[Today's Guide]
○ CSRC nods three companies' cross-industry acquisition, signs show case varying from case
○ Central leading group of deepening reform calls for accelerating SOEs reform, acquisition and reorganization to continue to speed up
○ Google to launch modular phone, demands for connector expected to rise
○ Hejun Capital buy 7.1 pct equities of Changelight, MTC proposes to buy overseas lighting assets
[SSN Focus]
○ CSRC nods three companies' cross-industry acquisition, signs show case varying from case
------
The China Securities Regulatory Commission (CSRC) approved with conditions of cross-industry acquisition and reorganization of three companies: including Zhejiang Shenghua Biok Biology Co., Ltd. (600226.SH) which plans to acquire 100 percent equities of online game firm Yanlong Technology Co., Ltd. for 1.6 billion yuan,
Beibu Gulf Tourism Corporation Limited (603869.SH) which plans to acquire 100 percent equities of big data firm BOCOM Smart Network Technologies Inc. and (002131.SZ) plans to acquire 100 percent equities of digital marketing firm Shanghai WIT Advertising Co., Ltd.
Comment: Although the CSRC previously noted that it would make no changes in refinancing, acquisition and reorganization, the market still was worried that cross-industry acquisition and reorganization will be prohibited. The approval of the three cases, especially the approval of the pesticide firm Shenghua Biok Biology's acquisition of the online game firm, reassures the market. Market participants believe that given that the cross-industry acquisition of Fuchun Communications Co., Ltd. (300299.SZ) and Sanlian Commercial Co., Ltd. (600898.SH) were refused, there are signs showing that whether cross-industry acquisition can be approved varies from case to case.
TOP
○ Central leading group of deepening reform calls for accelerating SOEs reform, acquisition and reorganization to continue to speed up
------
The 24th session of the central leading group of deepening reform was held on May 20. The meeting emphasizes accelerating fundamental reforms in state-owned reform, finance and tax, pricing system, agriculture, rural areas, opening-up, social security and ecological civilization and launching key reform measures. On the same day, Zhang Xiwu, Vice Chairman of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, disclosed at a regular briefing of the State Council that the 6 new central stated-owned enterprises (SOEs) consolidated from 12 last year have achieved significant results, and China will further advance the reorganization of central enterprises this year. It primarily considers disposing 345 zombie enterprises in 3 years.
Comment: Recently, central SOEs have seen frequent acquisition and reorganization. After less than a half year since China Minmetals Corporation announced consolidating with Metallurgical Corporation of China Ltd. announced consolidation, Kingray New Materials Science ＆ Technology Co., Ltd. (600390.SH), a subsidiary of China Minmetals Corporation, transformed to an all-around financing holding platform. China Communications Construction Company Limited injected its core real estate business into China Real Estate Corporation Limited (000736.SZ). Institutes believe that as central SOEs have seen profit declining year on year, they can cooperate with each through acquisition and reorganization and exit from some non-major business that they have no competitive edge. Among listed companies under the first 6 pilots central SOEs, companies having not been reorganized and with poor performance, such as Ruitai Materials Technology Co., Ltd. (002066.SZ) and Sdic Zhonglu Fruit Juice Co., Ltd. (600962.SH), will attract attention.
[SSN Selection]
○ The State Council on May 20 issued a guidance on deepening the integrated development of manufacturing and Internet, proposing to double the industrial cloud enterprise users in three years.
○ Shanghai Stock Exchange elected Wu Qing president of its board of directors on May 20. Gui Minjie will be no more the president for his age.
○ Beijing Municipal Environmental Bureau indicated that it will strive to implement the sixth-phase local standards for oil products in January 2017 to remarkably cut gas emission.
○Caixin.com reported that central SOE China Shipbuilding Industry Corporation is launching the ever largest internal restructuring and will consolidate its 6 major shipbuilding factories into three.
