[Today's Guide]
○ State Council executive meeting supports new energy vehicles and battery manufacturing equipment industry
○ Price of Erythrene up 11 pct in a single day, quantum communication to embrace the start of industrialization
○ China Tungsten and Hightech Materials to acquire wolfram and hard alloy assets, Shenzhen SEG to purchase assets from substantial shareholder
○ Tangrenshen to expand pigs breeding, Muyuan Foods proposes high share conversion and dividend
[SSN Focus]
○ State Council executive meeting supports new energy vehicles and battery manufacturing equipment industry
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Executive meeting of the State Council convened on Feb. 24 laid down measures to provide stronger support to new energy vehicle industry: for power battery, promote the research and development of key materials and battery system technologies. The central finance will give awards to enterprises according to indicators like the performance and sales volume of power battery, and enhance support to power battery digitized manufacturing outfit; in terms of charging facilities, utilize central government budget for investment and special financial debt for power distribution to support the construction of charging facilities in various regions, and encourage local governments to reduce fees on charging service.
Comment: developing new energy vehicles can protect and improve environment. It is an important measure to foster new impetus and a significant content of new economy development. As sales volume of new energy car surged last year, lithium battery manufacturers have in general doubled their output, generating huge demand for upper stream automated production equipment. Since the State Council executive meeting has for the first time expressly given support to battery manufacturing equipment industry, the prospect of the industry is no doubt optimistic. Leading equipment manufacturers such as Shenzhen Yinghe Technology Co., Ltd. (300457.SZ) and Wuxi Lead Intelligent Equipment Co., Ltd. (300450.SZ), and leading battery enterprises such as Sunwoda Electronic Co., ltd. (300207.SZ) has consecutively signed bulk orders recently.
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[SSN Selection]
○ The Chinese Football Association (CFA) indicated recently that the Football Management Center has been removed this month. And the CFA has fundamentally split from the General Administration of Sport of China.
○ Foreign media reported that China National Petroleum Corporation (CNPC) plans to spin off oil field service business. Expert interviewed indicated that this move may be carried out in response to the opening of upper stream sectors after oil reform in the future.
○ The Southcn.com reported that Guangdong Province (excluding Shenzhen) has launched cross-district first home policy. If a home buyer owns no home in a certain district, he/she is deemed as a first-home buyer when he/she intends to buy a home in that district.
○ Xiaomi adds NFC payment feature to its new Mi 5 set launched on Feb. 24. It is expected that NFC will be a standard configuration for flagship smartphones this year.
○ China Greatwall Computer Shenzhen Co., Ltd. (000066.SZ) and Greatwall Information Industry Co., Ltd. (000748.SZ) issued restructuring plan, proposing to realize securitization of quality military assets of the central state-owned enterprise China Electron through assets integration.
[Industry Information]
○ Price of Erythrene up 11 pct in a single day as supply tightened and demand rebounded
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SSN learnt that the price of Erythrene went up 11 percent on Feb. 23 as the supply tightened and demand rebounded. The price rose nearly 30 percent in nearly a month. On Feb. 24, the price continued to rise slightly. CNPC Fushun on Feb. 23 increased the price by 650 yuan per ton to 6,300 yuan per ton, which beat the market expectation, and the shipment quantity is relatively small. Besides, in east and northeastern China, the price of Erythrene continues to rise. Equipment of some downstream private rubber enterprises start running again, which has prompted demand.
Comment: it is learnt that vendors are still rosy about the market in the future, and are reluctant to sell out. In addition, price hike in overseas markets also supported the price of Erythrene in domestic market. In listed companies, Zibo Qixiang Tengda Chemical Co., Ltd. (002408.SZ) owns 150,000 ton Erythrene production equipment, and its performance is likely to benefit from price hike; North Huajin Chemical Industries Co., Ltd. (000059.SZ) owns 60,000 ton Erythrene production equipment, and has reported a net profits of 250 million yuan to 280 million yuan for 2015. North Huajin Chemical Industries has turned deficit in to profits, and is expected to remove the special treatment.
