[Today's Guide]
○Establishment of China Aero-engine Group to see substantial progress, domestication of aero-engine to expected
○SBMR finishes first batch of cobalt reserves in 2016, glass price slightly rebounds
○Wanlin Modern Logistics to improve wood supply chain through private placement, Shandong Geo-Mineral bought by Shandong State-owned Assets Investment Holdings through secondary market acquisition to 5 pct limit
○Zhengbang Technology transforms to comprehensive modern agricultural service provider, Victory Precision Manufacture forecasts explosive growth in Q1
[SSN Focus]
○Establishment of China Aero-engine Group to see substantial progress, domestication of aero-engine to expected
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According to the latest announcement of Sichuan Chengfa Aero Science ＆ Technology Co., Ltd. (600391.SH), AVIC Aero-Engine Controls Co., Ltd. (000738.SZ) and AVIC Aviation Engine Corporation Plc. (600893.SH), the higher authorities on March 2 announced the appointment of chairman, secretary and deputy secretary of leading Party group and general manager of China Aero-engine Group Co., Ltd., which is planned to be set up by the central government and will be the actual controller of the above three listed companies.
Comment: This means that the establishment of China Aero-engine Group sees substantial progress. The R＆D of aero-engines is featured with great technology difficulty, long R＆D period, huge investment and high risk, and is regarded as "a pearl of a crown" in manufacturing industry. At present, China is still highly depending on import. The Ministry of Industry and Information Technology (MIIT) indicated that the country will implement significant projects of aircraft engine and gas turbine this year. Institutions believe that the capital and system which restrain China's aero-engine industry will get improvement and industries including the complete engine, engine parts and high temperature alloy will see development opportunity.
[TOP]
○SSE Composite Index hits four-month biggest growth, various factors boost cyclical stocks
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The SSE Composite Index rose 4.26 percent on March 2, the biggest single-day growth in nearly four months. Only 9 stocks on Shanghai and Shenzhen stock markets fell. Among all of the sectors, cyclical stocks in real estate, building materials, nonferrous metal and iron sectors saw greater rise, of which 50 stocks in the real estate sector surged by the daily limit of 10 percent. Meanwhile, price of various bulk commodity futures also hit record high in the latest several months.
Comment: Recently, intensive policies on reducing housing inventories are introduced and measures on cutting output of overcapacity industries including iron and steel industry are under promotion. Institutions predict that supply-side reform will be an important theme during the two sessions. The cyclical stocks, which the market was not rosy about previously, are expected to see new asset allocation.
[SSN Selection]
○The State Council issued the several regulations on implementing Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements on March 2, encouraging research institutes, colleges and universities to transfer scientific and technological achievements to enterprises.
○The Ministry of Industry and Information Technology indicates it will carry out assessment on frequency spectrum utilization this year. If the ownership of 700MHz frequency band is settled, it will facilitate investment in 4G.
○China Futures Association released exposure draft on outline of the futures industry serving the entity economy, advancing entity enterprises to adopt futures to manage risks.
○The Bohai-Rim Steam-Coal Price Index (BSPI) jumped by 4 yuan per ton this week, witnessing the rise for six consecutive report periods.
○Proposals for major assets restructuring of Shenzhen Heungkong Holding Co., Ltd. (600162.SH), Qinghai Gelatin Company Limited (000606.SH) and Chongqing New Century Cruise Co., Ltd. (002558.SZ) were approved by China Securities Regulatory Commission with conditions. These three firms will resume trading on March 3.
[Industry Information]
○SBMR finishes 2016's first batch of cobalt reserves with volume and price beating expectation
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SSN learns that the State Bureau of Material Reserve (SBMR) recently finished the invitation for bids of this year's first batch of cobalt reserves. The volume and price both beat the expectation. It is reported that there are 2,800 tons of cobalt traded at this bidding, exceeding the total amount of two reserves in 2015. The reserve price is 201,000 yuan to 204,000 yuan per ton.
