[Today's Guide]
○ Mid- and long-term plan for railway network approved, China to build 8 north-to-south railways and 8 east-to-west railways
○ Battle for human face recognition market to start, stricter regulations for drug firms promote industry transformation
○ Tonze Electric acquires lithium firm, Zhejiang Orient Holdings to buy financial assets
○ Global Infotech to acquire Shanghai Ruimin, Shanghai Ganglian E-commerce Holdings to buy ZOL.com.cn
[SSN Focus]
○Mid- and long-term plan for railway network approved, China to build 8 north-to-south railways and 8 east-to-west railways
------
The executive meeting of the State Council on June 29 approved in principle the mid- and long-term plan for railway network. The plan proposes to build a high-speed railway network, with eight railways from south to north and eight from east to west as mainly lines and intercity railways as supplement; improve ordinary railway network and make railway cover all administrative districts above county levels; improve central funds' input in the railway construction in central and western China, vitalize exiting assets via market-based methods and relax market access.
Comment: To accelerate railway construction will not only help stabilize growth and adjustment economic structure but also expand efficient investment and consumption. It is a major beneficial measure both from the short and long view. Compared with the previous version of the mid- and long-term plan for railway network (revised in 2008), the new plan adjusted the objectives of main high-speed network from "four north-to-south railways and four east-to-west railways" to "eight north-to-south railways and eight east-to-west railways". Analysts interviewed expect that the annual average fixed-income asset investment in railway will reach 810 billion yuan during the 13th Five-Year Plan period, 15 percent higher than the 12th Five-Year Plan period; the annual average investment in urban rail transmit is expected to grow 76 percent from 2015.
[SSN Selection]
○ President of China Telecom Corporation Limited (CHA.NYSE; 00728.HK) estimated at the Mobile World Congress on June 29 that China's intelligentization market will reach a scale of 6.4 trillion yuan in 2020.
○ Hong Kong continues to see capital inflow into renminbi-denominated treasury bonds ETF. Renminbi is expected to become new safe-haven currency.
○ Ningbo City was approved to be China's first comprehensive pilot city for insurance innovation, which is of significance of promoting economic, financial and social transformation and development in Ningbo.
○ The 21st Century Business Herald reported that Chongqing Foreign Trade and Economic Relations Commission has received reply from Disney that it would not consider no more projects in other Chinese cities.
○ Sub-new stocks, including Shanghai Weihong Electronic Technology Co., Ltd. (300508.SZ), Guangzhou Haozhi Industrial Co., Ltd. (300503.SZ) and Jiangsu Olive Sensors High-Tech Co., Ltd. (300507.SZ), announced that they will suspend trading for verification from June 30 due to recent surge.
TOP
[Industry Information]
○ Battle for human face recognition market to start, market to explode soon
------
Ant Financial said on June 29 on its Weibo that it launches the artificial-intelligence and biological-recognition robot "Mark" , and will hold a contest to recognize faces of Internet celebrities with Wang Yuheng, a contestant in a reality-competition program Super Brain known for his observation ability. The contest will be broadcast on the Internet. Head of the Mark R＆D team indicated that The biological recognition technology of Ant Financial ranks top in various authoritative evaluations across the global. Its precision in a public evaluation in international authoritative face database has exceeded 99.5 percent.
Comment: Institutes estimate that the annual compound growth rate of the human face recognition market will reach 18 percent by 2019. China still has a low proportion in the human face recognition market. As the singular point of the industry's technologies comes close, China's market will see an explosion soon. Guosen Securities noted in its research report that Cloud Walk Technology Co., Ltd. in which Pci-suntek Technology Co., Ltd. (600728.SH) made investment is a leader in human face recognition. Poya Information Technology, subsidiary of Zhuhai Orbita Control Engineering Co., Ltd. (300053.SZ), is also involved in human face recognition business.
○ Drug enterprises to face stricter supervision in production, promote industry transformation and upgrading
------
SSN learnt that a circular on further strengthening supervision over medicine manufacturing technique was distributed to pharmaceutical enterprises yesterday. The circular requires the enterprises to self-inspect the manufacturing technique of each medicine which has been approved to hit the market before Dec. 31 and those who fail to finish this task before the deadline may be forced to suspend production or import. They are required to self-check whether the production technique of medicine accords with the production technique approved by supervisors.
