[Today's Guide]
○ International safety standards on automatic pilot to prepared, accelerating commercialization
○ Prosperity of sodium carbonate expected to improve continuously downstream, high-growth of cloud computing market becomes trend
○ Shandong Geo-Mineral to buy gold mine assets, ZEG buys shares of Tatwah Smartech
○ Wuchangyu bought by Changjin Equity Investment Partnership to 5 pct. Limit, Zeus Entertainment to acquire Yihua Tech.
[SSN Focus]
○ International safety standards on automatic pilot to prepared, accelerating commercialization
------
Foreign media reported that Meeting of G7 Transport ministers on Sept. passed a joint declaration, which mainly discussed cooperation on the preparation of international safety standards for the commercialization of automatic pilot. The declaration proposes to launch safety standards that emphasizes on international coordination, so as to help car makers to realize commercialization as soon as possible, and avoid excessive restrictions hindering technological innovation.
Comment: currently, governments, technology giants and car makers are actively researching and developing automatic pilot technology. Cooperation between G7 can avoid overlapping research and investment, and accelerate the commercialization of automatic pilot technology. Institutions believe that advanced driving assistant system (ADAS) is the key for the evolution from tradition vehicle to automatic pilot. It is estimated that China's ADAS market will hit 200 billion yuan by 2020. In listed companies, ZYNP Corporation (002448.SZ) and Zhejiang Vie Science ＆ Technology Co., Ltd. (002590.SZ) have all deployed in ADAS industry chain.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) has approved the IPOs of 12 enterprises, such as xinhuanet and Bank of Shanghai. Culture and media sector of the A-share market will welcome a new SOE member.
○ The CSRC recently formally issued and implemented the guidance of Fund of Funds (FOF), which makes clear the "double 20 percent restriction" of FOF investment and require that double dipping should be prohibited.
○ Ma Kai, member of the CPC Central Committee Political Bureau, has recently visited carbon fiber and graphene enterprises in Zhejiang Province and Jiangsu Provinces, encouraging relevant enterprises to vigorously develop the new material industry.
○ Rules on Interbank Market Credit Risk Mitigation Pilot Business was released on Sept. 23. The Chinese version of CDS will become a new tool that prevent market based credit risk.
○ Coal industry symposium held on Sept. 23 decided to moderately release advanced capacity of coal. The National Development and Reform Commission (NDRC) emphasizes that the determination of de-capacity should not be shaken due to price volatility.
○ International oil price on Sept. 23 declined over 3 percent, since Saudi Arabia estimated that agreement can hardly be made at the OPEC production freeze meeting.
TOP
[Industry Information]
○ Prosperity of sodium carbonate expected to improve continuously due to low inventory and pickup of demand in downstream
------
The SSN learnt that due to tight supply in the market, pickup of demand in the downstream and production restriction due to environmental protection, the price of sodium carbonate in the recent week has gone up 20 to 50 yuan, with the highest growth of nearly 4 percent. Relevant manufacturers indicated that due to the improvement of industrial supply and demand, the price of sodium carbonate will further see improvement ranging from 40 yuan to 100 yuan per ton.
Comment: the capacity of sodium carbonate has declined from 33 million tons in 2014 to 29 million tons so far. With impetus from the real estate industry, the production volume and price of glass both increased, which also supported the sodium carbonate industry. In listed companies, Hubei Shuanghuan Science and Technology Stock Co., Ltd. (000707.SZ) and Tangshan Sanyou Chemical Industries Co., Ltd. (600490.SH) have 1.8 million tons and 3.4 million tons of capacity respectively, accounting for a large proportion of their main business.
○ Share price of Amazon hit new high, high-growth of cloud computing market becomes trend
------
In the US stock market, the price of Amazon has surged for four consecutive sessions up till Sept. 23, increased by 67 percent in aggregate from the low point in February. The total market capitalization of the company is 382 billion dollars, the fourth largest in US stocks. In recent years, Amazon's ecommerce has maintained sound growth, and the performance of its cloud computing business Amazon Web Services (AWS) is even more outstanding. In the second quarter, revenue from AWS has grew by 58 percent year on year.
Comment: coincidently, Alibaba Cloud Computing has also maintained three digit growth in revenue from the second quarter of last year. Cloud computing is the foundation of information technology. Propelled by the government and enterprises, cloud computing is seeing explosive growth. The upgrading of broadband speed also contributes to the development of cloud service, and information security strategy will also promote overseas cloud computing giants to cooperate with their Chinese counterparts, bringing new opportunities to Chinese companies. Beijing Sinnet Technology Co., Ltd. (300383.SZ) has been authorized by Amazon for the provision of cloud computing business in Beijing; Inesa Intelligent Tech Inc. (600602.SH) has conducted cloud business with Microsoft; Digital China Group Co., Ltd. (000034.SZ) has signed strategic cooperation agreement with Alibaba Cloud Computing.