Comment: Analysts believe that recent two storages almost consume China's production in the first half year, and cobalt import will temperately meet the domestic demand, which will enhance the international price to some extent. Among the listed companies, Zhejiang Huayou Cobalt Co., Ltd. (603799.SH) is a leading company in China's cobalt industry; GEM Co., Ltd. (002340.SZ) can re-produce cobalt powder through recycling the old battery and electronic wastes.
○Demand improves amid supply side reform, glass price slightly rebounds
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SSN learnt that due to increasing production of downstream enterprises, the glass market sees improving demand, and the price has accumulatively increased by 0.2 to 0.5 yuan/㎡ after the Spring Festival, with the highest growth of nearly 4 percent. Another media reported that the Ministry of Industry and Information Technology (MIIT) is formulating the opinions to clear up lagged capacity in the glass industry; Guangdong Province recently proposed to control the plate glass within 100 million weight cases up to 2018.
Comment: As the supply side reform reduces overcapacity and the improving sales of the real estate market boosts demand, the profitability of the glass industry is likely to improve. In terms of listed companies, Zhuzhou Kibing Group Co., Ltd. (601636.SH) and Shandong Jinjing Science and Technology Stock Co., Ltd. (600586.SH) are leading glass magnates in China.
[TOP]
[Announcement Interpretation]
○Wanlin Modern Logistics to raise fund through private placement to improve wood supply chain
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Jiangsu Wanlin Modern Logistics Co., Ltd. (603117.SH) proposes to raise 890 million yuan through private placement by issuing 53.91 million shares to its controlling shareholder Shanghai Hurui Technology Co., Ltd. and etc. at no less than 16.51 yuan per share. The company will invest in various projects, such as an integrated service platform for wood supply chain management and logistics branch construction.
○Shandong Geo-Mineral bought by Shandong State-owned Assets Investment Holdings through secondary market acquisition to 5 pct limit
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Shandong Geo-Mineral Co., Ltd. (000409.SZ) announced that, up to March 2, Shandong State-owned Assets Investment Holdings Co., Ltd. and its subsidiary Shandong Juneng Investment Co., Ltd. totally hold 24,798,600 shares of the company, accounting for 5.25 percent of its total share capital, over the threshold of 5 percent. Shandong State-owned Assets Investment Holdings indicated that it proposes to further increase shareholding in the company in the future.
[TOP]
○Zhengbang Technology to raise fund through private placement, transforming to comprehensive modern agricultural service provider
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Jiangxi Zhengbang Technology Co., Ltd. (002157.SZ) proposes to raise 2,356 million yuan through private placement by issuing 166 million shares at 14.16 yuan per share. The raised fund will be used for building cultivation technique service centers, cultivating pigs and repaying the debt. The company will transform to a "comprehensive modern agricultural service provider" to provide agricultural products technical support value-added services.
○Haoningda Meters to raise RMB1.5 bln through private placement to develop internet-based jewelry business
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Shenzhen Haoningda Meters Co., Ltd. (002356.SZ) proposes to raise 1.5 billion yuan through private placement by issuing 69.50 million shares at 21.58 yuan per share. The raised fund will be invested in "internet jewelry" industrial upgrading projects and used for supplementing working capital. The said projects innovate jewelry consumption model to improve the profitability structure.
○Kelida Building ＆ Decoration to acquire 80 pct equity of Yugao Architectural Design
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Suzhou Kelida Building ＆ Decoration Co., Ltd. (603828.SH) proposes to acquire 80 percent equities of Yugao Architectural Design with 164 million yuan. The transaction will be done by issuing shares through private placement at 28.43 yuan per share. The counterparty promised that the net profit after deduction of Yugao from 2016 to 2018 will be no less than 20 million yuan, 26 million yuan and 33.8 million yuan. Yugao Architectural Design, mainly engaged in the architectural engineering design, is a comprehensive technological service provider with design, study, consultation and management capability.
