[Today's Guide]
○ China cracks down subsidies fraud in new energy vehicle to support healthy development of industry
○ PPP boosts development of rail transit, VOCs monitoring and treatment market to grow rapidly
○ Capital Environmental Protection expand sewage treatment business, controlling shareholder of Jinlihua Electric to transfer shares at premium
○ Sushi Testing Instrument to expand investment in main business, actual controller of Sunnada Communication to increase shareholding
[SSN Focus]
○ China cracks down subsidies fraud in new energy vehicle to support healthy development of industry
------
The Ministry of Finance (MOF) on Sept. 8 announced the results for the inspection and treatment of subsidies for new energy vehicle as well as the five typical subsidies fraud cases, including HIGER (involving 519.21 million yuan, Xiamen King Long Motor Group Co., Ltd. (600686.SH) directly holds a 60 percent stake in the company) and Shenzhen Wuzhoulong Motors Group (involving 55.74 million yuan, Beijing WKW Automotive Parts Co., Ltd. (002662.SZ) has a 48 percent stake in the company). The MOF will recover the advance funding used for financial aid, impose fine penalties on these companies and disqualify them for subsidies. For companies not involved in the inspection, local governments will conduct further inspection. The MOF will work with relevant departments to accelerate in revising and improving supporting policies for the industry and improve threshold for market access to lead technical progress.
Comment: Subsidies for new energy vehicle are an important source of King Long Motor Group's profit. The subsidies fraud has had a huge negative effect. But as for the industry, China remains unchanged in its policies to encourage enterprises to produce and sell new energy vehicles and users to buy and purchase new energy vehicles. Even if fiscal subsides are reduced, there will be further supports for taxation and government purchasing. Institutions believe that mainstream vehicle enterprises, especially passenger vehicle enterprises, have not been impacted by the accident. After the fraud is set, delinquent subsidies are expected to be issued. The list for the new batch of finished vehicles that can receive subsidies is expected to be issued. Finished vehicle, batteries, motors, spare parts and other industries will continue to see high growth.
[SSN Selection]
○ The total import and export value for August in China increased 7.9 percent year on year to 2.2 trillion yuan, hitting a new high since 2015.
○ The National Development and Reform Commission (NDRC) allows some large coal enterprises to increase production of dynamic steam coal when its prices are over 460 yuan per ton, but did not remove e restriction on 276 working days.
○ The Ministry of Science and Technology (MOST) has held a symposium on the 13th Five-Year Plan on aerospace technology and reported works about advanced remote sensing, navigation and positioning and geographic information.
○ China's NFC security technologies have become international standard, which to some degree has changed the situation that the core technology of Internet of Things in China is controlled by other countries.
○ Hangzhou Everfine Photo-E-Info Co., Ltd. (300306.SZ) gained unconditional approval from China Securities Regulatory Commission (CSRC) to issue shares to purchase assets. Zhejiang Chint Electrics Co., Ltd. (601877.SH) gained conditional approval from the CSRC.
TOP
[Industry Information]
○ Seminar on urban rail transmit investment and financing highlights PPP, industry to see rapid development
------
The National Development and Reform Commission (NDRC) on Sept. 8 held a seminar on the innovation of urban rail transmit investment and financing mechanism. It introduced the experience from Hong Kong mass transmit railway in the sustainable development of PPP mode and the progress of the PPP project in Beijing metro Line 4 . Currently, local governments have strong will to promote PPP projects. Most o ngoing PPP projects concentrate on municipal projects and rail transmit.
Comment: Institutions estimate that the total mileage of China's urban rail transit will see a compound growth of about 18 percent from 2016 to 2020, and the total input in urban rail transit will reach over 2 trillion yuan. This will bring a great number of new orders to the engineering construction, rail transit equipment, maintenance and operation market. Among listed companies, Nanjing Kangni Mechanical ＆ Electrical Co., Ltd. (603111.SH) is a leading door system supplier for rail transit in China. Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ) is mainly engaged in aluminium profile for rail transit.
○ Plans on VOCs waste gas treatment are under preparation, VOCs monitoring and treatment market to grow rapidly
------
Zhou Xianhui, chairwoman of China Chemical Industry Environmental Protection Association,indicated at the seminar on air pollution prevention that after the Ministry of Industry and Information Technology (MIIT) and the Ministry of Finance have jointly issued the plan on volatile organic compounds (VOCs) reduction in key industries, relevant authorities are preparing plans to control VOCs in coating, gelatinizer, rubber and other industries and making roadmaps for VOCs reduction to promote VOCs treatment. In addition, relevant authorities are making estimation of VOCs in key industries and strengthening studies of standards for air pollutants discharge in the chemical industry.
