[Today's Guide]
○ Preparation for Shenzhen-Hong Kong Stock Connect initiated, institutes rosy about three investment industries
○ Supervision on iron and coal de-capacity to conduct, those with slow progress will be punished
○ New policies on pharmaceutic adjuvants to implement, industry to see market with RMB100 bln
○ Simei Media to strengthen cultural business, Nan Yang Cable to buy Topsec
[SSN Focus]
○ Preparation for Shenzhen-Hong Kong Stock Connect initiated, institutes rosy about three investment industries
------
The Joint Announcement on Shenzhen-Hong Kong Stock Connect released on Aug. 16 specifies that the stocks to be covered by Shenzhen-Hong Kong Stock Connect are components of SZSE Component Index and SZSE SME Price Index with a market value of over 6 billion yuan as well as A H share companies listed on Shenzhen Stock Exchange. There is no limit on the total amount on Shenzhen-Hong Kong Stock Connect and the daily amount is same with that of Shanghai-Hong Kong Stock Connect. The total amount limit on Shanghai-Hong Kong Stock Connect is cancelled. It will take about four months from the releasing of the joint announcement to the formal implementation. The time for formal implementation will be announced later.
Comment: Based on past experiences, A-share market saw huge inflow of foreign capitals after the opening of Shanghai-Hong Kong Stock Connect. For structural opportunities driven by Shenzhen-Hong Kong Stock Connect, institutes believe that three industries are noteworthy. Firstly, stocks with low valuation and big market value and have been favored by foreign capitals for long time; Secondly, spirits, pharmaceutical, public consumption and other rare varieties in Hong Kong stock market; Thirdly, securities companies with possible outstanding performance.
◆ Shanghai Stock Connect recorded a net inflow of 4,686 million yuan on Aug. 16, hitting a new high since last late-August in a single day.
TOP
○ Supervision on iron and coal de-capacity to conduct, those with slow progress will be punished
------
The executive meeting of the State Council held on Aug. 16 determined to conduct special supervision on cutting over-capacity in the iron and coal industry to ensure the completion of the target for the whole year based on the requirements on progress and time. Those with slow progress and illicit new capacities will be publicized and held accountable to ensure the task of cutting over-capacity for the whole year.
Comment: Insiders believe that with the implementation of supply-side structural reform, the de-capacity in the iron and coal industry will enter the critical period. With the implementation of environmental protection policies, the iron and coal output will continue to drop in the second half, which will have positive effects on the price. Autumn is the peak season for the demand for metallurgical coals. Institute believe that Shanxi Lu'an Environmental Energy Development Co., Ltd. (601699.SH), Jizhong Energy Resources Co., Ltd. (000937.SZ) and Yang Quan Coal Industry (Group) Co., Ltd. (600348.SH) are likely to see improvements in performance.
◆ SDIC Xinji Energy Co., Ltd. (601918.SH) announced that 30.31 percent equities of the company held by the State Development ＆ Investment Corporation (SDIC) have been transferred to China Coal Energy Group Co., Ltd. for free. China Coal Energy has become the new controlling shareholder of SDIC Xinji Energy. China Coal Energy Company Limited (01898.HK; 601898.SH) is a listed company under China Coal Energy.
[SSN Selection]
○ Last week sees a net inflow of 16.1 billion yuan in securities margin, marking the first three consecutive weeks of net inflow since February.
○ The National Development and Reform Commission (NDRC) indicated on Aug. 16 that the three-year plan on revitalization of northeast China will be released soon. It proposes 127 key projects from 2016 to 2018.
○ China National Petroleum Corporation announced on Aug. 16 that the second line of the China-Russia oil pipeline has initiated construction in Heilongjiang recently.
○ Tim Cook, the CEO of Apple, indicated on Aug. 16 that Apple plans to establish the first independent R＆D center in China by the end of the year.
○ Foreign media reported that Hyperloop One has signed an agreement with Dubai to study the use of super high-speed rail in unloading ocean containers in Dubai port.