Comment: Industry insiders analyze that the approach of self-inspection means the start of eliminating outdated production capacity. A lot of pharmaceutical enterprises might shut down. But in the long run, it is good for the standardized development of the industry and leading enterprises. In the opinions of securities researchers, pharmaceutical equipment manufacturers with modernized and intelligentized production, including Shanghai Tofflon Science and Technology Co., Ltd. (300171.SZ) and Zhejiang Canaan Technology Co., Ltd. (300412,SZ), are expected to benefit from the process of transformation and upgrade of Chinese pharmaceutical industry.
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[Announcement Interpretation]
○ Tonze Electric acquires lithium firm for RMB2.7 bln
------
Guangdong Tonze Electric Co., Ltd.(002759.SZ) proposes to acquire 100 percent equities of Jiangsu Xintai Material Co., Ltd. for 2.7 billion yuan among which 405 million yuan will be paid in cash and the remainder will by paid by issuing 178 million shares at 12.89 yuan per share. It also proposes to raise 440 million yuan supporting fund by issuing shares at 12.89 yuan per share to its controlling shareholder Shantou Tzone Co., Ltd.
Xintai Material is mainly engaged in the research, development and sales of lithium hexafluorophosphate, a major raw material for lithium battery electrolyte. According to performance commitment, the net profit of Xintai Material after excluding non-recurring profit and loss will be no less than 187 million yuan, 240 million yuan and 248 million yuan from 2016 to 2018.
○ Zhejiang Orient Holdings to buy financial assets from controlling shareholders
------
Zhejiang Orient Holdings Co., Ltd. (600120.SH) proposes to buy 56 percent shareholding of Zhejin Trust, 100 percent shareholding of Dadi Futures and 50 percent shareholding of Sinokorea life at the consideration of 1,633 million yuan by issuing shares through private placement at 17.04 yuan per share. At the same time, the company proposes to raise 1.2 billion yuan for private placement at the same issuing price, which will be used to increase capital in Zhejin Trust, Dadi Futures and Sinokorea life.
Through this transaction, the core financial assets of Zhejiang International Business Group Co., Ltd. will be listed overall. Zhejiang Orient Holdings therefore will be transformed into a comprehensive holding group with financial business as its major business. And by bringing in strategic investors, the company will have multiple property rights in the form of mixed ownership. Zhejiang International Business Group committed that the net profits of Zhejin Trust after tax will be no less than 52,520,000 yuan, 56,990,000 yuan, 65,260,000 yuan from 2016 to 2018.
TOP
○ Global Infotech to acquire Shanghai Ruimin with RMB300 mln
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Global Infotech Co., ltd. (300465.SZ) proposes to buy the entire equities of Shanghai Ruimin Internet Technology Co., Ltd. at the consideration of 300 million yuan through additional issuance and cash payment. 78.2 percent of the consideration will be satisfied in the way of share issuance at the issuing price of 20.9 yuan per share. Meanwhile, the company will issue shares at the same price to its controlling shareholders, including Yinggao Investment, Dazi Shengshijing and Taihe Ruisi, through private placement, to raise supporting fund of 77,900,000 yuan.
Shanghai Ruimin is engaged in information technology business, and has cutting edge advantage in online payment business, bill business and financial leasing business. The Counterparty committed that net profits of Shanghai Ruimin will be no less than 20 million yuan, 26 million yuan and 33.8 million yuan respectively from 2016 to 2018.
○ Shanghai Ganglian E-commerce Holdings to buy ZOL.com.cn
------
Shanghai Ganglian E-commerce Holdings Co., ltd. (300226.SZ) proposes to buy the entire equities of Beijing Zhixing Ruijing Technology Co., Ltd. through additional issuance and cash payment. The consideration is 2.08 billion yuan, in which 55 percent will be satisfied by share issuance at the price of 36.49 yuan per share. At the same time, the company proposes to issue shares at the same price to its shareholder Dongxinye Investment, associated company Yuanlian Investment and general manager Gao Bo, to raise 953 million yuan.
