[Today's Guide]
○ Cool period after reorganizaiton termination to shorten, regulations on backdoor listing to curb speculative acivities
○ 14 IPOs approved, Eastern Communications holds high proportion shares of Broadex Technologies
○ Environmental pressure drives glyphosate price higher
○ P＆S Information Tech. to buy Patai Electronic Tech., Rongtai Industry to build data center
[SSN Focus]
○ Cool period after reorganization termination to shorten, regulations on backdoor listing to curb speculative activities
------
The China Securities Regulatory Commission (CSRC) has revised the interim rules on strengthening the regulation on abnormal transactions of stocks related to significant assets reorganizations of listed companies and the rules on certain issues on the regulation of significant assets reorganizations of listed companies, which shortens the "cool period" for the termination of significant assets reorganizations from three months to one month and sets the criteria on the disclosure of relevant matters about the trading subjects, indicated the spokesperson of the CSRC on Sept. 9.
Comment: Mergers and reorganizations play important roles in the exogenous development of listed companies. Some companies were forces to terminate reorganizations due to changes in the market environment, but they are eager to conduct subsequent reorganizations and even indicated in the announcement of trading suspension that they would continue to seek external mergers and business transformation. Some of them released new reorganization plans after the end of the three-month cool period. The shortening of the cool period to one month will help such companies seek industrial opportunities and conduct new mergers and acquisitions.
◆ In addition, the method of the regulation on significant assets reorganization of listed companies, which is known as the "strictest regulations on backdoor listing" will be revised from Sept. 9. It further fills up two supervision loopholes on the basis of the draft for soliciting opinions. The CSRC indicated that the revisions is to cool down backdoor listing, promote the reasonable recovery of the valuation system, improve the quality of listed companies through mergers and reorganizations and guide more capitals to invest in real economies.
TOP
○ 14 IPOs approved, Eastern Communications holds high proportion shares of Broadex Technologies
------
The China Securities Regulatory Commission (CSRC) approved the 14th batch of IPOs on Sept. 9 with a total fundraising of no more than 11.6 billion yuan, which covers 14 enterprises, including Broadex Technologies Co., Ltd., Bank of Hangzhou Co., Ltd. and Shanghai Laiyifen Co., Ltd. The interim report of the listed companies shows that TDG Holding Co., Ltd. (600330.SH) and Eastern Communications Co., Ltd. (600776.SH) hold 17.74 percent and 15.69 percent of the total share capital of Broadex Technologies with a carrying balance of 56.37 million yuan and 50.12 million yuan. Hangzhou Steam Turbine Co., Ltd. (200771.SZ), Baida Group Co., Ltd. (600865.SH) and Hangzhou Jiebai Group Co., Limited. (600814.SH) hold 5.89 percent, 0.764 percent and 0.30 percent of the total share capitals of Bank of Hangzhou with a carrying balance of 390.95 million yuan, 135.01 million yuan and 5 million yuan.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) solicits opinions on the regulation on the appropriateness of securities and futures investors, which set the basic classification of ordinary and professional investors.
○ The CSRC determines to open green financing channels in underdeveloped areas. Qualified IPO applications can be reviewed and passed upon submission.
○ CSRC chairman Liu Shiyu attended the seventh meeting of members of Shanghai Stock Exchange on Sept. 10, emphasizing that it will keep the bottom line of no systematical risks.
○ Shanghai and Shenzhen stock exchanges solicit opinions on the guidance on the business management of graded funds, proposing to establish access conditions such as holding securities assets of 300,000 yuan.
○ The outline of the development plan of the Yangtze Economic Belt was formally released recently, which set the new development pattern with one axis, two wings, three poles and many points.
○ Due to the hawkish comments of many Fed officials on Sept. 9, the three major U.S. stock indexes, namely the Dow Jones Industrial Average, S＆P 500 and Nasdaq Composite Index, plunged by over 2 percent.