TOP
[Announcement Interpretation]
○ Shandong Geo-Mineral to buy RMB2 bln gold mine assets
------
Shandong Geo-Mineral Co., Ltd. (000409.SZ) proposes to issue shares to Laizhou Hongsheng Mine Investment Co., Ltd., a company under its actual controller Shandong Provincial Bureau of Geology＆ Mineral Resources, through private placement, in order to acquire the entire equities of Laizhou Jinsheng at the valuation of 2,048 million yuan. At the same time, the company proposes to raise supporting fund of 930 million yuan. The issuing price of the above additional issuances are 9.52 yuan per share.
The core assets of Laizhou Jinsheng is the mining right of Zhuguolijia gold mine, which has a gold reserve of approximately 122 tons. The estimated average annual output is expected to be 4.9 tons after reached the designed capacity. This reorganization is a move through which actual controller performs its commitment.
○ ZEG buys shares of Tatwah Smartech
------
Cai Xiaoru, controlling shareholder of Tatwah Smartech Co., Ltd. (002512.SZ), signed a agreement with Zhuhai Zhiyuan Investment Center, under which Cai Xiaoru will transfer about 110 million shares to Zhiyuan Investment Center at 18.56 yuan per share. After the deal, Zhiyuan Investment Center will hold a 10.07 percent stake in the company and become its second largest shareholder. Meanwhile, Zhiyuan Investment Center will transfer irrevocably 8 percent of its voting rights to Cai Xiaoru.
Comment: The actual controller of Zhiyuan Investment Center is Xie Zhikun, the head of Zhongzhi Enterprise Group (ZEG) and its related companies. Tatwah Smartech announced previously on Sept. 19 that it proposed to acquire 40 percent equities of Huaxing Finance Leasing Co., Ltd. directly held by Xie Zhikun for 1 billion yuan to become its largest shareholder.
TOP
○ Wuchangyu bought by Changjin Equity Investment Partnership to 5 pct. limit
------
Hubei Wuchangyu Co., Ltd. (600275.SH) announces that Yichang Changjin Equity Investment Partnership bought 25,453,300 shares, or 5 percent of its total share, in the company at an average price of 11.197 yuan from Sept 21 to 23. Changjin Equity Investment Partnership was established on Sept. 2 with a registration capital of 1 billion yuan. It has the background of the State-owned Assets Supervision and Administration Commission of Yichang Municipal Government. Cheng Wanli is the representative of the company's executive partner, and plans to continue to increase holding no less than 25,430,500 shares in Wuchangyu in the next 6 months.
○ Zeus Entertainment to acquire Yihua Tech. for RMB 986mln.
------
Zeus Interactive Co., Ltd., a wholly-owned subsidiary of Dalian Zeus Entertainment Co., Ltd. (002354.SZ), proposes to acquire 100 percent equities of Yihua Technology Co., Ltd. for 986 million yuan. Yihua Technology is engaged in the research and development of Texas Hold'em Poker mobile games and software. It promises that its net profit from 2016 to 2019 should reach 60 million yuan, 78 million yuan, 101.4 million yuan and 126.75 million yuan, respectively.
○ Hubei Fuxing Science and Technology Co., Ltd. (000926.SZ) proposes to raise 3.6 billion yuan by issuing 400 million shares to its controlling shareholder Fuxing Group (it proposes to subscribe 30 percent of the total shares) and others. The proceeds will be invested in the innovation of Hongqiao Town K2 project and Fuxing Huafu K4 and K5 projects in the downtown of Wuhan.
○ The consortium of Enjoyor Co.,Ltd. (300020.SZ) becomes the preliminary winner of the first phase BRT PPP project in the downtown of Liqin City with a total investment of 669 million yuan.
[Financial Reports Express]
○ Kunlun Tech. forecasts growth from Q1 to Q3
------
Beijing Kunlun Tech Co., Ltd. (300418.SZ) forecasts a growth of 83 to 110 percent for the first three quarters mainly due to stable increase in sales and increasing investment returns.