Zhixing Ruijing runs the well-known website ZOL.com.cn. ZOL.com.cn ranked the 16th overall among Chinese language websites and number one in terms of overall rankings in Chinese language network technology websites. The unaudited net profits of Zhixing Ruijing for 2015 is 42,954,400 yuan. The counterparty committed that net profits of Zhixing Ruijing will be no less than 130 million yuan, 169 million yuan and 219.7 million yuan respectively from 2016 to 2018.
○ Jiangsu Etern proposes to purchase Yongding Zhiyuan
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Jiang Su Etern Co., ltd. (600105.SH) proposes to buy no less than 50 percent equities of Yongding Zhiyuan, which is primarily engaged in development of software and provision of solutions for telecommunication signal acquisition, DPI, Internet security, big data application sectors. It is one of the core partners of China Unicom and China Telecom. The biggest shareholder of Jiangsu Etern holds 50 percent shareholding in Yongding Zhiyuan. Yongding Zhiyuan realized 30,180,000 yuan revenue for the first five months of the year. Its net profit is 19,110,000 yuan.
○ Sealand Securities' gold shell asset management plan buys nearly five percent of Nanning Department Store in secondary market
------
Nanning Department Store Co., Ltd. (600712.SH) announced that Shenzhen Yinhai Wanhe on June 23 increased holding 2,796,000 shares of the company, accounting for 0.5133 percent of its total share capital. As of June 23, the Guohai gold shell 27 asset management plan managed by Sealand Securities held 24,477,000 shares of Nanning Department Store, accounting for 4.494 percent of the total share capital of the company. While Yinhai Wanhe is the consignor of the subordinate share of gold shell 27. Yinhai Wanhe said that it is a party acting in concert with gold shell 2, and at the same time, Fu Rulin, a shareholder of Nanning Department Store, is also a party acting in concert. However, the statement is not recognized by Sealand Securities.
○ Reorganizations of Kingsun Optoelectronic and Unistrong Science ＆ Technology approved by CSRC
------
The reorganizations of Dongguan Kingsun Optoelectronic Co., Ltd. (002638.SZ) and Beijing Unistrong Science ＆ Technology Co., Ltd. (002383.SZ) are approved by China Securities Regulatory Commission (CSRC) conditionally.
[Financial Reports Express]
○ Several companies expect growth in interim reports
------
Yihua Healthcare Co., ltd. (000150.SZ) expects 850 million yuan to 950 million yuan semi-annual net profits, up 751 to 840 times year on year, primarily due to the recognition of the investment revenue from selling equities of Guangdong Yihua Real Estate. GuangYuYuan Chinese Herbal Medicine Co., Ltd. (600771.SH) estimates semi-annual net profit of 21 million yuan, up 26 times year on year, primarily due to the performance of its subsidiary GuangYuYuan Shanxi experienced rapid growth.
○ Huangshanghuang Group Food proposes high share dividend
------
Controlling shareholder of Jiangxi Huangshanghuang Group Food Co., Ltd. (002695.SZ) proposes 30-for-10 conversion of capital surplus into shares combined with 1.25 cash dividend. Guangzhou Goaland Energy Conservation Tech Co., Ltd. (300499.SZ) expects 12 percent to 40 percent growth in its interim report and proposes 8-for-10 conversion of capital surplus into shares.
[Trading Trends]
○ J.s. Corrugating Machinery bought through two institutional seats
------
The trading volume ranking list on June 29 shows that J.s. Corrugating Machinery Co., Ltd. (000821.SZ) was bought through two institutional seats with a total of 113 million yuan, accounting for 30.37 percent of intraday turnover.
Comment: institutions believe that Huizhou Sanxie, subsidiary of the company, will start selling various new products in 2016, and actively expand cooperation with large customers such as Foxconn and JD.com. Thus the company's result is expected to increase significantly. The company has also participated in Shenzhen Huidacheng Intelligent Technology and involved in industrial visual. It has also worked tighter with Huazhong University of Science and Technology to set up unmanned aerial vehicle and rehabilitation robot companies. Following actions of the company are well worthy of attention.
[Trading Alarms]
○ Jihong Group to debut IPO on June 30
------
Jihong Group (002803.SZ) will unveil its initial public offering at the issuing price of 6.37 yuan per share. The PE ratio of the company is 23 times and the upper limit of subscription is 11,500 shares. The company is primarily engaged in packaging and printing businesses.