Comment: institutions pointed out that China now continuously introduce emission standards, levy VOCs pollution discharge fees and offer treatment subsidies. For some cities, the pollution discharge fees is higher or close to pollution treatment costs. The prevention and treatment of VOCs is now economically feasible. This will promote rapid development VOCs monitoring and treatment industry in the future. Listed companies such as Beijing SDL Technology Co., Ltd. (002658.SZ) and Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ) are engaged in relevant businesses.
TOP
[Announcement Interpretation]
○ Capital Environmental Protection expand sewage treatment business
------
Tianjin Capital Environmental Protection Group Company Limited (600874.SH) proposes to raise no more than 1,838 million yuan by additional issuance through private placement at no less than 7.33 yuan per share. The fundraising will be used for sewage treatment and energy station projects. The company indicated that PPP model is expected to provide capital sources and convenient channel for relevant companies. Sewage treatment industry will embrace broad room and rare opportunity for development.
○ Controlling shareholder of Jinlihua Electric to transfer shares at premium
------
Actual controller of Zhejiang Jinlihua Electric Co., ltd. (300069.SZ) and its party acting in concert proposes to transfer 14.97 percent of the company's equities to Zhuhai Anci according to agreement. The total valuation of the shares to be transferred is 753 million yuan, and the price is 43 yuan per share, representing 10.71 percent premium compared with the latest closing price of 38.84 yuan per share.
TOP
○ Sushi Testing Instrument to expand investment in main business
------
Suzhou Sushi Testing Instrument Co., Ltd. (300416.SZ) proposes to issue 17 million shares through private placement to raise no more than 500 million yuan, which will be used for temperature and humidity environmental test chamber technology upgrading and expansion project and laboratory network reconstruction and expansion project. After reached designed capacity, the estimated net annual profits is expected to reach 120 million yuan. The company's net profits last year was 48.42 million yuan.
○ Actual controller of Sunnada Communication to increase shareholding
------
Zhou Shiping, actual controller of Fujian Sunnada Communication Co., ltd. (002417.SZ) increased holding 7,374,260 shares of the company from Sept. 7 to Sept. 8, accounting for 2.73 percent of the company's total share capital. The average price of shareholding increase is about 19.6 yuan a share. The company's announcement says that it cannot rule out Zhou will further increase shareholding in the company, as he is confident about the company's prospect.
○ Haimo Technologies qualified as supplier to Saudi oil giant
Lanzhou Haimo Technologies Co., Ltd. (300084.SZ) has passed the supplier qualification certification of Saudi's Aramco, and products obtained supply qualification is multiphase wet gas meter. Aramco is the largest petrochemical enterprise in the world. Its annual oil production accounts for one eighth of the global production. It is also the largest multiphase wet gas meter purchaser in the Middle East.
○ Tianqi Lithium Industries, Inc. (002466.SZ) announced that it intended to acquire 23.02 percent equities of Chile's SQM, a global lithium giant.
○ The joint venture established by Shanghai Tunnel Engineering Co., Ltd. (600820.SH) and Greenland Holdings Corporation Limited (600606.SH) becomes the priority candidate of the PPP project of Nanjing metro line 5. The bid price is 19,613 million yuan.
[Trading Trends]
○ Insurance funds allowed to trade through Shanghai-Hong Kong Stock Connect, four kind of Hong Kong listed shares likely to pursued
------
The China Insurance Regulatory Commission (CIRC) on Sept. 8 issued "regulatory caliber on the pilot of insurance funds' participation in Shanghai-Hong Kong Stock Connect". It means that the Shanghai-Hong Kong Stock Connect is officially opened to insurance funds. Data shows that as of the end of 2015, insurance funds' overseas investment totaled about 36 billion U.S. dollars, accounting for less than 2 percent of the total scale and far less than the 15 percent regulatory threshold.
Comment: insurance funds currently can only trade Hong Kong listed shares in the form of QDII, but the quota for QDII is tight. To participate in the pilot of Shanghai-Hong Kong Stock Connect, insurance funds' pressure of assets shortage may mitigated. They can also increase investment return from both domestic and overseas markets. It is learnt that insurance funds are rosy about four kinds of Hong Kong listed shares: A-share market and Hong Kong dual listed stocks with high valuation gap, rare varieties, low valuation stocks with high share dividends and bond-type stocks. Exchange traded funds such as ETF Hang Seng China Enterprise ETF (QDII), Huaxia Hang Seng ETF (QDII), Yinhua Heng Seng China Enterprises Index Class (QDII) B and China Universal Hang Seng Index Class (QDII) B primarily trade Hong Kong blue-chip stocks.
