[Today's Guide]
○Private schools to conduct classifies management to encourage social forces participating in education development
○ Innovation action plan on energy technology revolution released, Rare earths prices recover
○Jiangshan Chemical's controlling shareholder to restructured, Golden Dragon Development to increase capital in Zhongshan Securities
○ Multiple companies expect growth in interim reports, Gree Real Estate proposes high share conversion and dividend in its annual report
[SSN Focus]
○ Private schools to conduct classifies management to encourage social forces participating in education development
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The 23rd meeting of the Leading Group for Overall Reform was held on April 18, which deliberated and passed the Detailed Rules on the Implementation of Classified Registration of Private Schools, the Implementation Details on the Supervision and Management of Profit-making Private Schools and other documents. It requires establishing the classified registration and management systems of profit-making and non-profit private schools to improve educational quality.
Comment: The classified registration can clearly define the categories of private schools. Profit-making private schools can improve the remuneration structure of teachers through shareholding incentives and attract more outstanding teachers. Non-profit private schools may be approved to be registered as privately-owned public institutes and enjoy preferential land, taxation and loan policies. Among A-share companies, Shaanxi Jinye Science Technology And Education Group Co., Ltd. (000812.SZ) and But'one Information Corporation, Xi'an (600455.SH) own private high education institutes.
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[SSN Selection]
○ The State Administration of Work Safety released opinions on the de-capacity in the iron ＆ steel and coal industries on its website on April 18. Various supporting policies on de-capacity have been released recently.
○ The Ministry of Public Security indicated on April 18 that China will introduce special car plates for new energy vehicles, which has one more digit than ordinary car plates.
○ The People's Government of Guangdong Province unveiled the guidance on clearing and reorganizing "zombie state-owned enterprises" on April 18.
○ Shanghai starts the display of environmental assessment on the rail transit construction plan in short term (2017 to 2025). The project will connect Chongming Island.
○ The Ministry of Education indicated that it attaches great importance to the environmental pollution surrounding Changzhou Foreign Languages School. State educational supervisors have arrived to conduct special supervision and guidance.
[Industry Information]
○ Innovation action plan on energy technology revolution released, listed companies actively develop
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The National Development and Reform Commission (NDRC) and the National Energy Administration recently released the Innovation Action Plan on Energy Technology Revolution (2016-2030) and the Roadmap on Key Innovation Actions in Energy Technology Revolution. Among the 15 key tasks listed in the Plan, the "innovations in unconventional oil ＆ gas and deep and deepwater oil and gas exploration and development technologies", the "innovation in the collection, use and sealing of carbon dioxide technologies" and the "innovation in the technologies for the treatment of spent fuel and safe treatment of high-level radioactive waste" rank high.
Comment: In terms of policy supports, the plan proposes strengthening the support with central budgetary capitals and governmental funds in energy technologies and will implement taxation policies benefiting energy technologies innovation. Enterprises with businesses in the above energy technologies are expected to benefit first. Lanzhou Haimo Technologies Co., Ltd. (300084.SZ) acquired U.S. shale oil and gas assets and is developing the environmental protection of oil and gas fields. Hunan Kaimeite Gases Co., Ltd. (002549.SZ) is cooperating with Hunan University in the study of carbon collection technologies. Advanced Technology ＆ Materials Co., Ltd. (000969.SZ) has established a joint venture to develop the treatment of nuclear power spent fuels.
○ Rare earths prices recover thanks to commercial reserve
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SSN learnt that thanks to the commercial reserve of rare earth, the prices of main rare earth varieties increased on April 18. The quoted price of praseodymium-neodymium oxide reached 260,000 yuan/ton and inquires for dysprosium oxide also hiked. Many manufacturers choose to hold the products and the quoted price has been raised to 1.2 million yuan/ton. The quoted price of terbium oxide also jumped to 2.3 million yuan/ton.
Comment: Rare earth enterprises conducted commercial reserve of rare earths in end-March. It is expected that the state-level reserve will follow in the future. According to the requirements of the Ministry of Industry and Information Technology, it will complete the establishment of all groups by the end of June to consolidate all rare earth mines and smelting enterprises. The research reports of securities companies believe that driven by the acquisition and storage of rare earth as well as the crackdown on rare earth smuggling and illicit exploration, the price of rare earth may continue to surge. The price of dysprosium oxide, a kind of heavy rare earth, is expected to surge 25 percent.
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[Announcement Interpretation]
○ Jiangshan Chemical's controlling shareholder to restructured
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Zhejiang Jiangshan Chemical Co., Ltd. (002061.SZ) announced that the State-owned Assets Supervision and Administration Commission of the People's Government of Zhejiang Province proposes to consolidate Zhejiang Railway Investment Group Co., Ltd., the controlling shareholder of the company, and Zhejiang Communications Investment Group Co., Ltd. into a new provincial state-owned holding group.
