[Today's Guide]
○ State Council holds meeting to promoting revitalization of northeast China, support SOEs reform
○ Military-civil integration achievement exhibition to open, various listed companies to attend
○ Lithium battery manufacturing transforms to automatic, brings huge potential for substitution
○ Hengda Hi-Tech to acquire Internat-based assets, Fuxing Science and Technology to see shareholding increase
[SSN Focus]
○ State Council holds meeting to promoting revitalization of northeast China, support SOEs reform
------
Premier Li Keqiang presided over a meeting of the State Council to revitalize the northeast region and other old industrial bases on Oct. 18. The meeting reviewed and approved the opinions on deepening the implementation of the new round of strategic plan for revitalizing northeast China and accelerating the stabilization of northeast China's economy and the 13th Five-Year Plan for revitalizing northeast China. Meeting also proposed to deepen the reform of state-owned enterprises (SOEs) in northeast China and support some central SOEs to carry out trial reform in mixed ownership.
Comments: SOEs take up a high proportion in the northeast China's economy, leaving lots of problems. Incomplete institutional reform is a major reason causing economic slowdown in the region. Since the beginning of this year, various ministries have "diagnosed" problems in the northeast China. The efforts are unprecedented. Reforms in local SOEs has also accelerated significantly. In May, the special group for northeast SOEs reform visited Heilongjiang and inspected China First Heavy Industries (CFHI) and China North Industries Group Corporation. In August, eight provincial SOEs of Liaoning Province attracted strategic investors to promote the mixed ownership reform. Jilin Forest Industry Co., Ltd. (600189.SH) and Jilin Ji'en Nickel Industry Co., Ltd. (600432.SH) held by Jilin Provincial State-owned Assets Supervision and Administration have suspended trading as they are involved major asset restructuring. According to statistics, among all listed central SOEs located in the northeast China, Changchun Yidong (600148.SH) and Daqing China Branch (000985.SZ) see their market capitalization less than 4 billion yuan. The substantial shareholder of Bengang Steel Plates Co., Ltd. (000761.SZ) and Liaoning Hongyang Energy Resource Invest Co., Ltd. (600758.SH) are among the nine SOEs in Liaoning that will launch mixed ownership reform in a whole.
TOP
○ Military-civil integration achievement exhibition to open, various listed companies to attend
------
The second military-civil integration high-tech achievement exhibition and high-level forum be held in Beijing in October. The exhibition and forum will be jointly held by the Central Military Commission, the MIIT and the State Administration of Science. Technology and Industry for National Defense. It will focus on high-tech products and high-tech achievements made by private enterprises as well as institutions of higher learning, research institutes outside the traditional military system.
Comment: With great policy support and demands for military equipment upgrading, private enterprises engaged in the military sector with core technologies will see a new round of development opportunities. A total of 88 private enterprise will attend the civil-military integration exhibition, including data storage device maker Toyou Feiji Electronics Co., Ltd. (300302.SZ), infrared camera maker Zhejiang Dali Technology Co., Ltd. (002214.SZ) and navigation electronic equipment supplier Beijing Highlander Digital Technology Co., Ltd. (300065.SZ).
[SSN Focus]
○ New enterprises loans in China rose to 618.2 billion yuan from 120.9 billion yuan in August, indicating that enterprises' demands for investment are picking up. The growth momentum is expected to continue in the fourth quarter.
○ The Ministry of Industry and Information Technology (MIIT) expressed supports for participating the preparation of international block chain standard at the establishment of the China block chain technology and industrial development forum and first conference of developers on Oct. 18.
○ The Ministry of Industry and Information Technology released the plan on the development of the rare earth industry (2016-2020) on its website today, proposing to make the output of major rare earth material to grow over 15 percent each year.
○ An official from the National Energy Administration said on Oct. 18 that the 13th Five-Year Plan for renewable energy sources and wind power has basically completed. The output of renewable energy sources will account for 27 percent of the total electricity output.
