Early Bird

Early Bird 21-April-2016

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2016-04-21 14:08

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[Today's Guide]
○ State Council deploy transportation infrastructure for poverty alleviation, steel market to embrace continuous prosperity
○ China's first blockchain alliance established, technological development to gain strong impetus
○ Yongda Auto to go backdoor listing via Yangtze New Materials, Huanghe Enterprise to become real estate firm
○ Shenke Slide Bearing to buy digital marketing firm, Yunhai Special Metals sees H1 performance surge

[SSN Focus]

○ State Council deploy transportation infrastructure for poverty alleviation, steel market to embrace continuous prosperity
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The executive meeting of the State Council convened on April 20 determines to complete the construction of transportation network with broad coverage, full accessibility and high quality in poverty stricken areas by 2020. It will implement the "double 100 projects", namely to construct a hundred key road projects, including a hundred km rural roads, highways, railways and airports. It will enhance policy support in fiscal and taxation and land utilization, attach equal importance to construction and maintenance, and perfect long-term mechanism for investment and management.

Comment: according to government's work report, China will complete 1.65 trillion yuan investment in road. It is estimated that this decision can produce demand of road utilization steel of 45 million tons. The de-capacity of steel industry has entered a substantial stage, deformed steel bar futures has soared to the daily limit for three consecutive days, but still lower than the price of spot price, which shows that the real economy is in great demand for steel as there is a short supply in the steel market. Propelled by policy of the alleviating poverty through transportation infrastructure, the demand for steel is likely to remain strong.

[TOP]

[SSN Selection]
○ The Ministry of Land and Resources and Zhejiang Provincial land and resource department established a joint investigation team, which has on April 20 headed to Wenzhou City, Zhejiang Province to give instructions on the issue of renewing expired residential land.
○ It is learnt that the Ministry of Industry and Information Technology (MIIT) will soon issue business certificate for basic telecommunications to China Broadcasting Network Ltd, indicating that the implementation of broadband broadcasting and television strategy is accelerating.
○ The first conceptual car of LeTV super car "LeSEE" on April 20 made a debut. It is equipped with automatic pilot and face recognition functions.
○ Xinhua news agency's investigation reveals that during the restoration of the toxic site where Changzhou Foreign Languages School located, problems of not completing on time and not complying with the plan were discovered. Experts say supervision on soil restoration projects should be carried out in no time.
○ China Securities Regulatory Commission (CSRC) has approved the IPO of xinhuanet.com. The website proposes to raise about 1.5 billion yuan for projects such as cloud platform for all media information application service.

[Industry Information]
○ China's first blockchain alliance established, technological development to gain strong impetus
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The Paper reported that blocakchain-China Distributed General Ledger based Alliance Agreement jointly promoted by 11 institutions such as Securities Internet System Co., Ltd, was officially set up on April 19. The purpose of the establishment of the alliance is to develop underlying blockchain infrastructure conform to China's policy and regulations, national standard, business logic and usage habit. It is also learnt that some other institutions in China are also preparing for the establishment of a similar alliance, to promote the development and application of China's blockchain technology.

Comment: block chain technology can guarantee the structure of data not being falsified or forged. It has broad prospects in financial payment area. Currently, application research of blockchain around the globe is primarily conducted by governments and alliances. The establishment of the above alliance is expected to boost the development and application of blockchain technology in China. In listed companies, Guangzhou Kingteller Technology Co., Ltd. (002177.SZ) announced that it was organizing teams to research blockchain technology; Feitian Technologies Co., Ltd. (300386.SZ) indicated in its annual report that the company possessed technologic reserve and research in blockchain technology.

[TOP]

○ Tungsten prices continue to soar, drivn by purchasing and storage and production restriction
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SSN learns that tungsten prices continue to soar on April 20. Prices of tungsten concentrate and APT surge by 1,500 yuan and 2,500 yuan per ton, both witnessing an average growth of over 2 percent. Price of tungsten concentrate has totally risen by 40 percent since hitting the lowest record in last November. Relevant manufacturers indicate that the price of tungsten concentrate has just recovered to the exploitation cost of large mines and the market price might increase further.

Comment: institutions pointed out that the State Reserves Bureau plans to purchase and store 10,000 tons of tungsten concentrate, equivalent to nearly 10 percent of the total production volume in 2015. Meanwhile, China Nonferrous Metals Industry Association advocates a 15 percent year-on-year decline in tungsten concentrate production this year. Driven by the purchasing and storage and production restriction, business environment of tungsten industry is expected to improve. In listed companies, Chongyi Zhangyuan Tungsten Co., Ltd. (002378.SZ) boasts abundant tungsten resource reserves and its tungsten powder production ranks among the top in the industry. China Tungsten And Hightech Materials Co., Ltd. (000657.SZ) plans to acquire Hunan Shizhuyuan Nonferrous Metals Co., Ltd. and other tungsten ore assets under its controlling shareholder. After the acquisition, its tungsten resource reserves will rank among the top in China.

[Announcement Interpretation]
○ Yongda Auto to go backdoor listing via Yangtze New Materials for RMB12 bln
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Suzhou Yangtze New Materials Co., Ltd. (002652.SZ) plans to swap all its assets and liabilities for 613 million yuan. Meanwhile, it proposes to issue 1,228 million shares at 9.77 yuan per share to Yongda Investment Holdings Co., Ltd. to acquire 100 percent equities of Yongda Automobile Group for 12 billion yuan.

