[Today's Guide]
○ China's, U.S. and eurozone PMI beat expectation, economic growth sees active changes
○ Measures to improve market supply and demand in rare earth industry, Taobao to introduce VR shopping model
○ Substantial shareholder Guangdong Macro to transfer controlling right at premium, Beijing Urban-Rural Trade Centre to transfer its state-owned shares
○ TDG Holding's participating stock company obtains approval for IPO, multiple companies propose high share conversion and dividend
[SSN Focus]
○ China's, U.S. and eurozone PMI beat expectation, economic growth sees active changes
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The National Bureau of Statistics (NBS) announced on April 1 that China's manufacturing purchasing managers' index (PMI) came in at 50.2 in March, 1.2 percentage points higher from February. It is the first hike in the recent eight months and much higher than the market expectation of 49.4 percent. Experts from the China Logistics Information Center indicated that the market has reached the bottom and is recovering. If the trend can be maintained, it will improve enterprise benefits. The U.S. ISM manufacturing PMI and the eurozone manufacturing PMI released on the same day also beat the market expectation. The S＆P 500 Index closed 0.63 percent higher to the highest level in 2016, which is only 3 percent lower than the highest level in 2015.
Comment: Such economic data as investment, exports and industrial added value in March will be released this week. The bullish domestic and overseas PMI means recoveries in such data. The recovering demands in the property market in particular is expected to affect the investment in the upper stream in March, especially the investment in second-tier cities. Institutes are rosy that infrastructure will play a key role in maintaining economic growth. Steel, cement, construction machinery and other industries will benefit.
[TOP]
[SSN Selection]
○ China Business Journal reported that about 21 policies on SOEs reform will be released this year, covering SOEs reorganization, employee shareholding and remuneration reform.
○ China Securities Regulatory Commission (CSRC) spokesperson indicated on April 1 that the listing transfer system of the National Equities Exchange and Quotations (NEEQ) is under study.
○ Vice Minister of Finance indicated that the negative rating on China by international rating companies shows that they overestimated economic difficulties and underestimated the capacity to deal with them.
○ Disperse dyes manufacturers raised the quoted price by about 10 percent from March 31 to April 1.
○ The low-price new Model 3 of Tesla is very popular. It has received 232,000 orders in a day after initiating booking on March 31.
[Industry Information]
○ Commercial reserves of rare earth initiates, measures to improve market supply and demand
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The China Rare Earth Information Net under Baotou Research Institute of Rare Earths reported that the commercial rare earths reserves conducted by rare earth enterprises and initiated by the state with the supply-side reform in the rare earth industry has started. Relevant reform measures on the state level will be implemented. It is reported that China Northern Rare Earth (Group) High-tech Co., Ltd. (600111.SH), Aluminum Corporation of China, Xiamen Tungsten Co., Ltd. (600549.SH), China Minmetals Corporation and China Nonferrous Metal Industry's Foreign Engineering And Construction Co., Ltd. (000758.SZ) will participate in the activity.
Comment: Signs show that the supply-side reform in the rare earth industry from the state to local levels and from governments to enterprises are under steady progress. The 13th Five-year Plan on the rare earth industry will be released by end-June. The reorganization of large rare earth groups will speed up. The General Office of the State Council released documents, requiring achieving traceability management in the whole process of rare earth products. Such policies will achieve the stable development of the rare earth industry and improve the price.
○ Taobao introduces Buy plus to boost VR development
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The official weibo of Taobao announced on April 1 afternoon that it will introduce a new shopping model Buy plus. It will create an interactive three-dimensional shopping environment with VR technologies and the image system of computers and supporting sensors. It will achieve online experience for all stores and products. Taobao plans to introduce the function after four months.
Comment: Domestic and overseas Internet leaders are actively developing VR, which will be applied in shopping, video, gaming, household decoration and other industries. It is likely to boost the development of contents providers of products displaying and video manufacturing as well as chips, micro projection, helmet and other hardware equipment enterprises. Among A-share companies with VR technologies, Shenzhen Esun Display Co., Ltd. (002751.SZ) provides Huawei Technologies Co., Ltd. and other well-known enterprises with brand terminal display businesses. Wisesoft Co., Ltd. (002253.SZ) cooperated with Alpha Group (002292.SZ) and Leyard Optoelectronic Co., Ltd. (300296.SZ) to develop IP manufacturing and channels operation.
[TOP]
[Announcement Interpretation]
○ Substantial shareholder Guangdong Macro to transfer controlling right at premium of nearly 40 pct
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Guangzhou Huishun Investment Co., Ltd., the substantial shareholder of Guangdong Macro Co., Ltd. (000533.SZ), and Guangzhou Huifu Boyan Investment signed an agreement, proposing to transfer 120 million shares of the listed companies at 12.92 yuan per share to the latter, which accounts for 17.37 percent of the total share capital. The total price is 1.55 billion yuan. The prices represents a premium of 36 percent of the stock price of the company before trading suspension. The biggest shareholder of the company will be Guangzhou Huifu Boyan Investment after the transfer.
Comment: Guangzhou Huifu Boyan Investment indicated that it will consolidate quality assets with the listed company as a platform and may further increase the shareholding in the company in the future. It is noteworthy that Guangzhou Huifu Boyan Investment is changing the industrial and commercial registration. Huiyin Tianyue, which contributes 99.999 percent of the company will exit and PangAn Dahua Asset Management Plan will replace it.
○ Beijing Urban-Rural Trade Centre to transfer its state-owned shares free of charge
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Beijing Suburban Tourism Industrial Development Co., Ltd, controlling shareholder of Beijing Urban-Rural Trade Centre Co., Ltd. (600861.SH), proposes to transfer all the state-owned shares in the company held by it (accounting for 33.49 percent of the total share capital of the company) to Beijing State-owned Capital Operation and Management Center, the actual controller of the company.