TOP
○ Mid- and long-term plan for railway network approved, China to build 8 north-to-south railways and 8 east-to-west railways
○ Battle for human face recognition market to start, stricter regulations for drug firms promote industry transformation
○ Tonze Electric acquires lithium firm, Zhejiang Orient Holdings to buy financial assets
○ Global Infotech to acquire Shanghai Ruimin, Shanghai Ganglian E-commerce Holdings to buy ZOL.com.cn
[SSN Focus]
○Mid- and long-term plan for railway network approved, China to build 8 north-to-south railways and 8 east-to-west railways
------
The executive meeting of the State Council on June 29 approved in principle the mid- and long-term plan for railway network. The plan proposes to build a high-speed railway network, with eight railways from south to north and eight from east to west as mainly lines and intercity railways as supplement; improve ordinary railway network and make railway cover all administrative districts above county levels; improve central funds' input in the railway construction in central and western China, vitalize exiting assets via market-based methods and relax market access.
Comment: To accelerate railway construction will not only help stabilize growth and adjustment economic structure but also expand efficient investment and consumption. It is a major beneficial measure both from the short and long view. Compared with the previous version of the mid- and long-term plan for railway network (revised in 2008), the new plan adjusted the objectives of main high-speed network from "four north-to-south railways and four east-to-west railways" to "eight north-to-south railways and eight east-to-west railways". Analysts interviewed expect that the annual average fixed-income asset investment in railway will reach 810 billion yuan during the 13th Five-Year Plan period, 15 percent higher than the 12th Five-Year Plan period; the annual average investment in urban rail transmit is expected to grow 76 percent from 2015.
[SSN Selection]
○ President of China Telecom Corporation Limited (CHA.NYSE; 00728.HK) estimated at the Mobile World Congress on June 29 that China's intelligentization market will reach a scale of 6.4 trillion yuan in 2020.
○ Hong Kong continues to see capital inflow into renminbi-denominated treasury bonds ETF. Renminbi is expected to become new safe-haven currency.
○ Ningbo City was approved to be China's first comprehensive pilot city for insurance innovation, which is of significance of promoting economic, financial and social transformation and development in Ningbo.
○ The 21st Century Business Herald reported that Chongqing Foreign Trade and Economic Relations Commission has received reply from Disney that it would not consider no more projects in other Chinese cities.
○ Sub-new stocks, including Shanghai Weihong Electronic Technology Co., Ltd. (300508.SZ), Guangzhou Haozhi Industrial Co., Ltd. (300503.SZ) and Jiangsu Olive Sensors High-Tech Co., Ltd. (300507.SZ), announced that they will suspend trading for verification from June 30 due to recent surge.
TOP
[Industry Information]
○ Battle for human face recognition market to start, market to explode soon
------
Ant Financial said on June 29 on its Weibo that it launches the artificial-intelligence and biological-recognition robot "Mark" , and will hold a contest to recognize faces of Internet celebrities with Wang Yuheng, a contestant in a reality-competition program Super Brain known for his observation ability. The contest will be broadcast on the Internet. Head of the Mark R＆D team indicated that The biological recognition technology of Ant Financial ranks top in various authoritative evaluations across the global. Its precision in a public evaluation in international authoritative face database has exceeded 99.5 percent.
Comment: Institutes estimate that the annual compound growth rate of the human face recognition market will reach 18 percent by 2019. China still has a low proportion in the human face recognition market. As the singular point of the industry's technologies comes close, China's market will see an explosion soon. Guosen Securities noted in its research report that Cloud Walk Technology Co., Ltd. in which Pci-suntek Technology Co., Ltd. (600728.SH) made investment is a leader in human face recognition. Poya Information Technology, subsidiary of Zhuhai Orbita Control Engineering Co., Ltd. (300053.SZ), is also involved in human face recognition business.
○ Drug enterprises to face stricter supervision in production, promote industry transformation and upgrading
------
SSN learnt that a circular on further strengthening supervision over medicine manufacturing technique was distributed to pharmaceutical enterprises yesterday. The circular requires the enterprises to self-inspect the manufacturing technique of each medicine which has been approved to hit the market before Dec. 31 and those who fail to finish this task before the deadline may be forced to suspend production or import. They are required to self-check whether the production technique of medicine accords with the production technique approved by supervisors.
