[Today's Guide]
○ State Council executive meeting pushes for "Internet plus circulation", shore up weak points in cold chain
○ State Reserve Bureau resumes tungsten concentrate storing plan, improving supply and demand situation to to shore up tungsten prices
○ China Zhongwang to go backdoor listing via CRED Holding, Sanzhen Industry to acquires water assets
○ Yinyi Holdings to acquire equities of Hechi Chemical, JuneYao Group to control AJ Group
[SSN Focus]
○ State Council executive meeting pushes for "Internet plus circulation", shore up weak points in cold chain
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The executive meeting of the State Council on April 6 deployed to improving the "Internet plus circulation" action. It points out that China should break hard bottlenecks in lagging information infrastructure and cold chain transportation, build intelligent logistics system, develop the Internet of Things and increase input in broadband construction in rural areas. SSN also learns that the Ministry of Commerce will soon release the guidance on the implementation of the "Internet plus circulation" action.
Comment: Experts from the Chinese Academy of Social Sciences interviewed indicated that these measures are operable and will help to reduce enterprises' logistics cost. Information infrastructure and cold chain transportation in rural areas are weak points in trading circulation. The implementation of these policies can make up these weak points. After the illegal vaccine accident in Shandong Province, many provinces have enhanced examination in cold chain transportation. Among A-share listed companies, China Railway Tielong Container Logistics Co., Ltd. (600125.SH) recently announced increasing investment in its cold chain logistics base project. CMST Development Co., Ltd. (600787.SH) owns refrigeration storage facilities. Aucma Company Limited (600336.SH) can provides solutions to medicine cold chain storage. Dalian Refrigeration Co., Ltd. (000530.SZ) launched intelligent fresh food distribution cabinet.
◆ The meeting also decided to implement the plan on the standardization and quality improvement in the equipment manufacturing industry to promote to make new breakthroughs in standardization in robot, advanced railway transportation equipment, agricultural machinery, high-performance medical equipment and other key fields.
[TOP]
○ Lithium battery's performance improves, potential aluminum plastic film market opens
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Shenzhen Selen Science ＆ Technology Co., Ltd. (002341.SZ) has announced its plan to acquire T＆T's soft lithium battery aluminum plastic film assets for 550 million yuan. T＆T is a well-known Japanese company engaged in the production and sales of external packing materials for battery aluminum. Compared with traditional battery external packing materials, such as aluminum shell, aluminum plastic film can effectively reduce battery weight, improve safety performance of lithium battery and lower probability of battery explosion.
Comment: Institutions believe that new energy vehicles have increasingly high demands for the safety performance and capacity of lithium battery, which brings great demand for aluminum plastic film materials. Currently, all mainstream electric car makers use aluminum plastic film packing. Its potential market can reach tens of billions of yuan. Among listed companies, hanghai Zijiang Enterprise Group Co., Ltd. (600210.SH), China's aluminum plastic film leader, has become suppliers for ATL, Tianjin Lishen Battery Joint-Stock Co., Ltd. and other lithium battery enterprises. Daoming Optics ＆ Chemical Co., Ltd. (002632.SZ) is expected to mass produce aluminum plastic film products in the mid of 2016. FSPG Hi-Tech Co., Ltd. (000973.SZ) is also developing aluminum plastic film products.
[SSN Selection]
○ SSN learns that the State-owned Assets Supervision and Administration Commission may summon up a symposium recently to discuss long-term cooperation among central state-owned coal enterprises. It is expected to more benefit coal enterprises.
○ SSN learns that the construction of diversified oil and gas exploration and mining mechanism is advancing orderly, exploring in the participation of various economic factors.
○ China's Ministry of Education indicated at a press conference held on April 6 that China will construct online resources to ensure that there are sufficient art courses.
○ Titanium dioxide leader Sichuan Lomon Titanium Industry Co., Ltd. on April 6 again raises its titanium dioxide price by 500 yuan per ton, higher than the previous three price lifts of 300 yuan per ton this year.
○ Three ministries and commissions on April jointly released the five-year plan for the robotics industry, requiring to achieve breakthroughs in key components and high-end products.
[Industry Information]
○ State Reserve Bureau resumes tungsten concentrate storing plan, improving supply and demand situation to shore up tungsten prices
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China's State Reserve Bureau plans to announce the latest prices and quantity of tungsten concentrate storing, according to the reports of Shanghai Metals Market. This is the third-time storing plan after November 2015 and February 2016. The first two storing plans have failed due to price issues. Considering that Ganzhou Tungsten Industry Association had forecast the average price of black tungsten concentrate to remain stable at 75,000 yuan per ton in April, much higher the market price of 67,000 yuan per ton, this storing plan might succeed.