○ The latest weekly report of the Commodity Futures Trading Commission shows that the net long positions in crude oil rises to the highest level in a year.
TOP
[Industry Information]
○ Google to launch modular phone, demands for connector expected to rise
------
According to media report, Google announced at the recent Google I/O that it will launch a developer version of modular phone Project Ara text machine, and the mass-produced version will be out in 2017. It is reported that Project Ara can allows users to determine battery capacity, camera module, processor, size of memory and storage according to their own needs.
Comment: Modular phone can provide more choices for users with lower costs as users can insert modules and assemble and upgrading hardware component themselves. Considering the need to fix components and controlling the size of phone, the appearance of modular phone will boost demands for connectors. In terms of companies, Shenzhen Everwin Precision Technology Co., Ltd. (300115.SZ) and Shenzhen Deren Electronic Co., Ltd. (002055.SZ) have great shares in electronic connectors.
○ iPhone likely to adopt glass casing
------
Foreign media reported that Apple Inc. (NASDAQ:AAPL) plans to launch iPhone with glass casing and metal frames, and that iPhone will adopt OLED screen instead of LCD screen which has been used since 2007. It is reported that the glass casing will be heavier than aluminium alloy casing, but the new AMOLED screen will be lighter. OLED screen and glass casing might be only adopted on iPhone Plus to be launched next year.
Comment: since Apple has a large customer base, if glass body is applied this time, it will create a rather big market space for glass outer parts. Essence Securities indicated in its research report that glass outer parts have been used in many smart devices and have very bright prospect. Lens Technology Co., Ltd. (300433.SZ) is the largest glass item supplier of Apple; Zhejiang Crystal-optech Co., ltd. (002273.SZ) and Lida Optical ＆ Electronic Co., ltd. (002189.SZ) has glass material equipment and relevant technologies.
TOP
[Announcement Interpretation]
○ Two funds under Hejun Capital buy 7.1 pct equities of Changelight
------
Wang Xiangwu, a party acting in concert with the original shareholder of Xiamen Changelight Co., Ltd. (300102.SZ), on May 17 and 18 transferred all together 50 million shares of the company to Juxinsheng No.1 and Zhengdexin No.1, two funds under Hejun Capital through bulk trading and agreement in succession. The total valuation of the transfer was 330 million yuan, with an average price of 6.6 yuan per share.
The above two funds are both controlled by Zhang Yujin, partner of Hejun Capital. Upon completion of the transaction, Zhang holds 7.1 percent equities of Changelight in total. He expressed optimistic view about the business development of the company and expected investment return from the company. Zhang is likely to continue to increase shareholding in the company in the next 12 months. The latest price of the company is 6.71 yuan per share.
○ MTC proposes to buy overseas lighting assets indirectly
------
Shenzhen MTC Co., Ltd. (002429.SZ) proposes to participate in the industry merging and acquisition fund established by a venture capital, to buy an overseas company in the lighting industry. The targeted company is a well-known company in the lighting industry. Supposing the transaction proceeds smoothly, the company will be able to capture the cutting edge technology in the lighting industry, and improve its position in the international market by virtue of its strength in R＆D and manufacturing capacity.
○ Controlling shareholder increased shareholding in Qixing Iron Tower
------
Controlling shareholder of Shandong Qixing Iron Tower Co., Ltd. (002359.SZ) on May 20 increased holding 1.78 million shares in the company. Controlling shareholder of Yihua Lifestyle Technology Co., ltd. (600987.SH) on May 20 continued to increase holding 3.73 million shares of the company.
[Trading Trends]
○ Yongtai Technology bought through three institutional seats
------
The trading volume ranking list of May 20 indicated that Zhejiang Yongtai Technology Co., ltd. (002326.SZ) was bought through three institutional seats with a total of 102 million yuan, accounting for 13.21 percent of intraday turnover.