Comment: Industry insiders analyze that the approach of self-inspection means the start of eliminating outdated production capacity. A lot of pharmaceutical enterprises might shut down. But in the long run, it is good for the standardized development of the industry and leading enterprises. In the opinions of securities researchers, pharmaceutical equipment manufacturers with modernized and intelligentized production, including Shanghai Tofflon Science and Technology Co., Ltd. (300171.SZ) and Zhejiang Canaan Technology Co., Ltd. (300412,SZ), are expected to benefit from the process of transformation and upgrade of Chinese pharmaceutical industry.
TOP
[Announcement Interpretation]
○ Tonze Electric acquires lithium firm for RMB2.7 bln
------
Guangdong Tonze Electric Co., Ltd.(002759.SZ) proposes to acquire 100 percent equities of Jiangsu Xintai Material Co., Ltd. for 2.7 billion yuan among which 405 million yuan will be paid in cash and the remainder will by paid by issuing 178 million shares at 12.89 yuan per share. It also proposes to raise 440 million yuan supporting fund by issuing shares at 12.89 yuan per share to its controlling shareholder Shantou Tzone Co., Ltd.
Xintai Material is mainly engaged in the research, development and sales of lithium hexafluorophosphate, a major raw material for lithium battery electrolyte. According to performance commitment, the net profit of Xintai Material after excluding non-recurring profit and loss will be no less than 187 million yuan, 240 million yuan and 248 million yuan from 2016 to 2018.
○ Zhejiang Orient Holdings to buy financial assets from controlling shareholders
------
Zhejiang Orient Holdings Co., Ltd. (600120.SH) proposes to buy 56 percent shareholding of Zhejin Trust, 100 percent shareholding of Dadi Futures and 50 percent shareholding of Sinokorea life at the consideration of 1,633 million yuan by issuing shares through private placement at 17.04 yuan per share. At the same time, the company proposes to raise 1.2 billion yuan for private placement at the same issuing price, which will be used to increase capital in Zhejin Trust, Dadi Futures and Sinokorea life.
Through this transaction, the core financial assets of Zhejiang International Business Group Co., Ltd. will be listed overall. Zhejiang Orient Holdings therefore will be transformed into a comprehensive holding group with financial business as its major business. And by bringing in strategic investors, the company will have multiple property rights in the form of mixed ownership. Zhejiang International Business Group committed that the net profits of Zhejin Trust after tax will be no less than 52,520,000 yuan, 56,990,000 yuan, 65,260,000 yuan from 2016 to 2018.
TOP
○ Global Infotech to acquire Shanghai Ruimin with RMB300 mln
------
Global Infotech Co., ltd. (300465.SZ) proposes to buy the entire equities of Shanghai Ruimin Internet Technology Co., Ltd. at the consideration of 300 million yuan through additional issuance and cash payment. 78.2 percent of the consideration will be satisfied in the way of share issuance at the issuing price of 20.9 yuan per share. Meanwhile, the company will issue shares at the same price to its controlling shareholders, including Yinggao Investment, Dazi Shengshijing and Taihe Ruisi, through private placement, to raise supporting fund of 77,900,000 yuan.
Shanghai Ruimin is engaged in information technology business, and has cutting edge advantage in online payment business, bill business and financial leasing business. The Counterparty committed that net profits of Shanghai Ruimin will be no less than 20 million yuan, 26 million yuan and 33.8 million yuan respectively from 2016 to 2018.
○ Shanghai Ganglian E-commerce Holdings to buy ZOL.com.cn
------
Shanghai Ganglian E-commerce Holdings Co., ltd. (300226.SZ) proposes to buy the entire equities of Beijing Zhixing Ruijing Technology Co., Ltd. through additional issuance and cash payment. The consideration is 2.08 billion yuan, in which 55 percent will be satisfied by share issuance at the price of 36.49 yuan per share. At the same time, the company proposes to issue shares at the same price to its shareholder Dongxinye Investment, associated company Yuanlian Investment and general manager Gao Bo, to raise 953 million yuan.