TOP
[Industry Information]
○ New policies on pharmaceutic adjuvants to implement, industry to see market with RMB100 bln
------
SSN learnt that the associated appraisal on pharmaceutic adjuvants and medicines has been initiated in August. The associated appraisal will have same requirements on pharmaceutic adjuvants and medicines. The China Food and Drug Administration (CFDA) has strengthened the regulation on pharmaceutic adjuvants since this year and initiated the associated appraisal on pharmaceutic adjuvants and medicines.
Comment: Insiders estimate that the implementation of new policies will further regulate the pharmaceutic adjuvant industry. More new and high-end pharmaceutic adjuvants are expected to enter the market. The total output of pharmaceutic adjuvants is expected to hike to 100 billion yuan in 2050 from the 50 billion yuan in 2015. Hunan Er-Kang Pharmaceutical Co., Ltd. (300267.SZ) has conducted the research and development of high-end pharmaceutic adjuvants. Anhui Sunhere Pharmaceutical Excipients Co., Ltd. (300452.SZ) has entered the supply chain of Wyeth and other well-known international pharmaceutical enterprises.
○ UHV projects to conduct, industry to see continuous growth
------
Xinhua News Agency reported that the GIL comprehensive pipeline of the Huainan-Nanjing-Shanghai 1,000kv AC ultra high voltage power transmission initiated construction in Changshu City, Jiangsu Province on Aug. 16. It is the first adoption of UHV GIL in key power transmission pipelines. The approved total dynamic investment is about 4,763 million yuan and is scheduled to compete in 2019.
Comment: China International Capital Corporation Limited (CICC) pointed out that with the construction of various UHV lines, the approval and construction of UHV projects will increase significantly from last year. About 10 UHV lines will be approved in the future. The increase of the UHV sector will last till 2018. Henan Pinggao Electric Co., Ltd. (600312.SH) enjoys huge orders for UHV projects and most will be delivered this year and next year. China XD Electric Co., Ltd. (601179.SH) is speeding up in the delivery of UHV products, which will ensure its performance growth.
TOP
[Announcement Interpretation]
○ Simei Media to buy three companies with RMB1.5 bln to strengthen cultural business
------
Simei Media Co., Ltd. (002712.SZ) proposes to buy the entire shareholding of Hangzhou Zhangwei Technology and Shanghai Guanda Movie ＆ TV culture Co., Ltd and 20 percent shareholding of Keyi Media at the valuation of 1,547 million yuan, which will be satisfied by issuing shares at 28.95 yuan per share through private placement and cash payment of 656 million yuan. At the same time, the company plans to raise supporting fund of 741 million yuan by issuing shares at no less than 29.11 yuan per share. Main businesses of Zhangwei Technology include digital reading and copyright derivatives; Guanda Movie ＆ TV Culture is primarily engaged in planning, production and distribution of TV drama; Keyi Media has integrated marketing broadcast services and content production business.
The counterparty has made the following commitments: from 2016 to 2018, the net profits of Zhangwei Technology will be no less than 36 million yuan, 44 million yuan and 55 million yuan respectively; the net profits of Guanda Movie ＆ TV Culture will be no less than 62 million yuan, 80.6 million yuan and 100 million yuan respectively; the net profits of Keyi Media will be no less than 33.5 million yuan, 40.2 million yuan and 48.24 million yuan respectively. The company has made the rights and interests distribution plan for 2015 during the suspension: 20-for-10 conversion of capital surplus into shares combined with 1.5 yuan cash dividend for every 10 shares.
○ Nan Yang Cable to buy NEEQ listed company Topsec
------
Guangdong Nan Yang Cable Group Holding Co., Ltd. (002212.SZ) buys 100 percent equities of Beijing Topsec Co., Ltd. at the valuation of 5.7 billion yuan, which is satisfied by issuing shares at 8.66 yuan per share through private placement and cash payment. At the same time, the company proposes to raise supporting fund of 2.12 billion yuan from nine financial institutions, including Hongshenghui Investment through private placement at 9.7 yuan per share.
