[Today's Guide]
○Top-level design for military-civil integration unveiled, policies to launch intensively in H2
○Tesla to launch electric truck, domestication rate of air traffic management equipment to increase
○Western Mining to acquire two companies, Great Wall International ACG to acquire two cartoon assets
○Esun Display to invest in 3D industry, restructuring of Stellar Megaunion and Baoshuo approved
[SSN Focus]
○Top-level design for military-civil integration unveiled, policies to launch intensively in H2
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The Central Committee of the Communist Party of China, the State Council and the Military Commission of the Central Committee of the CPC recently printed and distributed the Opinions about Integrated Development of Economic Construction and National Defense Construction. It is proposed to make the system and mechanism for the integrated development more mature, further perfect the system of laws, regulations and policies as well as achieve substantial progress in key areas by 2020. The system reform of the science and technology industry of national defense should be deepened; the reorganization of military enterprises should be advanced; the piloting mixed ownership reform should be pushed forward smoothly; the introduction of quality private enterprises into the R＆D, production and maintenance area of weaponry should be guided; the commercialization of military technologies in national economic areas should be facilitated.
Comment: The Opinions, deemed as the top-level design in this area, specifies the general thought, key tasks and policy measures of the military-civil integrated development under new trends. As military-civil integration is lifted as a national strategy, more and more listed private companies are involved in military projects. SSN learns that the regulators will launch multiple supporting documents later, so policy dividend might be intensively released in the second half. Multiple companies are rosy about companies like Wuhan Guide Infrared Co., Ltd. (002414.SZ) engaged in the overall development of complete weaponry system, Jiangsu Leike Defense Technology Co., Ltd. (002413.SZ) actively expanding to satellite navigation and radar system business and Anhui Shenjian New Materials Co., Ltd. (002361.SZ) expanding to aerospace equipment business through acquisition.
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[SSN Selection]
○The second quarterly reports of funds show that the average positions held by stock-oriented open-end funds increases from 86.7 percent in the end of the first quarter to 88.02 percent now. Stocks engaged in food ＆ beverage and household appliances are favored.
○Domestic Cobalt price surged 4,100 yuan/ton on July 21. Institutions believe that the shrinkage at the supply side and the increasing demand from lithium battery will further push up the price of Cobalt.
○State Nuclear Power Technology Company (SNPTC) held its midyear work meeting on July 20, proposing to accelerate its overall listing.
○BYD Company Limited (002594.SZ) announced completion of private placement. Shanghai Samsung Semiconductor Co., Ltd. becomes the ninth substantial shareholder of the company with 3 billion yuan.
○Shenzhen Stock Exchange issues supervision letters to both China Vanke Co., Ltd. (000002.SZ) and Shenzhen Jushenghua Co., Ltd., requiring improvement of information disclosure.
[Industry Information]
○Tesla to launch electric truck, highlighing advantages in logistics cost
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Tesla CEO Elon Musk recently unveiled a new plan claiming that the company will expand its production line to cover several main means of transportation on land. The company has started research on the R＆D and improvement of trucks and the bus with "high passenger density". Both of the products will be launched next year. As to industrial application, Musk wants to launch heavy electric truck and believes that it will largely cut the cost of goods transportation.
Comment: To reduce logistics cost, Cainiao Network Technology Co., Ltd. has gradually adopted pure electric logistics vehicles for delivery. Institutions estimate that by 2020, the number of electric logistics vehicles might reach 510,000, indicating a compound annual growth rate of 50 percent; the market size might soar to 260 billion yuan. The competitiveness of electric logistics vehicles produced by Dongfeng Automobile Co., Ltd. (600006.SH) ranks top in the industry; Shanghai Chuangli Group Co., Ltd. (603012.SH) has made arrangement in the new energy vehicles industrial chain, involving products like battery pack, motor, controller and charging piles and etc.
○RMB50 bln to invested in air traffic management system during 13th five-year plan period, domestication rate of equipment to increase
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Che Jinjun, director of the Civil Aviation Administration of China's Air Traffic Management Bureau, indicated on July 21 that the overall investment plan for China's civil aviation air traffic system might reach 50 billion yuan during the 13th five-year plan period. All-round domestication will be realized in network communication equipment, medium and small-size automatic system, ADS-B ground station and data processing center.
Comment: The General Office of the State Council in May printed and distributed the Guidance on Promoting the Development of General Aviation Industry with key tasks in five aspects like constructing general aviation airport and expanding the opening of low-altitude airspace stressed. Institutions believe that air traffic management system will see benefit first. Jiuzhou Air Traffic Management Co., Ltd. under Sichuan Jiuzhou Electronic Co., Ltd. (000801.SZ) masters strong technology concerning ADS-B system products. Wisesoft Co., Ltd. (002253.SZ) is a leading enterprise in the area of domestic air traffic products.
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○Iris identification technology embraces rapid development, multiple terminal products to launch soon
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It is reported on July 21 that the annual meeting of the Internet Finance Authentication Alliance (IFAA) is held in Beijing. Beijing IrisKing Co., Ltd., a member of IFAA, introduced its iris identification technology on the meeting. IrisKing has completed the development of the intelligent terminal solution for iris identification that is in line with the IFAA system. Several types of iris mobile phones with IFAA authentication will be launched soon.