Zhixing Ruijing runs the well-known website ZOL.com.cn. ZOL.com.cn ranked the 16th overall among Chinese language websites and number one in terms of overall rankings in Chinese language network technology websites. The unaudited net profits of Zhixing Ruijing for 2015 is 42,954,400 yuan. The counterparty committed that net profits of Zhixing Ruijing will be no less than 130 million yuan, 169 million yuan and 219.7 million yuan respectively from 2016 to 2018.
○ Jiangsu Etern proposes to purchase Yongding Zhiyuan
------
Jiang Su Etern Co., ltd. (600105.SH) proposes to buy no less than 50 percent equities of Yongding Zhiyuan, which is primarily engaged in development of software and provision of solutions for telecommunication signal acquisition, DPI, Internet security, big data application sectors. It is one of the core partners of China Unicom and China Telecom. The biggest shareholder of Jiangsu Etern holds 50 percent shareholding in Yongding Zhiyuan. Yongding Zhiyuan realized 30,180,000 yuan revenue for the first five months of the year. Its net profit is 19,110,000 yuan.
○ Sealand Securities' gold shell asset management plan buys nearly five percent of Nanning Department Store in secondary market
------
Nanning Department Store Co., Ltd. (600712.SH) announced that Shenzhen Yinhai Wanhe on June 23 increased holding 2,796,000 shares of the company, accounting for 0.5133 percent of its total share capital. As of June 23, the Guohai gold shell 27 asset management plan managed by Sealand Securities held 24,477,000 shares of Nanning Department Store, accounting for 4.494 percent of the total share capital of the company. While Yinhai Wanhe is the consignor of the subordinate share of gold shell 27. Yinhai Wanhe said that it is a party acting in concert with gold shell 2, and at the same time, Fu Rulin, a shareholder of Nanning Department Store, is also a party acting in concert. However, the statement is not recognized by Sealand Securities.
○ Reorganizations of Kingsun Optoelectronic and Unistrong Science ＆ Technology approved by CSRC
------
The reorganizations of Dongguan Kingsun Optoelectronic Co., Ltd. (002638.SZ) and Beijing Unistrong Science ＆ Technology Co., Ltd. (002383.SZ) are approved by China Securities Regulatory Commission (CSRC) conditionally.
[Financial Reports Express]
○ Several companies expect growth in interim reports
------
Yihua Healthcare Co., ltd. (000150.SZ) expects 850 million yuan to 950 million yuan semi-annual net profits, up 751 to 840 times year on year, primarily due to the recognition of the investment revenue from selling equities of Guangdong Yihua Real Estate. GuangYuYuan Chinese Herbal Medicine Co., Ltd. (600771.SH) estimates semi-annual net profit of 21 million yuan, up 26 times year on year, primarily due to the performance of its subsidiary GuangYuYuan Shanxi experienced rapid growth.
○ Huangshanghuang Group Food proposes high share dividend
------
Controlling shareholder of Jiangxi Huangshanghuang Group Food Co., Ltd. (002695.SZ) proposes 30-for-10 conversion of capital surplus into shares combined with 1.25 cash dividend. Guangzhou Goaland Energy Conservation Tech Co., Ltd. (300499.SZ) expects 12 percent to 40 percent growth in its interim report and proposes 8-for-10 conversion of capital surplus into shares.
[Trading Trends]
○ J.s. Corrugating Machinery bought through two institutional seats
------
The trading volume ranking list on June 29 shows that J.s. Corrugating Machinery Co., Ltd. (000821.SZ) was bought through two institutional seats with a total of 113 million yuan, accounting for 30.37 percent of intraday turnover.
Comment: institutions believe that Huizhou Sanxie, subsidiary of the company, will start selling various new products in 2016, and actively expand cooperation with large customers such as Foxconn and JD.com. Thus the company's result is expected to increase significantly. The company has also participated in Shenzhen Huidacheng Intelligent Technology and involved in industrial visual. It has also worked tighter with Huazhong University of Science and Technology to set up unmanned aerial vehicle and rehabilitation robot companies. Following actions of the company are well worthy of attention.
[Trading Alarms]
○ Jihong Group to debut IPO on June 30
------
Jihong Group (002803.SZ) will unveil its initial public offering at the issuing price of 6.37 yuan per share. The PE ratio of the company is 23 times and the upper limit of subscription is 11,500 shares. The company is primarily engaged in packaging and printing businesses.
TOP
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