[Today's Guide]
○ Fuzhou ＆ Hangzhou introduced new polices on provident fund, local house firms to benefit from de-stocking
○ Viscose staple fiber prices continue to rise on high demands and low inventories
○ China to speed up in space lab program, industry to see development opportunities
○ Yoke Technology to acquire silica powder manufacturer, ORG Packaging proposes high share conversion and dividend in annual report
[SSN Focus]
○ Fuzhou ＆ Hangzhou introduced new polices on provident fund, local house firms to benefit from de-stocking
------
On Feb. 26, Fuzhou City, Fujian Province issued a circular on adjusting relevant policies on individual loans for housing provident fund. The circular specifies that for families that have two members provides housing provident fund, the highest loans for housing purchasing from 600,000 yuan to 800,000 yuan. It also encourages employees with Fuzhou household registration, but paying housing provident fund outside Fuzhou to buy residential house in the seven counties (municipal-level counties) of Fuzhou. On the same day, Hangzhou, Zhejiang Province also issued the draft opinions on further promoting stable and health development of the housing market (for consultation). The draft opinions propose to allow employees around the nation who have regularly pay housing provident fund to use provident fund loans when purchasing houses in Hangzhou.
Comment: Policies on real estate, including reducing down payment, lifting interest rates for housing provident fund loans and providing tax preference in transactions, have been intensively issued around the Spring Festival, creating a favorable environment for the industry's backing to marketization. Experts interviewed expect that more policies on de-stocking will be issued at a high frequency but with little stimulus. Yango Group Co., Ltd.(000671.SZ), China Calxon Group Co., Ltd. (000918.SZ) and Sundy Land Investment Co., Ltd. (600077.SH) own many projects in Fuzhou and Hangzhou.
[SSN Selection]
○ Chinese Premier Li Keqiang reiterated establishing an open and transparent capital market of long-term, steady and healthy growth in a video speech delivered at the G20 summit of central bankers and finance ministers.
○ China's central bank used the expression of "stable and slightly loose" to describe the nation's current monetary policy at a press conference held on Feb. 26.
○ Shanghai Stock Exchanged issued a document to regulate the disclosure of the shareholding increase plan of listed companies. It requires that listed companies should specify the down limit of increased holdings and ensure that there should be practical price window.
○ China's top four coal companies decided to lift the water and coal prices by 10 yuan per ton in later March. Due to the continuous decline in coal sources, the right of speech of domestic coal enterprises has increased remarkably in short term.
○ Everbright Securities (601788.SH) become the first one releasing its annual financial report in the securities industry. It invested 4.38 billion yuan in last June and 1.48 billion yuan in last September in its accounts opened in China Securities Finance Co., Ltd.
TOP
[Industry Information]
○ Viscose staple fiber prices continue to rise on high demands and low inventories
------
SSN learnt that driven by high demands and lower market inventories, the price of viscose staple fiber continued to rise by a nearly 7 percent after the Spring Festival holiday. It also learnt that viscose staple fiber manufactures currently have ample orders. New orders are arranged till later March. Currently, the quoted price of mid-end viscose staple fiber is between 13,000 and 131,000 yuan per ton; and that of high-end viscose staple fiber is 13,300 yuan per ton. Manufactures show obvious intention to lift the price.
Comment: Institutions believe that the production in the viscose industry has remarkably slowed down in recent years. Newly increased production in 2015 is rather low. And the pressure from environmental protection has made the industry irradiate nearly 10 percent backward capacity in the industry. Capacity has barely increased in 2016. Driven by the supply-side reform, the supply and demand pattern in the industry is expected to see continuous improvement. In terms of companies, Jiangsu Aoyang Technology Corporation Limited (002172.SZ) has a capacity of up to 300,000 tons, accounting for a higher proportion in its main business. Nanjing Chemical Fibre Co., Ltd. (600889.SH) own nearly 80,000 tons of equity capacity.
TOP
○ China to speed up in space lab program, industry to see development opportunities
------
China will carry out its space lab program from mid-2016 to the first half of 2017, sources from the manned space program said on Feb. 28. According to the plan, China will send its second orbiting space lab Tiangong-2 into space in the third quarter of this year. China also plans to launch the Shenzhou-11 spacecraft, which will carry two astronauts on board, in the fourth quarter of this year to dock with Tiangong-2, according to the program's spokesperson. It will launch a cargo ship Tianzhou-1 with the Long March-7 rocket in the first half of 2017.