○ MOST plans to give key support to quantum communication, industrialization to start
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The new science and technology plan of China will focus on major demands and give key supports to the fundamental research of future-oriented quantum communication, Wan Gang, Minister of the Ministry of Science and Technology (MOST), said on Feb. 2. In addition, the backbone quantum secure communication line from Beijing to Shanghai undertaken by Chinese Academy of Sciences and University of Science and Technology of China will complete and deliver in this June. The quantum scientific experiment satellite led by Pai Jianwei, an academician of Chinese Academy of science, will be launched to the space this July.
Comment: Given the achievements that China has made, China now leads the international market in the research and industrial application of quantum communication technology. The year 2016 will see the start of the industrialization of quantum communication technology in China. Institutes estimate that the quantum communication market will reach hundreds of billions of yuan in the next 10 years. Among listed companies, Digital China Information Service Co., Ltd. (000555.SZ) participated in the construction the above-mentioned quantum secure communication line. It has first mover advantage in the quantum communication filed; Sanlux Co., Ltd. (002224.SZ) owns a quantum communication industrial fund. Its Phoenix Civil-Military Research Institute has been involved in the quantum communication research.
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○ China's tin concentrate surges 5 pct.in two days on short supply in global market
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The quoted price of tin concentrate in China has surged about 5.3 percent or 5,000 yuan a ton from Feb. 23 to 24. In addition, since its quoted price surged 1,750 a ton since Feb. 23, the spot tin traded on Shanghai Futures Stock continued to rise, quoted at 105,000 to 108,000 yuan per ton on Feb 24, up by 2,000 yuan per ton over the previous trading day. As the price went up, it is hard to find any low-price tin supply. Some smelting plants continued to raise their quoted prices. Traders show high sentiment to replenish stocks; while the downstream industries begin to purchase tin.
Comment: It is learnt that Indonesian tin smelter PT Refined Bangka Tin has stopped refining operations. The exports of Indonesia, the world's largest tin exporter, is likely to be dashed further. In January 2016, the exports of refined tin from Indonesia was only 2,486 tons, slumping 63 percent year on year. ITRI forecasts that the 2016 may see 10,000 ton tin in short supply. Among listed companies, Yunnan Tin Co., Ltd. (000960.SZ) ranks top in the world in terms of its tin production.
[Announcement Interpretation]
○ China Tungsten and Hightech Materials to acquire wolfram and hard alloy assets with RMB 3bln.
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China Tungsten and Hightech Materials Co., Ltd. (000657.SZ) plans to acquire 100 percent equity in Hunan Shizhuyuan Nonferrous Metals Co., Ltd., Hunan Nonferrous Metals Xintianling Wolfram Mine Co., Ltd. and German company HPTec GmbH, 50.02 percent equity in Hunan Yaogangxian Mining Co., Ltd. and 71.22 percent equity in Nanchang Cemented Carbide Limited Liability Company through private placement. The former two companies are owned by the listed company's actual controller China Minmetals Corporation. The underlying asset has a discreet value of 3,036 million yuan. Meanwhile, the company proposes to raise 3,036 million yuan supporting fund through private placement. The floor price of the two private placement is 13.75 yuan per share.
Among the underlying assets are core mines and hard alloy manufactures owned by China Minmetals. By doing this China Minmetals will fulfill its promise to resolve competitions in the industry. After the deal, China Tungsten and Hightech Materials will become the only wolfram platform under China Minmetals. It will upgrade its products from low and medium-end hard alloy to high value-added hard alloy.
○ Shenzhen SEG receives assets injection with RMB4.5 bln from substantial shareholder
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Shenzhen SEG Co., Ltd. (000058.SZ) proposes to purchase 100 percent equities of Shenzhen SEG Chuangyehui Co., Ltd., 55 percent equities of Shenzhen SEG Kangle Electronics Co., Ltd., 100 percent equities of Shenzhen SEG Property Development Co., Ltd. and 79 percent equities of Shenzhen SEG Property Investment Co., Ltd. held by Shenzhen Electronics Group Co., Ltd., the substantial shareholder of the company, through private placement and in cash. The preliminary valuation of the target assets is 4.5 billion yuan. The company also plans to raise a supporting fund of 2 billion yuan. The bottom price of the shares issued through private placement and for fund raising is 9.97 yuan per share.