Comment: institutions indicated that the company's pesticide segment has seen stable orders; the medical intermediate pentafluorophenol has great prospect; the building of a vertically integrated medical industrial chain has gradually completed; electronic chemicals will soon be put into production; light-sensitive lacquer is already at the downstream testing stage. In the next three years, the medical, pesticide and electronic chemical businesses of the company is likely to embrace good performance.
[Trading Alarms]
○ Skshu Paint to debut IPO on May 23
------
The issuing price of Skshu Paint Co., Ltd. (732737.SZ) will be 15.94 yuan per share, with the PE ratio of 18 times. The upper limit of subscription is 10,000 shares. The company is primarily engaged in paintings.
[Weekly Review]
○ Which is the best destination for money when markets are gloom?
------
In the middle of May, the stock index had raised and fallen in a narrow range of less than 100 points. However, things were quite different for individual stocks. Though both benefited from the price hikes, the chemical sector declined while the rare earth sector surged; for new technologies that has achieved constant progress, the intelligent driving sector weakened, but the block chain sector climbed. On May 20, the lithium battery sector abruptly fell after outperformed the market for days, while the soil environmental protection and pollution control action plan and Chongqing Free Trade Zone related opportunities again emerge.
Stock holders are unwilling to keep the stocks as they concern about the economic slowdown. But as the rigid redemption of bonds is no longer sustainable and housing purchase is restricted, capitals can hardly find a better investment choice than the stock market. The idled money will finally flow back to the stock market. When investors' sentiment about the market is complicated, it is an inevitable result that the performance of different sectors will take turns to lead the market.
To deal with such a market condition, we should strategically act slower and more calmly than the market, in order to avoid buy high and sell low. While in terms of tactics, we should act faster and more flexible than the market, and discover new hot spots as soon as possible. The SSN on May 12 reported that the nine biggest molybdenum mines had proposed to jointly cut production, on May 17 reported quantum communication would be a focus at an important meeting, and on May 19 reported that Google started to conduct research in artificial intelligence. Subsequently, relevant stocks all have very good performance.
TOP
○ CSRC nods three companies' cross-industry acquisition, signs show case varying from case
○ Central leading group of deepening reform calls for accelerating SOEs reform, acquisition and reorganization to continue to speed up
○ Google to launch modular phone, demands for connector expected to rise
○ Hejun Capital buy 7.1 pct equities of Changelight, MTC proposes to buy overseas lighting assets
[SSN Focus]
○ CSRC nods three companies' cross-industry acquisition, signs show case varying from case
------
The China Securities Regulatory Commission (CSRC) approved with conditions of cross-industry acquisition and reorganization of three companies: including Zhejiang Shenghua Biok Biology Co., Ltd. (600226.SH) which plans to acquire 100 percent equities of online game firm Yanlong Technology Co., Ltd. for 1.6 billion yuan,
Beibu Gulf Tourism Corporation Limited (603869.SH) which plans to acquire 100 percent equities of big data firm BOCOM Smart Network Technologies Inc. and (002131.SZ) plans to acquire 100 percent equities of digital marketing firm Shanghai WIT Advertising Co., Ltd.
Comment: Although the CSRC previously noted that it would make no changes in refinancing, acquisition and reorganization, the market still was worried that cross-industry acquisition and reorganization will be prohibited. The approval of the three cases, especially the approval of the pesticide firm Shenghua Biok Biology's acquisition of the online game firm, reassures the market. Market participants believe that given that the cross-industry acquisition of Fuchun Communications Co., Ltd. (300299.SZ) and Sanlian Commercial Co., Ltd. (600898.SH) were refused, there are signs showing that whether cross-industry acquisition can be approved varies from case to case.