○ Golden Dragon Development to raise RMB7bln to increase capital in Zhongshan Securities
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Guangdong Golden Dragon Development Inc. (000712.SZ) terminated the previous private placement and proposes another fundraising of 7 billion yuan instead, in which 6,457.5 million yuan will be used to increase capital in Zhongshan Securities, and the remainder of the fundraising will be used to repay borrowings. Its controlling shareholder Dongguan Xinshiji Science and Education Development Co., Ltd committed to subscribe no less than 20 percent of the total fundraising.
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○ New factory site of Shenyang Chemical Industry put into normal operation, likely to boost its performance
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Since the relocation and transformation project of Shenyang Chemical Industry Co., Ltd. (000698.SZ) was completed and put into operation, its production has been in good condition. From April, the new site will start normal production. Earlier, the company expected 200-290 percent in the first quarterly report. It is learnt that another three parcels of land of the company will be delivered by the end of May, and the estimated profits before tax is above 200 million yuan. Furthermore, the company's profitability takes a leading position in the industry after reorganization. The company's performance is likely to achieve explosive growth this year.
○ Wuhan Double to acquire European football agency
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Wuhan Double Co., Ltd. (600136.SH) proposes to buy 100 percent shareholding of Nice International Sports for 39.5 million Euros (equivalent to 0.29 billion yuan). The latter holds 46 percent equity of BORG B.V, and promise to increase the shareholding to 70 percent by buying additional shareholdings from original shareholder with 18 million yuan. BORG B.V holds 100 percent equity in MBS (Spain) and MBS (UK). MBS is involved in professional football player and youth player management business and club consultation service in Spain and the UK. It has signed contract with football stars like Suarez, Iniesta and Tiago, and provide consultation service to football clubs such as Barcelona, Bayern Munich, Arsenal and Manchester on long-term basis.
Comment: Wuhan Double, which aims to "build global culture and entertainment integrative platform", is accelerating acquisition of sports assets. After controlling a European football agency, the company can dilate the value of European sport IP resources in the Chinese market through "bringing in", and introduce Chinese football players and brands into European market through "going out".
[Financial Reports Express]
○ Multiple companies expect growth in interim reports
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Myhome Real Estate Development Group Co., ltd. (000667.SZ) expects 311-360 percent growth in interim report, primarily due to substantial growth in sales of residential property. Leo Group Co., ltd. (002131.SZ) reported 78 percent growth in its first quarterly report, and expects 35-85 percent growth in interim report, primarily due to the combination of Wansheng Weiye and Beijing Weichuang Shidai Advertisement Co., Ltd. into its financial statement. Dalian Rubber ＆ Plastics Machinery Co., Ltd. (600346.SH) expects earnings of 150-200 million yuan, largely turning deficit into profits, which is primarily due to the change of the company's main business after reorganization.
Zhejiang Wanfeng Auto Wheel Co., Ltd. (002085.SZ) reported 20 percent growth in the first quarter, and expect 20-50 percent growth in the interim report, primarily due to improvement of efficiency resulted from upgrading of techniques. Xinzhi Motor Co., ltd. (002664.SZ) reported 47 percent growth in the first quarter and 10-40 percent growth in the interim report, primarily due to the increases in sales.
○ Gree Real Estate proposes high share conversion and dividend
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Gree Real Estate Co., ltd. (600185.SH) reported 338 percent growth in its annual report. The board of directors has approved the distribution plan of 18-for-10 conversion of capital surplus into shares combined with 2 yuan dividend. Jiangsu Sanfangxiang Industry Co., Ltd. (600370.SH) reported 23 percent growth in its annual report, and the board of directors has passed the distribution plan of 15-for-10 conversion of capital surplus into shares combined with 0.2 yuan dividend. Zhejiang Shengyang Science and Technology Co., ltd. (603703.SH) reported 36 percent decline, and its board of directors has approved the distribution plan of 15-for-10 conversion of capital surplus into shares combined with 3.91 yuan dividend. Chongqing Changan Automobile Company Limited (000625.SZ) reported 32 percent growth in its annual report, and proposes 6.4 yuan dividend for every ten shares.
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[Trading Trends]
○ Four institutions bought Zhejiang Yatai Pharmaceutical
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The trading volume ranking list of April 18 shows that Zhejiang Yatai Pharmaceutical Co., Ltd. (002370.SZ) was bought through four institutional seats with a total of 23,397,000 yuan, accounting for 20.87 percent of intraday trading turnover; another institution sold with a total of 2,474,000 yuan.
Comment: the company has previously disclosed plan for private placement, proposing to buy the entire equity of Shanghai Newsummit Biopharma Co. Ltd, and focus on the construction of its two CRO related businesses. Institutions believe that China's CRO market expanded rapidly, due to the benefit of cost advantage in China and strong demand from R＆D of drug. As a platform for CRO business, Newsummit Biopharma is expected to have strong profitability in the next three years, and is able to support Yatai Pharmaceutical's profits growth.
[Trading Alarm]
○Yorhe Fluid Intelligent Control IPO debut on April 19
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Yorhe Fluid Intelligent Control Co., Ltd (002795.SZ) will offer at 14.85 yuan per share with PE ratio of 23 times. The upper limit of subscription is 10,000 shares. Payment date for successful application is April 21.
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