Shenzhen Electronics injected quality professional electronic market, property operation, commercial properties and other core operating assets in the listed company through the reorganization. The listed company will build a modern new commercial complex with "Internet plus technology plus entrepreneurs plus finance plus culture" after the reorganization. The net profit of the target companies in 2013, 2014 and the first ten months of 2015 is 123 million yuan, 128 million and 148 million yuan, respectively.
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○ Tangrenshen to acquire two companies to develop pigs breeding
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Tangrenshen Group Co., Ltd. (002567.SZ) intends to acquire 90 percent equities of Hunan Longhua Farming Development Co., Ltd. and Shenzhen Premierinve Biotechnology Co., Ltd. with a total of 731 million yuan by issuing shares through private placement and in cash. Meanwhile, it will raise a supporting fund of 420 million yuan. The bottom price of the shares issued through private placement and for fund raising is 10.08 yuan per share.
Longhua Farming Development is a pigs supplier while Premierinve Biotechnology is principally engaged in pig feed. The two companies will bring synergy with the listed company. The committed net profit of Longhua Farming Development is 41 million yuan, 49.20 million yuan and 59.04 million yuan and the committed net profit of Premierinve Biotechnology is 30 million yuan, 33 million yuan and 36.30 million yuan from 2016 to 2018.
○ Ningbo Thermal Power to acquire assets from substantial shareholder with RMB2.18 bln
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Ningbo Thermal Power Co., Ltd. (600982.SH) proposes to acquire 100 percent equities of the energy group held by Ningbo Development ＆ Investment Group Co., Ltd., the controlling shareholder of the company by issuing 274 million shares at 5.85 yuan per share through private placement and in cash. Meanwhile, it will also purchase 40 percent equities of Mingzhou Thermal Power, 40 percent equities of Kefeng Thermal Power, 25 percent equities of Changfeng Thermal Power and 25 percent equities of Mingzhou Biomass with a cash payment of about 262 million yuan through its subsidiary Hong Kong Green Energy. The total amount of the above transactions is 2,186 million yuan. At the same time, the company will raise a supporting fund of 1.5 billion yuan by issuing shares at the same price through private placement.
The energy group is engaged in investment in power and energy projects and industrial projects. It currently controls and invests in seven thermal power companies, two power generation companies, six new energy companies and three other companies. Mingzhou Thermal Power, Changfeng Thermal Power and Kefeng Thermal Power are principally engaged in thermal and power while Mingzhou Biomass is principally engaged in biomass power generation. The transaction will solve the potential competition with the controlling shareholder.
○ Huading Nylon to introduce employee shareholding plan
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Yiwu Huading Nylon Co., Ltd. (601113.SH) intends to introduce the phase-I employee shareholding plan with a total amount of no more than 65 million yuan. It will appoint Tianzhi Wukang No. 7 assets management plan to manage the plan. The upper limit of the latter is 195 million and it will set the preferential and progressive levels with a proportion of 2:1.
[Financial Reports Express]
○ Muyuan Foods proposes high share conversion and dividend
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Muyuan Foods Co., Ltd. (002714.SZ) recorded an increase of 643 percent in net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 3.53 yuan dividend for every 10 shares according to its annual report. Xia Xinde, the actual controller of Guangzhou Great Power Energy ＆ Technology Co., Ltd. (300438.SZ), proposes a 20-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares according to its annual report. Jiangxi Sanxin Medtec Co., Ltd. (300453.SZ) recorded an increase of 6.7 percent in net profit and proposes a 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares according to its annual report.
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[Trading Alarms]
○ R＆T Plumbing Technology for subscription from Feb. 25
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Xiamen R＆T Plumbing Technology Co., Ltd. (002790.SZ) issues shares at 16.58 yuan per share with an upper subscription limit of 16,000 shares and a P/E ratio of 20 times. Lot-winners should ensure sufficient capitals in the corresponding accounts for contribution on Feb. 29 after the subscription.
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