[Today's Guide]
○ State Council to promote non-ferrous metals transformation and cut over-capacity
○ Lightweight materials to facilitate new energy vehicles development, institutes conduct frequent inspections
○ Electric logistics vehicles enjoy advantages and to lead transportation industry
○ Tianyao Pharmaceuticals to acquire pharmaceutical assets, Electrochemical Scientific develops lithium iron phosphate
[SSN Focus]
○ State Council to promote non-ferrous metals transformation and cut over-capacity
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SSN learnt from authoritative persons from the China Nonferrous Metals Industry Association that the General Office of the State Council released the guidance on building an excellent market environment to promote the restructuring and transformation and increase the profits of the non-ferrous metals industry, which set key tasks in strictly controlling new capacities, cutting over-capacities and improving the reserve system. Experts from the General Research Institute for Nonferrous Metals indicated the institute and the association are promoting the application of nonferrous products, such as significantly increasing the application of aluminium products in construction, transportation and other industries.
Comment: The integration of the capacity exit at the supply end and the expansion in application at the demand end will solve the over capacity of non-ferrous metals, the electrolytic aluminium in particular, to promote the overall upgrading of the industry. The aluminium alloy plate for passenger vehicles and aviation and other highly processed products are expected to see rapid development. The appropriate increase in the reserve of non-ferrous metals will help stabilize the market price and ease the pressure of manufacturers.
◆ During the night trading session on June 15, the Shanghai main cooper contracts opened over 2 percent higher and the Shanghai main zinc contracts opened over 1 percent higher.
[TOP]
[SSN Selection]
○ The executive meeting of the State Council on June 15 determines to regulate the margin in the project construction. It is preliminarily estimated that nearly 1 trillion yuan will be vitalized in the construction enterprises.
○ May saw an increase of 985.5 billion yuan in RMB loans, higher than the market expectation. The house purchase loans contributed more to the loans increase.
○ The central bank released the yield curve of the treasury bonds and other bonds in China for the first time. Insiders believe that it will facilitate the internationalization of RMB.
○ The Enterprises Alliance on China Electricity International Capacity Cooperation was established in Beijing on June 15, which will facilitate the "going out" of the power industry in China.
○ Chongqing sees more second children registered than the first children in the first five months. The effects of the two-child policy gradually show out.
○ Foreign media reported that Apple increased the procurement for components to Apple Watch 2. The output may reach 2 million based on the orders.
[Industry Information]
○ Lightweight materials to facilitate new energy vehicles development, relevant companies see more inspections by institutes
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SSN learnt that institutes have increased the inspection on manufacturers of aluminium magnesium alloy and other lightweight materials since the end of May. Xiao Yaqing, chairman of the State-owned Assets Supervision and Administration Commission (SASAC), pointed out in a recent meet with Alcoa president that China has huge potential in the high-quality and lightweight metal market. Under the background of the rapid development of new energy vehicles, the use of lightweight metal materials can reduce the weight of power vehicles and increase the driving mileage.
Comment: Institutes estimate that the demand for aluminium magnesium alloy will surge by 2020. The aluminium magnesium alloy market will exceed 250 billion yuan. The demand for aluminium magnesium alloys will grow at a CAGR of 80 percent. Based on the records of the inspection, Zhejiang Wanfeng Auto Wheel Co., Ltd. (002085.SZ) indicated that its subsidiary is a global leader in the lightweight aluminium magnesium alloy pressure casting industry. It enjoys a market share of over 65 percent in North America with Tesla and BMW as its clients. Nanjing Yunhai Special Metals Co., Ltd. (002182.SZ) indicated that its aluminium magnesium alloy products have been applied in components for new energy vehicles, which can significantly reduce the weight of vehicles.
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○ Electric logistics vehicles enjoy advantages and to lead transportation industry
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SSN learnt that Cainiao and Zhejiang Skio Matrix Co., Ltd. signed a strategic cooperaitn agreement recently. Logistics enterprise in the Cainiao alliance will gradually adopt electric vehicles provided by Skio Matrix and its partners in delivery. Skio Matrix will open its mobile power grid to such enterprises and provide charging and other services. For Cainiao, the introduction of the new energy vehicles provided by Skio Matrix and its partners will solve the high cost and the difficulties in the management of vehicles of logistics enterprises.
Comment: Institutes believe that the overall cost of purely electric vehicles is lower and they are more environment-friendly. Considering the subsidies on the purchase of vehicles are equivalent to ordinary vehicles, the operation cost of electric vehicles will reduce 37,800 yuan each year while the carbon emission will reduce 11,787kg each year. They will become the new orientation of the transportation industry in the future. The express delivery industry has been developing rapidly in recent years. Based on the penetration rate of 30 percent for electric logistics vehicles, the market potential can reach 10 billion yuan.