[Trading Alarms]
○ Healthcare ＆ Broadex Technologies to conduct IPO on Sept. 26
------
Healthcare Co., Ltd. (732313) will offer shares at 15.41 yuan per share with an upper limit of 24,000 shares for each applicant. The company's PE ratio is 23 times. The company is mainly engaged in memory foam home appliances. Broadex Technologies (300548.SZ) will offer shares at 11.75 yuan per share with an upper limit of 8,000 shares for each applicant. The company's PE ratio is 23 times. The company is mainly engaged in integrated optoelectronic device.
[Weekly Review]
○ A-share market to develop stably
------
One of the important changes in the market is that the fluctuation range of the stock index has been narrowing. On Sept. 20, the SSE Composite Index fluctuated within a range of 0.39 percent, the narrowest in 14 years. Some media compared it to "bradycardia".
Narrow fluctuations are due to investors' cautious sentiment, and the cautious sentiment is a result of market education. The A-share market has been dominated by investors who bought stocks in bullish run and sold in bearish run. The index has been fluctuating slowly and gone higher since it reaches the lowest point of 2,638. Its fluctuation zone cannot contain so many such investors. The final result will be that the market will go up after fluctuations. Investors that are used to sharp changes should adjust their method to adapt to the new normal.
We could learn something from several star stocks in recent months. Hengtong Optic-electric Co., Ltd. (600487.SH), Beijing Sanju Environmental Protection ＆ New Materials Co., Ltd. (300072.SZ) and Shengyi Technology Co., Ltd. (600183.SH) went up as high as 63 percent, 62 percent and 45 percent since the beginning of August. Their P/E ratios are all around 30 times, but were much lower at IPOs. Their earnings expanded 172 percent, 100 percent and 37 percent respectively in the first half of this year. From this we can see that high-growth and low-evaluated stocks are like gold that glitter even in a weak market. Besides, CNHTC Jinan Truck Co., Ltd. (000951.SZ), Weifu High-Technology Group Co., Ltd. (000581.SZ) and Suzhou Gold Mantis Construction Decoration Co., Ltd. (002081.SZ) that have performed strongly have some advantages in valuation.
Beneath the surface of low fluctuations, the market is moving actively. Bullish factors will bring more margin effects on low-evaluated stocks, which requires investors making a secondary judgment. SSN will continue to be an information collector, remain with you to witness the stable development of the A-share market.
TOP
○ International safety standards on automatic pilot to prepared, accelerating commercialization
○ Prosperity of sodium carbonate expected to improve continuously downstream, high-growth of cloud computing market becomes trend
○ Shandong Geo-Mineral to buy gold mine assets, ZEG buys shares of Tatwah Smartech
○ Wuchangyu bought by Changjin Equity Investment Partnership to 5 pct. Limit, Zeus Entertainment to acquire Yihua Tech.
[SSN Focus]
○ International safety standards on automatic pilot to prepared, accelerating commercialization
------
Foreign media reported that Meeting of G7 Transport ministers on Sept. passed a joint declaration, which mainly discussed cooperation on the preparation of international safety standards for the commercialization of automatic pilot. The declaration proposes to launch safety standards that emphasizes on international coordination, so as to help car makers to realize commercialization as soon as possible, and avoid excessive restrictions hindering technological innovation.
Comment: currently, governments, technology giants and car makers are actively researching and developing automatic pilot technology. Cooperation between G7 can avoid overlapping research and investment, and accelerate the commercialization of automatic pilot technology. Institutions believe that advanced driving assistant system (ADAS) is the key for the evolution from tradition vehicle to automatic pilot. It is estimated that China's ADAS market will hit 200 billion yuan by 2020. In listed companies, ZYNP Corporation (002448.SZ) and Zhejiang Vie Science ＆ Technology Co., Ltd. (002590.SZ) have all deployed in ADAS industry chain.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) has approved the IPOs of 12 enterprises, such as xinhuanet and Bank of Shanghai. Culture and media sector of the A-share market will welcome a new SOE member.
○ The CSRC recently formally issued and implemented the guidance of Fund of Funds (FOF), which makes clear the "double 20 percent restriction" of FOF investment and require that double dipping should be prohibited.
○ Ma Kai, member of the CPC Central Committee Political Bureau, has recently visited carbon fiber and graphene enterprises in Zhejiang Province and Jiangsu Provinces, encouraging relevant enterprises to vigorously develop the new material industry.
○ Rules on Interbank Market Credit Risk Mitigation Pilot Business was released on Sept. 23. The Chinese version of CDS will become a new tool that prevent market based credit risk.