Comment: As the storing plan is gradually implemented, the supply and demand situation in the tungsten market is expected to further improve and shore up tungsten prices. As for companies, Chongyi Zhangyuan Tungsten Co., Ltd. (002378.SZ), China Tungsten And Hightech Materials Co., Ltd. (000657.SZ) and Xiamen Tungsten Co., Ltd. (600549.SH) own the whole industrial chain in mining, smelting and deep processing.
[TOP]
[Announcement Interpretation]
○ China Zhongwang to go backdoor listing via CRED Holding for RMB 28.2bln
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CRED Holding Co., Ltd. (600890.SH) plans to swap 100 percent equities of China Zhongwang Holdings Limited held by Zhongwang Precision Manufacturing Co., Ltd. with its 100 percent equities in Xinjiang CRED Real Estate Company. The swapping asset is estimated to value at 200 million yuan. The swapped asset is priced at 28.2 billion yuan. The company also proposes to raise 5 billion yuan supporting funds from 8 specific investors. After the deal, China Zhongwang will go back-door listing.
China Zhongwang is the second largest industrial aluminium extrusion product developer and manufacturer in the world and the largest in Asia. The counterpart promises that the net profit of China Zhongwang from 2016 to 2018 will be no less than 2.8 billion yuan, 3.5 billion yuan and 4.2 billion yuan, respectively.
○ Sanzhen Industry to acquires controlling shareholder's water assets with RMB4.4 bln
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Wuhan Sanzhen Industry Holding Co., Ltd. (600168.SH) proposes to acquire the 100 percent equities of the water supply company and the project company held by Wuhan Water Group Co., Ltd., the controlling shareholder of the company, as well as assets related to water supply held by Wuhan C＆D Inc. with a total of about 4.4 billion yuan by issuing 482 million shares at 8.85 yuan per share through private placement and 136.5 million yuan in cash. It also plans to raise a supporting fund of 2,364 million yuan. The move is to fulfill the commitment of "an overall listing of water assets" made by the controlling shareholder.
[TOP]
○ Yinyi Holdings to acquire equities of Hechi Chemical
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Hechi Group, the controlling shareholder of Guangxi Hechi Chemical Co., Ltd. (600953.SH), and Ningbo Yinyi Holdings Co., Ltd. signed an equity transfer agreement. Pursuant to the agreement, 29.59 percent equities of Hechi Chemical (87 million shares) will be transferred at 9.66 yuan per share with a total price of about 840 million yuan. Yinyi Holdings will become a shareholder while Xiong Xuqiang will remain the actual controller of the listed company after the transfer. Hechi Chemical closed at 11.16 yuan before trading suspension.
Comment: Yinyi Holdings committed that its shareholding in Hechi Chemical will be no less than 29.59 percent in the following five years. As a flagship of Yinyi companies, Yinyi Holdings is good at the operation of shell companies. It currently controls Yinyi Real Estate Co., Ltd. (000981.SZ) and 28.63 percent equities of Ningbo Kangqiang Electronics Co., Ltd. (002119.SZ).
○ JuneYao Group to control AJ Group to further develop financial businesses
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Shanghai AJ Group Co., Ltd. (600643.SH) intends to issue 245 million shares at 8.97 yuan per share through private placement to JuneYao Group to raise 2.2 billion yuan. The proceeds will supplement the principal of AJ Trust and AJ Lease to support its financial businesses. JuneYao Group will become the biggest shareholder of AJ Group after the issuance. Based on the agreement, all parties support JuneYao Group in obtaining the position of the actual controller.
Comment: JuneYao Group planned to inject JuneYao Dairy as the biggest shareholder of the listed company. The change of the plan meets the market expectation that JuneYao Group will build AJ Group into a platform for the listing of its financial sectors.
[TOP]
○ Top Resource Conservation ＆ Environment to control Zhengmao Gas
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Top Resource Conservation ＆ Environment Corp. (300332.SZ) proposes to acquire 51 percent equities of Bazhou Zhengmao Gas Co., Ltd. with over 200 million yuan. Zhengmao Gas is a gas enterprise with the franchise right to conduct natural gas operation. It committed that its net profit from 2016 to 2018 will be no less than 40 million yuan, 50 million yuan and 60 million yuan, respectively.
