[Today's Guide]
○ Titanium dioxide price rises again, industry continues to improve
○ CEC to improve assets securitization rate, listed companies to play key roles
○ Tapai Group to improve cement industrial chain, COFCO Property (Group) to conduct private placement to expand main business
○ Yunhai Special Metals reported explosive growth for Q1, Four institutions buy Anoky Group
[SSN Focus]
○ Titanium dioxide price rises again, industry continues to improve
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Lomon Corporation, a domestic leader in the titanium dioxide industry, announced March 7 that the prices of all its products would increase by 300 yuan/ton. It has raised the price by a total of 900 yuan/ton or nearly 9 percent since the beginning of 2016. It is the third price rise of titanium dioxide in the year driven by the relatively low market inventory and the commencement of production in the downstream. As a result, other enterprises will follow the leader in the industry. SSN has closely followed the price rise of titanium dioxide this year.
Comment: The domestic and overseas titanium dioxide capacities have been shrinking and the consolidation in the industry has been speeding up in recent years. Institutes estimate that driven by the recovery in property sales and the supply-side reform, it will see a price of about 2,000 yuan/ton with a growth potential of nearly 20 percent this time. Among listed companies, CNNC Hua Yuan Titanium Dioxide Co., Ltd. (002145.SZ) owns a capacity of nearly 200,000 tons. The titanium dioxide business of Jilin Gpro Titanium Industry Co., Ltd. (000545.SZ) and Anhui Annada Titanium Industry Co., Ltd. (002136.SZ) account for a high proportion. Henan Billions Chemicals Co., Ltd. (002601.SZ) became the leader in the industry after acquiring Lomon Corporation.
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[SSN Selection]
○ The central bank recently announced that the foreign exchange reserves in February slowed down in declining. Analysts believe that it is mainly due to the phased recovery of RMB exchange rate.
○The central bank issued the Opinions on Financial Supports to Economic and Social Development in Tibet, which emphasizes increasing financial supports and services to infrastructure and other areas.
○ Bloomberg reported that the CIF of 62 percent grade iron ores at Qingdao Port surged 19 percent on March 7, the biggest increase in a single day since 2009.
○ Xu Dazhe, head of the State Administration of Science, Technology and Industry for National Defence (SASTIND), indicated on March 6 that the Opinions on Promoting the Deep Development of Civil and Military Integration in Science, Technology and Industry for National Defence has been prepared.
○ Alibaba Group Holding Limited (NYSE: BABA) acquired equities of AGTech Holdings Limited (08279.HK), a lottery stock listed on the Stock Exchange, with 2.4 billion HK dollars. Officials of the General Administration of Sport previously indicated that it will prepare for the pilot online sales of sports lotteries this year.
[Industry Information]
○ CEC to improve assets securitization rate, listed companies to play key roles
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SSN learnt that Liu Liehong, CPPCC deputy and general manager of China Electronics Corporation (CEC), indicated on March 7 that the SOEs reform of CEC will carry out three major tasks in the future. Firstly, it will further diversify investors and introduce strategic investors through the reform of mixed ownership. Secondly, it will promote shareholding by employees of the CEC. Thirdly, it will further advance assets securitization. CEC plans to improve the overall assets securitization rate from the current 55 percent to about 80 percent. The current military assets securitization rate of CEC is relatively low and it will increase significantly in the future. In advancing the assets securitization of the group, it will maintain the plan of "one listed company in one industry".
Comment: Relevant listed companies under the group are expected to play key roles in improving the assets securitization rate. Institutes are rosy about Shanghai Belling Corp., Ltd. (600171.SH), which further acquired integrated circuit assets. Nanjing Panda Electronics Company Limited (00553.HK; 600775.SH) is expected to be injected with military engineering assets. Other companies include Nanjing Huadong Electronics Information ＆ Technology Co., Ltd. (000727.SZ) and Shenzhen Kaifa Technology Co., Ltd. (000021.SZ) principally engaged in liquid crystal display and electronics manufacturing.
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[Announcement Interpretation]
○ Tapai Group to raise RMB3 bln to improve cement industrial chain
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Guangdong Tapai Group Co., Ltd. (002233.SZ) proposes to issue 380 million shares to Zhong Liehua, chairman of the company, and other targets at no less than 7.9 yuan per share through private placement to raise 3 billion yuan. The proceeds will be invested in the new project in the cement production line. Zhong will subscribe with no less than 300 million yuan. The company indicated that the move will improve the industrial chain of its main businesses and improve the ability in the supply of cement.