Topsec primarily provides information security products and services such as firewall and VPN. The market share of its firewall products has ranked No.1 in China for years. Last November, Topsec was listed on the (National Equities Exchange and Quotations NEEQ). In 2015, Topsec realized net profits 230 million yuan. According to the performance commitment, net profits of Topsec for 2016 to 2018 will be no less than 1,255 million yuan in total.
○ HejunConsulting takes over 8.52 pct equities of Changelight
------
Xiamen Changelight Co., Ltd. (300102.SZ) announced that Deng Dianming, a shareholder with more than 5 percent shareholding of the company, plans to transfer 60 million outstanding shares (representing 8.52 percent of the company's total share capital) held by him to Hejun Zhengde at the price of 7 yuan per share. The valuation of the transaction is 420 million yuan. The company closed at 7.83 yuan on August 16.
Comment: after reduced his shareholding, Deng Guangming's shareholding in the company falls from 10.74 percent to 2.22 percent, while the sharehodling of Hejun Zhengde increases from 6.2 percent to 14.72 percent. Hejun Zhengde and Suzhou Hezheng, a party acting in concert, in aggregate hold 110 million shares of the company, representing 15.61 percent of the company's total share capital. Hejun Zhengde ranks as the second largest shareholder of the company, and its shareholding is comparable to that of the largest shareholder. HejunConsulting is primarily engaged in consulting service. But in recent years, it has helped a number of companies with industrial upgrading and market value management with the "PE plus listed company" model.
○ Controlling shareholder of Senyuan Electric proposes shareholding increasing plan
------
Senyuan Group, controlling shareholder of Henan Senyuan Electric Co., Ltd. (002358.SZ) plans to increase shareholding in the listed company again in the next six months, after it increased holding of about 10 million shares of the company in May. The price for the shareholding increase will be no more than 25 yuan per share, and the total amount will be no more than 1.2 billion yuan.
○ Chongqing SASAC to take over 15 pct equities of Chongqing Gas Group
------
Chongqing Energy, controlling shareholder of Chongqing Gas Group Corporation Ltd. (600917.SH) proposes to transfer 15 percent shareholding of the listed company (233.4 million shares) to Chongqing Yukang Assets Management Co., Ltd., a company under Chongqing SASAC, at 10.09 yuan per share. Upon completion of the transfer, Chongqing Energy still hold 801 million shares of Chongqing Gas Group, but the proportion of shareholding will be reduced to 51.48 percent. The latest price of the company is 10.2 yuan per share.
[Financial Reports Express]
○ Shuanghui Investment ＆ Development proposes share dividend of 9 yuan for every 10 shares in interim report
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Henan Shuanghui Investment ＆ Development Co., Ltd. (000895.SZ) reported 8.5 percent growth in its interim report, and proposes share dividend of 9 yuan for every 10 shares.
[Trading Trends]
○ Easpring Material Technology bought through three institutional seats
------
The trading volume ranking list on Augyst 16 shows that Beijing Easpring Material Technology Co., Ltd. (300073.SZ) was bought through three institutional seats with a total of 230 million yuan, representing 28.48 percent of intraday turnover.
Comment: in the last year, demand for lithium ion battery cathode materials used for new energy vehicle continues to expand. Institutions indicated in the research reports that the company's multiple materials for automotive power is in full production. Its revenue from cathode materials witnessed significant year on year growth, and gross margin also increased sharply. At the same time, the company sold equities of Hunan Xingcheng Graphite Technology Co., Ltd., which has improved its financial condition.
[Trading Alarms]
○ Kuangshun Photosensitivity New-Material offers for subscription on Aug. 17
------
Jiangsu Kuangshun Photosensitivity New-Material Stock Co., Ltd. (300537.SZ) offers for subscription at 9.19 yuan per share. The company's PE ratio is 23 times, and the upper limit for subscription is 10,000 shares. The company is primarily engaged in the production of printing ink specially used for electronic products.
