[Today's Guide]
○'Soil Ten' launched, more efforts to be made in soil monitoring and remediation
○China steps into 5G era, Internet data traffic to see booming development
○Fulin Precision Machining to acquire Shenhua Technology, Zhengye Technology to acquire two automation equipment producers
○Zhengye Technology to acquire two automation equipment producers, Two sub-new stocks bought by institutional seats
[SSN Focus]
○ 'Soil Ten' launched, more efforts to be made in soil monitoring and remediation
------
The website of Chinese government releases the Action Plan on the Prevention of Soil Pollution (the 'Soil Ten') today, pointing out that the overall situation of China's soil environment is worrying and some regions suffers severe soil pollution, which has become a highlighted shortage when building a moderately prosperous society in all respects. Therefore, the plan proposes to establish a soil quality monitoring network and make soil quality monitoring spots cover all counties (including cities and districts) by the end of 2020; to orderly conduct pollution control and remediation and 100 million mu polluted cultivated land will be repaired by 2020.
Comment: Based on the goal of the Soil Ten, the task of prevention and control of soil pollution is very tough but has gained various policy supports. Institutions believe that soil remediation is under early development stage and its annual average compound growth rate is expected to reach about 50 percent during the 13th Five-year Plan period. Among listed companies in A-share market, Jiangsu Skyray Instrument Co., Ltd. (300165.SZ) has introduced several soil detection devices. Beijing GeoEnviron Engineering ＆ Technology, Inc. (603588.SH) and Guangxi Bossco Environmental Protection Technology Co., Ltd. (300422.SZ) are very experienced in soil remediation projects.
○CSOP FTSE China A50 ETF saw subscription with RMB1.8 bln, foreign capitals rush into A-share market
------
SSN learns that CSOP FTSE China A50 ETF saw a net subscription with 185 million fund units on May 31 and the total amount reached about 1.83 billion yuan. Nearly 10 foreign-funded institutions participated in the subscription. It is the third time that this RQFII ETF received wholesale subscription in one week, recording 4.4 billion yuan in net inflow. At the secondary market, the CSOP FTSE China A50 ETF surged with increasing turnover and its closing price saw a 1 percent premium when compared with its net value. This indicates that it is favored by capitals. The Northbound Trading of the Shanghai-Hong Kong Stock Connect witnessed 3.4 billion yuan in net buying, hitting a new record high in four months.
Comment: In the opinion of analysts, although it is not sure whether the A shares will be included in MSCI, but it is quite possible in terms of the activities of overseas capitals. The A-share market saw a balance between long positions and short positions since mid-May. With the incremental overseas capitals breaking this pattern, the long positions are expected to win in this battle.
[SSN Selection]
○Statistics from the State Administration of Foreign Exchange (SAFE) indicates that it has approved 501.8 billion yuan for RQFII quota as of May 30, up by 21.2 billion yuan when compare with April 28.
○The Southbound Trading of the Shanghai-Hong Kong Stock Connect witnessed 26.7 billion Hong Kong dollars in net inflow in May, ranking the second highest in history.
○The central bank conducts a reverse repo with 120 billion yuan on May 31 and the precision plan deals with the short-term fluctuation in capital supply at the end of the month.
○Last week, the securities margin saw 58.2 billion yuan in net transfer. Investors' trading was less active and positions decreased when compared with the previous week.
○The World Soccer Congress will kick off in Shanghai on June 1. Senior managers of several famous football clubs from home and abroad will attend it.
TOP
[Industry Information]
○China steps into 5G era, Internet data traffic to see booming development
------
The 1st Global 5G Event was held in Beijing on May 31. The Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology (MOST) support the establishment of a group to advance 5G to fully advance the research and development of 5G. It will conduct the research, development and experiment on 5G technologies and establish a wide 5G cooperation mechanism with the Europe, the U.S., Japan and South Korea. The tremendous users group and economic aggregate contain huge application demand and development potential, which has made foundation for China to step into 5G era quickly.
