[Today's Guide]
○State Council supports transformation of scientific and technological achievements, listed companies under colleges expected to gain benefits
○Shandong applies for 3rd batch of FTZ, price of wolframite to increase by 14 pct
○Zhejiang Furun to acquire Ad Time, Vtron technologies to invest in First Leader Education
○Victory Precision Manufacture to purchase production lines of lithium-ion battery diaphragm, Ideal Jewelry proposes high share conversion
[SSN Focus]
○State Council supports transformation of scientific and technological achievements, listed companies under colleges expected to gain benefits
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The executive meeting of the State Council held on Feb. 17 finalized the policies and measures supporting the transformation of scientific and technological achievements so as to promote in-depth integration of technology and economy. It encourages the state-established R＆D institutions, universities and colleges to transfer the scientific and technological achievements to enterprises and other organizations through transfer, permission or evaluation investment and provides them with various preferential policies in order to arouse their enthusiasm.
Comment: Accelerating the transformation of scientific and technological achievements is of great significance in advancing structural reform and supply-side reform in particular, implementing innovation-driven development strategy, promoting mass entrepreneurship and innovation and improving development quality and efficiency. Universities, colleges and scientific research institutes are the major providers of scientific and technological achievements. Several provinces and cities recently introduced measures to break system barriers together with reform in universities and colleges. China Hi-Tech Group Co., Ltd. (600730.SH) and CASTECH Inc. (002222.SZ) and other listed companies under some famous universities, colleges and Chinese Academy of Sciences are expected to benefit first from this process.
[TOP]
○2 state-run companies suspend trading, SOEs reform speeds up
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Shang Gong Group Co., Ltd. (600843.SH) announced on Feb. 17 evening that it would suspend trading from Feb. 18 as its actual controller the State-owned Assets Supervision and Administration Commission of Shanghai Pudong New Area People's Government is mulling for significant matters concerning the company. China National Medicines Corporation Ltd. (600511.SH) suspended trading in the afternoon also as its actual controller China National Pharmaceutical Group Corporation was mulling for significant matters to tackle the company's horizontal competition issue.
Comment: There are signs that the restructuring of state-owned enterprises (SOEs) has speeded up since the end of last year. Every two of eight central enterprises integrated with each other, declining the number of central enterprises to 106. The two sessions of various provinces and cities regard the SOEs reform as the work focus of this year and are expected to introduce implantation details. The state-run capital companies which have low group assets securitization rate, suffer horizontal competition and have to carry out promise of inject assets are favored by institutions.
[SSN Selection]
○Chinese central bank and other two ministries and commissions improve deposit interest rate formation mechanism for housing reserved funds accounts of employees, which will be implanted based on the benchmark interest rate for one-year deposit.
○The National Development and Reform Commission indicates that it totally reviewed and approved fixed-assets investment worth 54.1 billion yuan in January, which are mainly invested in water conservancy and energy fields.
○The joint training of Long March 5 saw a successful completion recently, marking the maiden flight of satellite is coming soon.
○A document of U.S. Securities and Exchange Commission shows that Buffett and several giants increased investment in energy stocks in the fourth quarter of last year.
○Sina Technology reports that LeTV Holdings Co. Ltd. and Aston Martin signed memorandum of understanding on Feb. 17. The two parties will establish a joint venture company to conduct cooperation on electric vehicles.
[Industry Information]
○Shandong's application for 3rd batch of FTZ enters approval stage
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SSN learns that Shandong province is competing to be included in the third batch of free trade zone (FTZ). At present, Shandong has almost completed the preparatory work. The proposal has been approved by national commissions and is under approval of the State Council now. According to the proposal, Shandong FTZ covers an area of about 120 square kilometers. It will center on Qingdao free trade port area and include part of Jinan, Weihai and Yantai cities.
Comment: Previously, Guo Shuqing, governor of Shandong Province, presented government work report in the two sessions of Shandong, and mentioned that it will positively apply for building China (Shandong) Pilot Free Trade Zone in 2016. In terms of listed companies, Qingdao Doublestar Co., Ltd. (000599.SZ) is a local enterprise in Qingdao City; Rizhao Port Co., Ltd. (600017.SH) is mainly engaged in businesses of cargo handling and management for the port.