TOP
○ Central leading group of deepening reform calls for accelerating SOEs reform, acquisition and reorganization to continue to speed up
------
The 24th session of the central leading group of deepening reform was held on May 20. The meeting emphasizes accelerating fundamental reforms in state-owned reform, finance and tax, pricing system, agriculture, rural areas, opening-up, social security and ecological civilization and launching key reform measures. On the same day, Zhang Xiwu, Vice Chairman of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council, disclosed at a regular briefing of the State Council that the 6 new central stated-owned enterprises (SOEs) consolidated from 12 last year have achieved significant results, and China will further advance the reorganization of central enterprises this year. It primarily considers disposing 345 zombie enterprises in 3 years.
Comment: Recently, central SOEs have seen frequent acquisition and reorganization. After less than a half year since China Minmetals Corporation announced consolidating with Metallurgical Corporation of China Ltd. announced consolidation, Kingray New Materials Science ＆ Technology Co., Ltd. (600390.SH), a subsidiary of China Minmetals Corporation, transformed to an all-around financing holding platform. China Communications Construction Company Limited injected its core real estate business into China Real Estate Corporation Limited (000736.SZ). Institutes believe that as central SOEs have seen profit declining year on year, they can cooperate with each through acquisition and reorganization and exit from some non-major business that they have no competitive edge. Among listed companies under the first 6 pilots central SOEs, companies having not been reorganized and with poor performance, such as Ruitai Materials Technology Co., Ltd. (002066.SZ) and Sdic Zhonglu Fruit Juice Co., Ltd. (600962.SH), will attract attention.
[SSN Selection]
○ The State Council on May 20 issued a guidance on deepening the integrated development of manufacturing and Internet, proposing to double the industrial cloud enterprise users in three years.
○ Shanghai Stock Exchange elected Wu Qing president of its board of directors on May 20. Gui Minjie will be no more the president for his age.
○ Beijing Municipal Environmental Bureau indicated that it will strive to implement the sixth-phase local standards for oil products in January 2017 to remarkably cut gas emission.
○Caixin.com reported that central SOE China Shipbuilding Industry Corporation is launching the ever largest internal restructuring and will consolidate its 6 major shipbuilding factories into three.
○ The latest weekly report of the Commodity Futures Trading Commission shows that the net long positions in crude oil rises to the highest level in a year.
TOP
[Industry Information]
○ Google to launch modular phone, demands for connector expected to rise
------
According to media report, Google announced at the recent Google I/O that it will launch a developer version of modular phone Project Ara text machine, and the mass-produced version will be out in 2017. It is reported that Project Ara can allows users to determine battery capacity, camera module, processor, size of memory and storage according to their own needs.
Comment: Modular phone can provide more choices for users with lower costs as users can insert modules and assemble and upgrading hardware component themselves. Considering the need to fix components and controlling the size of phone, the appearance of modular phone will boost demands for connectors. In terms of companies, Shenzhen Everwin Precision Technology Co., Ltd. (300115.SZ) and Shenzhen Deren Electronic Co., Ltd. (002055.SZ) have great shares in electronic connectors.
○ iPhone likely to adopt glass casing
------
Foreign media reported that Apple Inc. (NASDAQ:AAPL) plans to launch iPhone with glass casing and metal frames, and that iPhone will adopt OLED screen instead of LCD screen which has been used since 2007. It is reported that the glass casing will be heavier than aluminium alloy casing, but the new AMOLED screen will be lighter. OLED screen and glass casing might be only adopted on iPhone Plus to be launched next year.
Comment: since Apple has a large customer base, if glass body is applied this time, it will create a rather big market space for glass outer parts. Essence Securities indicated in its research report that glass outer parts have been used in many smart devices and have very bright prospect. Lens Technology Co., Ltd. (300433.SZ) is the largest glass item supplier of Apple; Zhejiang Crystal-optech Co., ltd. (002273.SZ) and Lida Optical ＆ Electronic Co., ltd. (002189.SZ) has glass material equipment and relevant technologies.
