[Today's Guide]
○ CPC Central Committee Political Bureau pledges efforts in output reduction, reduction in nonferrous industry takes effect
○ VR to highlight MWC, urea prices surge in many places
○ Dongshan Precision Manufacturing to acquire NASDAQ-listed company, Truchum Advanced Materials and Technology to transform and upgrade through private placement
○ But'one Information to Xinchuanhui Electronic Technology, multiple companies proposes high share conversion and dividend
[SSN Focus]
○ CPC Central Committee Political Bureau pledges efforts in output reduction, reduction in nonferrous industry takes effect
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The Political Bureau of the Communist Party of China Central Committee discussed the government work report and the draft on the outline of the 13th Five-Year Plan at a meeting held on Jan. 22. The meeting stressed that China should keep a balance between stabilizing growth and adjusting economic structure in 2016, make the economy operate withing reasonable ranges, strengthen structural reform on the supply and focus on cutting excessive industrial capacity, destocking, de-leveraging, lowering corporate costs and improving weak links.
On the same day,the price of almost all commodities closed higher. Wenhua CCI hit a new high in nearly 3 months, led by nickel, zinc and other nonferrous metals. The Philippines said that it will cut 20 percent of its nickel exports this year. Zinc concentrate giants Glencore International PLC, Teck and Minmetals Resources Limited plan to cut production by 780,000 tons in 2016. The zinc market experienced supply glut in 2015 and now is faced with short supply. Major Chinese nonferrous metal miners have reduced over 10 percent production since last November.
Comment: This means that the reduction and suspension of production in the nonferrous metal industry around the global have shown effects. As the Federal Reserve slows to lift interest rates, new loans have surged in January, the real estate industry frequently see positive policies and it enters a high reason for engineering works in the spring, the reduction of production is expected to continue to push these prices higher.
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[SSN Selection]
○ The opinions on the new round of renovation and upgrading of power grid in rural areas during the 13 Five-Year Period was released. The opinions require that urban and rural areas in east China should have equal access to power supply services.
○ The National Energy Administration stressed that China should vigorously promote supply-side reform in the energy sector and strive to shut down 60-million-ton backward coal capacity.
○ Shanghai will adjust charges for outpatient service, ward and other medical services since Feb. 23.
○ Almost U.S. companies have released their earnings reports. Statistics show that healthcare, consumption and financial companies posted strong profitability.
○ The acquisition and reorganization committee of the China Securities Regulatory Commission passed the reorganization application of Anhui Wanjiang Logistics (Group) Co., Ltd. (600575.SH) and Sinoma Science ＆ Technology Co., Ltd. (002080.SZ). The two will resume trading on Feb. 23.
[Industry Information]
○ MWC kicks off with VR as hotspot
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The Mobile World Congress (MWC) 2016 kicks off on Feb. 22. Samsung and Facebook announced the establishment of a research and development team on virtual reality social application at the MWC. LG, HTC and other manufacturers also released new VR hardware products. It is disclosed that ZTE Corporation (00763.HK; 000063.SZ) is developing new VR display equipment. Gartner estimated that the sales of VR equipment will reach 25 million units by the end of 2018.
Comment: The market believes that with the introduction of market-oriented hardware and contents, the VR industry will boom in 2016. It is expected that the annual sales of wearable VR equipment will reach about 40 million units with a market of about 40 billion yuan in 2020. With contents services and enterprise application, the market is expected to exceed 100 billion yuan. Among listed companies, JANUS (Dongguan) Precision Components Co., Ltd. (300083.SZ) and Zhejiang Firstar Panel Technology Co., Ltd. (300256.SZ) are VR equipment suppliers to HTC. Shenzhen Esun Display Co., Ltd. (002751.SZ) enjoys advantages in the self-developed 3D scanning technology and is expected to benefit from the booming VR/AR businesses.
○ Surging urea demands drive prices higher
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SSN learnt that thanks to the surging demand from spring ploughing, the factory prices of urea in Shandong and Hebei provinces increased by 30 to 60 yuan per ton with a maximum of nearly 5 percent last week.
Comment: Benefiting from the surging demand for agricultural products and the price recovery in the international market, it is expected that the urea prices will continue to hike by the end of February. As for listed companies, Luxi Chemical Group Co., Ltd. (000830.SZ) owns a capacity of 1.85 million tons of urea and is under full production. It raised the factory by 20 yuan per ton last weekend. Shandong Hualu-Hengsheng Chemical Co., Ltd. (600426.SH) owns a capacity of nearly 1.8 million tons of urea. It is actively upgrading its equipment with obvious cost advantages.
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○ Long-range concept vehicle to debut, gas turbines to catch attention
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The Geneva International Motor Show will kick off on March 1. Techrules will introduce a concept vehicle with TREV technology. With the application of the technology, the vehicle has a maximum power of 1,044 horsepower and a range of over 2,000 kilometers.
Comment: Micro gas turbines are featured with low fuel consumption, noises, emission and maintenance rate as well as other advanced technologies. They are quite competitive in private hybrid power vehicles and military vehicles as well as border defense. Among listed companies, Harbin Dongan Auto Engine Co., Ltd. (600178.SH) and BAIC BJEV jointly apply for the M10 range extender project in 2014, which is the only range extender project supporting power vehicles in the plans with national supports. Anhui Quanchai Engine Co., Ltd. (600218.SH) is the biggest medium and small power internal combustion engine research and development as well as manufacturing base in the China.