Comment: The space lab is a key part of the three parts in the space lab program in China, which marks a new development progress in the manned space program in China. It will also bring opportunities to rockets manufacturing, manned aircraft and other industries. In terms of listed companies, the joint axis and other products of Fujian Longxi Bearing (Group) Co., Ltd. (600592.SH) have been applied in Shenzhou spaceship and other aerospace projects. China Spacesat Co., Ltd. (600118.SH) is principally engaged in the research and development of micro and small satellites. The Fifth Academy of China Aerospace Science and Technology Corporation, the substantial shareholder of the company, is a leader in the research and development of manned spacecraft. Shaanxi Aerospace Power Hi-Tech Co., Ltd. (600343.SH) owns core technologies in the fluid for liquid rocket engines.
TOP
[Announcement Interpretation]
○ Yoke Technology to acquire silica powder manufacturer
------
Jiangsu Yoke Technology Co., Ltd. (002409.SZ) proposes to acquire 100 percent equities of Zhejiang Huafei Electronic Base Material Co., Ltd. with 200 million yuan by issuing shares and in cash. It will pay a cash consideration of 70 million yuan and the remaining will be paid by issuing 5.56 million shares at 23.39 yuan per share to the previous shareholders of Huafei Electronic.
Huafei Electronic is principally engaged in the manufacturing and sale of silica powder products and is a leader in terms of the silica powder production capacity. The counterparty committed that the audited after-tax net profit of Huafei Electronic will be no less than 12 million yuan, 17 million yuan and 22 million yuan from 2016 to 2018 and the total net profit will be no less than 51 million yuan for the three years.
○ Kuangda Technology sees shareholding increase
------
Jiangsu Kuangda Venture Capital Co., Ltd., a concerted actor of Shen Jieliang, the actual controller of Kuangda Technology Group Co., Ltd. (002516.SZ), intends to increase the shareholding in the company with no less than 5 million shares but no more than 15 million shares in the following six months. Many senior managers of Heilan Home Co., Ltd. (600398.SH) plan to increase the shareholding in the company with no less than 30 million shares and no more than 100 million shares in the following six months from March 1 when the stock price of the company is below 13 yuan.
Tibet Tianyou Investment Co., Ltd., the substantial shareholder of Aotecar New Energy Technology Co., Ltd. (002239.SZ), increased the shareholding in the company with 2.58 million shares on Feb. 26. Sanan Group, a shareholder of Sanan Optoelectronics Co., Ltd. (600703.SH), increased the shareholding in the company with another 1.64 million shares on Feb. 26.
○ Ciwen Media to raise RMB1.5 bln through private placement to develop main business
------
Ciwen Media Co., Ltd. (002343.SZ) intends to raise 1.5 billion yuan by issuing 35.39 million shares at no less than 42.38 yuan per share through private placement to Wang Mei, the actual controller of the company, and other targeted parties. The proceeds will be used in the production of series and Internet drama. Wang will subscribe no less than 6.66 percent of the total shares to be issued.
[Financial Reports Express]
○ ORG Packaging proposes high share conversion and dividend
------
ORG Packaging Co., Ltd. (002701.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 4 shares and 4.5 yuan dividend for every 10 shares according to its annual report. Liaoning Fu-An Heavy Industry Co., Ltd. (603315.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with cash dividend according to its annual report. Lier Chemical Co., Ltd. (002258.SZ) proposes a 5-for-10 conversion of capital surplus into shares combined with 5 shares and 2 yuan dividend for every 10 shares according to its annual report.
Zhejiang Dahua Technology Co., Ltd. (002236.SZ) proposes a 7-for-10 conversion of capital surplus into shares combined with 8 shares and 2 yuan dividend for every 10 shares according to its annual report. Chongqing Zhifei Biological Products Co., Ltd. (300122.SZ) expects a growth of 33 percent and proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its annual report.
○ Kehua Hengsheng reports growth in Q1
------
Xiamen Kehua Hengsheng Co., Ltd. (002335.SZ) reported 100 to 150 percent growth in the first quarter, which is primarily driven by data center and photovoltaic power generation businesses. Meanwhile, the company's profitability in rail transportation business has also improved.
[Trading Trends]
○ Five institutions bought Sunway Communication
------
The trading volume ranking list on Feb. 26 shows that Shenzhen Sunway Communication Co., ltd. (300136.SZ) was bought through five institutional seats with a total of 67,708,900 yuan, accounting for 29.8 percent of intraday trading turnover. Another institution sold off 7,149,000 yuan.