Comment: IFAA belongs to a network liable identification industrial alliance built by First Research Institute of the Ministry of Public Security and many related enterprises. It is initiated by Anti Financial, involving cellphone manufacturers, like Samsung and Huawei, and chip providers, like QUALCOMM Incorporated, as members, which will widely popularize the iris recognition technology. Institutions expect that, by 2020, the annual compound growth rate of iris recognition will be 24.86 percent, with 35.18 percent for consumer electronics applications.
[Announcement Interpretation]
○Western Mining to acquire two companies for RMB2.5 bln
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Western Mining Co., Ltd. (601168.SH) proposes to issue 216 million shares at 5.91 yuan per share through private placement, plus with the cash of 1,230 million yuan, to acquire the 100 percent equities of Qinghai Lithium Industrial Co., Ltd. and Huidong Daliang Mining Co., Ltd. respectively. The total price is 2,504 million yuan. Meanwhile, it also proposes to raise 1,270 million yuan as supporting fund through private placement of 5.91 yuan per share, and the raised fund will be used for cash consideration. Based on performance commitment, Qinghai Lithium Industrial will gain the net profit of 160, 159 and 158 million yuan from 2017 to 2019; 6.71, 52.66 and 77.78 million yuan for Daliang Mining from 2017 to 2019.
The main products of Daliang Mining are zinc and lead concentrates, while Qinghai Lithium Industrial now has a capacity of 10,000 tons for lithium carbonate, mainly used for new energy battery production.
○Great Wall International ACG to acquire two cartoon assets with RMB700 mln
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Great Wall International ACG Co., Ltd. (000835.SZ) proposes to acquire Xi'an Lingjing Gtechnology and Mini World with 708 million yuan through share issuance and cash. The offering price is 12.69 yuan per share. Meanwhile, it also plans to raise 425 billion yuan with 12.69 yuan per share as a bottom price for theme park construction and cartoon production.
Based on performance commitment, Lingjing Gtechnology will gain the net profit of no less than 35, 43.75 and 54.6875 million yuan from 2016 to 2018; while no less than 17, 22.10 and 28.73 million yuan for Mini World from 2016 to 2018. Additionally, the company will sell 99.8 percent equities of Sichuan Shengda Coking Co., Ltd. for 164 million yuan to exit from this industry, and totally transform to cartoon culture enterprise.
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○Esun Display to raise RMB1,465 mln through private placement for 3D industry
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Shenzhen Esun Display Co., Ltd. (002751.SZ) proposes to issue 26,076,400 shares with no less than 56.19 yuan per share to its actual controller Liu Menglong and etc. through private placement. The raised 1,465 million yuan will be used to invest in projects of 3D innovative education, 3D digital museum, and 3D technological R＆D center. Liu will subscribe no less than 25 percent of the total shares.
○Restructuring of Stellar Megaunion and Baoshuo conditionally approved
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The restructuring of Stellar Megaunion Corporation (000892.SZ) and Hebei Baoshuo Co., Ltd. (600155.SH) has been conditionally approved by the China Securities Regulatory Commission.
[TOP]
○J.S. Corrugating Machinery to raise RMB800 mln through private placement to expand intelligent manufacture
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J.S. Corrugating Machinery Co., Ltd. (000821.SZ) proposes to issue 54.68 million shares with no less than 14.63 yuan per share through private placement to raise 800 million yuan, which will be used to improve the automation and intelligence of its traditional businesses, and greatly develop the robot and artificial intelligence businesses. Especially, intelligent manufacturing projects plan to build a production shop with automatic production line for lithium battery packing, and another production shop with automatic production line for lead-acid cell. Rehabilitation robot project will cooperate with Huazhong University of Science and Technology, and the products can provide rehabilitation treatment and training for the disabled.
○Two platforms increased shareholdings in Apeloa Pharmaceutical
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Dongyang Cooperative ＆ Commercial Investment and Dongyang Hengqian Investment, the shareholding platforms of the management for Apeloa Pharmaceutical Co., Ltd. (000739.SZ), totally increased 18.35 million shareholdings in the listed company on July 20 and 21 respectively, accounting for 1.61 percent of the total equity. In next 12 months, they may continue to increase the shareholdings.
[Financial Reports Express]
○Newchoice Pipe Technology proposes a high share conversion and dividend
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The actual controller of Fujian Newchoice Pipe Technology Co., Ltd. (300198.SZ) proposes a 12-for-10 conversion of capital surplus into shares according to its semi-annual report.
○China Jushi predicts performance growth
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China Jushi Co., Ltd. (600176.SH) predicts a performance growth of 50 to 60 percent in its semi-annual report, mainly due to constant uptrend of glass fiber market.
[Trading Trends]
○Unisplendour Corporation bought through three institutional seats
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The trading volume ranking list on July 21 shows that Unisplendour Corporation Limited (000938.SZ) was bought through three institutional seats with a total of 202 million yuan, accounting for 12.04 percent of its intraday turnover, and also sold by one institutional seat for 27.82 million yuan.
Comment: The company recently announced its net profit forecast of 250 to 280 million yuan for the first half year, up by 165 and 195 percent year on year. Institutions believed that each business of the company is strong in profitability, and plus with equity alteration of H3C Technologies Co., Limited, the core business will be greatly supported, and likely to see high-speed development.
[Trading Alarms]
○Jafron Biomedical to issue new shares on July 22
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Jafron Biomedical Co., Ltd. (300529.SZ) will issue new shares at 10.8 yuan per share, with 12,000 shares as upper limit for subscription, and a P/E ratio of 23 times. The company is mainly engaged in blood purification products.
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