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[Announcement Interpretation]
○ Tianyao Pharmaceuticals plans to acquire pharmaceutical assets for RMB1.37 bln
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Tianjin Tianyao Pharmaceuticals Co., Ltd. (600488.SH) plans to acquire 62 percent equities of Tianjin Kingyork Pharmaceuticals Co., Ltd. and 100 equities of Hubei Tianyao Pharmaceuticals Co., Ltd. for a total of 1,373 million yuan among which 443 million yuan will be paid in cash and the reminder will be paid by issuing 183 million shares at 5.08 yuan per share to its controlling shareholder Tianyao Group and others. In 2015, Tianjin Kingyork Pharmaceuticals and Hubei Tianyao Pharmaceuticals garnered a net profit of 68.90 million yuan and 3.78 million yuan, respectively.
By acquiring the two companies of its substantial shareholder, Tianyao Pharmaceuticals will improve its investment in corticosteroid and amino acid drug. The company's strategy shifts from bulk drug to both bulk drug and preparations. Meanwhile, it introduces chemical drug injection to expand its main business.
○ Electrochemical Scientific develops lithium iron phosphate business
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Xiangtan Electrochemical Scientific Co., Ltd. (002125.SZ) plans to set up Hunan Yuneng New Material Co., Ltd. with Guangzhou L＆F New Material Co., Ltd. and others. The former will contribute 20 million yuan, accounting for 20 percent of the total share capital.
The new company will be mainly engaged in lithium iron phosphate and other materials for li-ion batteries. It will produce about 10,000 tons of nanoscale lithium iron phosphate annually. And its first phase project can produce 3,000 tons annually. The investment will help the company expand its business scale and profitability in new energy materials for battery.
[TOP]
○ Gcl System Integration Technology raises fund through private placement to invest in photovoltaic cell
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Gcl System Integration Technology Co., Ltd. (002506.SZ) plans to raise 3,346 million yuan by issuing 700 million shares through private placement to investment in its 1,600MW effective differential photovoltaic cell project, 250MW super-effective heterojunction photovoltaic cell project and 500MWh energy storage project and supplement working capital.
○ Annada Titanium Industry follows to lift titanium dioxide prices
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As Henan Billions Chemicals Co., Ltd. (002601.SZ) and CNNC Hua Yuan Titanium Dioxide Co., Ltd. (002145.SZ) lifted the prices of their main product titanium dioxide, Anhui Annada Titanium Industry Co., Ltd. (002136.SZ) decides to lift the price of its main product, rutile titanium dioxide from June 14. Specifically, the price of rutile titanium dioxide for domestic sale hiked up 500 yuan per ton, and that for exports hiked up 80 U.S. dollars per ton. The price of its rutile titanium dioxide has hiked a total of 2,800 yuan per ton till now, and that of anatase titanium dioxide hiked a total of 2,000 yuan per ton.
○ Keda Clean Energy's chairman becomes its biggest shareholder
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Lu Qin, the substantial shareholder of Keda Clean Energy Co., Ltd. (600499.SH), proposes to transfer his 38 million share holdings in the company to the company's second largest shareholder Bian Cheng. After the transfer, Lu Qin's shareholdings in the company will decrease to 9.63 percent, and Bian Cheng's shareholdings will rise to 12.33 percent. The company will have no controlling shareholder or actual controller. The transfer is valued at a total of over 500 million yuan, or 13.23 yuan per share, with some discount from the company's latest stock price of 15.69 yuan.
Comment: Lu Qin, as honorary chairman of the company, has not been involved in its decision-making and management. Bian Cheng, the president, plays a very important role in the company's development. Therefore, the transfer will help optimize the company's equity structure and improve consistency of the interests between its senior management and shareholders.
[Financial Reports Express]
○ Zhengbang Technology revises up H1 earnings forecast
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Jiangxi Zhengbang Technology Co., Ltd. (002157.SZ) revised up earnings forecast for the first half year, benefiting from rise in pork prices. It revised up its net profit from 450 million to 500 million yuan to 600 million to 610 million yuan for the first half year.
[Trading Trends]
○ Citychamp Dartong bought by two institutions
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The trading volume ranking list on June 15 shows that Citychamp Dartong Co., Ltd. (600067.SH) was bought by two institutions with a total amount of 138 million yuan, accounting for 33.8 percent of its intraday turnover. Another one institutional seats sold 57.56 million yuan.
Comment: The lithium sector went up on June 15. The company set up a subsidiary Citychamp RuImin New Energy Co., Ltd. which is engaged in the research, development, production and sales of power battery, battery pack and electricity charging technology. In addition, institutions believe that as most of the company's real estate projects are in Beijing, Suzhou and Nanjing and house sales in the first- and second-tier cities continue to improve, the company sees a promising sales prospect this year.
[Trading Alarms]
○ Holsin Engineering Consulting to debut IPO on June 16
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Holsin Engineering Consulting Co., Ltd. (732909) will offer shares at 10.55 yuan per share with an upper limit of 10,000 shares for each applicant. The company's PE ratio is 21 times. The company is a comprehensive engineering management consulting enterprise.
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