Comment: the company lately reported that its performance for 2015 has increased by 2.6 times year on year due to continuous expansion in global market and the rapid growth of sales volume. Institutions believe that the company has the advantage of long-term relationship with large customers such as Samsung and Huawei, which can promote the launch of its radio frequency products, and will release the company's huge potential in revenue and profit growth after the orders raising. Besides, the R＆D of its radio frequency module has begun to make profits, and the company has started bulk shipment to some international customers, which is expected to become important new resources of its revenue.
[Trading Alarms]
○ Haozhi Industrial IPO to start on Feb. 29
------
The issuing price of Guangzhou Haozhi Industrial Co., Ltd (300503.SZ) is 7.72 yuan per share. The upper limit of subscription is 10,000 shares. The PE ratio is 23 times. Applicants should ensure there's enough money in the account on March 2 to satisfy successful application.
[Weekly Review]
○ When event-driven meets systematic risk
------
To the disappointment of most investors, the "honeymoon" of A-share market after the Chinese New Year hardly sustained two weeks. "Thousands of stocks plummeted to the daily limit of ten percent" and "more than a hundred points loss" again staged on last Thursday. Various good news, like "[the government] will further support the new energy cars", "the Ministry of Science and Technology (MOST) propose to support quantum communication as the priority", are ignored by the market. The event-driven strategy failed to function. However, it was not the first time the strategy lost its effect. In previous systematic risk when the market declined constantly, this strategy also failed.
The event-driven refers to the trading strategy of obtaining high investment return through fully grasping the timing based on ahead-of-time exploration and in-depth analysis of events that may cause unusual movement to prices. The event-driven strategy emphasize "timing". When the events are realized, or the target return is achieved (even though the event has not realized), we should sell the stock. From the practice in the A-share market, by applying this strategy, investors can always realize significant profits in a surging or stable market. But in a plummeting market, this strategy can hardly work. This requires us to make greater efforts in judging the trend of the whole market. When the judgment is fuzzy or emergency happened, we should not do anything, or simply leave the market.
TOP
○ Fuzhou ＆ Hangzhou introduced new polices on provident fund, local house firms to benefit from de-stocking
○ Viscose staple fiber prices continue to rise on high demands and low inventories
○ China to speed up in space lab program, industry to see development opportunities
○ Yoke Technology to acquire silica powder manufacturer, ORG Packaging proposes high share conversion and dividend in annual report
[SSN Focus]
○ Fuzhou ＆ Hangzhou introduced new polices on provident fund, local house firms to benefit from de-stocking
------
On Feb. 26, Fuzhou City, Fujian Province issued a circular on adjusting relevant policies on individual loans for housing provident fund. The circular specifies that for families that have two members provides housing provident fund, the highest loans for housing purchasing from 600,000 yuan to 800,000 yuan. It also encourages employees with Fuzhou household registration, but paying housing provident fund outside Fuzhou to buy residential house in the seven counties (municipal-level counties) of Fuzhou. On the same day, Hangzhou, Zhejiang Province also issued the draft opinions on further promoting stable and health development of the housing market (for consultation). The draft opinions propose to allow employees around the nation who have regularly pay housing provident fund to use provident fund loans when purchasing houses in Hangzhou.
Comment: Policies on real estate, including reducing down payment, lifting interest rates for housing provident fund loans and providing tax preference in transactions, have been intensively issued around the Spring Festival, creating a favorable environment for the industry's backing to marketization. Experts interviewed expect that more policies on de-stocking will be issued at a high frequency but with little stimulus. Yango Group Co., Ltd.(000671.SZ), China Calxon Group Co., Ltd. (000918.SZ) and Sundy Land Investment Co., Ltd. (600077.SH) own many projects in Fuzhou and Hangzhou.
[SSN Selection]
○ Chinese Premier Li Keqiang reiterated establishing an open and transparent capital market of long-term, steady and healthy growth in a video speech delivered at the G20 summit of central bankers and finance ministers.
○ China's central bank used the expression of "stable and slightly loose" to describe the nation's current monetary policy at a press conference held on Feb. 26.
○ Shanghai Stock Exchanged issued a document to regulate the disclosure of the shareholding increase plan of listed companies. It requires that listed companies should specify the down limit of increased holdings and ensure that there should be practical price window.
