[Today's Guide]
○ State Council executive meeting supports TCM industry and integrated development of health and old care
○ Opinions on cutting coal overcapacity released, industrial supply-side reform to speed up
○ Dongxu Optoelectronic Tech to raise fund to expand main business, Tiansheng New Materials to introduce employee shareholding plan
○ Enlight Media's film wins over RMB 1.6bln at box office, Kunlun Tech offers to buy Opera Software
[SSN Focus]
○ State Council executive meeting supports TCM industry and integrated development of health and old care
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The executive meeting of the State Council convened on Feb. 14 made plans on the innovation and upgrading of the pharmaceutical industry and determined measures on further development of the Chinese tradition medicine (TCM) industry. The meeting determined to promote the integration of Chinese and western medicines and improve the TCM criteria system; loosen the access to TCM services and improve the TCM services network covering urban and rural areas; develop TCM healthcare services and facilitate the integrated development of TCM, healthcare, tourism and tourism; and increase the number of TCM categories in the national basic medicine category.
Comment: TCM plays an active role in exploring solutions in the medical reform with Chinese characteristics. Tu Youyou won the Nobel Prize in Physiology or Medicine, which shows the bright prospects of the TCM modernization. With the preparation of the Guideline on the TCM Strategic Development Plan (2016-2030) and the Law of Traditional Chinese Medicine to be introduced, the industry will see more policy supports. Guizhou Xinbang Pharmaceutical Co., Ltd. (002390.SZ), Guizhou Yibai Pharmaceutical Co., Ltd. (600594.SH) and Inner Mongolia Furui Medical Science Co., Ltd. (300049.SZ) with medical services platforms will be favored by institutes.
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[SSN Selection]
○ U.S. Federal Reserve chair Janet Yellen said on Feb. 11 that it is feasible for the U.S. to adopt a negative interest rate. The gold price hiked over 5 percent to a new high in nearly one year during the Chinese New Year period.
○ The offshore RMB appreciated 0.92 percent against U.S. dollars during the Chinese New Year period. The central bank cited Governor Zhou Xiaochuan's remarks on its website on Feb. 13, saying that it would not let speculative forces dominate the market sentiments.
○ The retail sales and the sales of catering enterprises hiked 11.2 percent year on year during the Chinese New Year period. The total box office recorded a year-on-year growth of 67 percent in the first six days of the year of monkey.
○ Statistics show that the prices of Vitamin A and butadiene surged 1.89 and 1.9 percent, respectively, during the Chinese New Year period.
○ U.S. scientists announced that they directly detected the existence of gravitational wave for the first time, which is expected to help study the birth of the universe.
[Industry Information]
○ Opinions on cutting coal overcapacity released, industrial supply-side reform to speed up
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The State Council released opinions on cutting overcapacity and lifting enterprises out of difficulties in the coal industry on Feb. 5, proposing to cut and regroup a capacity of 500 million tons respectively in the following three to five years from 2016. It will not approve new coal projects in three years in principle In addition, it will promote the development of mixed economy in qualified state-owned enterprises and encourage large coal enterprises to merge and reorganize medium and small enterprises. It will also support the integrated development of coal and power generation and lead large coal-based power generation and coal enterprises to invest in each other.
Comment: Institutes believe that the accelerating supply-side reform in the coal industry will help to reduce the industry's overcapacity and improve its concentration. The opinions will cut a total of about 700 million tons of capacity, or nearly 17 percent of the total capacity in the industry. This is a great push in improving the supply and demand pattern of the industry. In terms of companies, Shanxi Xishan Coal and Electricity Power Co., Ltd. (000983.SZ) is a leading coking coal miner in China and has vigorously developed power generation business. Guizhou Panjiang Refined Coal Co., Ltd. (600395.SH) is a leader in the coal industry in Guizhou Province.