Comment: The data traffic of mobile network in China grew by 103 percent year on year in 2015. Insiders believe that the settlement of 5G standards will promote the development of high data traffic application. The application of unmanned drive, home robots and other Internet of Things will be coming soon. Institutions think that Wangsu Science ＆ Technology Co., Ltd. (300017.SZ) leading in CDN, Shenzhen SDG Information Co., Ltd. (000070.SZ) and Shenzhen Gongjin Electronics Co., Ltd. (603118.SH) engaged in optical communication industry are expected to benefit from the booming development of Internet data traffic.
○Institutes inspect 3D curved glass, coating film enterprises expected to see higher demands and expansion
------
SSN learnt that as Apple may adopt glass body for its new model, institutes have increased their inspections on 3D curved glass since late May. Statistics show that Lens Technology Co., Ltd. (300433.SZ), which was inspected by Nanshan Life Insurance and other institutes, indicated that the output of its 3D products still enjoys huge growth potential. The unit price of 3D products is 3 to 5 times of 2.5D products. With more projects putting into production in the future, the brands and products of 3D curved glass will increase.
Comment: Compared to metal and plastics, the thermal conductivity of glass is between those of the said two materials, but glass is more transparent than plastics and easier to color than metal. 3D bend glass and OLED provide more innovative possibilities for screen function. The demands for film coating enterprises, such as Zhejiang Crystal-optech Co., Ltd. (002273.SZ) and Lida Optical ＆ Electronic Co., Ltd. (002189.SZ), are likely to expand.
TOP
[Announcement Interpretation]
○Fulin Precision Machining to acquire Shenhua Technology
------
Mianyang Fulin Precision Machining Co., Ltd. (300432.SZ) proposes to acquire the 100 percent equities of Hunan Shenhua Technology Co., Ltd. with 2.1 billion yuan: nearly 1.6 billion yuan through private placement with 16.68 yuan per share and cash of 504 million yuan. Meanwhile, the company will also raise 1.5 billion yuan through private placement with the same price. An Zhifu, the actual controller of the company, will carry out subscriptions.
Shenhua Technology is mainly engaged in the research, production and sales of anode materials for power battery, and its main products include lithium iron phosphate and ternary anode materials. The original shareholders promise that its net profits from 2016 to 2018 will be no less than 152 million yuan, 200 million yuan and 261 million yuan.
TOP
○Zhengye Technology to acquire two automation equipment producers
------
Guangdong Zhengye Technology Co., Ltd. (300410.SZ) proposes to acquire the 51 percent equities of Shenzhen Prevail Technology Co., Ltd. and 100 percent equities of Shenzhen Xuansuo Optoelectronic Technology Co., Ltd. with 572 million yuan. 157.5 million yuan will be paid in cash, and the remaining through private placement with 41.41 yuan per share. The company also plans to raise 265 million yuan through private placement, and the pricing benchmark will base on the first date of issuance.
Prevail Technology is mainly engaged in automatized welding production line, related equipment, welding materials and components, and the original shareholders committed that its net profits from 2016 to 2018 will be no less than 25 million yuan, 32.50 million yuan and 42.25 million yuan. Xuansuo Optoelectronic Technology is mainly engaged in LED automation equipment and overall solutions, and the original shareholders committed that its net profits from 2016 to 2018 will be no less than 36 million yuan, 46.80 million yuan and 60.84 million yuan
○Midea Group to acquire robot magnate KUKA with RMB29.2 bln
------
Midea Group Co., Ltd. (000333.SZ) proposes to provide an offer to acquire KUKA Group through its wholly-owned overseas subsidiary MECC with cash. Based on 115 euros per share, the total price for acquisition is 4 billion euros (29.2 billion yuan). KUKA is a leading robot and automatic production equipment ＆ solutions supplier worldwide, with three main businesses, including KUKA robot, KUKA system and SWISSLOG. The operational revenue of KUKA Group recorded 2,966 million euros in 2015, with a net profit of 136 million euros before deducting interest rate and tax.