○ China Aviation Supplies Co., Ltd. was officially set up in Beijing. Its shareholders include China Southern Airlines Group, China Aviation Group, China Eastern Airlines Group, China Aviation Supplies Holding Company and China Reform Holding Corporation Ltd.
○ Last week saw a net inflow of 63 billion yuan equity margin mainly due to the ending of the National Day holidays and warm-up of the equity market.
TOP
[Industry Information]
○ Lithium battery manufacturing transforms to automatic, brings huge potential for substitution
------
Bian Shuguang, deputy director of the high technology research and development center of the Ministry of Science and Technology, said recently that China has formed a relatively complete lithium battery industry chain. China has also mastered technologies in the compound design, structural design and manufacturing process of power battery. The production line has gradually transformed from the semi-automatic to large-scale automatic manufacturing. In the next step, China will improve the level of intelligent manufacturing of battery and improve the verification methods and standard system for battery, which is also a key task for the development of power battery in China.
Comment: Institutions point out that the automation level in domestic power battery production lines is low. The automation level in first-class enterprises is less than 60 percent, and that in second and third-class enterprises is less than 30 percent. In addition, the localization rate of high-end lithium-ion battery equipment is only 45 to 50 percent, indicating that their is a large space for substitution. Shenzhen Yinghe Technology Co., Ltd. (300457.SZ) invested in four automatic power battery production lines at the end of last year. The company has increased investment in the research and development for overall solutions for power battery production line, and won a number of high-quality customers; Guangdong Zhengye Technology Co., Ltd. (300410.SZ) successfully substituted Japan and U.S. lithium battery testing equipment with domestic products. He company has developed battery lug by acquiring Jiangmeng Tuolian Electronics Technology Co., Ltd.
○ Standard for air cleaner grading to unveil, boost industry structure upgrading
------
The standard for the grading of filter air cleaner's performance in purifying particulate matter has been finalized, and was submitted to the Standardization Administration of China and will be released as soon as November this year, www.cheaa.com reported. The standard comes up with higher and more detailed requirements for air cleaners from the perspective of consumers and further refines the new standard for air cleaners.
Comment: Analysts believe that the implementation of the standards will drive the upgrading of the industrial structure. Companies with relevant technical advantages will benefit from the increasing market share promoted by the improved industrial concentration. In terms of listed companies, KingClean Electric Co., Ltd. (603355.SH) is principally engaged in electric appliances for environmental cleanup. The sales of its own brand surged by over 50 percent in the first half of 2016. Create Technology ＆ Science Co., Ltd. (000551.SZ) expected its net profit to surge by 50 to 100 percent year on year in the first three quarters. Its subsidiary is the biggest high and new-tech company in the air cleanup and purification industry.
○ Deep-sea scientific investigation achieves results, three-step strategy established
------
Xinhua News Agency reported that scientific researchers from Qingdao National Laboratory for Marine Science and Technology (QNLM) completed the deep-sea scientific investigation with a depth of 10,000 meters at the Mariana Trench taking Dong Fang Hong 2 scientific investigation ship. It successfully recovered instruments and equipment operated for nearly one year in the Mariana Trench and tested the self-developed marine equipment for scientific investigation. It is reported that the QNLM has established the "three-step" strategy for deep-sea exploration, which will drive the construction of ocean drilling vessels in China in the following three to five years.
Comment: The "13th Five-year Plan" on national technical innovation proposes that in terms of the deep sea, it will make breakthroughs in the research and manufacturing of deep-sea submersibles, the production platforms for semi-submersible drilling platforms and other large marine engineering equipment. Listed companies with technical advantages will play key roles in deep-sea development. A subsidiary of China CSSC Holdings Limited (600150.SH) delivered the most advanced sixth generation of 3,000-meter deep-sea semi-submersible drilling platforms. Offshore Oil Engineering Co., Ltd. (600583.SH) has many deep-sea ships under service and has robots for introduced deep-sea operation.