○ COFCO Property (Group) to conduct private placement to expand main business
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COFCO Property (Group) Co., Ltd. (000031.SZ) proposes to issue 510 million shares through private placement at no less than 9.82 yuan per share to its controlling shareholder COFCO Group, to raise 5 billion yuan, which will be used to acquire 49 percent equity of COFCO Property Investment, 100 percent equity of Yantai COFCO Ruibo, Shenzhen COFCO Xiangyun International project (phase one), COFCO Ziyun Project, COFCO Yunjing International and loan repayment.
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○ Morn Electric Equipment proposes fundraising to expand financial leasing business
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Shanghai Morn Electric Equipment Co., Ltd. (002451.SZ) proposes to raise 1.8 billion yuan through private placement, in which 1.5 billion yuan will be used to increase capital in Shanghai Morn Financial Leasing Co., Ltd. for financial business expansion, and 0.3 billion yuan will be used to supplement working capital. The company indicated that it will comprehensively push forward the development strategy of tapping into the financial leasing area.
○ Hanjian Heshan Pipeline to raise fund through private placement, supported by substantial shareholders
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Beijing Hanjian Heshan Pipeline Co., Ltd. (603616.SH) proposes to issue 13,330,000 shares through private placement at no less than 23.27 yuan per share to raise 310 million yuan, which will be used to supplement working capital and loan repayment. The largest shareholder Beijing Hanjian Group committed to subscribe no less than 30 percent of the total shares to be issued. The latest price of the company is 27.71 yuan per share.
○ Greattown contributes 350 million yuan to set up property insurance company
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Greattown Fujian, a wholly owned subsidiary of Greattown Holdings Ltd. (600094.SH), proposes to unite with multiple companies to jointly set up Huanghe Property Insurance Company Limited, with contribution of 350 million yuan. Greattown Fujian will hold 14 percent shareholding of Huanghe Property Insurance and become the second largest shareholder. Greattown indicated that this move is an important initiative for Greattown Financial Holding's development in financial business sectors.
[Financial Reports Express]
○ Yunhai Special Metals reported explosive growth for Q1
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Nanjing Yunhai Special Metals Co., Ltd. (002182.SZ) reported 414 to 462 percent growth for the first quarter, primarily due to increase of sales and reduction of costs. Shenzhen Liantronics Co., Ltd. (300269.SZ) reported 93 to 118 percent growth in the first quarter, primarily attributable to the improvement of digital outdoor media business.
○ Poly Real Estate Group and Gemdale Corporation witnessed surge of sales volume in Feb.
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Poly Real Estate Group Co., Ltd. (600048.SH) in February contracted 8.9 billion yuan, up 89 percent year on year. The company has realized contract sales of 229.1 billion yuan from January to February, increased by 90 percent year on year. Gemdale Corporation (600383.SH) in February contracted 2.98 billion yuan, up 227 percent year on year.
○ Absen Optoelectronic proposes high share conversion and dividend
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Actual controller of Shenzhen Absen Optoelectronic Co., Ltd (300389.SZ) proposes 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares according to its annual report. Actual controller of Yongxing Special Stainless Steel Co., ltd. (002756.SZ) proposes 8-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for every 10 shares according to its annual report.
[Trading Trends]
○ Four institutions buy Anoky Group
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The trading volume ranking list on March 7 shows that Shanghai Anoky Group Co., ltd. (300067.SZ) was bought by four institutions with a total of 61,134,500 yuan, accounting for 13.4 percent of intraday trading turnover.
Comment: the company is primarily engaged in disperse dyes. Share prices of listed companies in the same industry, including Zhejiang Longsheng Group Co., Ltd. (6000352.SH) and Zhejiang Runtu Co., ltd. (002440.SZ) also surged recently. Institutions believe that the supply side reform has raised to unprecedented strategic height. In this context, policy threshold for relevant parties to expand production has obviously become higher. Shortage of supply in printing and dyeing industry still exists, and price hiking trend of products is expected to continue, which are in favor of relevant companies.
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