○BBMG Corporation to invest Jidong Development with over RMB5.2 bln
------
BBMG Corporation (601992.SH) proposes to subscribe the newly registered capital of around 1.24 billion yuan of Jidong Development Co., Ltd. with 4.75 billion yuan, and meanwhile, the company also plans to acquire the 10 percent equities of Jidong Development held by Zhongtai Trust Co., Ltd. with 475 million yuan. After transaction, the company will hold 55 percent equities of Jidong Development, making it as the controlling shareholder of Jidong Development and indirect controlling shareholder of Tangshan Jidong Cement Co., Ltd. (000401.SZ) and Tangshan Jidong Equipment and Engineering Co., Ltd. (000856.SZ).
○Keda Clean Energy and Gree Real Estate to launch employee shareholding plan
------
Keda Clean Energy Co., Ltd. (600499.SH) proposes to launch the employee shareholding plan of no more than 87 million yuan, and it expects to involve no more than 5.97 million shares, accounting for 0.85 percent equity. Gree Real Estate Co., Ltd. (600185.SH) launches the first employee shareholding plan to raise the fund not surpassing 15 million yuan; institutions will be authorized to establish the asset management plan for purchasing and holding the shares of Gree Real Estate.
[Trading Trends]
○Two sub-new stocks bought by institutional seats
------
On May 31, two sub-new stocks Zhejiang Doyin Pump Industry Co., Ltd. (002793.SZ) and Shanghai Weihong Electronic Technology Co., Ltd. (300508.SZ) were bought by institutional seats. 27.90 million shares of Doyin Pump Industry were bought by one institutional seat, accounting for 5.01 percent of intraday turnover; 33.41 shares of Weihong Electronic Technology bought by two ones, 6.51 percent.
Comment: Doyin Pump Industry is the largest well submersible pump manufacturer and exporter in China. Analyst believed that, under the background of speeding-up development in agricultural water conservancy, the company is likely to form a developing trend with progress in both domestic and overseas businesses. Weihong Electronic Technology is a solutions provider for professional sports controlling system. Along with constant upgrading of China's manufacturing industry, insiders believed that the sports controlling businesses of the company will achieve favorable market chances.
TOP
○'Soil Ten' launched, more efforts to be made in soil monitoring and remediation
○China steps into 5G era, Internet data traffic to see booming development
○Fulin Precision Machining to acquire Shenhua Technology, Zhengye Technology to acquire two automation equipment producers
○Zhengye Technology to acquire two automation equipment producers, Two sub-new stocks bought by institutional seats
[SSN Focus]
○ 'Soil Ten' launched, more efforts to be made in soil monitoring and remediation
------
The website of Chinese government releases the Action Plan on the Prevention of Soil Pollution (the 'Soil Ten') today, pointing out that the overall situation of China's soil environment is worrying and some regions suffers severe soil pollution, which has become a highlighted shortage when building a moderately prosperous society in all respects. Therefore, the plan proposes to establish a soil quality monitoring network and make soil quality monitoring spots cover all counties (including cities and districts) by the end of 2020; to orderly conduct pollution control and remediation and 100 million mu polluted cultivated land will be repaired by 2020.
Comment: Based on the goal of the Soil Ten, the task of prevention and control of soil pollution is very tough but has gained various policy supports. Institutions believe that soil remediation is under early development stage and its annual average compound growth rate is expected to reach about 50 percent during the 13th Five-year Plan period. Among listed companies in A-share market, Jiangsu Skyray Instrument Co., Ltd. (300165.SZ) has introduced several soil detection devices. Beijing GeoEnviron Engineering ＆ Technology, Inc. (603588.SH) and Guangxi Bossco Environmental Protection Technology Co., Ltd. (300422.SZ) are very experienced in soil remediation projects.
○CSOP FTSE China A50 ETF saw subscription with RMB1.8 bln, foreign capitals rush into A-share market
------
SSN learns that CSOP FTSE China A50 ETF saw a net subscription with 185 million fund units on May 31 and the total amount reached about 1.83 billion yuan. Nearly 10 foreign-funded institutions participated in the subscription. It is the third time that this RQFII ETF received wholesale subscription in one week, recording 4.4 billion yuan in net inflow. At the secondary market, the CSOP FTSE China A50 ETF surged with increasing turnover and its closing price saw a 1 percent premium when compared with its net value. This indicates that it is favored by capitals. The Northbound Trading of the Shanghai-Hong Kong Stock Connect witnessed 3.4 billion yuan in net buying, hitting a new record high in four months.