[Announcement Interpretation]
○ Dongshan Precision Manufacturing to acquire NASDAQ-listed company by raising RMB4.5 bln
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Suzhou Dongshan Precision Manufacturing Co., Ltd. (002384.SZ) proposes to raise 4.5 billion yuan by issuing shares at no less than 15.93 yuan per share to acquire 100 percent equities of MFLX and supplement the working capital. MFLX is a company listed on the NASDAQ with a total trading price of about 610 million U.S. dollars (equivalent to 3,984 million yuan) for its 100 percent equities. Its main production base is located in Suzhou City, Jiangsu Province and is principally engaged in the research and sale of flexible printed circuits and soft circuit components. The downstream industries are intelligent mobile phones, tablet computers and the manufacturing of other electronic consumption equipment with Apple and Xiaomi as its clients. The current market valuation of MFLX is over 500 million U.S. dollars.
○ Truchum Advanced Materials and Technology to raise RMB1.5 bln for transformation and upgrading
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Anhui Truchum Advanced Materials and Technology Co., Ltd. (002171.SZ) plans to raise 1,542 million yuan by issuing 110 million shares at no less than 14.14 yuan. The proceeds will be invested in the upgrading of copper alloy plate and strip products, intelligent thermal equipment and the industrialization of special composite materials as well as the production line of high-performance anode material for lithium-ion batteries. The projects will bring another 346 million yuan each year after reaching the designed capacities. The company recorded a net profit of 70.45 million yuan in 2015.
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○ But'one Information to Xinchuanhui Electronic Technology
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But'one Information Corporation, Xi'an (600455.SH) intends to acquire 100 percent equities of Nanjing Xinchuanhui Electronic Technology Co., Ltd. with 350 million yuan by issuing 7.09 million shares at 40.89 yuan per share through private placement and a cash payment of 60 million yuan. Meanwhile, the company proposes to raise a supporting fund of 330 million yuan by issuing shares at 42.30 million yuan per share through private placement. Xinchuanhui Electronic Technology provides aerospace electronic information system software products and technical solutions, Internet-based applications and solutions. Based on the performance commitment, the net profit of after extraordinary items of Xinchuanhui Electronic Technology will be 22 million yuan, 33 million yuan and 45 million yuan from 2016 to 2018.
○ Li Qin bought the share of Chengdu Road ＆ Bridge Engineering
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Chengdu Road ＆ Bridge Engineering Co., ltd. (002628.SZ) on Feb. 22 received notice from its shareholder Li Qin that as of Feb. 17, Li has bought in aggregate 148 million shares of the company, representing over 20 percent shareholding of the company. It marks that Li has completed the fourth buying of shares of the company through secondary market acquisition to the 5 percent limit. Providing Zheng Yuli, the actual controller of Chengdu Road ＆ Bridge Engineering, has not increased shareholding in the company, Li's shareholding has surpassed Zheng's of 19.84 percent.
○ Dalian Refrigeration's shareholder announced plan to increase shareholding
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Dalian Bingshan Group Refrigerating Equipment Co., Ltd., controlling shareholder of Dalian Refrigeration Co., Ltd. (000530.SZ) on Feb. 22 increased holding of 1 million shares of the company. In the coming six months, it will continue to increase holding no less than 1 percent of shareholding of the company with a total amount of no more than 160 million yuan. Besides, HNA Retailing, controlling shareholder of Xi'An Catering Co., Ltd. (000721.SZ), on Feb 22 increased holding 1.8 million shares of Xi'An Catering.
○ Guangxia (Yinchuan) Industry applies for removal of special treatment
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Upon completion reorganization, Guangxia (Yinchuan) Industry Co., Ltd. (000557.SZ) has improved its profitability. The company applies for the removal of special treatment or delisting risk warning.
[Financial Reports Express]
○ Multiple companies proposes high share conversion and dividend
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Hu Min, actual controller of Nanjing Co., ltd. (002546.SZ), proposed an 18-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares according to its annual report. Hangzhou Liaison Interactive Information Technology Co., Ltd. (002280.SZ) reported 91 percent growth in its annual report and proposed a 15-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares. Zhu Mingqiu, actual controller of Simei Media Co., td. (002712.SZ), proposed a distribution plan of 20-for-10 conversion of capital surplus into shares combined with cash dividend.
Actual controller of China Oil Hbp Science ＆ Technology Co., ltd. (002554.SZ) proposed a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares. Ma Biao, actual controller Beijing Science Sun Pharmaceutical Co., ltd. (300485.SZ), proposed a 10-for-10 conversion of capital surplus into shares combined with 3.6 yuan dividend for every 10 shares according to its annual report. Beijing Thunisoft Co., ltd. (300271.SZ) reported 41 percent growth in its annual report, and proposed a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. Jiangsu Hongdou Industrial Co., Ltd. (600400.SH) reported 31 percent growth in its annual report and proposed a 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.
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[Trading Trends]
○ Three institutions bought Guangdong Golden Dragon Development
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The trading volume ranking list on Feb. 22 shows that Guangdong Golden Dragon Development Inc. was bought through three institutional seats with a total of 105 million yuan, accounting for 15 percent of its intraday trading turnover; another institution sold with an amount of 9,170,000 yuan.
Comment: the company's chairman was previously out of touch and the company has suspended trading since Jan. 18. On the night of Feb. 21, the company announced that it has get in touch with its chairman, and the chairman has made arrangements for relevant matters of the company as well as signed an authorization document. At present, other directors, supervisors and senior management are all on duty. During the trading suspension, the company announced that its performance for 2015 has increased by 1.1 to 1.6 times year on year.
[Trading Alarms]
○ Eoptolink Technology to unveil IPO on Feb. 23
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Eoptolink Technology (300502.SZ) unveil its IPO with issuance price of 21.47 yuan per share at the upper limit of subscription of 19,000 shares and a PE ratio of 19 times. After application, investors should ensure there is enough money in the account to satisfy successful application on Feb. 25.
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