TOP
○ Preparation for Shenzhen-Hong Kong Stock Connect initiated, institutes rosy about three investment industries
○ Supervision on iron and coal de-capacity to conduct, those with slow progress will be punished
○ New policies on pharmaceutic adjuvants to implement, industry to see market with RMB100 bln
○ Simei Media to strengthen cultural business, Nan Yang Cable to buy Topsec
[SSN Focus]
○ Preparation for Shenzhen-Hong Kong Stock Connect initiated, institutes rosy about three investment industries
------
The Joint Announcement on Shenzhen-Hong Kong Stock Connect released on Aug. 16 specifies that the stocks to be covered by Shenzhen-Hong Kong Stock Connect are components of SZSE Component Index and SZSE SME Price Index with a market value of over 6 billion yuan as well as A H share companies listed on Shenzhen Stock Exchange. There is no limit on the total amount on Shenzhen-Hong Kong Stock Connect and the daily amount is same with that of Shanghai-Hong Kong Stock Connect. The total amount limit on Shanghai-Hong Kong Stock Connect is cancelled. It will take about four months from the releasing of the joint announcement to the formal implementation. The time for formal implementation will be announced later.
Comment: Based on past experiences, A-share market saw huge inflow of foreign capitals after the opening of Shanghai-Hong Kong Stock Connect. For structural opportunities driven by Shenzhen-Hong Kong Stock Connect, institutes believe that three industries are noteworthy. Firstly, stocks with low valuation and big market value and have been favored by foreign capitals for long time; Secondly, spirits, pharmaceutical, public consumption and other rare varieties in Hong Kong stock market; Thirdly, securities companies with possible outstanding performance.
◆ Shanghai Stock Connect recorded a net inflow of 4,686 million yuan on Aug. 16, hitting a new high since last late-August in a single day.
TOP
○ Supervision on iron and coal de-capacity to conduct, those with slow progress will be punished
------
The executive meeting of the State Council held on Aug. 16 determined to conduct special supervision on cutting over-capacity in the iron and coal industry to ensure the completion of the target for the whole year based on the requirements on progress and time. Those with slow progress and illicit new capacities will be publicized and held accountable to ensure the task of cutting over-capacity for the whole year.
Comment: Insiders believe that with the implementation of supply-side structural reform, the de-capacity in the iron and coal industry will enter the critical period. With the implementation of environmental protection policies, the iron and coal output will continue to drop in the second half, which will have positive effects on the price. Autumn is the peak season for the demand for metallurgical coals. Institute believe that Shanxi Lu'an Environmental Energy Development Co., Ltd. (601699.SH), Jizhong Energy Resources Co., Ltd. (000937.SZ) and Yang Quan Coal Industry (Group) Co., Ltd. (600348.SH) are likely to see improvements in performance.
◆ SDIC Xinji Energy Co., Ltd. (601918.SH) announced that 30.31 percent equities of the company held by the State Development ＆ Investment Corporation (SDIC) have been transferred to China Coal Energy Group Co., Ltd. for free. China Coal Energy has become the new controlling shareholder of SDIC Xinji Energy. China Coal Energy Company Limited (01898.HK; 601898.SH) is a listed company under China Coal Energy.
[SSN Selection]
○ Last week sees a net inflow of 16.1 billion yuan in securities margin, marking the first three consecutive weeks of net inflow since February.
○ The National Development and Reform Commission (NDRC) indicated on Aug. 16 that the three-year plan on revitalization of northeast China will be released soon. It proposes 127 key projects from 2016 to 2018.
○ China National Petroleum Corporation announced on Aug. 16 that the second line of the China-Russia oil pipeline has initiated construction in Heilongjiang recently.
○ Tim Cook, the CEO of Apple, indicated on Aug. 16 that Apple plans to establish the first independent R＆D center in China by the end of the year.
○ Foreign media reported that Hyperloop One has signed an agreement with Dubai to study the use of super high-speed rail in unloading ocean containers in Dubai port.