○Average price of wolframite estimated to increase by round 14 pct in Feb
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SSN learnt that the Tungsten Industry Association of Ganzhou City has determined the forecasted average price of tungsten in February 2016, and wolframite price increases to 75,000 yuan per ton now from 9000 yuan per ton last month, surging by nearly 14 percent. So far, wolframite has reached the highest forecasted average price since last July.
Comment: According to insiders, the upstream supply expects stronger price. As enterprises and traders successively start the work after the Lantern Festival and the replenishment demands arise after the holiday, tungsten price is expected to rebound steadily in March. In terms of listed companies, Xiamen Tungsten Co., Ltd. (600549.SH) is the largest manufacturer and exporter for tungsten oxide, tungsten powder and tungsten carbide powder in China; Chongyi Zhangyuan Tungsten Co., Ltd. (002378.SZ) builds up a comprehensive and integrated production system, covering mining and beneficiation in the upstream, refining in the midstream and intensive processing in the downstream.
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○Qualified lead accumulator enterprises list issues, product price likely to continue rebound
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The website of Ministry of Industry and Information Technology on Feb. 17 shows that a list is released, covering the first wave of 39 enterprises qualified with standards of lead accumulator industry, such as Shenzhen Center Power Tech. Co., Ltd. (002733.SZ), Zhejiang Narada Power Source Co., Ltd. (300068.SZ) and Fengfan Stock Limited Company (600482.SH). It is also learnt that the demands for electric vehicle batteries in the end market further rebounded during the Spring Festival. Batteries dealers are expected to see a delivery peak and lead accumulator price will further rebound after the logistics restarts. Last December, the industry has successively increased the prices for various times.
Comment: Insiders pointed out that, along with the implementation of industrial standards, a large number of lagged capacities will exist in the market, and industrial concentration is likely to improve to great extent. Currently, the lead accumulator price has obviously increased in the market, and the said enterprises will benefit directly.
[Announcement Interpretation]
○Zhejiang Furun to conduct transboundary merge of internet assets with RMB1.2 bln
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Zhejiang Furun Co., Ltd. (600070.SH) proposes to carry out private placement at 7.51 yuan per share, acquire 100 percent equities of Ad Time with cash, and raise a supporting fund of 600 million yuan at the same offering price. Based on big data, Ad Time provides internet marketing and marketing data analysis for clients, with an evaluation of 1.2 billion yuan; its shareholder committed that the company's net profits after deduction from 2016 to 2018 will be no less than 55 million yuan, 85 million yuan and 122 million yuan. By this, Zhejiang Furun will shift its main businesses of textile and steel tube to "traditional industries big data internet".
○Vtron technologies to invest in First Leader Education to expand to preschool education industry
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Wisharedu, wholly owned by Vtron technologies Ltd. (002308.SZ), proposes to be a transferee of Guangzhou First Leader Education Brand Management Co., Ltd. with 42 million yuan in cash, and increase investment in the company with 18 million yuan to acquire 33.71 percent equities of the company. First Leader Education is a service provider of integrated and systematic solution for meddle and high class kindergarten. According to commitment, its net profit of 2016 to 2018 will be no less than 11 million yuan, 17 million yuan and 32 million yuan, respectively.
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○Victory Precision Manufacture to purchase production lines of lithium-ion battery diaphragm with over RMB900 mln
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A fully-owned company under Suzhou Green Power New Energy Materials Co., Ltd. purchases 10 production lines of lithium-ion battery diaphragm and some critical equipment from JEPWL Co., Ltd., a Japan company, with around 930 million yuan. Green Power New Energy Materials is a holding subsidiary under Suzhou Victory Precision Manufacture Co., Ltd. (002426.SZ), and this move will add new profit growth point to the company.
