[Today's Guide]
○ Lead and zinc futures surges, profitability of mine enterprises expected to continue to improve
○ China's new-born population grow again, demand of infant industry to increase
○ Equities of Sunlight Machinery transferred at high premium, Zhongzhi Enterprise Group becomes shareholder Huanghe Enterprise sees shareholding increases
○ Tibet Tourism sees shareholding increase by substantial shareholders, Yonggui Electric Equipment obtains military engineering qualification
[SSN Focus]
○ Shenzhen-Hong Kong Stock Connect to open Dec. 5, big market consisted of Shanghai, Shenzhen and Hong Kong bourses comes into being
------
The China Securities Regulatory Commission (CSRC) and Securities and Futures Commission of Hong Kong on Nov. 25 jointly announced that eligible stock trading via Shenzhen-Hong Kong Stock Connect will start on Dec. 5. Charles Li, chief executive of Hong Kong Exchange and Clearing Limited (HKEx) indicated that participants of the market are well positioned for the milestone of interconnection. Shenzhen-Hong Kong Stock Connect will bring more investment opportunities and conveniences for investors on both sides, and contribute to the common prosperity of both markets.
The HKEx on the same day announced in total 881 eligible shares under Shenzhen-Hong Kong Stock Connect, including 267 mainboard shares, 411 medium and small cap shares and 203 ChiNext board shares. 121 members are currently permitted to participate in the Southbound Trading Link under the Shenzhen-Hong Kong Stock Connect. The account-opening work of Shenzhen Hong Kong Stock Connect has already started on Nov. 7, and will continue in the next week.
TOP
○ Lead and zinc futures surges, profitability of mine enterprises expected to continue to improve
------
On Nov. 25, the London lead futures closed 8.58 percent higher, the largest single day rise in nearly 7 years; the London Zinc closed higher 5.09 percent, hitting the new high in nearly 8 years. It is learnt that due to part of China's lead and zinc mines in frigid highlands have already suspended production since this month. Inventory of smelting enterprises are at a low level at present, and the supply of concentrate is tight.
Comment: lead and zinc are major selling products of many mine enterprises. The price fluctuation of zinc and lead will directly affect the profitability of such enterprises. The net profit of Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060.SZ) in Q3 increased by over 3 times year on year. Interim report of the company shows that the proved lead and zinc metal resource amount approximates tens of millions tons; Yunnan Chihong Zinc ＆ Germanium Co., Ltd. (600497.SH) has two high-grade mines in Huize and Yiliang, which are rare in China, which gives the company advantage of low cost; Western Mining Group Co., Ltd., the largest shareholder of Western Mining Co., Ltd. (601168.SH), has rich businesses, and the listed company proposes to acquire Daliang Mining and Qinghai Lithium from the group company.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) on Nov. 25 approved the IPO of 14 enterprises, including Central China Securities. It is estimated the total fundraising will not exceed 11.2 billion yuan.
○ The CSRC has ticketed Hundsun Technologies Inc., Hithink RoyalFlush Information Network Co., Ltd. (300033.SZ) and Mecrt for off-market margin financing. Such companies are confiscated of illegal gains and imposed three times penalty.
○ Shanghai oil and gas trading center was launched on Nov. 26. It signals that China has made a critical step forward on market-based reform of oil and gas market.
○ The central government recently issued opinions on perfecting property right protection mechanism and protecting property right in accordance with the law. The top-level design has resolved 8 property right related issues.
○ Two investigation of the State Council has been dispatched to Hebei Province and Jiangsu Province, which will conduct investigation on violations of a majority of enterprises in the de-capacity of the iron industry.
○ The National Health and Family Planning Commission (NHFPC) has issued the 13th Five-Year Food Safety Standard and Supervision Plan, requiring that risk supervision should cover all county-level administrative region and extended to villages and towns in rural areas.
TOP
[Industry Information]
○ China's new-born population grow again, demand of infant industry to increase
------
The Senior Conference of Population and Development was held in Beijing on Nov. 26. Wang Peian, deputy director of the National Health and Family Planning Commission (NHFPC) said at the conference that China's new-born population has exceeded 17.5 million, increasing by 0.95 million from the last year. This number is comparable with that around 2000. In 2015, China's newborns reached 16.55 million, down 0.32 million from 2014. In addition, to improve supporting policies and measures related to two-child birth policy, the NHFPC and relevant departments on Nov. 25 jointly issued guiding opinions on accelerating the construction of maternal and child facilities.
Comment: institutions believe that the gradual implementation of overall two-child policy will bring opportunities for the infant industry chain to expand. The potential market size of subsectors such as milk-powder, paper diaper, children's medication and healthcare and toy is expected to reach trillions of yuan. As for listed companies, Ningbo David Medical Device Co., Ltd. (300314.SZ) is a leading player in terms of infant incubator and neonatal jaundice treatment equipment; Dyne Pharmaceutical, subsidiary of Shandong Shanda Wit Science and Technology Co., Ltd. (000915.SZ), has built children's health industry focus on "children's health care and treatment".
TOP
[Announcement Interpretation]
○ Equities of Sunlight Machinery transferred at high premium, Zhongzhi Enterprise Group becomes shareholder
------
Controlling shareholder of Dalian Sunlight Machinery Co., Ltd. (002621.SZ) proposes to transfer 29,522,800 shares (representing 13.12 percent of the total share capital) held by it to Zhuhai Rongcheng at 40.65 yuan a share. The controlling shareholder also proposes to irrevocable entrust voting rights corresponding to 35.73 million shares (15.88 percent of the total share capital) to Zhuhai Rongcheng.