TOP
[Announcement Interpretation]
○ Hengda Hi-Tech to acquire two Internet-based marketing companies
------
Jiangxi Hengda Hi-Tech Co., Ltd. (002591.SZ) proposes to acquire 100 percent equities of Wuhan Feiyou and Changsha Jufeng with 276 million yuan and 336 million yuan by issuing shares through private placement and the payment in cash. Meanwhile, it proposes to raise a supporting fund of 252 million yuan by issuing shares through private placement. The issuing price in the above private placement is 13.65 yuan per share.
The two target companies are principally engaged in Internet-based marketing and their main businesses include the distribution and marketing of software and the Internet-based web advertisements. Based on the performance commitment, the net profit after extraordinary items of Wuhan Feiyou will be 23.80 million yuan, 30.90 million yuan and 40.20 million yuan in 2016 to 2018. The net profit after extraordinary items of Changsha Jufeng will reach 29.00 million yuan, 37.70 million yuan and 49.00 million yuan in the same period.
○ Fuxing Science and Technology adjusts private placement plan, substantial shareholder to increase shareholding
------
Hubei Fuxing Science and Technology Co., Ltd. (000926.SZ) plans to raise 3.3 billion yuan by issuing 260 million share at no less than 12.7 yuan per share through private placement. The proceeds will be invested in three urban village renovation programs. The total investment in the three programs is about 7.67 billion yuan and the total net profit is expected to be 1,343 million yuan. Compared with the initial private placement plan, the proceeds to be raised is lower. The substantial shareholder will direct increase the shareholding in the company instead of participating in the subscription. It intends to increase the shareholding by about 47 million shares in the following eight months, accounting for 4.95 percent of the total share capital of the company. The latest closing price of Fuxing Science and Technology is 12.43 yuan.
○ Broadband Technology applies to cancel "special treatment"
------
All of the frozen bank accounts of Shanghai Broadband Technology Co., Ltd. (600608.SH) have been unfrozen. It applies to Shanghai Stock Exchange (SSE) to cancel the "special treatment". The company will not apply for trading suspension when the SSE considers whether to cancel the "special treatment". In principle, the SSE will made decisions within five trading days after receiving the application.
○ Box office of Enlight Media's film surges
------
The film I Belonged to You, which was invested and released by Beijing Enlight Media Co., Ltd. (300251.SZ) was shown in the mainland on Sept. 29. As at Oct. 17, its box office exceeds 763.5 million yuan, accounting for over 50 percent of the business revenue of the company in 2015. The business revenue of the company from the film will be about 160 to 206 million yuan.
○ Lingnan Landscape and GeoEnviron Engineering ＆ Technology signs PPP orders
------
Lingnan Landscape Co., Ltd. (002717.SZ) signed a framework agreement on PPP investment cooperation on Zengzi Square in Jiaxiang County. The total investment in the project is 480 million yuan. Beijing GeoEnviron Engineering ＆ Technology, Inc. (603588.SH) signed a franchise operation agreement on a PPP program on household rubbish incineration and power generation in Jingmai Industrial Park in Puyang City. The total investment in the project is approximately 750 million yuan.
○ Shenzhen Topband Co., Ltd. (002139.SZ) intends to acquire 100 percent equities of Shenzhen Allied Control System Co., Ltd. with 120 million yuan. The target company is principally engaged in the research and development, manufacturing and sale of intelligent controllers, temperature controllers and heating control systems.
[Trading Alarms]
○ Jiafaantal Technology and Thalys Medical Technology to conduct IPOs on Oct. 19
------
Chengdu Jiafaantal Technology Co., Ltd. (300559.SZ) issues shares at 17.56 yuan per share with a P/E ratio of 22.99 times and an upper subscription limit of 18,000 shares. It is principally engaged in information products for education and tests. Wuhan Thalys Medical Technology Inc. (603716.SH) issues shares at 26.91 yuan per share with a P/E ratio of 22.98 times and an upper subscription limit of 12,000 shares. It is principally engaged in the intensive marketing of medical treatment and inspection.