Comment: on Nov. 30, Sun Yong, a natural person increased capital of the company through secondary market acquisition to the 5 percent limit at prices range from 13.55-16.55 yuan per share. The latest price of the company is 13.6 yuan per share.
[TOP]
○ TDG Holding's participating stock company obtains approval for IPO
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Broadex Technologies, a participating stock company TDG Holding Co., Ltd. (600330.SH), has obtained approval for IPO. TDG Holding is the second largest shareholder of Broadex Technologies, holding 11 million shares of the company, which accounts for 17.74 percent of its share capital.
○ Kerong Environmental Resources to raise RMB700 mln through additional issuance to deploy environmental protection industry
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Xuzhou Kerong Environmental Resources Co., ltd. (300152.SZ) proposes to issue 100 million shares through private placement to raise 700 million yuan, which will be used for a solid waste to energy project in Suining County, Suining Baoyuan combined heat and power generation project and supplement to working capital.
○ Sanlian Hope Shin-Gosen Technical Service proposes to raise RMB900 mln for textile big data factory project
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Beijing Sanlian Hope Shin-Gosen Technical Service Co., Ltd. (300384.SZ) proposes to raise 901 million yuan through private placement, which will be used for textile big data factory project and supplement to working capital. The pricing ex-date of private placement is the first day of issuance. The company estimates that after reaching designed capacity, the project will contribute additional revenue of 390 million yuan.
○ Yaoji Playing Card to buy Wanshengda Industrial with 255 million yuan
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Shanghai Yaoji Playing Card Co., Ltd. (002605.SZ) proposes to buy 85 percent equity of Zhejiang Wanshengda Industrial Co., Ltd at the valuation of 255 million yuan, which will be satisfied by fundraising from additional issuance and cash. At the same time, the company will issue shares at the price of and no less than 14.53 yuan per share to raise supporting fund of 254 million yuan. The committed net profits after deduction of non-recurring profits or losses of Wanshengda for 2016-2018 are no less than 20 million yuan, 25.5 million yuan and 31 million yuan, respectively.
Wanshengda and Yaoji Playing Card both rank among the six well-known play card brands in China. The core markets of the two sides are complementary. After controlling Wanshengda, the production capacity and sales channel of Yaoji Playing Card will all expand massively, which will further consolidate the company's leading position in the industry.
○ Tiancheng Controls to raise RMB500 mln to expand passenger car seat
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Zhejiang Tiancheng Controls Co., Ltd. (603085.SH) proposes to issue 20,840,000 shares through private placement at no less than 27.79 yuan per share to raise 579 million yuan. The actual controller of the company Chen Bangrui will subscribe no less than 10 percent. The fundraising will be used for passenger car seat intelligent production base construction project, 1.4 million sets of one-pin key components and supplement to working capital.
[Financial Reports Express]
○ Multiple companies propose high share conversion and dividend
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Controlling shareholder of Inner Mongolia Yuan Xing Energy Company Limited (000683.SZ) proposes 8-for-10 conversion of capital surplus into shares in the annual report. The largest shareholder of Nanjing Kangni Mechanical＆ Electrical Co., Ltd. (603111.SH) proposes 15-for-10 conversion of capital surplus into shares combined with cash dividend in the annual report. Kuangda Technology Group Co., ltd. (002516.SZ) reports 49 percent growth in its annual report and proposes 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every ten shares. Zhengzhou Yutong Bus Co., Ltd. (600066.SH) reports 35 percent growth in its annual report and proposes 15-for-10 conversion of capital surplus into shares.
[TOP]
○ Dayu Water-saving expects growth in Q1
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Dayu Water-saving Group Co., Ltd. expects 280-310 percent growth in Q1, primarily due to rapid increase in orders.
[Trading Alarms]
○ Flyco Electrical Appliance to start IPO on April 5
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Shanghai Flyco Electrical Appliance Co., Ltd. (732868.SZ) to start IPO on April 5 at the issuing price of 18.03 yuan per share, and the upper limit of subscription is 130,000 shares. The company's PE ratio is 17 times, and the payment date for successful subscription is April 7.
[Weekly Review]
○ A twice-told story could also be a new story
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It is often said that stock market is a place that passion won't last long. But since deepening state-owned enterprises (SOEs) reform was proposed at the Third Plenary Session of the 18th Communist Party of China (CPC) Central Committee, the SOEs theme has never fade on the A-share market. When CNR and CSR merged, many large cap central SOEs surged; after the first batch of six pilot central SOEs determined reform plans, medium cap listed companies under China Oil ＆ Foodstuffs Corporation (COFCO) and State Development ＆ Investment Corporation (SDIC) rallied exponentially.
In this March, as registration-based IPO system and strategic emerging industrial board were delayed, the shell value of small-cap SOEs again highlighted. SSN spotted the new direction of reform through intensively issued equity assignment announcement in recent days. After Zhejiang Qianjiang Motorcycle Co., Ltd. (000913.SZ) surged to the daily limit of 10 percent, SSN exclusively planed the small-cap local SOE theme, in which Shandong Zhangqiu Blower Co., Ltd. (002598.SZ) has surged to the daily limit of 10 percent for three consecutive days.
Each year, the National Development and Reform Commission (NDRC) issues "Opinions on Deepening Key Emphases in Economic System Reform". Roughly, the document with tens of thousands words cover all sectors of society and economy, and it seems alike each year. But reading carefully, you will find that there are progresses each year. SSN noticed that this year the statement on salt industry in the document has transformed from "advance reform" to "launch reform schemes", and soon after our report, salt stocks all gained on the second day.
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