TOP
[Industry Information]
○ Environmental pressure drives glyphosate price higher
------
SSN learnt that driven by the environmental pressure and the booming purchases, the glyphosate price has been surging. Baichuan's statistics show that the trading price in the glyphosate market increased by 700 yuan/tonne or nearly 4 percent on Sept. 8 and has surged 9 percent in recent month. The dominant glyphosate price is 19,000 to 20,000 yuan/tonne and the dominant trading price is 18,200 to 18,500 yuan/tonne.
Comment: Securities companies pointed out that the central environmental inspection group will enter Hubei and Sichuan in mid-September. The two provinces are major glyphosate producers with a total capacity of 320,000 tonnes, accounting for 50 percent of the domestic capacity. In addition, as the booming purchase reason approaches, the downstream demands will be boosted. Driven by the environmental pressure and the booming demands, the industry will see improvements in supply and demand. In terms of listed companies, Nantong Jiangshan Agrochemical ＆ Chemicals Co., Ltd. (600389.SH) owns a capacity of 70,000 tons of glyphosate and its performance will be improved thanks to the price rise. Zhejiang Xinan Chemical Industrial Group Co., Ltd. (600596.SH) and Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) are domestic leaders in the industry in terms of capacity.
○ Tiangong-2 launches on, aerospace constriction to speed up
------
CCTV reported that China's second space lab Tiangong-2 is scheduled to be put into space between September 15 and 20 at Jiuquan Satellite Launch Center in northwest China, according to the office of China's manned space program. The exercise on Sept. 11 shows that all systems are under normal conditions. Tiangong-2, which the first true space lab in China, carries 14 application loads and conducts space science and technical experiments.
Comment: Space lab mission is an important part of China's Three-Step Development Strategy for manned space flight, marking that China has entered a new development stage in the application of manned space flight. The successful implementation of space station and manned space flight will promote the development of robot manufacturing, manned spacecraft and other industries. Shaanxi Aerospace Power Hi-Tech Co., Ltd. (600343.SH) owns core fluid technology for liquid-propellant rocket engine. China Aerospace Times Electronics Co., Ltd. (600879.SH) undertakes the research of electronics for Long March VII carrier.
TOP
[Announcement Interpretation]
○ P＆S Information Tech. to buy Patai Electronic Tech. for RMB 2.6bln to develop main business
------
Wuhan P＆S Information Technology Co., Ltd. (300184.SZ) proposes to buy 100 percent equities of Wuhan Patai Electronic Technology Co., Ltd. for 2.63 billion yuan among which 50 percent will be paid in cash and the reminder will be paid by fund raised through private placement. The company also proposes to raise 1,315 million yuan supporting capital by issuing shares at 11.03 yuan per share to its actual controller and families in order to pay cash considerations.
Patai Electronic Technology acts as an agency and distributor for Sony, Omron and other electronic components makers both at home and abroad. It is complementary with P＆S Information Technology in the distribution of electronic components. According to performance commitment, the net profit of Patai Electronic Technology from 2016 to 2018 should reach 205 million yuan, 237.8 million yuan and 275.85 million yuan respectively.
○ Rongtai Industry to raise RMB 1.6bln. to build data center
------
Guangdong Rongtai Industry Co., Ltd. (600589.SH) proposes to raise 1,659 million yuan by issuing no more than 190 million shares at prices no less than 8.75 yuan per share through private placement. 1,339 million yuan will be invested in the construction of Rongtai cloud computing data center in Zhangbei County. The project, with a construction period of 3 years, will focus on IDC and cloud computing businesses after completion. Operating in full load, the project is expected to bring an operating revenue of 763 million yuan and a gross profit of over 50 percent. Its internal rate of return after tax is expected to reach 19.13 percent.
○ Tagen Group wins bid for EPC of rainwater and sewage pipe network
------
Shenzhen Tagen Group Co., Ltd. (000090.SZ) jointly won the bid for the EPC of rainwater and sewage pipe network in Pingshan New Area, Shenzhen at 1,585 million yuan, accounting for about 25 percent of the company's operating revenue in 2015.