TOP
○ China cracks down subsidies fraud in new energy vehicle to support healthy development of industry
○ PPP boosts development of rail transit, VOCs monitoring and treatment market to grow rapidly
○ Capital Environmental Protection expand sewage treatment business, controlling shareholder of Jinlihua Electric to transfer shares at premium
○ Sushi Testing Instrument to expand investment in main business, actual controller of Sunnada Communication to increase shareholding
[SSN Focus]
○ China cracks down subsidies fraud in new energy vehicle to support healthy development of industry
------
The Ministry of Finance (MOF) on Sept. 8 announced the results for the inspection and treatment of subsidies for new energy vehicle as well as the five typical subsidies fraud cases, including HIGER (involving 519.21 million yuan, Xiamen King Long Motor Group Co., Ltd. (600686.SH) directly holds a 60 percent stake in the company) and Shenzhen Wuzhoulong Motors Group (involving 55.74 million yuan, Beijing WKW Automotive Parts Co., Ltd. (002662.SZ) has a 48 percent stake in the company). The MOF will recover the advance funding used for financial aid, impose fine penalties on these companies and disqualify them for subsidies. For companies not involved in the inspection, local governments will conduct further inspection. The MOF will work with relevant departments to accelerate in revising and improving supporting policies for the industry and improve threshold for market access to lead technical progress.
Comment: Subsidies for new energy vehicle are an important source of King Long Motor Group's profit. The subsidies fraud has had a huge negative effect. But as for the industry, China remains unchanged in its policies to encourage enterprises to produce and sell new energy vehicles and users to buy and purchase new energy vehicles. Even if fiscal subsides are reduced, there will be further supports for taxation and government purchasing. Institutions believe that mainstream vehicle enterprises, especially passenger vehicle enterprises, have not been impacted by the accident. After the fraud is set, delinquent subsidies are expected to be issued. The list for the new batch of finished vehicles that can receive subsidies is expected to be issued. Finished vehicle, batteries, motors, spare parts and other industries will continue to see high growth.
[SSN Selection]
○ The total import and export value for August in China increased 7.9 percent year on year to 2.2 trillion yuan, hitting a new high since 2015.
○ The National Development and Reform Commission (NDRC) allows some large coal enterprises to increase production of dynamic steam coal when its prices are over 460 yuan per ton, but did not remove e restriction on 276 working days.
○ The Ministry of Science and Technology (MOST) has held a symposium on the 13th Five-Year Plan on aerospace technology and reported works about advanced remote sensing, navigation and positioning and geographic information.
○ China's NFC security technologies have become international standard, which to some degree has changed the situation that the core technology of Internet of Things in China is controlled by other countries.
○ Hangzhou Everfine Photo-E-Info Co., Ltd. (300306.SZ) gained unconditional approval from China Securities Regulatory Commission (CSRC) to issue shares to purchase assets. Zhejiang Chint Electrics Co., Ltd. (601877.SH) gained conditional approval from the CSRC.
TOP
[Industry Information]
○ Seminar on urban rail transmit investment and financing highlights PPP, industry to see rapid development
------
The National Development and Reform Commission (NDRC) on Sept. 8 held a seminar on the innovation of urban rail transmit investment and financing mechanism. It introduced the experience from Hong Kong mass transmit railway in the sustainable development of PPP mode and the progress of the PPP project in Beijing metro Line 4 . Currently, local governments have strong will to promote PPP projects. Most o ngoing PPP projects concentrate on municipal projects and rail transmit.
Comment: Institutions estimate that the total mileage of China's urban rail transit will see a compound growth of about 18 percent from 2016 to 2020, and the total input in urban rail transit will reach over 2 trillion yuan. This will bring a great number of new orders to the engineering construction, rail transit equipment, maintenance and operation market. Among listed companies, Nanjing Kangni Mechanical ＆ Electrical Co., Ltd. (603111.SH) is a leading door system supplier for rail transit in China. Jilin Liyuan Precision Manufacturing Co., Ltd. (002501.SZ) is mainly engaged in aluminium profile for rail transit.
○ Plans on VOCs waste gas treatment are under preparation, VOCs monitoring and treatment market to grow rapidly
------
Zhou Xianhui, chairwoman of China Chemical Industry Environmental Protection Association,indicated at the seminar on air pollution prevention that after the Ministry of Industry and Information Technology (MIIT) and the Ministry of Finance have jointly issued the plan on volatile organic compounds (VOCs) reduction in key industries, relevant authorities are preparing plans to control VOCs in coating, gelatinizer, rubber and other industries and making roadmaps for VOCs reduction to promote VOCs treatment. In addition, relevant authorities are making estimation of VOCs in key industries and strengthening studies of standards for air pollutants discharge in the chemical industry.