TOP
○ State Council holds meeting to promoting revitalization of northeast China, support SOEs reform
○ Military-civil integration achievement exhibition to open, various listed companies to attend
○ Lithium battery manufacturing transforms to automatic, brings huge potential for substitution
○ Hengda Hi-Tech to acquire Internat-based assets, Fuxing Science and Technology to see shareholding increase
[SSN Focus]
○ State Council holds meeting to promoting revitalization of northeast China, support SOEs reform
------
Premier Li Keqiang presided over a meeting of the State Council to revitalize the northeast region and other old industrial bases on Oct. 18. The meeting reviewed and approved the opinions on deepening the implementation of the new round of strategic plan for revitalizing northeast China and accelerating the stabilization of northeast China's economy and the 13th Five-Year Plan for revitalizing northeast China. Meeting also proposed to deepen the reform of state-owned enterprises (SOEs) in northeast China and support some central SOEs to carry out trial reform in mixed ownership.
Comments: SOEs take up a high proportion in the northeast China's economy, leaving lots of problems. Incomplete institutional reform is a major reason causing economic slowdown in the region. Since the beginning of this year, various ministries have "diagnosed" problems in the northeast China. The efforts are unprecedented. Reforms in local SOEs has also accelerated significantly. In May, the special group for northeast SOEs reform visited Heilongjiang and inspected China First Heavy Industries (CFHI) and China North Industries Group Corporation. In August, eight provincial SOEs of Liaoning Province attracted strategic investors to promote the mixed ownership reform. Jilin Forest Industry Co., Ltd. (600189.SH) and Jilin Ji'en Nickel Industry Co., Ltd. (600432.SH) held by Jilin Provincial State-owned Assets Supervision and Administration have suspended trading as they are involved major asset restructuring. According to statistics, among all listed central SOEs located in the northeast China, Changchun Yidong (600148.SH) and Daqing China Branch (000985.SZ) see their market capitalization less than 4 billion yuan. The substantial shareholder of Bengang Steel Plates Co., Ltd. (000761.SZ) and Liaoning Hongyang Energy Resource Invest Co., Ltd. (600758.SH) are among the nine SOEs in Liaoning that will launch mixed ownership reform in a whole.
TOP
○ Military-civil integration achievement exhibition to open, various listed companies to attend
------
The second military-civil integration high-tech achievement exhibition and high-level forum be held in Beijing in October. The exhibition and forum will be jointly held by the Central Military Commission, the MIIT and the State Administration of Science. Technology and Industry for National Defense. It will focus on high-tech products and high-tech achievements made by private enterprises as well as institutions of higher learning, research institutes outside the traditional military system.
Comment: With great policy support and demands for military equipment upgrading, private enterprises engaged in the military sector with core technologies will see a new round of development opportunities. A total of 88 private enterprise will attend the civil-military integration exhibition, including data storage device maker Toyou Feiji Electronics Co., Ltd. (300302.SZ), infrared camera maker Zhejiang Dali Technology Co., Ltd. (002214.SZ) and navigation electronic equipment supplier Beijing Highlander Digital Technology Co., Ltd. (300065.SZ).
[SSN Focus]
○ New enterprises loans in China rose to 618.2 billion yuan from 120.9 billion yuan in August, indicating that enterprises' demands for investment are picking up. The growth momentum is expected to continue in the fourth quarter.
○ The Ministry of Industry and Information Technology (MIIT) expressed supports for participating the preparation of international block chain standard at the establishment of the China block chain technology and industrial development forum and first conference of developers on Oct. 18.
○ The Ministry of Industry and Information Technology released the plan on the development of the rare earth industry (2016-2020) on its website today, proposing to make the output of major rare earth material to grow over 15 percent each year.
○ An official from the National Energy Administration said on Oct. 18 that the 13th Five-Year Plan for renewable energy sources and wind power has basically completed. The output of renewable energy sources will account for 27 percent of the total electricity output.