○ Coal industry symposium held on Sept. 23 decided to moderately release advanced capacity of coal. The National Development and Reform Commission (NDRC) emphasizes that the determination of de-capacity should not be shaken due to price volatility.
○ International oil price on Sept. 23 declined over 3 percent, since Saudi Arabia estimated that agreement can hardly be made at the OPEC production freeze meeting.
TOP
[Industry Information]
○ Prosperity of sodium carbonate expected to improve continuously due to low inventory and pickup of demand in downstream
------
The SSN learnt that due to tight supply in the market, pickup of demand in the downstream and production restriction due to environmental protection, the price of sodium carbonate in the recent week has gone up 20 to 50 yuan, with the highest growth of nearly 4 percent. Relevant manufacturers indicated that due to the improvement of industrial supply and demand, the price of sodium carbonate will further see improvement ranging from 40 yuan to 100 yuan per ton.
Comment: the capacity of sodium carbonate has declined from 33 million tons in 2014 to 29 million tons so far. With impetus from the real estate industry, the production volume and price of glass both increased, which also supported the sodium carbonate industry. In listed companies, Hubei Shuanghuan Science and Technology Stock Co., Ltd. (000707.SZ) and Tangshan Sanyou Chemical Industries Co., Ltd. (600490.SH) have 1.8 million tons and 3.4 million tons of capacity respectively, accounting for a large proportion of their main business.
○ Share price of Amazon hit new high, high-growth of cloud computing market becomes trend
------
In the US stock market, the price of Amazon has surged for four consecutive sessions up till Sept. 23, increased by 67 percent in aggregate from the low point in February. The total market capitalization of the company is 382 billion dollars, the fourth largest in US stocks. In recent years, Amazon's ecommerce has maintained sound growth, and the performance of its cloud computing business Amazon Web Services (AWS) is even more outstanding. In the second quarter, revenue from AWS has grew by 58 percent year on year.
Comment: coincidently, Alibaba Cloud Computing has also maintained three digit growth in revenue from the second quarter of last year. Cloud computing is the foundation of information technology. Propelled by the government and enterprises, cloud computing is seeing explosive growth. The upgrading of broadband speed also contributes to the development of cloud service, and information security strategy will also promote overseas cloud computing giants to cooperate with their Chinese counterparts, bringing new opportunities to Chinese companies. Beijing Sinnet Technology Co., Ltd. (300383.SZ) has been authorized by Amazon for the provision of cloud computing business in Beijing; Inesa Intelligent Tech Inc. (600602.SH) has conducted cloud business with Microsoft; Digital China Group Co., Ltd. (000034.SZ) has signed strategic cooperation agreement with Alibaba Cloud Computing.
TOP
[Announcement Interpretation]
○ Shandong Geo-Mineral to buy RMB2 bln gold mine assets
------
Shandong Geo-Mineral Co., Ltd. (000409.SZ) proposes to issue shares to Laizhou Hongsheng Mine Investment Co., Ltd., a company under its actual controller Shandong Provincial Bureau of Geology＆ Mineral Resources, through private placement, in order to acquire the entire equities of Laizhou Jinsheng at the valuation of 2,048 million yuan. At the same time, the company proposes to raise supporting fund of 930 million yuan. The issuing price of the above additional issuances are 9.52 yuan per share.
The core assets of Laizhou Jinsheng is the mining right of Zhuguolijia gold mine, which has a gold reserve of approximately 122 tons. The estimated average annual output is expected to be 4.9 tons after reached the designed capacity. This reorganization is a move through which actual controller performs its commitment.
○ ZEG buys shares of Tatwah Smartech
------
Cai Xiaoru, controlling shareholder of Tatwah Smartech Co., Ltd. (002512.SZ), signed a agreement with Zhuhai Zhiyuan Investment Center, under which Cai Xiaoru will transfer about 110 million shares to Zhiyuan Investment Center at 18.56 yuan per share. After the deal, Zhiyuan Investment Center will hold a 10.07 percent stake in the company and become its second largest shareholder. Meanwhile, Zhiyuan Investment Center will transfer irrevocably 8 percent of its voting rights to Cai Xiaoru.
Comment: The actual controller of Zhiyuan Investment Center is Xie Zhikun, the head of Zhongzhi Enterprise Group (ZEG) and its related companies. Tatwah Smartech announced previously on Sept. 19 that it proposed to acquire 40 percent equities of Huaxing Finance Leasing Co., Ltd. directly held by Xie Zhikun for 1 billion yuan to become its largest shareholder.
