[Today's Guide]
○ Weaker expectation on U.S. interest rise and investment demands drive gold price higher
○ 13th Five-year Plan on chemical fiber formulated for approval
○ Two major engines related special projects, to start, components and parts enterprises see opportunities
○ Goldsland Holdings increases shareholding in TCL, Elion Clean Energy sees shareholding increase
[SSN Focus]
○ Weaker expectation on U.S. interest rise and investment demands drive gold price higher
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As at 9:00PM Feb. 25 (Beijing time), the international gold price closed at 1,237 U.S. dollars per ounce, surging for three consecutive days. It has hiked over 10 percent this month, the highest growth in a single month in four years. Statistics show that the global gold ETF has recorded a net inflow of about 204 tonnes this year, which is expected to make it a single quarter with the highest inflow since June 2010.
Comment: As the sales of new houses, the preliminary PMI in the service industry and other economic data in the U.S. are lower than the market expectation and even hit a new low in recent years, it will prevent the Federal Reserve in raising the interest rate ion short term. Deutsche Bank estimates that the Federal Reserve will only raise the interest in December this year. The central bank of the Eurozone, Japan and Sweden all implemented negative interest rate policies, which drive more investors increasing the investment in gold assets with higher monetary attribute. The turnover of gold ETFs and the stocks of companies in the precious metal industry increased significantly, showing that the market is increasingly concerned about the industry.
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[SSN Selection]
○ SSN learnt from China Life Insurance Company Limited (02628.HK; 601628.SH) that the company is actively advancing capital increase from shareholders to improve the solvency ratio.
○ The State-owned Assets Supervision and Administration Commission indicated that it will conduct mixed ownership reform in power, oil, military engineering and other key industries and will determine the first batch of enterprises for pilot reforms.
○ The National Development and Reform Commission issued a document to promote the upgrading of quality of refined oil product and required stopping the sale of gasoline and diesel below the National V standard.
○ Miao Wei, Minister of Industry and Information Technology, indicated that it has joined nine enterprises in investing 500 million yuan to establish a power battery institution.
○ TTK Express announced the completion of the round A financing with no less than 600 million yuan. More express enterprises will be listed during the 13th Five-year Plan period.
[Industry Information]
○ 13th Five-year Plan on chemical fiber formulated, industrial fibers to see high growth
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SSN learnt that China Chemical Fibers Association has completed the formulation of the "13th Five-year" Development Plan on the Chemical Fiber Industry and has submitted to the Ministry of Industry and Information Technology (MIIT) for approval. According to the Plan, the growth of the fiber industry during the 13th Five-year Plan period will be mainly driven by fibers for industrial uses. It also requires that the target during the 13th Five-year Plan period is to raise the proportion of industrial fibers from the current 28 percent to 33 percent. The effective capacities of high-performance fibers and bio-fibers will reach 260,000 tons and exceed 900,000 tons, respectively.
Comment: With the increasing expansion of the fiber application and the improvement of the consumption ability, the market size and growth potential of textiles for industrial uses will be further released. Leading enterprises will enjoy opportunities. Among listed companies, Wuxi Taiji Industry Company Ltd. (600667.SH) ranks high in the capacity and sales of tyre fabrics, which are widely used in radial tyres for vehicles and coal conveyer belts. Shenma Industry Co., Ltd. (600810.SH) is the biggest manufacturer of nylon-66 industrial yarn and tyre fabrics in China.
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○ MIIT to start two major engines related special projects, components and parts enterprises to see broader market
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"The Ministry of Industry and Information Technology (MIIT) has mapped out work plan for 2016, which primarily caters to five major projects, including the construction of the national manufacturing innovation center, intelligent manufacturing, industrial foundation enhancement, green manufacturing and high-end equipment innovation. The document will be issued as soon as the countersignature is finished. For high-end equipment innovation engineering, the MIIT's major task this year is to start special major projects involve airplane engine and steam turbine engine," Miao Yu, the minister of the MIIT said on Feb. 25.
Comment: China's aircraft engine is highly dependent on import at present, and there is huge market space for alternatives. Institutions estimated that scale of the two engines related special investment will be more than hundreds of billions yuan. Civil and military engine industries will see market demand of trillions of yuan, and supporting industries like core components and parts will enter rapid development period. In listed companies, AVIC Aero-Engine Controls Co., Ltd. (000738.SZ) is the only aircraft engine control system manufacturer; Sichuan Chengfa Aero Science ＆ Technology Co., ltd. (600391.SH) has strong competitiveness in aircraft engine vane and bearing fields, and its clients cover well-known international aircraft engine manufacturers.
