Early Bird

Early Bird 19-May-2016

XFA Premium News
2016-05-19 13:47

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[Today's Guid]
○State Council executive meeting promotes central SOEs to advance quality and efficiency and bring in private capitals to participate in reorganization
○Further polices on supply-side reform of construction material industry issued, leading enterprises will benefit
○ Benefo Tejing Electric to acquire Guanlong Electromagnetic Wire, Songcheng Performance Development invests in VR
○ Baiyang Investment and other see shareholding increase, Changchun Sinoenergy to acquire foreign oil-gas field firm


[SSN Focus]
○ State Council executive meeting promotes central SOEs to advance quality and efficiency and bring in private capitals to participate in reorganization
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The State Council executive meeting held on May 18 made arrangements for central SOEs to streamline their structure, in order to improve quality and efficiency. The meeting proposed to guide and urge central enterprises to focus on their major businesses, transfer out of non-major businesses in an orderly way, and proactively and properly bring in various private capitals to participate in and support the restructuring and reorganization of central enterprises; deduct management levels, striving to reduce the levels of most central SOEs from 5 to 9 levels at present to less than 3 to 4 levels within three years, and cut the number of legal entities by around 20 percent.

Comment: after constant reorganization and merging of central SOEs operating in the same industry, the number of China's central SOEs has reduced to about 100. But there are still tens of millions of subsidiaries under such central SOEs. The efficiency of resource allocation is to be improved. During this year, various A-share market listed companies under central SOEs plan to transfer controlling rights or bring in strategic investment. Experts interviewed indicated that in terms of encouraging private capitals to participate in central enterprises' reorganization, the government may take further measures in the future. In respect of improving quality and efficiency, the de-capacity measures are likely to unfold in the second half year.

[TOP]

[SSN Selection]
○ Four departments, including the National Development and Reform Commision on May 18 jointly issued a notice, requiring enterprises in the coal industry to practically control excessive production capacity and reduce production output.
○ The National Health and Family Planning Commission (NHFPC) on May 18 issued Opinions on enhancing reform and development of children's medical and health services, aiming to reasonably adjust the price of pediatric medical service.
○ Ran Chengqi, director of the China Satellite Navigation Office, on May 18 indicated that China will further launch over 30 Beidou satellites during the 13th Five-Year plan period.
○ Poly Real Estate won the bid of the Zhoupu land parcel outside of Shanghai's outer ring line with 296 percent premium. It is estimated that the price of actual salable floor area is approximately 55,000 yuan per square meter.
○ Shanghai Municipal Government will hold a press conference on May 19 to specially introduce the opening and preparation of Shanghai Disneyland.

[Industry Information]
○Further polices on supply-side reform of construction material industry issued, leading enterprises will benefit
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General Office of the State Council recently published the Instructions on Promoting the Construction Material Industry to Stabilize Growth, Adjust Structure and Improve Efficiency. The paper proposes to further cut a portion of cement clinker and plate glass production capacity by 2020; realize the goal of concentrating about 60 percent production of cement clinker and plate glass in top ten companies in the industry in terms of output; steadily improve the proportion of deep processing of material products and green products; improve the efficiency of construction material industry, and strive to let profit ratio of sales of cement and plate glass industry to approach the industry average and achieve positive growth of total profits of the industry.

Comment: the instruction has set clear goal for the supply-side reform of the construction material industry. To cut excessive capacity is likely to further concentrate the market shares in leading enterprises. In listed companies, Anhui Conch Cement Company Limited (600585.SH) and CSG Holding Co., Ltd. (000012.SZ) are leasing players in their respective industries. The instruction also proposed to promote new-type of wall materials. Functional organic coating sheet produced by Suzhou Yangtze New Materials Co., Ltd. (002652.SZ) are primarily used for new-type of energy conservation and environment protection wall materials.