○ Substantial shareholder of Lubei Chemical to introduce strategic investors to conduct mixed ownership reform
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Shandong Lubei Enterprise Group General Company, the controlling shareholder of Shandong Lubei Chemical Co., Ltd. (600727.SH), determined to introduce strategic investors to conduct mixed ownership reform. Lubei Enterprise Group is a state-owned giant with such products as fertilizers, titanium dioxide, cement and aluminium oxide. Its annual sales can reach 20 billion yuan.
○ B-ray Media to develop electronic sports
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Chengdu B-ray Media Co., Ltd. (600880.SH) plans to join Shanghai Keahoarl Information Technology Co., Ltd. and Sichuan Lianchuang Donglin Equities Investment and Fund Management Co., Ltd. in establishing a project company to develop electronic sports. The cooperation of all parties through the project company will include the hosting of international and domestic electronic sports games; the building of the IP of sports; the manufacturing of electronic sports; the live broadcasting of games; relevant training on electronic sports and sports presenter; the establishment of electronic sports teams and the exploration of new models of electronic sports.
[Financial Reports Express]
○ Toyou Feiji Electronics expects growth in Q1 report
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Toyou Feiji Electronics Co., Ltd. (300302.SZ) expects an increase of 510 to 540 percent in the first quarterly report thanks to the rapid development of main businesses as well as the replacement of imported products by homemade ones. Shandong Chenming Paper Holdings Limited (01812.HK; 000488.SZ) expects an increase of 300 to 340 percent in the first quarterly report thanks to the reducing cost and improved gross profit margin.
○ Yonker Environmental proposes high share conversion and dividend
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Yonker Environmental Protection Co., Ltd. (300187.SZ) recorded an increase of 107 percent based on its annual report. The board of directors passed a distribution plan with a 20-for-10 conversion of capital surplus into shares combined with 0.3 yuan dividend for every 10 shares. It expects a growth of 0 to 20 percent in the first quarter. Hubei Huitian New Materials Co., Ltd. (300041.SZ) recorded a decrease of 23 percent based on its annual report and proposes a 10-for-10 conversion of capital surplus into shares combined with 1.5 yuan dividend for every 10 shares.
[Data Speaks]
○ Listed companies to release Q1 reports, five industries to boom
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Listed companies on Shanghai and Shenzhen stock exchanges will start to release their first quarterly reports from April 8, 2016. Based on the released results announcements, listed companies in lithium battery, vitamin, PTA, photovoltaic and husbandry industries expect high growth. Thanks to the rapid growth in the sales of new energy vehicles, Sichuan Tianqi Lithium Industries, Inc. (002466.SZ) expects an increase of over 800 percent in the perform of the first quarter year on year. The profit in the first quarter has exceeded that of last year. The price rise of vitamin products also benefited leading companies in the industry. Brother Enterprises Holding Co., Ltd. (002562.SZ) expects its net profit in the first quarter to hike 150 to 180 percent in the first quarter. Zhejiang NHU Company Ltd. (002001.SZ) expects its performance to increase over 75 percent year on year.
In addition, thanks to the improved supply and demand in the upper and down streams, the PTA industry boomed significantly in the first quarter. Rongsheng Petro Chemical Co., Ltd. (002493.SZ) saw its performance surging over 700 percent in the first quarter. Hengyi Petrochemical Co., Ltd. (000703.SZ) expects its performance to increase nearly 200 percent. The photovoltaic and husbandry industries also recovered. Risen Energy Co., Ltd. (300118.SZ) expects its net profit in the first quarter to reach half of last year thanks to the surging sales of its photovoltaic products. As for the husbandry industry, Muyuan Foods Co., Ltd. (002714.SZ), Jiangxi Zhengbang Technology Co., Ltd. (002157.SZ) and Shandong Minhe Animal Husbandry Co., Ltd. (002234.SZ) recorded outstanding profits thanks to the surging prices of live pigs and baby chicks. Such companies recorded losses in the first quarter of last year.
[Trading Trends]
○ Three institutional seats buy Watertek Information
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The trading volume ranking list on April 6 shows that three institutional seats bought Beijing Watertek Information Technology Co., Ltd. (300324.SZ) with a total of 227 million yuan, accounting for 35.7 percent of its intraday turnover. One institutional seat sold it with 17,415,000 yuan.
Comment: Institutes believe that the company is a private enterprise conducting military engineering for private use under the background of military-civil integration. After more than ten years of development and with the replacement of business taxes by VAT, the taxation controlling business of the company will surge in the following three years. Besides, the company also faces opportunities in the development of IT application in national defense. It will conduct military engineering and taxation controlling as dual main businesses.
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