○ China Aviation Supplies Co., Ltd. was officially set up in Beijing. Its shareholders include China Southern Airlines Group, China Aviation Group, China Eastern Airlines Group, China Aviation Supplies Holding Company and China Reform Holding Corporation Ltd.
○ Last week saw a net inflow of 63 billion yuan equity margin mainly due to the ending of the National Day holidays and warm-up of the equity market.
TOP
[Industry Information]
○ Lithium battery manufacturing transforms to automatic, brings huge potential for substitution
------
Bian Shuguang, deputy director of the high technology research and development center of the Ministry of Science and Technology, said recently that China has formed a relatively complete lithium battery industry chain. China has also mastered technologies in the compound design, structural design and manufacturing process of power battery. The production line has gradually transformed from the semi-automatic to large-scale automatic manufacturing. In the next step, China will improve the level of intelligent manufacturing of battery and improve the verification methods and standard system for battery, which is also a key task for the development of power battery in China.
Comment: Institutions point out that the automation level in domestic power battery production lines is low. The automation level in first-class enterprises is less than 60 percent, and that in second and third-class enterprises is less than 30 percent. In addition, the localization rate of high-end lithium-ion battery equipment is only 45 to 50 percent, indicating that their is a large space for substitution. Shenzhen Yinghe Technology Co., Ltd. (300457.SZ) invested in four automatic power battery production lines at the end of last year. The company has increased investment in the research and development for overall solutions for power battery production line, and won a number of high-quality customers; Guangdong Zhengye Technology Co., Ltd. (300410.SZ) successfully substituted Japan and U.S. lithium battery testing equipment with domestic products. He company has developed battery lug by acquiring Jiangmeng Tuolian Electronics Technology Co., Ltd.
○ Standard for air cleaner grading to unveil, boost industry structure upgrading
------
The standard for the grading of filter air cleaner's performance in purifying particulate matter has been finalized, and was submitted to the Standardization Administration of China and will be released as soon as November this year, www.cheaa.com reported. The standard comes up with higher and more detailed requirements for air cleaners from the perspective of consumers and further refines the new standard for air cleaners.
Comment: Analysts believe that the implementation of the standards will drive the upgrading of the industrial structure. Companies with relevant technical advantages will benefit from the increasing market share promoted by the improved industrial concentration. In terms of listed companies, KingClean Electric Co., Ltd. (603355.SH) is principally engaged in electric appliances for environmental cleanup. The sales of its own brand surged by over 50 percent in the first half of 2016. Create Technology ＆ Science Co., Ltd. (000551.SZ) expected its net profit to surge by 50 to 100 percent year on year in the first three quarters. Its subsidiary is the biggest high and new-tech company in the air cleanup and purification industry.
○ Deep-sea scientific investigation achieves results, three-step strategy established
------
Xinhua News Agency reported that scientific researchers from Qingdao National Laboratory for Marine Science and Technology (QNLM) completed the deep-sea scientific investigation with a depth of 10,000 meters at the Mariana Trench taking Dong Fang Hong 2 scientific investigation ship. It successfully recovered instruments and equipment operated for nearly one year in the Mariana Trench and tested the self-developed marine equipment for scientific investigation. It is reported that the QNLM has established the "three-step" strategy for deep-sea exploration, which will drive the construction of ocean drilling vessels in China in the following three to five years.
Comment: The "13th Five-year Plan" on national technical innovation proposes that in terms of the deep sea, it will make breakthroughs in the research and manufacturing of deep-sea submersibles, the production platforms for semi-submersible drilling platforms and other large marine engineering equipment. Listed companies with technical advantages will play key roles in deep-sea development. A subsidiary of China CSSC Holdings Limited (600150.SH) delivered the most advanced sixth generation of 3,000-meter deep-sea semi-submersible drilling platforms. Offshore Oil Engineering Co., Ltd. (600583.SH) has many deep-sea ships under service and has robots for introduced deep-sea operation.