[TOP]

○ NDRC pushes for parking informatization, to launch pilot in Beijing, Shanghai and Hangzhou
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The National Development and Reform Commission (NDRC) recently issued a circular on the 2016 key works for parking lots, proposing to develop urban parking system information, actively push for construction of parking data platform, promote integration of parking information and Internet, establish basic database and update and share parking data in real time. Beijing, Shanghai and Hangzhou will be pilot cities for parking information platform and will strive to complete construction of data platform within the year.

Comment: Data shows that the average gap rate of parking lots in Beijing, Shanghai, Guangzhou and Shenzhen is 76.3 percent. But the vacancy rate in some parking lots in these cities reaches as high as 44.6 percent. Internet can help effectively allocate parking lots resources. According to Qianzhan Industry Research Institute's survey, the intelligent parking lot system market in China is expected to exceed 5 billion yuan in 2015 and will expand at annual rate of 21 percent.

[Announcement Interpretation]
○ Benefo Tejing Electric to acquire Guanlong Electromagnetic Wire and develop main business
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Tianjin Benefo Tejing Electric Co., Ltd. (600468.SH) proposes to acquire 93 percent equities in Suzhou Guanlong Electromagnetic Wire Co., Ltd. for 320 million yuan in cash. Guanlong Electromagnetic Wire is a high-tech enterprise engaged in research, development and production of electric wire. After the acquisition, Benefo Tejing Electric will see its electric wire business further improve. The counterpart promised that the net profit of Guanlong Electromagnetic Wire in 2016 and 2017 will be less than 37.88 million yuan and 45.96 million, respectively.

○ Songcheng Performance Development invests RMB160 mln in VR industry
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Songcheng Performance Development Co., Ltd. (300144.SZ) plans to jointly set up a subsidiary SONGCHENG SPACES with U.S.-based technology firm SPACES with 160 million yuan. It will hold 80 percent shares in the joint venture. The joint venture will be mainly engaged in development and operation of VR and AR-themed parks, the application of VR and AR in entertainment and show and the application of VR, AR digital platform and Internet.

Meanwhile, the company plans to invest 120 million yuan to set up a wholly-owned subsidiary Zhangjiajie Qianguqing Entertainment Development Company, and singed investment agreement in Zhangjiajie Qianguqing project with Wulingyuan People's Government, Zhangjiajie.

[TOP]

○ Baiyang Investment and other see shareholding increase
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The actual controller of Baiyang Investment Group, Inc. (002696.SZ) increased shareholding in the company by 570,000 shares on May 18, and plans to increase by no less than 4 million shares and no more than 8 million shares in the coming year. The actual controller and vice president of Shenzhen Tempus Global Business Service Holding Ltd. (300178.SZ) together increased shareholding in the company by 720,000 shares on May 17. The actual controller of Zhongli Science and Technology Group Co., Ltd. (002309.SZ) increased shareholding in the company by 500,000 shares on May 18.

○ Changchun Sinoenergy to acquire foreign oil-gas field firm via other platforms
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The subsidiary of Changchun Sinoenergy Corporation (600856.SH) proposes to acquire 49.74 percent equities of Sinoenergy Petroleum Investment Co., Ltd. for 955 million yuan. After the acquisition, the company will hold 50.26 percent shares in the company. It will plans to acquire Canada-based oil-gas field firm Long Run in cash through the new acquired company and its overseas platform.

Oil-gas field firm Long Run is mainly engaged in the exploration, mining and production of oil and natural gas in west Canada. After the transaction, Changchun Sinoenergy will expand its main business to the upstream natural gas industrial chain. It will own quality upstream natural gas resource and sales network. Its supply chain and market coverage will be further improved.

[TOP]

[Trading Alarm]
○Tianshun Supply Chain to debut IPO on May 19
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Xinjiang Tianshun Supply Chain Co., Ltd. (002800.SZ) will offer shares at 7.7 yuan per share with an upper limit of 18,500 shares for each applicant. The company's PE ratio is 20 times. The company is mainly engaged in third-party logistic.

 
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