○ Power China wins bid for construction of China-Laos Railway
------
Power Construction Corporation of China, Ltd. (601669.SH) won the bid for the construction of two sections of the railway from Borten to Vientiane (one section of China-Laos Railway) at a total amount of 5,875 million yuan. China-Laos Railway is one of major infrastructure projects in the "Belt and Road" construction.
○Joyson Group, controlling shareholder of Ningbo Joyson Electronic Corp. (600699.SH), proposes to increase shareholding in the company in the next 12 months starting from Sept. 12, 2016 with a total amount no less than 450 million yuan which includes about 80 billion that was used for previous shareholding increase.
○ Shanghai International Port (Group) Co., Ltd. (600018.SH) plans to participate as a cornerstone investor in Postal Savings Bank of China's IPOs in Hong Kong. It expects to subscribe no more than 2.4 billion U.S. dollars in the IPOs, accounting from about 4.15 to 4.99 percent of the bank's total share capital.
[Weekly Review]
○ Polices play major role in stock market
------
In the past week the market first surged, consolidated, pulled back and stabilized. Consolidation within a narrow range has recently been the keynote in the market.
In observation of the market, as hotspots have rotated rapidly, quality stocks in the market have appeared more clearly. These are sectors that see centralized capital inflow and substantial policy support and still have large space for performance growth. The most typical one is that market hotspots have rotated among all PPP-related shares: infrastructure on Monday, environmental protection in Tuesday, sponge city on Wednesday, sewage treatment and rail transport on Thursday and Friday. Other hotposts that started to stand out from last week, including state-owned enterprise reform and optical communication, also have policy backdrops. This again proves that it is still the best analysis method to start with polices base on company performance in times of lackluster economy.
SSN last week highlighted reports on optical communication, waterlogging prevention in urban areas and investment and financing in rail transportation. All these report struck a chord in the market and achieved excellent results. News from these fields will remain our focus in the future.
TOP
○ Cool period after reorganizaiton termination to shorten, regulations on backdoor listing to curb speculative acivities
○ 14 IPOs approved, Eastern Communications holds high proportion shares of Broadex Technologies
○ Environmental pressure drives glyphosate price higher
○ P＆S Information Tech. to buy Patai Electronic Tech., Rongtai Industry to build data center
[SSN Focus]
○ Cool period after reorganization termination to shorten, regulations on backdoor listing to curb speculative activities
------
The China Securities Regulatory Commission (CSRC) has revised the interim rules on strengthening the regulation on abnormal transactions of stocks related to significant assets reorganizations of listed companies and the rules on certain issues on the regulation of significant assets reorganizations of listed companies, which shortens the "cool period" for the termination of significant assets reorganizations from three months to one month and sets the criteria on the disclosure of relevant matters about the trading subjects, indicated the spokesperson of the CSRC on Sept. 9.
Comment: Mergers and reorganizations play important roles in the exogenous development of listed companies. Some companies were forces to terminate reorganizations due to changes in the market environment, but they are eager to conduct subsequent reorganizations and even indicated in the announcement of trading suspension that they would continue to seek external mergers and business transformation. Some of them released new reorganization plans after the end of the three-month cool period. The shortening of the cool period to one month will help such companies seek industrial opportunities and conduct new mergers and acquisitions.
◆ In addition, the method of the regulation on significant assets reorganization of listed companies, which is known as the "strictest regulations on backdoor listing" will be revised from Sept. 9. It further fills up two supervision loopholes on the basis of the draft for soliciting opinions. The CSRC indicated that the revisions is to cool down backdoor listing, promote the reasonable recovery of the valuation system, improve the quality of listed companies through mergers and reorganizations and guide more capitals to invest in real economies.