○Jolywood (Suzhou) Sunwatt to increase investment in solar cell with RMB1.52 bln through private placement
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Lin Jianwei, actual controller of Jolywood (Suzhou) Sunwatt Co., Ltd. (300393.SZ), together with others, proposes to raise 1.52 billion yuan through private placement at an offering price of 35.76 yuan per share. The raised fund will be used to invest in a solar cell project and to supplement working capital.
○Yaxing Chemical acquires Xinhu Yangguang with RMB2.17 bln to expand to O2O business of garment wholesale
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Weifang Yaxing Chemical Co., Ltd. (600319.SH) proposes to acquire 100 percent equities of Beijing Xinhu Yangguang Property Management Co., Ltd. under Li Guibin, actual controller of Yaxing Chemical, with 2.17 billion yuan. The transaction will be done by issuing 283 million shares at 7.68 yuan per share through private placement. In the meantime, the company plans to raise a supporting fund of 800 million yuan at an offering price of 8.21 yuan per share to pay off loans, and Li will subscribe 500 million yuan. The company's stock price closed at 6.68 yuan per share before trading suspension.
Xinhu Yangguang brings forth new ideas to the O2O business mode of garment wholesale. The counterparty promises that the net profit of the company during the November-December period of 2015 to 2018 will be no less than 20 million yuan, 170 million yuan, 136 million yuan and 160 million yuan, respectively. The company's stock price nose-dived over 30 percent after launching the scheme of private placement at end 2015. The company is 2.1 billion yuan in value at present.
○Jinlong Machinery ＆ Electronic nodded for private placement
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Nodded by the China Securities Regulatory Commission (CSRC), Jinlong Machinery ＆ Electronic Co., Ltd. (300032.SZ) will raise 2.5 billion yuan through private placement to invest in intelligent terminal of linear motor and tactile feedback integration, intelligent terminal of touch display integration and etc. projects. Meanwhile, the company determines to terminate its share repurchase plan since "it is not allowed to issue shares for fundraising during share repurchase".
[Financial Reports Express]
○Companies including Ideal Jewelry propose high share conversion
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Su Riming, actual controller of Shenzhen Ideal Jewelry Co., Ltd. (002740.SZ), proposes a 20-for-10 conversion of capital surplus into shares combined with 1.1 yuan dividend for every 10 shares in its annual report; JIAYU Xinxin Investment (Group) Co., Ltd., controlling shareholder of Beijing JIAYU Door, Window and Curtain Wall Joint-Stock Co., Ltd. (300117.SZ), proposes a 12-for-10 conversion of capital surplus into shares combined with 0.2 yuan dividend for every 10 shares; Shandong Oriental Ocean Sci-Tech Co., Ltd. (002086.SZ) forecasts an increase of 20.26 percent in terms of net profit in its annual report and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.56 yuan dividend for every 10 shares.
[TOP]
[Data Speaks]
○Quality stocks with high share conversion to concern
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As annual reports are disclosed in succession, stocks with high performance growth and share conversion are interested in by the market. According to statistics by SSN, totally 98 listed companies have proposed a 10-for-10 or above conversion of capital surplus into shares, and 38 of these companies forecast large growth in terms of performance. Companies like KPC Pharmaceuticals, Inc. (600422.SH), Eternal Asia Supply Chain Management Ltd. (002183.SZ) and Oriental Times Media Corporation (002175.SZ) average their compound growth rate in recent three years to above 20 percent.
[Trading Trends]
○Xinjiang Chalkis bought through five institutional seats
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The trading volume ranking list on Feb. 17 shows that Xinjiang Chalkis Co., Ltd. (000972.SZ) was bought through five institutional seats with a total of 80,244,300 yuan, accounting for 14.9 percent of its intraday turnover.
Comment: Xinjiang Chalkis resumed trading on Jan. 19 and announced that it would acquire Guangdong Lvshou Health Information Consultancy Co., Ltd. to expand to health industry. The company later announced that it is approved to pilot state-owned enterprise reform. Institutions believe that Lvshou, a leading e-commerce seller of weight-losing products in China, is now transforming towards weight management service provider and will see rapid growth of performance this year. It is estimated that the company will set foot in new areas through continual acquisition.
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