Comment: institutions pointed out that China now continuously introduce emission standards, levy VOCs pollution discharge fees and offer treatment subsidies. For some cities, the pollution discharge fees is higher or close to pollution treatment costs. The prevention and treatment of VOCs is now economically feasible. This will promote rapid development VOCs monitoring and treatment industry in the future. Listed companies such as Beijing SDL Technology Co., Ltd. (002658.SZ) and Hebei Sailhero Environmental Protection High-tech Co., Ltd. (300137.SZ) are engaged in relevant businesses.
TOP
[Announcement Interpretation]
○ Capital Environmental Protection expand sewage treatment business
------
Tianjin Capital Environmental Protection Group Company Limited (600874.SH) proposes to raise no more than 1,838 million yuan by additional issuance through private placement at no less than 7.33 yuan per share. The fundraising will be used for sewage treatment and energy station projects. The company indicated that PPP model is expected to provide capital sources and convenient channel for relevant companies. Sewage treatment industry will embrace broad room and rare opportunity for development.
○ Controlling shareholder of Jinlihua Electric to transfer shares at premium
------
Actual controller of Zhejiang Jinlihua Electric Co., ltd. (300069.SZ) and its party acting in concert proposes to transfer 14.97 percent of the company's equities to Zhuhai Anci according to agreement. The total valuation of the shares to be transferred is 753 million yuan, and the price is 43 yuan per share, representing 10.71 percent premium compared with the latest closing price of 38.84 yuan per share.
TOP
○ Sushi Testing Instrument to expand investment in main business
------
Suzhou Sushi Testing Instrument Co., Ltd. (300416.SZ) proposes to issue 17 million shares through private placement to raise no more than 500 million yuan, which will be used for temperature and humidity environmental test chamber technology upgrading and expansion project and laboratory network reconstruction and expansion project. After reached designed capacity, the estimated net annual profits is expected to reach 120 million yuan. The company's net profits last year was 48.42 million yuan.
○ Actual controller of Sunnada Communication to increase shareholding
------
Zhou Shiping, actual controller of Fujian Sunnada Communication Co., ltd. (002417.SZ) increased holding 7,374,260 shares of the company from Sept. 7 to Sept. 8, accounting for 2.73 percent of the company's total share capital. The average price of shareholding increase is about 19.6 yuan a share. The company's announcement says that it cannot rule out Zhou will further increase shareholding in the company, as he is confident about the company's prospect.
○ Haimo Technologies qualified as supplier to Saudi oil giant
Lanzhou Haimo Technologies Co., Ltd. (300084.SZ) has passed the supplier qualification certification of Saudi's Aramco, and products obtained supply qualification is multiphase wet gas meter. Aramco is the largest petrochemical enterprise in the world. Its annual oil production accounts for one eighth of the global production. It is also the largest multiphase wet gas meter purchaser in the Middle East.
○ Tianqi Lithium Industries, Inc. (002466.SZ) announced that it intended to acquire 23.02 percent equities of Chile's SQM, a global lithium giant.
○ The joint venture established by Shanghai Tunnel Engineering Co., Ltd. (600820.SH) and Greenland Holdings Corporation Limited (600606.SH) becomes the priority candidate of the PPP project of Nanjing metro line 5. The bid price is 19,613 million yuan.
[Trading Trends]
○ Insurance funds allowed to trade through Shanghai-Hong Kong Stock Connect, four kind of Hong Kong listed shares likely to pursued
------
The China Insurance Regulatory Commission (CIRC) on Sept. 8 issued "regulatory caliber on the pilot of insurance funds' participation in Shanghai-Hong Kong Stock Connect". It means that the Shanghai-Hong Kong Stock Connect is officially opened to insurance funds. Data shows that as of the end of 2015, insurance funds' overseas investment totaled about 36 billion U.S. dollars, accounting for less than 2 percent of the total scale and far less than the 15 percent regulatory threshold.
Comment: insurance funds currently can only trade Hong Kong listed shares in the form of QDII, but the quota for QDII is tight. To participate in the pilot of Shanghai-Hong Kong Stock Connect, insurance funds' pressure of assets shortage may mitigated. They can also increase investment return from both domestic and overseas markets. It is learnt that insurance funds are rosy about four kinds of Hong Kong listed shares: A-share market and Hong Kong dual listed stocks with high valuation gap, rare varieties, low valuation stocks with high share dividends and bond-type stocks. Exchange traded funds such as ETF Hang Seng China Enterprise ETF (QDII), Huaxia Hang Seng ETF (QDII), Yinhua Heng Seng China Enterprises Index Class (QDII) B and China Universal Hang Seng Index Class (QDII) B primarily trade Hong Kong blue-chip stocks.
TOP
Latest comments