TOP
○ 14 IPOs approved, Eastern Communications holds high proportion shares of Broadex Technologies
------
The China Securities Regulatory Commission (CSRC) approved the 14th batch of IPOs on Sept. 9 with a total fundraising of no more than 11.6 billion yuan, which covers 14 enterprises, including Broadex Technologies Co., Ltd., Bank of Hangzhou Co., Ltd. and Shanghai Laiyifen Co., Ltd. The interim report of the listed companies shows that TDG Holding Co., Ltd. (600330.SH) and Eastern Communications Co., Ltd. (600776.SH) hold 17.74 percent and 15.69 percent of the total share capital of Broadex Technologies with a carrying balance of 56.37 million yuan and 50.12 million yuan. Hangzhou Steam Turbine Co., Ltd. (200771.SZ), Baida Group Co., Ltd. (600865.SH) and Hangzhou Jiebai Group Co., Limited. (600814.SH) hold 5.89 percent, 0.764 percent and 0.30 percent of the total share capitals of Bank of Hangzhou with a carrying balance of 390.95 million yuan, 135.01 million yuan and 5 million yuan.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) solicits opinions on the regulation on the appropriateness of securities and futures investors, which set the basic classification of ordinary and professional investors.
○ The CSRC determines to open green financing channels in underdeveloped areas. Qualified IPO applications can be reviewed and passed upon submission.
○ CSRC chairman Liu Shiyu attended the seventh meeting of members of Shanghai Stock Exchange on Sept. 10, emphasizing that it will keep the bottom line of no systematical risks.
○ Shanghai and Shenzhen stock exchanges solicit opinions on the guidance on the business management of graded funds, proposing to establish access conditions such as holding securities assets of 300,000 yuan.
○ The outline of the development plan of the Yangtze Economic Belt was formally released recently, which set the new development pattern with one axis, two wings, three poles and many points.
○ Due to the hawkish comments of many Fed officials on Sept. 9, the three major U.S. stock indexes, namely the Dow Jones Industrial Average, S＆P 500 and Nasdaq Composite Index, plunged by over 2 percent.
TOP
[Industry Information]
○ Environmental pressure drives glyphosate price higher
------
SSN learnt that driven by the environmental pressure and the booming purchases, the glyphosate price has been surging. Baichuan's statistics show that the trading price in the glyphosate market increased by 700 yuan/tonne or nearly 4 percent on Sept. 8 and has surged 9 percent in recent month. The dominant glyphosate price is 19,000 to 20,000 yuan/tonne and the dominant trading price is 18,200 to 18,500 yuan/tonne.
Comment: Securities companies pointed out that the central environmental inspection group will enter Hubei and Sichuan in mid-September. The two provinces are major glyphosate producers with a total capacity of 320,000 tonnes, accounting for 50 percent of the domestic capacity. In addition, as the booming purchase reason approaches, the downstream demands will be boosted. Driven by the environmental pressure and the booming demands, the industry will see improvements in supply and demand. In terms of listed companies, Nantong Jiangshan Agrochemical ＆ Chemicals Co., Ltd. (600389.SH) owns a capacity of 70,000 tons of glyphosate and its performance will be improved thanks to the price rise. Zhejiang Xinan Chemical Industrial Group Co., Ltd. (600596.SH) and Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) are domestic leaders in the industry in terms of capacity.
○ Tiangong-2 launches on, aerospace constriction to speed up
------
CCTV reported that China's second space lab Tiangong-2 is scheduled to be put into space between September 15 and 20 at Jiuquan Satellite Launch Center in northwest China, according to the office of China's manned space program. The exercise on Sept. 11 shows that all systems are under normal conditions. Tiangong-2, which the first true space lab in China, carries 14 application loads and conducts space science and technical experiments.
Comment: Space lab mission is an important part of China's Three-Step Development Strategy for manned space flight, marking that China has entered a new development stage in the application of manned space flight. The successful implementation of space station and manned space flight will promote the development of robot manufacturing, manned spacecraft and other industries. Shaanxi Aerospace Power Hi-Tech Co., Ltd. (600343.SH) owns core fluid technology for liquid-propellant rocket engine. China Aerospace Times Electronics Co., Ltd. (600879.SH) undertakes the research of electronics for Long March VII carrier.