TOP
[Industry Information]
○ New policies on pharmaceutic adjuvants to implement, industry to see market with RMB100 bln
------
SSN learnt that the associated appraisal on pharmaceutic adjuvants and medicines has been initiated in August. The associated appraisal will have same requirements on pharmaceutic adjuvants and medicines. The China Food and Drug Administration (CFDA) has strengthened the regulation on pharmaceutic adjuvants since this year and initiated the associated appraisal on pharmaceutic adjuvants and medicines.
Comment: Insiders estimate that the implementation of new policies will further regulate the pharmaceutic adjuvant industry. More new and high-end pharmaceutic adjuvants are expected to enter the market. The total output of pharmaceutic adjuvants is expected to hike to 100 billion yuan in 2050 from the 50 billion yuan in 2015. Hunan Er-Kang Pharmaceutical Co., Ltd. (300267.SZ) has conducted the research and development of high-end pharmaceutic adjuvants. Anhui Sunhere Pharmaceutical Excipients Co., Ltd. (300452.SZ) has entered the supply chain of Wyeth and other well-known international pharmaceutical enterprises.
○ UHV projects to conduct, industry to see continuous growth
------
Xinhua News Agency reported that the GIL comprehensive pipeline of the Huainan-Nanjing-Shanghai 1,000kv AC ultra high voltage power transmission initiated construction in Changshu City, Jiangsu Province on Aug. 16. It is the first adoption of UHV GIL in key power transmission pipelines. The approved total dynamic investment is about 4,763 million yuan and is scheduled to compete in 2019.
Comment: China International Capital Corporation Limited (CICC) pointed out that with the construction of various UHV lines, the approval and construction of UHV projects will increase significantly from last year. About 10 UHV lines will be approved in the future. The increase of the UHV sector will last till 2018. Henan Pinggao Electric Co., Ltd. (600312.SH) enjoys huge orders for UHV projects and most will be delivered this year and next year. China XD Electric Co., Ltd. (601179.SH) is speeding up in the delivery of UHV products, which will ensure its performance growth.
TOP
[Announcement Interpretation]
○ Simei Media to buy three companies with RMB1.5 bln to strengthen cultural business
------
Simei Media Co., Ltd. (002712.SZ) proposes to buy the entire shareholding of Hangzhou Zhangwei Technology and Shanghai Guanda Movie ＆ TV culture Co., Ltd and 20 percent shareholding of Keyi Media at the valuation of 1,547 million yuan, which will be satisfied by issuing shares at 28.95 yuan per share through private placement and cash payment of 656 million yuan. At the same time, the company plans to raise supporting fund of 741 million yuan by issuing shares at no less than 29.11 yuan per share. Main businesses of Zhangwei Technology include digital reading and copyright derivatives; Guanda Movie ＆ TV Culture is primarily engaged in planning, production and distribution of TV drama; Keyi Media has integrated marketing broadcast services and content production business.
The counterparty has made the following commitments: from 2016 to 2018, the net profits of Zhangwei Technology will be no less than 36 million yuan, 44 million yuan and 55 million yuan respectively; the net profits of Guanda Movie ＆ TV Culture will be no less than 62 million yuan, 80.6 million yuan and 100 million yuan respectively; the net profits of Keyi Media will be no less than 33.5 million yuan, 40.2 million yuan and 48.24 million yuan respectively. The company has made the rights and interests distribution plan for 2015 during the suspension: 20-for-10 conversion of capital surplus into shares combined with 1.5 yuan cash dividend for every 10 shares.
○ Nan Yang Cable to buy NEEQ listed company Topsec
------
Guangdong Nan Yang Cable Group Holding Co., Ltd. (002212.SZ) buys 100 percent equities of Beijing Topsec Co., Ltd. at the valuation of 5.7 billion yuan, which is satisfied by issuing shares at 8.66 yuan per share through private placement and cash payment. At the same time, the company proposes to raise supporting fund of 2.12 billion yuan from nine financial institutions, including Hongshenghui Investment through private placement at 9.7 yuan per share.
