pilot on power system reform in Shanxi Province was approved by the National Development and Reform Commission (NDRC). Pithead power plants with cost advantages are expected to benefit first.
○ New York Federal Reserve President indicated Feb. 3 that a stronger U.S. dollar will damage the U.S. economy. The U.S. dollar index plunged to a new low in over three months on Feb. 4 evening.
○ U.S. scientists have invented molybdenite memristors, which may change the semiconductor industry from the times of silicon to the times of molybdenite.
[Industry Information]
○ TSMC approved to establish plant in mainland with 3 bln USD, demands for materials and equipment to expand
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Xinhua News Agency reported that Taiwan Semiconductor Manufacturing Co. (TSMC), the world's leading semiconductor maker, proposes to invest 3 billion U.S. dollars to set up a wafer plant in Nanjing City, Jiangsu Province. The application has been approved by Taiwan authorities. The new plant will have a monthly capacity of about 20,000 twelve-inch wafers with production planned to begin in the latter half of 2018. TSMC expects to solve the problems in the industrial development by obtaining more market shares through the establishment of a twelve-inch wafers plant.
Comment: The import of chips in China is bigger than petroleum and the market potential is huge. Institutes believe the establishment of the plant by TSMC in the mainland will bring a growth of over 30 billion U.S. dollars in the upper and down-stream industries. The demands for semiconductor materials and equipment will improve. In terms of listed companies, Shanghai Sinyang Semiconductor Materials Co., Ltd. (300236.SZ) is principally engaged in electronic chemicals with TSMC as its potential client. Tianshui Huatian Technology Co., Ltd. (002185.SZ) is leader in the domestic packaging and testing of integrated circuits and has been invested by the national integrated circuits funds.
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[Announcement Interpretation]
○ Shentong Valve to raise RMB548 mln through private placement to invest in nuclear power equipment
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Jiangsu Shentong Valve Co., Ltd. (002438.SZ) proposes to issue 29.78 million shares at no less than 18.40 yuan per share through private placement. The proceeds of 548 million yuan will be invested in the valve services quick response center, the intelligent manufacturing of valves and the research and development of special valves. It will transform from “single manufacturing” to “manufacturing plus services”. The actual controller of the company will subscript with 54.80 million yuan. The stock price of the company was 16.42 yuan before trading suspension, representing a discount of 10 percent over the bottom issuance price.
○ Changyuan Group to raise RMB800 mln through private placement to invest intelligent power grid
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Changyuan Group Ltd. (600525.SH) proposes to issue 65.15 million shares through private placement with a price no less than 12.28 yuan per share, raising 800 million yuan for R&D and production base construction project of serial products related to intelligent power grid, and also for debts repayment. Its shareholder, Shenzhen Woer Heat-Shrinkable Material Co., Ltd. (002130.SZ), proposes to subscribe this private placement with 100 to 200 million yuan. Meanwhile, Changyuan Group will push out stock incentive plan.
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○ Shares of Haixin Group bought to over 5 pct
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Shanghai Haixin Group Co., Ltd. (600851.SH) announced that Shenzhen Ningrui Investment Management Co., Ltd. on Jan. 4 bought 60,392,500 shares of the company through block trade and call auction, accounting for over 5 percent equity, mainly as Ningrui Investment Management is optimistic about the company’s future development prospect, and is likely to continuously increase the shareholdings.
○ Shouhang Resources Saving and Israeli team work together for thorium-based nuclear power reactor, expanding clean energy
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Beijing Shouhang Resources Saving Co., Ltd. (002665.SZ) works together with Israeli Ben-Dak/GalperinTeam for R&D of thorium-based nuclear power reactor. It will set joint venture to research and develop the thorium nuclear power plant according to the project progress. The company stated that nuclear power generation is based on uranium235 now, but the resources is rapidly reducing. Uranium233 is one of the nuclear fuels to replace uranium235, however, it does not exist in the nature, and can be created by thorium233.
Comment: Ben-Dak/GalperinTeam is a leading thorium nuclear experts team in the world, which has researched and developed an effective technical roadmap rapidly being popularized in the world now for thorium nuclear power generation.
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○ Wonders Information to issue employee shareholding plan
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Wonders Information Co., Ltd. (300168.SZ) proposes to set employee shareholding plan to raise no more than 100 million yuan, and the assets management plan will be no more than 200 billion lots, with 1:1 for aggressive and priority ones.
○ Huace Film & TV to invest Joyu Culture, stepping into tourism industry
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Zhejiang Huace Film & TV Co., Ltd. (300133.SZ) proposes to subscribe the private placement of Shanghai Joyu Culture Media Co., Ltd. with 250 million yuan to gain its 4.31 percent equity. Joyu Culture owns www.lvmama.com, mainly engaged in e-commerce of B2C tourism based on self-guided tour service.
[Trading Trends]
○ Four institutions bought Yifan Xinfu Pharmaceutical
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The trading volume ranking list on Jan. 4 shows that Yifan Xinfu Pharmaceutical Co., Ltd. (002019.SZ) was bought through four institutional seats with a total of 247 million yuan, accounting for 41.34 percent of its intraday turnover.
Comment: The company is a leading calcium pantothenate enterprise with a market share of 38 percent. Institutions believed that current calcium pantothenate supply is strained in China. Under pressure of supply side reform and environmental protection, newly-added capacity is very difficult to realize, and the price is likely to increase than expectation in the future, possibly having positive influence on its performance.
[Publication Suspension]
○ Based on the holiday schedules of Shanghai and Shenzhen stock exchanges, the SSN Early Bird will suspend publication from Feb. 7 and will resume publication on Feb.14. Wish you a happy Chinese new year!
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