TOP
[Announcement Interpretation]
○ P＆S Information Tech. to buy Patai Electronic Tech. for RMB 2.6bln to develop main business
------
Wuhan P＆S Information Technology Co., Ltd. (300184.SZ) proposes to buy 100 percent equities of Wuhan Patai Electronic Technology Co., Ltd. for 2.63 billion yuan among which 50 percent will be paid in cash and the reminder will be paid by fund raised through private placement. The company also proposes to raise 1,315 million yuan supporting capital by issuing shares at 11.03 yuan per share to its actual controller and families in order to pay cash considerations.
Patai Electronic Technology acts as an agency and distributor for Sony, Omron and other electronic components makers both at home and abroad. It is complementary with P＆S Information Technology in the distribution of electronic components. According to performance commitment, the net profit of Patai Electronic Technology from 2016 to 2018 should reach 205 million yuan, 237.8 million yuan and 275.85 million yuan respectively.
○ Rongtai Industry to raise RMB 1.6bln. to build data center
------
Guangdong Rongtai Industry Co., Ltd. (600589.SH) proposes to raise 1,659 million yuan by issuing no more than 190 million shares at prices no less than 8.75 yuan per share through private placement. 1,339 million yuan will be invested in the construction of Rongtai cloud computing data center in Zhangbei County. The project, with a construction period of 3 years, will focus on IDC and cloud computing businesses after completion. Operating in full load, the project is expected to bring an operating revenue of 763 million yuan and a gross profit of over 50 percent. Its internal rate of return after tax is expected to reach 19.13 percent.
○ Tagen Group wins bid for EPC of rainwater and sewage pipe network
------
Shenzhen Tagen Group Co., Ltd. (000090.SZ) jointly won the bid for the EPC of rainwater and sewage pipe network in Pingshan New Area, Shenzhen at 1,585 million yuan, accounting for about 25 percent of the company's operating revenue in 2015.
○ Power China wins bid for construction of China-Laos Railway
------
Power Construction Corporation of China, Ltd. (601669.SH) won the bid for the construction of two sections of the railway from Borten to Vientiane (one section of China-Laos Railway) at a total amount of 5,875 million yuan. China-Laos Railway is one of major infrastructure projects in the "Belt and Road" construction.
○Joyson Group, controlling shareholder of Ningbo Joyson Electronic Corp. (600699.SH), proposes to increase shareholding in the company in the next 12 months starting from Sept. 12, 2016 with a total amount no less than 450 million yuan which includes about 80 billion that was used for previous shareholding increase.
○ Shanghai International Port (Group) Co., Ltd. (600018.SH) plans to participate as a cornerstone investor in Postal Savings Bank of China's IPOs in Hong Kong. It expects to subscribe no more than 2.4 billion U.S. dollars in the IPOs, accounting from about 4.15 to 4.99 percent of the bank's total share capital.
[Weekly Review]
○ Polices play major role in stock market
------
In the past week the market first surged, consolidated, pulled back and stabilized. Consolidation within a narrow range has recently been the keynote in the market.
In observation of the market, as hotspots have rotated rapidly, quality stocks in the market have appeared more clearly. These are sectors that see centralized capital inflow and substantial policy support and still have large space for performance growth. The most typical one is that market hotspots have rotated among all PPP-related shares: infrastructure on Monday, environmental protection in Tuesday, sponge city on Wednesday, sewage treatment and rail transport on Thursday and Friday. Other hotposts that started to stand out from last week, including state-owned enterprise reform and optical communication, also have policy backdrops. This again proves that it is still the best analysis method to start with polices base on company performance in times of lackluster economy.
SSN last week highlighted reports on optical communication, waterlogging prevention in urban areas and investment and financing in rail transportation. All these report struck a chord in the market and achieved excellent results. News from these fields will remain our focus in the future.
TOP
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