TOP
[Announcement Interpretation]
○ Hengda Hi-Tech to acquire two Internet-based marketing companies
------
Jiangxi Hengda Hi-Tech Co., Ltd. (002591.SZ) proposes to acquire 100 percent equities of Wuhan Feiyou and Changsha Jufeng with 276 million yuan and 336 million yuan by issuing shares through private placement and the payment in cash. Meanwhile, it proposes to raise a supporting fund of 252 million yuan by issuing shares through private placement. The issuing price in the above private placement is 13.65 yuan per share.
The two target companies are principally engaged in Internet-based marketing and their main businesses include the distribution and marketing of software and the Internet-based web advertisements. Based on the performance commitment, the net profit after extraordinary items of Wuhan Feiyou will be 23.80 million yuan, 30.90 million yuan and 40.20 million yuan in 2016 to 2018. The net profit after extraordinary items of Changsha Jufeng will reach 29.00 million yuan, 37.70 million yuan and 49.00 million yuan in the same period.
○ Fuxing Science and Technology adjusts private placement plan, substantial shareholder to increase shareholding
------
Hubei Fuxing Science and Technology Co., Ltd. (000926.SZ) plans to raise 3.3 billion yuan by issuing 260 million share at no less than 12.7 yuan per share through private placement. The proceeds will be invested in three urban village renovation programs. The total investment in the three programs is about 7.67 billion yuan and the total net profit is expected to be 1,343 million yuan. Compared with the initial private placement plan, the proceeds to be raised is lower. The substantial shareholder will direct increase the shareholding in the company instead of participating in the subscription. It intends to increase the shareholding by about 47 million shares in the following eight months, accounting for 4.95 percent of the total share capital of the company. The latest closing price of Fuxing Science and Technology is 12.43 yuan.
○ Broadband Technology applies to cancel "special treatment"
------
All of the frozen bank accounts of Shanghai Broadband Technology Co., Ltd. (600608.SH) have been unfrozen. It applies to Shanghai Stock Exchange (SSE) to cancel the "special treatment". The company will not apply for trading suspension when the SSE considers whether to cancel the "special treatment". In principle, the SSE will made decisions within five trading days after receiving the application.
○ Box office of Enlight Media's film surges
------
The film I Belonged to You, which was invested and released by Beijing Enlight Media Co., Ltd. (300251.SZ) was shown in the mainland on Sept. 29. As at Oct. 17, its box office exceeds 763.5 million yuan, accounting for over 50 percent of the business revenue of the company in 2015. The business revenue of the company from the film will be about 160 to 206 million yuan.
○ Lingnan Landscape and GeoEnviron Engineering ＆ Technology signs PPP orders
------
Lingnan Landscape Co., Ltd. (002717.SZ) signed a framework agreement on PPP investment cooperation on Zengzi Square in Jiaxiang County. The total investment in the project is 480 million yuan. Beijing GeoEnviron Engineering ＆ Technology, Inc. (603588.SH) signed a franchise operation agreement on a PPP program on household rubbish incineration and power generation in Jingmai Industrial Park in Puyang City. The total investment in the project is approximately 750 million yuan.
○ Shenzhen Topband Co., Ltd. (002139.SZ) intends to acquire 100 percent equities of Shenzhen Allied Control System Co., Ltd. with 120 million yuan. The target company is principally engaged in the research and development, manufacturing and sale of intelligent controllers, temperature controllers and heating control systems.
[Trading Alarms]
○ Jiafaantal Technology and Thalys Medical Technology to conduct IPOs on Oct. 19
------
Chengdu Jiafaantal Technology Co., Ltd. (300559.SZ) issues shares at 17.56 yuan per share with a P/E ratio of 22.99 times and an upper subscription limit of 18,000 shares. It is principally engaged in information products for education and tests. Wuhan Thalys Medical Technology Inc. (603716.SH) issues shares at 26.91 yuan per share with a P/E ratio of 22.98 times and an upper subscription limit of 12,000 shares. It is principally engaged in the intensive marketing of medical treatment and inspection.
TOP
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