○ China's top four coal companies decided to lift the water and coal prices by 10 yuan per ton in later March. Due to the continuous decline in coal sources, the right of speech of domestic coal enterprises has increased remarkably in short term.
○ Everbright Securities (601788.SH) become the first one releasing its annual financial report in the securities industry. It invested 4.38 billion yuan in last June and 1.48 billion yuan in last September in its accounts opened in China Securities Finance Co., Ltd.
TOP
[Industry Information]
○ Viscose staple fiber prices continue to rise on high demands and low inventories
------
SSN learnt that driven by high demands and lower market inventories, the price of viscose staple fiber continued to rise by a nearly 7 percent after the Spring Festival holiday. It also learnt that viscose staple fiber manufactures currently have ample orders. New orders are arranged till later March. Currently, the quoted price of mid-end viscose staple fiber is between 13,000 and 131,000 yuan per ton; and that of high-end viscose staple fiber is 13,300 yuan per ton. Manufactures show obvious intention to lift the price.
Comment: Institutions believe that the production in the viscose industry has remarkably slowed down in recent years. Newly increased production in 2015 is rather low. And the pressure from environmental protection has made the industry irradiate nearly 10 percent backward capacity in the industry. Capacity has barely increased in 2016. Driven by the supply-side reform, the supply and demand pattern in the industry is expected to see continuous improvement. In terms of companies, Jiangsu Aoyang Technology Corporation Limited (002172.SZ) has a capacity of up to 300,000 tons, accounting for a higher proportion in its main business. Nanjing Chemical Fibre Co., Ltd. (600889.SH) own nearly 80,000 tons of equity capacity.
TOP
○ China to speed up in space lab program, industry to see development opportunities
------
China will carry out its space lab program from mid-2016 to the first half of 2017, sources from the manned space program said on Feb. 28. According to the plan, China will send its second orbiting space lab Tiangong-2 into space in the third quarter of this year. China also plans to launch the Shenzhou-11 spacecraft, which will carry two astronauts on board, in the fourth quarter of this year to dock with Tiangong-2, according to the program's spokesperson. It will launch a cargo ship Tianzhou-1 with the Long March-7 rocket in the first half of 2017.
Comment: The space lab is a key part of the three parts in the space lab program in China, which marks a new development progress in the manned space program in China. It will also bring opportunities to rockets manufacturing, manned aircraft and other industries. In terms of listed companies, the joint axis and other products of Fujian Longxi Bearing (Group) Co., Ltd. (600592.SH) have been applied in Shenzhou spaceship and other aerospace projects. China Spacesat Co., Ltd. (600118.SH) is principally engaged in the research and development of micro and small satellites. The Fifth Academy of China Aerospace Science and Technology Corporation, the substantial shareholder of the company, is a leader in the research and development of manned spacecraft. Shaanxi Aerospace Power Hi-Tech Co., Ltd. (600343.SH) owns core technologies in the fluid for liquid rocket engines.
TOP
[Announcement Interpretation]
○ Yoke Technology to acquire silica powder manufacturer
------
Jiangsu Yoke Technology Co., Ltd. (002409.SZ) proposes to acquire 100 percent equities of Zhejiang Huafei Electronic Base Material Co., Ltd. with 200 million yuan by issuing shares and in cash. It will pay a cash consideration of 70 million yuan and the remaining will be paid by issuing 5.56 million shares at 23.39 yuan per share to the previous shareholders of Huafei Electronic.
Huafei Electronic is principally engaged in the manufacturing and sale of silica powder products and is a leader in terms of the silica powder production capacity. The counterparty committed that the audited after-tax net profit of Huafei Electronic will be no less than 12 million yuan, 17 million yuan and 22 million yuan from 2016 to 2018 and the total net profit will be no less than 51 million yuan for the three years.
○ Kuangda Technology sees shareholding increase
------
Jiangsu Kuangda Venture Capital Co., Ltd., a concerted actor of Shen Jieliang, the actual controller of Kuangda Technology Group Co., Ltd. (002516.SZ), intends to increase the shareholding in the company with no less than 5 million shares but no more than 15 million shares in the following six months. Many senior managers of Heilan Home Co., Ltd. (600398.SH) plan to increase the shareholding in the company with no less than 30 million shares and no more than 100 million shares in the following six months from March 1 when the stock price of the company is below 13 yuan.