Comment: In the opinion of analysts, although it is not sure whether the A shares will be included in MSCI, but it is quite possible in terms of the activities of overseas capitals. The A-share market saw a balance between long positions and short positions since mid-May. With the incremental overseas capitals breaking this pattern, the long positions are expected to win in this battle.
[SSN Selection]
○Statistics from the State Administration of Foreign Exchange (SAFE) indicates that it has approved 501.8 billion yuan for RQFII quota as of May 30, up by 21.2 billion yuan when compare with April 28.
○The Southbound Trading of the Shanghai-Hong Kong Stock Connect witnessed 26.7 billion Hong Kong dollars in net inflow in May, ranking the second highest in history.
○The central bank conducts a reverse repo with 120 billion yuan on May 31 and the precision plan deals with the short-term fluctuation in capital supply at the end of the month.
○Last week, the securities margin saw 58.2 billion yuan in net transfer. Investors' trading was less active and positions decreased when compared with the previous week.
○The World Soccer Congress will kick off in Shanghai on June 1. Senior managers of several famous football clubs from home and abroad will attend it.
TOP
[Industry Information]
○China steps into 5G era, Internet data traffic to see booming development
------
The 1st Global 5G Event was held in Beijing on May 31. The Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology (MOST) support the establishment of a group to advance 5G to fully advance the research and development of 5G. It will conduct the research, development and experiment on 5G technologies and establish a wide 5G cooperation mechanism with the Europe, the U.S., Japan and South Korea. The tremendous users group and economic aggregate contain huge application demand and development potential, which has made foundation for China to step into 5G era quickly.
Comment: The data traffic of mobile network in China grew by 103 percent year on year in 2015. Insiders believe that the settlement of 5G standards will promote the development of high data traffic application. The application of unmanned drive, home robots and other Internet of Things will be coming soon. Institutions think that Wangsu Science ＆ Technology Co., Ltd. (300017.SZ) leading in CDN, Shenzhen SDG Information Co., Ltd. (000070.SZ) and Shenzhen Gongjin Electronics Co., Ltd. (603118.SH) engaged in optical communication industry are expected to benefit from the booming development of Internet data traffic.
○Institutes inspect 3D curved glass, coating film enterprises expected to see higher demands and expansion
------
SSN learnt that as Apple may adopt glass body for its new model, institutes have increased their inspections on 3D curved glass since late May. Statistics show that Lens Technology Co., Ltd. (300433.SZ), which was inspected by Nanshan Life Insurance and other institutes, indicated that the output of its 3D products still enjoys huge growth potential. The unit price of 3D products is 3 to 5 times of 2.5D products. With more projects putting into production in the future, the brands and products of 3D curved glass will increase.
Comment: Compared to metal and plastics, the thermal conductivity of glass is between those of the said two materials, but glass is more transparent than plastics and easier to color than metal. 3D bend glass and OLED provide more innovative possibilities for screen function. The demands for film coating enterprises, such as Zhejiang Crystal-optech Co., Ltd. (002273.SZ) and Lida Optical ＆ Electronic Co., Ltd. (002189.SZ), are likely to expand.
TOP
[Announcement Interpretation]
○Fulin Precision Machining to acquire Shenhua Technology
------
Mianyang Fulin Precision Machining Co., Ltd. (300432.SZ) proposes to acquire the 100 percent equities of Hunan Shenhua Technology Co., Ltd. with 2.1 billion yuan: nearly 1.6 billion yuan through private placement with 16.68 yuan per share and cash of 504 million yuan. Meanwhile, the company will also raise 1.5 billion yuan through private placement with the same price. An Zhifu, the actual controller of the company, will carry out subscriptions.