Topsec primarily provides information security products and services such as firewall and VPN. The market share of its firewall products has ranked No.1 in China for years. Last November, Topsec was listed on the (National Equities Exchange and Quotations NEEQ). In 2015, Topsec realized net profits 230 million yuan. According to the performance commitment, net profits of Topsec for 2016 to 2018 will be no less than 1,255 million yuan in total.
○ HejunConsulting takes over 8.52 pct equities of Changelight
------
Xiamen Changelight Co., Ltd. (300102.SZ) announced that Deng Dianming, a shareholder with more than 5 percent shareholding of the company, plans to transfer 60 million outstanding shares (representing 8.52 percent of the company's total share capital) held by him to Hejun Zhengde at the price of 7 yuan per share. The valuation of the transaction is 420 million yuan. The company closed at 7.83 yuan on August 16.
Comment: after reduced his shareholding, Deng Guangming's shareholding in the company falls from 10.74 percent to 2.22 percent, while the sharehodling of Hejun Zhengde increases from 6.2 percent to 14.72 percent. Hejun Zhengde and Suzhou Hezheng, a party acting in concert, in aggregate hold 110 million shares of the company, representing 15.61 percent of the company's total share capital. Hejun Zhengde ranks as the second largest shareholder of the company, and its shareholding is comparable to that of the largest shareholder. HejunConsulting is primarily engaged in consulting service. But in recent years, it has helped a number of companies with industrial upgrading and market value management with the "PE plus listed company" model.
○ Controlling shareholder of Senyuan Electric proposes shareholding increasing plan
------
Senyuan Group, controlling shareholder of Henan Senyuan Electric Co., Ltd. (002358.SZ) plans to increase shareholding in the listed company again in the next six months, after it increased holding of about 10 million shares of the company in May. The price for the shareholding increase will be no more than 25 yuan per share, and the total amount will be no more than 1.2 billion yuan.
○ Chongqing SASAC to take over 15 pct equities of Chongqing Gas Group
------
Chongqing Energy, controlling shareholder of Chongqing Gas Group Corporation Ltd. (600917.SH) proposes to transfer 15 percent shareholding of the listed company (233.4 million shares) to Chongqing Yukang Assets Management Co., Ltd., a company under Chongqing SASAC, at 10.09 yuan per share. Upon completion of the transfer, Chongqing Energy still hold 801 million shares of Chongqing Gas Group, but the proportion of shareholding will be reduced to 51.48 percent. The latest price of the company is 10.2 yuan per share.
[Financial Reports Express]
○ Shuanghui Investment ＆ Development proposes share dividend of 9 yuan for every 10 shares in interim report
------
Henan Shuanghui Investment ＆ Development Co., Ltd. (000895.SZ) reported 8.5 percent growth in its interim report, and proposes share dividend of 9 yuan for every 10 shares.
[Trading Trends]
○ Easpring Material Technology bought through three institutional seats
------
The trading volume ranking list on Augyst 16 shows that Beijing Easpring Material Technology Co., Ltd. (300073.SZ) was bought through three institutional seats with a total of 230 million yuan, representing 28.48 percent of intraday turnover.
Comment: in the last year, demand for lithium ion battery cathode materials used for new energy vehicle continues to expand. Institutions indicated in the research reports that the company's multiple materials for automotive power is in full production. Its revenue from cathode materials witnessed significant year on year growth, and gross margin also increased sharply. At the same time, the company sold equities of Hunan Xingcheng Graphite Technology Co., Ltd., which has improved its financial condition.
[Trading Alarms]
○ Kuangshun Photosensitivity New-Material offers for subscription on Aug. 17
------
Jiangsu Kuangshun Photosensitivity New-Material Stock Co., Ltd. (300537.SZ) offers for subscription at 9.19 yuan per share. The company's PE ratio is 23 times, and the upper limit for subscription is 10,000 shares. The company is primarily engaged in the production of printing ink specially used for electronic products.
TOP
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