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[Announcement Interpretation]
○ Dongxu Optoelectronic Tech to raise fund to expand main business
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Dongxu Optoelectronic Technology Co., Ltd. (000413.SZ) proposes to raise 6.95 billion yuan by issuing 1,093 million shares at prices no less than 6.36 yuan per share through private placement. All the funds will be used to construct the 8.5th generation TFT-LCD glass substrate production line project. After the project reaches designed capacity, it is estimated that its annual average after-tax profit is 905 million yuan. The company also releases its annual report. Its net profit increased 183 percent year on year. The latest closing price of the company is 6.12 yuan per share.
○ Tiansheng New Materials to introduce employee shareholding plan
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Changzhou Tiansheng New Materials Co., Ltd. (300169.SZ) proposes to introduce an employee shareholding plan to raise no more than 50 million yuan. The upper limit of the assets management plan will be 100 million. It will establish the preferred portion and the progressive portion at a proportion of 1:1.
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○ Enlight Media: The Mermaid wins over RMB 1.6bln at box office
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Film The Mermaid produced by Beijing Enlight Media Co., Ltd. (300251.SZ) debuted on Feb. 8. According to incomplete statistics, as at 12 a.m. on Feb. 14, the film' box office in Chinese mainland has exceeded 1.6 billion, 50 percent higher than the audited operating revenues of the company's most recent accounting year.
○ Kunlun Tech and Qihoo 360 Tech to buy Opera Software
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Beijing Kunlun Tech Co., Ltd. (300418.SZ), along with Qihoo 360 Technology Co., Ltd. and Golden Brick Capital Private Equity Fund, made a takeover offer to buy 100 percent equities of the Opera Software ASA, a Norwegian company, at about 10.5 Norwegian Krone (about 1.2 billion U.S. dollars).
Opera Software was listed on Oslo Bors Holding ASA. It is one of the most famous cross-platform browser in the world. It has connected over 350 million Internet users across the globe to their favorite contents and services. According to the announcement, Kunlun Tech will contribute about 168 million U.S. dollars, or 14 percent of the total offer.
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○ NanHua Bio-medicine expands to stem cells through private placement
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NanHua Bio-medicine Co., Ltd. (000504.SZ) proposes to raise 290 million yuan through private placement by issuing 50 million shares. The raised fund will be used to invest in stem cells storage project as well as cell and tissue engineering experiment center project, supplement working capital and pay off loans.
○ Selen Science ＆ Technology raises RMB1.8bln through private placement for strategic transformation
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Shenzhen Selen Science ＆ Technology Co., Ltd. (002341.SZ) proposes to raise 1.8 billion yuan through private placement by issuing 136 million shares at 13.17 yuan per share. The raised fund will be used to invest in TAC functional optical thin film project, pay off loans and supplement working capital. Hou Yi, actual controller of the company, and the company's employee shareholding plan will be involved in the subscription with 500 million yuan and 350 million yuan, respectively.
The private placement will enable the company to achieve scale production and management and meet the downstream demand on display panel. The company's stock price closed at 15 yuan per share before trading suspension.
[Weekly Review]
○ Seek for investment opportunities
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We will soon embark on the journey of investment in 2016 after bidding farewell to 2015. The turbulent international market as well as the accelerated economic transformation and the registration-based IPO system reform will further complicate the picture for the investment in 2016. Luckily opportunities always come along with fluctuation. It is well-advised to seek for opportunities in main investment themes in 2016. Two sets of data will summarize the main investment themes.
First of all, they are "0" and "1", which mean developing from nothing. Previous bullish sectors, such as mobile games and Internet finance, all shared the same experience and were the main investment themes at that time. We should enjoy the convenience brought by emerging new technologies and new economies, while at the same time identify possible investment themes in 2016.
Another set of data are "1" and "N", which mean expanding from small to big. Only sustainable new themes can stand out among numerous transitory themes. For developing from nothing, a good sense of smell towards emerging industries should be kept; while for expanding from small to big, close attentions should be paid to the development of these industries. And that's what SSN is good at. We will go together with you to seek for investment opportunities in 2016.
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