○Jiangxi Special Electric Motor to increase capital in Four Link Systems to improve new energy vehicle business
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Jiangxi Special Electric Motor Co., Ltd. (002176.SZ) proposes to increase capital in Four Link Systems Inc. with 588 million yen, around 34 million yuan, to acquire 50 percent equities of the company. The subject company, principally engaged in overall vehicle design, electronic control system for new energy vehicles and etc., is now developing subminiature, intelligent, foldable and mobile automobile products.
○Zoomlion Heavy Industry Science and Technology to acquire garbage disposal company
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A fully-owned sanitation machine company under Zoomlion Heavy Industry Science and Technology Co., Ltd. (000157.SZ; 01157.HK) proposes to invest 75 million yuan in acquiring 100 percent equities of Hunan Ningxiang Renhe Garbage Disposal Company. The latter owns exclusive franchise rights in disposing urban solid waste and household garbage in Ningxiang County and recorded a net profit of 5.12 million yuan in 2015.
Comment: The company completed its acquisition of the controlling stake of Ladurner, an Italian environmental protection company, in last December and is now moving faster in transforming from sanitation equipment provider towards environment industry overall solution provider and investment operator. Latest stock price of the company closed at 4.39 yuan per share, lowering than its net asset value per share of 5.12 yuan per share.
○Jiangxi Boya Bio-Phar. and Zhenxing Biopharmaceutical ＆ Chemical obtain permit on blood plasma collection
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Yudu Boya Blood Plasma Collection Co., Ltd., a controlling subsidiary under Jiangxi Boya Bio-Pharmaceutical Co., Ltd. (300294.SZ), has obtained the permit on blood plasma collection issued by Jiangxi Provincial Health and Family Planning Commission;
Guangdong Shuanglin Bio-Pharmaceutical Co., Ltd., a fully-owned subsidiary under Zhenxing Biopharmaceutical ＆ Chemical Inc. (000403.SZ), has obtained the permit on blood plasma collection issued by Guangdong Provincial Health and Family Planning Commission. Its blood plasma collection is allowed to be carried out in Lianjiang City, Wuchuan City and Potou District of Zhanjiang City.
[Financial Reports Express]
○Victory Precision Manufacture forecasts explosive performance growth in Q1
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Thanks to the excellent performance of the Li-ion battery diaphragm company acquired last year, Suzhou Victory Precision Manufacture Co., Ltd. (002426.SZ) forecasts a performance growth of 318-362 percent in the first quarter. Due to the large growth of its entertainment business during the Spring Festival, Songcheng Performance Development Co., Ltd. (300144.SZ) expects a performance growth of 90-120 percent in the first quarter.
[TOP]
○Lianming Machinery proposes high share conversion and dividend
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Controlling shareholder of Shanghai Lianming Machinery Co., Ltd. (603006.SH) proposes a 10-for-10 conversion of capital surplus into shares combined with dividend in its annual report.
[Trading Trends]
○Kaiser (China) Holding bought through four institutional seats
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The trading volume ranking list on March 2 shows that Kaiser (China) Holding Co., Ltd. (002425.SZ) was bought through four institutional seats with a total of 99,754,800 yuan, accounting for 30 percent of the intraday turnover. Another three institutional seats sold with a total amount of 28.21 million yuan.
Comment: Due to the financial consolidation of Shenzhen Kuniu Game Technology Co., Ltd. and Hangzhou Huanwen Technology Co., Ltd., the company sees a growth of 11.4 times in terms of net profit in 2015, according to the performance report recently released by the company. Institutions believe that the vitalization of the company's traditional business speeds up and negative impact will gradually wear off. As the arrangement of "IP operation and IP commercialization" in the general entertainment industrial chain gradually completes, the company might embrace improving performance.
[Trading Alarms]
○Huayu Mining to launch on March 3
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The issuing price of Tibet Huayu Mining Co., Ltd. (780020.SH) is set at 7.18 yuan per share with an up-limit of 15,000 shares per account. The P/E ratio is 23 times. Investors who succeed in subscribing the shares should pay for the subscription on March 7.
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