TOP
[Announcement Interpretation]
○ Two funds under Hejun Capital buy 7.1 pct equities of Changelight
------
Wang Xiangwu, a party acting in concert with the original shareholder of Xiamen Changelight Co., Ltd. (300102.SZ), on May 17 and 18 transferred all together 50 million shares of the company to Juxinsheng No.1 and Zhengdexin No.1, two funds under Hejun Capital through bulk trading and agreement in succession. The total valuation of the transfer was 330 million yuan, with an average price of 6.6 yuan per share.
The above two funds are both controlled by Zhang Yujin, partner of Hejun Capital. Upon completion of the transaction, Zhang holds 7.1 percent equities of Changelight in total. He expressed optimistic view about the business development of the company and expected investment return from the company. Zhang is likely to continue to increase shareholding in the company in the next 12 months. The latest price of the company is 6.71 yuan per share.
○ MTC proposes to buy overseas lighting assets indirectly
------
Shenzhen MTC Co., Ltd. (002429.SZ) proposes to participate in the industry merging and acquisition fund established by a venture capital, to buy an overseas company in the lighting industry. The targeted company is a well-known company in the lighting industry. Supposing the transaction proceeds smoothly, the company will be able to capture the cutting edge technology in the lighting industry, and improve its position in the international market by virtue of its strength in R＆D and manufacturing capacity.
○ Controlling shareholder increased shareholding in Qixing Iron Tower
------
Controlling shareholder of Shandong Qixing Iron Tower Co., Ltd. (002359.SZ) on May 20 increased holding 1.78 million shares in the company. Controlling shareholder of Yihua Lifestyle Technology Co., ltd. (600987.SH) on May 20 continued to increase holding 3.73 million shares of the company.
[Trading Trends]
○ Yongtai Technology bought through three institutional seats
------
The trading volume ranking list of May 20 indicated that Zhejiang Yongtai Technology Co., ltd. (002326.SZ) was bought through three institutional seats with a total of 102 million yuan, accounting for 13.21 percent of intraday turnover.
Comment: institutions indicated that the company's pesticide segment has seen stable orders; the medical intermediate pentafluorophenol has great prospect; the building of a vertically integrated medical industrial chain has gradually completed; electronic chemicals will soon be put into production; light-sensitive lacquer is already at the downstream testing stage. In the next three years, the medical, pesticide and electronic chemical businesses of the company is likely to embrace good performance.
[Trading Alarms]
○ Skshu Paint to debut IPO on May 23
------
The issuing price of Skshu Paint Co., Ltd. (732737.SZ) will be 15.94 yuan per share, with the PE ratio of 18 times. The upper limit of subscription is 10,000 shares. The company is primarily engaged in paintings.
[Weekly Review]
○ Which is the best destination for money when markets are gloom?
------
In the middle of May, the stock index had raised and fallen in a narrow range of less than 100 points. However, things were quite different for individual stocks. Though both benefited from the price hikes, the chemical sector declined while the rare earth sector surged; for new technologies that has achieved constant progress, the intelligent driving sector weakened, but the block chain sector climbed. On May 20, the lithium battery sector abruptly fell after outperformed the market for days, while the soil environmental protection and pollution control action plan and Chongqing Free Trade Zone related opportunities again emerge.
Stock holders are unwilling to keep the stocks as they concern about the economic slowdown. But as the rigid redemption of bonds is no longer sustainable and housing purchase is restricted, capitals can hardly find a better investment choice than the stock market. The idled money will finally flow back to the stock market. When investors' sentiment about the market is complicated, it is an inevitable result that the performance of different sectors will take turns to lead the market.
To deal with such a market condition, we should strategically act slower and more calmly than the market, in order to avoid buy high and sell low. While in terms of tactics, we should act faster and more flexible than the market, and discover new hot spots as soon as possible. The SSN on May 12 reported that the nine biggest molybdenum mines had proposed to jointly cut production, on May 17 reported quantum communication would be a focus at an important meeting, and on May 19 reported that Google started to conduct research in artificial intelligence. Subsequently, relevant stocks all have very good performance.
TOP
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