Yongda Automobile is a leading passenger vehicle dealer and comprehensive service provider in China. After the deal, the actual controller of the listed company will be Zhang De'an. Yongda Automobile will go back-door listing. It promises that its net profit from 2016 to 2018 will be no less than 800 million yuan, one billion yuan and 1.2 billion yuan.

○ Real estate firm Xinyuan Group to go backdoor listing via Huanghe Enterprise for RMB3 bln
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Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ) plans to swap its 907 million yuan assets and liabilities with the equivalently-valued equities (29.38 percent) in Xinyuan Group. The company will issue 200 million shares at 10.75 yuan per share through private placement to pay for the difference. The swapped asset Xinyuan Group is traded for 3,088 million yuan.

This deal will be a backdoor listing. The former second largest shareholder Hunan Yucheng Investment Co. Ltd. will become the controlling shareholder of Huanghe Enterprise. Tan Yuexin will become the actual controller. Xinyuan Group is mainly in engaged in real estate investment and development and waste water treatment. Its real projects concentrate in Changsha, Hunan Province. It promises that its net profits from 2016 to 2018 will reach 266 million yuan, 297 million yuan and 450 million yuan, respectively.

[TOP]

○ Shenke Slide Bearing to buy digital marketing firm for RMB2.1bln., actual controller changes
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Shenke Slide Bearing Corporation (002633.SZ) proposes to acquire 100 equities of Beijing Zibolan Network Technology Co., Ltd. for a total of 2.1 billion yuan among which 264 million yuan will paid in cash and the remainder will be paid by issuing118 million shares at 15.51 yuan per share. Meanwhile, the company plans to raise 2.1 billion yuan supporting fund by issuing shares at 15.51 yuan per share to five subscribers, including Beijing Huachuang Yisheng Asset Management Co., Ltd. Huachuang Yisheng Asset Management will subscribe 96.71 million shares. After the fund-raising, Huachuang Yisheng Asset Management will hold over 29 percent equities in the company and become the new actual controller.

Zibolan Network Technology provides agency service for SEM products in personal computer and mobile phone on mainstream media, including Baidu, Sougou and Google. It also provides solutions to digital marketing. According to the counterpart's commitment, the net profit of Zibolan Network Technology from 2016 to 2018 will be no less than 130 million yuan, 170 million yuan and 220 million yuan, respectively.

○ Tensyn Digital Marketing Tech to fully hold Hantian Xinghe Advertising for RMB400 mln
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Beijing Tensyn Digital Marketing Technology Joint Stock Company (300392.SZ) proposes to acquire 90 percent equities of Beijing Hantian Xinghe Advertising Co., Ltd. for 399 million yuan among which about 160 million yuan will paid in cash and the remainder will be paid by issuing 7.45 million shares at 32.14 yuan per share to its counterpart Beijing Hantian Runhai Advertising Co., Ltd. Meanwhile, the company plans to raise 250 million yuan supporting fund to pay some of the deal. After the transaction,  Tensyn Digital Marketing Technology will hold 100 equities of Hantian Xinghe Advertising.

Hantian Xinghe Advertising is committed to providing Internet-based advertising service for the automobile industry. It promises that its net profit from 2016 to 2019 will reach 35.2 million yuan, 42.1 million yuan, 49.4 million yuan and 55.1 million yuan.

[Financial Reports Express]
○ Yunhai Special Metals sees H1 performance surge
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Nanjing Yunhai Special Metals Co., Ltd. (002182.SZ) reported a growth of 9 percent in its annual report and forecasts a growth of 414 to 462 percent for the first half year mainly due to sales growth and cost reduction. China Jushi Co., Ltd. (600176.SH) forecasts a growth of 85 to 95 percent for the first quarter mainly due to the bullish fiber glass market.

Cachet Pharmaceutical Co., Ltd. (002462.SZ) reported a growth of 43 percent for first quarter and and forecasts a growth of 20 to 40 percent for the first half year mainly due to growth in main business. Canny Elevator Co., Ltd. (002367.SZ) reported a growth of 21 percent for first quarter and forecasts a growth of 20 to 40 percent for the first half year mainly due to increasing orders. Kweichow Moutai Co., Ltd. (600519.SH) reported a growth of 12 percent for first quarter.

[TOP]

○ Shenjian New Materials and North Navigation Control Tech propose high share conversion and dividend
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Anhui Shenjian New Materials Co., Ltd. (002361.SZ) reported a growth of 35 percent in annual reported and proposes a 10-for-10 conversion of capital surplus into shares combined with 1 yuan dividend for every 10 shares. North Navigation Control Technology Co., Ltd. (600435.SH) reported a growth of 19 percent in annual reported and proposes a 10-for-10 conversion of capital surplus into shares combined with 0.5 yuan dividend for every 10 shares.

[Trading Alarms]
○ Doron Technology to debut IPO on April 21
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Nanjing Doron Technology Co., Ltd. (732528) will offer shares at 9.45 yuan per share with an upper limit of 19,000 shares for each applicant. The company's PE ratio is 6 times. The company is mainly engaged in motor vehicle driving license system.
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