Shenhua Technology is mainly engaged in the research, production and sales of anode materials for power battery, and its main products include lithium iron phosphate and ternary anode materials. The original shareholders promise that its net profits from 2016 to 2018 will be no less than 152 million yuan, 200 million yuan and 261 million yuan.
TOP
○Zhengye Technology to acquire two automation equipment producers
------
Guangdong Zhengye Technology Co., Ltd. (300410.SZ) proposes to acquire the 51 percent equities of Shenzhen Prevail Technology Co., Ltd. and 100 percent equities of Shenzhen Xuansuo Optoelectronic Technology Co., Ltd. with 572 million yuan. 157.5 million yuan will be paid in cash, and the remaining through private placement with 41.41 yuan per share. The company also plans to raise 265 million yuan through private placement, and the pricing benchmark will base on the first date of issuance.
Prevail Technology is mainly engaged in automatized welding production line, related equipment, welding materials and components, and the original shareholders committed that its net profits from 2016 to 2018 will be no less than 25 million yuan, 32.50 million yuan and 42.25 million yuan. Xuansuo Optoelectronic Technology is mainly engaged in LED automation equipment and overall solutions, and the original shareholders committed that its net profits from 2016 to 2018 will be no less than 36 million yuan, 46.80 million yuan and 60.84 million yuan
○Midea Group to acquire robot magnate KUKA with RMB29.2 bln
------
Midea Group Co., Ltd. (000333.SZ) proposes to provide an offer to acquire KUKA Group through its wholly-owned overseas subsidiary MECC with cash. Based on 115 euros per share, the total price for acquisition is 4 billion euros (29.2 billion yuan). KUKA is a leading robot and automatic production equipment ＆ solutions supplier worldwide, with three main businesses, including KUKA robot, KUKA system and SWISSLOG. The operational revenue of KUKA Group recorded 2,966 million euros in 2015, with a net profit of 136 million euros before deducting interest rate and tax.
○BBMG Corporation to invest Jidong Development with over RMB5.2 bln
------
BBMG Corporation (601992.SH) proposes to subscribe the newly registered capital of around 1.24 billion yuan of Jidong Development Co., Ltd. with 4.75 billion yuan, and meanwhile, the company also plans to acquire the 10 percent equities of Jidong Development held by Zhongtai Trust Co., Ltd. with 475 million yuan. After transaction, the company will hold 55 percent equities of Jidong Development, making it as the controlling shareholder of Jidong Development and indirect controlling shareholder of Tangshan Jidong Cement Co., Ltd. (000401.SZ) and Tangshan Jidong Equipment and Engineering Co., Ltd. (000856.SZ).
○Keda Clean Energy and Gree Real Estate to launch employee shareholding plan
------
Keda Clean Energy Co., Ltd. (600499.SH) proposes to launch the employee shareholding plan of no more than 87 million yuan, and it expects to involve no more than 5.97 million shares, accounting for 0.85 percent equity. Gree Real Estate Co., Ltd. (600185.SH) launches the first employee shareholding plan to raise the fund not surpassing 15 million yuan; institutions will be authorized to establish the asset management plan for purchasing and holding the shares of Gree Real Estate.
[Trading Trends]
○Two sub-new stocks bought by institutional seats
------
On May 31, two sub-new stocks Zhejiang Doyin Pump Industry Co., Ltd. (002793.SZ) and Shanghai Weihong Electronic Technology Co., Ltd. (300508.SZ) were bought by institutional seats. 27.90 million shares of Doyin Pump Industry were bought by one institutional seat, accounting for 5.01 percent of intraday turnover; 33.41 shares of Weihong Electronic Technology bought by two ones, 6.51 percent.
Comment: Doyin Pump Industry is the largest well submersible pump manufacturer and exporter in China. Analyst believed that, under the background of speeding-up development in agricultural water conservancy, the company is likely to form a developing trend with progress in both domestic and overseas businesses. Weihong Electronic Technology is a solutions provider for professional sports controlling system. Along with constant upgrading of China's manufacturing industry, insiders believed that the sports controlling businesses of the company will achieve favorable market chances.
TOP
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