Tibet Tianyou Investment Co., Ltd., the substantial shareholder of Aotecar New Energy Technology Co., Ltd. (002239.SZ), increased the shareholding in the company with 2.58 million shares on Feb. 26. Sanan Group, a shareholder of Sanan Optoelectronics Co., Ltd. (600703.SH), increased the shareholding in the company with another 1.64 million shares on Feb. 26.
○ Ciwen Media to raise RMB1.5 bln through private placement to develop main business
------
Ciwen Media Co., Ltd. (002343.SZ) intends to raise 1.5 billion yuan by issuing 35.39 million shares at no less than 42.38 yuan per share through private placement to Wang Mei, the actual controller of the company, and other targeted parties. The proceeds will be used in the production of series and Internet drama. Wang will subscribe no less than 6.66 percent of the total shares to be issued.
[Financial Reports Express]
○ ORG Packaging proposes high share conversion and dividend
------
ORG Packaging Co., Ltd. (002701.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 4 shares and 4.5 yuan dividend for every 10 shares according to its annual report. Liaoning Fu-An Heavy Industry Co., Ltd. (603315.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with cash dividend according to its annual report. Lier Chemical Co., Ltd. (002258.SZ) proposes a 5-for-10 conversion of capital surplus into shares combined with 5 shares and 2 yuan dividend for every 10 shares according to its annual report.
Zhejiang Dahua Technology Co., Ltd. (002236.SZ) proposes a 7-for-10 conversion of capital surplus into shares combined with 8 shares and 2 yuan dividend for every 10 shares according to its annual report. Chongqing Zhifei Biological Products Co., Ltd. (300122.SZ) expects a growth of 33 percent and proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares according to its annual report.
○ Kehua Hengsheng reports growth in Q1
------
Xiamen Kehua Hengsheng Co., Ltd. (002335.SZ) reported 100 to 150 percent growth in the first quarter, which is primarily driven by data center and photovoltaic power generation businesses. Meanwhile, the company's profitability in rail transportation business has also improved.
[Trading Trends]
○ Five institutions bought Sunway Communication
------
The trading volume ranking list on Feb. 26 shows that Shenzhen Sunway Communication Co., ltd. (300136.SZ) was bought through five institutional seats with a total of 67,708,900 yuan, accounting for 29.8 percent of intraday trading turnover. Another institution sold off 7,149,000 yuan.
Comment: the company lately reported that its performance for 2015 has increased by 2.6 times year on year due to continuous expansion in global market and the rapid growth of sales volume. Institutions believe that the company has the advantage of long-term relationship with large customers such as Samsung and Huawei, which can promote the launch of its radio frequency products, and will release the company's huge potential in revenue and profit growth after the orders raising. Besides, the R＆D of its radio frequency module has begun to make profits, and the company has started bulk shipment to some international customers, which is expected to become important new resources of its revenue.
[Trading Alarms]
○ Haozhi Industrial IPO to start on Feb. 29
------
The issuing price of Guangzhou Haozhi Industrial Co., Ltd (300503.SZ) is 7.72 yuan per share. The upper limit of subscription is 10,000 shares. The PE ratio is 23 times. Applicants should ensure there's enough money in the account on March 2 to satisfy successful application.
[Weekly Review]
○ When event-driven meets systematic risk
------
To the disappointment of most investors, the "honeymoon" of A-share market after the Chinese New Year hardly sustained two weeks. "Thousands of stocks plummeted to the daily limit of ten percent" and "more than a hundred points loss" again staged on last Thursday. Various good news, like "[the government] will further support the new energy cars", "the Ministry of Science and Technology (MOST) propose to support quantum communication as the priority", are ignored by the market. The event-driven strategy failed to function. However, it was not the first time the strategy lost its effect. In previous systematic risk when the market declined constantly, this strategy also failed.
The event-driven refers to the trading strategy of obtaining high investment return through fully grasping the timing based on ahead-of-time exploration and in-depth analysis of events that may cause unusual movement to prices. The event-driven strategy emphasize "timing". When the events are realized, or the target return is achieved (even though the event has not realized), we should sell the stock. From the practice in the A-share market, by applying this strategy, investors can always realize significant profits in a surging or stable market. But in a plummeting market, this strategy can hardly work. This requires us to make greater efforts in judging the trend of the whole market. When the judgment is fuzzy or emergency happened, we should not do anything, or simply leave the market.
TOP
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