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[Announcement Interpretation]
○Goldsland Holdings bought the share of TCL through secondary market acquisition to the 5 percent limit
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TCL Corporation (000100.SZ) announced that Goldsland Holdings Company Limited increased holding of over 612 million shares in total of the company from Jan. 5 to Feb. 25 at the average price of 3.66 yuan per share, accounting for more than 5 percent of TCL'S total share capital. On this basis, Goldsland Holdings has spent 2.24 billion yuan for increasing shareholding. As a solely state-owned corporation owned by the People's Government of Guangdong Province, Goldsland Holdings owns three listed companies: FSPG Hi-Tech Co., Ltd. (000973.SZ), Starlake Bioscience Co., inc. Zhaoqing Guangdong (600866.SH) and Guangdong Advertising Group Co., Ltd. (002400.SZ). Goldsland Holdings indicated that the valuation of TCL is reasonable, and it is likely to continue increase shareholding in TCL in the next 12 months, in order to maintain stability of the capital market.
The Q3 report shows that Huizhou Investment Company as the largest shareholder, held 7.19 percent of TCL. Li Dongsheng is the second largest shareholder, holding 5.22 percent. The latest closing price of TCL is 3.68 yuan.
○ Elion Clean Energy and others see shareholding increase
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Elion Group, the shareholder of Elion Clean Energy Company Limited (600277.SZ), increased holding 25.97 million shares of the latter from Feb. 1 to 25. According to its shareholding increase plan, Elion Grouo will increase holding a total of 600 to 700 million yuan shares in the following 12 months. Sanan Group, the shareholder of Sanan Optoelectronics Co., Ltd. (600703.SH), continued to increase holding 4.92 million shares in the latter on Feb. 25. It has increased holding a total of 21.32 million shares. According to its shareholding increase plan released on January, it will increase holding an accumulative total of no less than 200 million yuan and no more than 1 billion yuan share in Sanan Optoelectronics in the following 12 months. The accumulative proportion of increased holding should be no more than 2 percent.
Jiangsu Zhongnan Urban Construction Investment Co., Ltd., the controlling shareholder of Jiangsu Zhongnan Construction Group Co., Ltd. (000961.SZ), increased holding 2.05 million shares of the latter with about 30 million yuan. According to its announcement released in end-January, Zhongnan Urban Construction Investment proposed to increase holding 200 million yuan shares of Zhongnan Construction Group at price no more than 15 yuan per share. Greenland Holding Group, the substantial shareholder of Greenland Holdings Corporation Limited (600606.SH), increased holing over 0.77 million shares in the later on Feb. 25.
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○ Unknown capital bought IDC Fluid Control's shares at 10 pct. premium
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Du Jialin, the third largest shareholder of Zhejiang IDC Fluid Control Co., Ltd. (002468.SZ), reduced holding 11.6 million shares of the company through block trading system at an average price of 32.3 yuan per share, accounting for 3.5 percent of its total shares. The total value of shareholding reduced is over 374 million yuan. The average price is 9.75 percent higher than its closing price of 29.43 yuan per share on the same day. After-trading data shoes that the shares were bought by the business department of Hongxin Securities located on Guiping Road, Shanghai, but not the business department of Yingda Securities at Fuhua 3th Road, Shenzhen that previously bought shares sold by Du Jialin.
○ Jiangxi Copper Company to issue A and H shares through private placement
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Jiangxi Copper Company Limited (600362.SH; 00358) proposes to raise 3.5 billion yuan from its controlling shareholder Jiangxi Copper Corporation and others by issuing shares at prices no less than 11.37 yuan per share through private placement. The fund will be invested in the expansion of the third phase of the copper mine in Chengmen Mountain, Jiangxi Province. Besides, the company also proposes to raise 4.15 billion HK dollars through private offering of H shares which will be subscribed by Jiangxi Copper Corporation. The fund will be used to supplement the company's working capital. The company also plans to expand its mine capacity, improve degree of self-supply of raw materials and reduce costs through fund-raising projects. It will also increase cash reserve to cope with the downturn risk in the industry.
[Financial Reports Express]
○ Xixia Automobile Water Pump and others propose high share conversion and dividend
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Henan Province Xixia Automobile Water Pump Co., Ltd. (002536.SZ) reported 41 percent growth in its annual report and proposes a 20-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares. Talkweb Information System Co., Ltd. (002261.SZ) reported 272 percent growth in its annual report and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.4 yuan dividend for every 10 shares. Shaanxi International Trust Co., Ltd. (000563.SZ) reported 29 percent growth in its annual report and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.3 yuan dividend for every 10 shares.
[Trading Alarms]
○ Starry Phar. debut IPO on Feb. 26
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Zhejiang Starry Pharmaceutical Co., Ltd. (732520) will offer shares at 12.15 yuan per share with an upper limit of 12,000 shares for each applicant. The company's PE ratio is 23 times. After applied for subscription, applicants should ensure there is sufficient money for the payment according to their successful application on March 1.
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