TOP
○ Wuchangyu bought by Changjin Equity Investment Partnership to 5 pct. limit
------
Hubei Wuchangyu Co., Ltd. (600275.SH) announces that Yichang Changjin Equity Investment Partnership bought 25,453,300 shares, or 5 percent of its total share, in the company at an average price of 11.197 yuan from Sept 21 to 23. Changjin Equity Investment Partnership was established on Sept. 2 with a registration capital of 1 billion yuan. It has the background of the State-owned Assets Supervision and Administration Commission of Yichang Municipal Government. Cheng Wanli is the representative of the company's executive partner, and plans to continue to increase holding no less than 25,430,500 shares in Wuchangyu in the next 6 months.
○ Zeus Entertainment to acquire Yihua Tech. for RMB 986mln.
------
Zeus Interactive Co., Ltd., a wholly-owned subsidiary of Dalian Zeus Entertainment Co., Ltd. (002354.SZ), proposes to acquire 100 percent equities of Yihua Technology Co., Ltd. for 986 million yuan. Yihua Technology is engaged in the research and development of Texas Hold'em Poker mobile games and software. It promises that its net profit from 2016 to 2019 should reach 60 million yuan, 78 million yuan, 101.4 million yuan and 126.75 million yuan, respectively.
○ Hubei Fuxing Science and Technology Co., Ltd. (000926.SZ) proposes to raise 3.6 billion yuan by issuing 400 million shares to its controlling shareholder Fuxing Group (it proposes to subscribe 30 percent of the total shares) and others. The proceeds will be invested in the innovation of Hongqiao Town K2 project and Fuxing Huafu K4 and K5 projects in the downtown of Wuhan.
○ The consortium of Enjoyor Co.,Ltd. (300020.SZ) becomes the preliminary winner of the first phase BRT PPP project in the downtown of Liqin City with a total investment of 669 million yuan.
[Financial Reports Express]
○ Kunlun Tech. forecasts growth from Q1 to Q3
------
Beijing Kunlun Tech Co., Ltd. (300418.SZ) forecasts a growth of 83 to 110 percent for the first three quarters mainly due to stable increase in sales and increasing investment returns.
[Trading Alarms]
○ Healthcare ＆ Broadex Technologies to conduct IPO on Sept. 26
------
Healthcare Co., Ltd. (732313) will offer shares at 15.41 yuan per share with an upper limit of 24,000 shares for each applicant. The company's PE ratio is 23 times. The company is mainly engaged in memory foam home appliances. Broadex Technologies (300548.SZ) will offer shares at 11.75 yuan per share with an upper limit of 8,000 shares for each applicant. The company's PE ratio is 23 times. The company is mainly engaged in integrated optoelectronic device.
[Weekly Review]
○ A-share market to develop stably
------
One of the important changes in the market is that the fluctuation range of the stock index has been narrowing. On Sept. 20, the SSE Composite Index fluctuated within a range of 0.39 percent, the narrowest in 14 years. Some media compared it to "bradycardia".
Narrow fluctuations are due to investors' cautious sentiment, and the cautious sentiment is a result of market education. The A-share market has been dominated by investors who bought stocks in bullish run and sold in bearish run. The index has been fluctuating slowly and gone higher since it reaches the lowest point of 2,638. Its fluctuation zone cannot contain so many such investors. The final result will be that the market will go up after fluctuations. Investors that are used to sharp changes should adjust their method to adapt to the new normal.
We could learn something from several star stocks in recent months. Hengtong Optic-electric Co., Ltd. (600487.SH), Beijing Sanju Environmental Protection ＆ New Materials Co., Ltd. (300072.SZ) and Shengyi Technology Co., Ltd. (600183.SH) went up as high as 63 percent, 62 percent and 45 percent since the beginning of August. Their P/E ratios are all around 30 times, but were much lower at IPOs. Their earnings expanded 172 percent, 100 percent and 37 percent respectively in the first half of this year. From this we can see that high-growth and low-evaluated stocks are like gold that glitter even in a weak market. Besides, CNHTC Jinan Truck Co., Ltd. (000951.SZ), Weifu High-Technology Group Co., Ltd. (000581.SZ) and Suzhou Gold Mantis Construction Decoration Co., Ltd. (002081.SZ) that have performed strongly have some advantages in valuation.
Beneath the surface of low fluctuations, the market is moving actively. Bullish factors will bring more margin effects on low-evaluated stocks, which requires investors making a secondary judgment. SSN will continue to be an information collector, remain with you to witness the stable development of the A-share market.
TOP
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