Zhuhai Rongcheng is an enterprise under Zhongzhi Qixing Investment Management Co., Ltd. The purpose of the equity alteration is to gain controlling right of the listed company. It cannot be rolled out that the new controlling shareholder will not carry out plan to change the assets and businesses of the listed company in the next 12 month. Upon completion of the equity alteration, the actual controller of the company will be Xie Zhikun. The company closed at 24.9 yuan before suspension of trading.
○ Huanghe Enterprise sees shareholding increases
------
Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ) announced that Zhang Lin increased the shareholding in the company with 471,400 shares on Nov. 24 with an average price of 20.99 yuan per share. The fund established by Hanxin Asset as the fund manager, Pan Juanmei and Zhang Lin totally hold 9,308,100 shares in Huanghe Enterprise after the equity changes, accounting for 5.01 percent of its total share capital.
TOP
○ Tibet Tourism sees shareholding increase by substantial shareholders
------
Guofeng Group, the controlling shareholder of Tibet Tourism Co., Ltd. (600749.SH), increased the shareholding in the company with a total of 9,456,900 shares from Sept. 6 to Nov. 25, accounting for 5 percent of its total share capital. The total payment was 231 million yuan and the average cost was 24.38 yuan per share. Guofeng Group totally holds 25 percent of the shares of the company after the completion of the shareholding increase. The latest stock price of the company is 24.58 yuan.
The substantial shareholder of Wuhan DDMC Culture Co., Ltd. (600136.SH) increased the shareholding in the company with 4,958,000 shares with 20.28 yuan per share through bulk trading on Nov. 25, accounting for 1.02 percent of the total share capital of the company.
The controlling shareholder of Hengtong Optic-electric Co., Ltd. (600487.SH) increased the shareholding in the company with 4,453,900 shares on Nov. 25, accounting for 0.36 percent of its total share capital. It may further increase the shareholding in the company in the following six months with a total proportion of no more than 2 percent of the total share capital and a total amount of no more than 500 million yuan.
○ Yonggui Electric Equipment obtains military engineering qualification
------
Yonghui Technology, a wholly-owned subsidiary of Zhejiang Yonggui Electric Equipment Co., Ltd. (300351.SZ), was granted the registration certificate for the manufacturing of equipment by the development department of the Central Military Commission. It has obtained the qualification for the research and development and production of electronic integrated systems for top 12 military engineering groups in China. It also obtained the qualification for bidding in the network for procurement information about arms and equipment for the whole army.
[Trading Trends]
○ Five institutional seats buy Quanxin Cable Technology
------
The trading volume ranking list on Nov. 25 shows that Nanjing Quanxin Cable Technology Co., Ltd. (300447.SZ) was bought through five institutional seats with a total of 111 million yuan, accounting for 19.51 percent of its intraday turnover.
Comment: The company is principally engaged in high-performance cables and components for military uses. Institutes believe that the company proposes to acquire Changzhou Connect Environmental ＆ Technology Co., Ltd. to develop desalination equipment. The P/E of this acquisition is about 12 times and it will dilute the valuation of the company. In addition, the company will complete the Phase-II shareholding incentive plan, which shows the confidence over the future development of the company.
[Trading Alarms]
○ Rutong Petro-Machinery and Beiken Energy Engineering Stock to conduct IPOs on Nov. 28
------
Jiangsu Rutong Petro-Machinery Co., Ltd. (603036.SH), principally engaged in equipment for oil drilling and production, issues shares at 6.84 yuan per share with an upper subscription limit of 20,000 shares for each account. Xinjiang Beiken Energy Engineering Stock Co., Ltd. (002828.SZ), principally engaged in technical services for drilling projects, issues shares at 12.02 yuan per share with an upper subscription limit of 11,500 shares for each account.
[Weekly Review]
○ Measures in capturing Meng Huo for seven times and emerging bullish news
------
There is a story about capturing and releasing Meng Huo seven times in the Romance of the Three Kingdoms. When Meng Huo was captured by Zhuge Liang for the first time, he thought that it was just because of his carelessness and required for fighting again. However, Meng was captured again and again later and captured for seven times. Meng finally realized that his failure was not caused by technical failures and it was because the fundamentals of Zhuge Liang were better than his.
We also saw bullish news one after another in the recent hikes of the stock market. The tasks in de-capacity have been completed. Insurance funds have bought blue chips. Capitals out of the stock market have been enthusiastic about IPOs. The Shenzhen-Hong Kong Stock Connect will be launched soon. Although they have significant influence individually, we should think over if there are news neglected by the market and if they have more far-reaching changes.
The Chinese economic growth has been slowing down for five consecutive years since 2011. Stock investors considered most stocks as "sunset industries". The P/E ratio of certain blue chips has been reduced to single digit. With the property investment growth bottoming at the beginning of 2016, the prices of coal and steel ＆ iron also stopped declining. The manufacturing PMI, the railway freight and the social power consumption have been surging since August. The sales volume of passenger vehicles and heavy trucks also increased. The profit of industrial enterprises above the designated size increased 9.8 percent in October compared with 7.7 percent in September. The recovery of the fundamentals is irresistible even if there is such external disturbance as the new policies introduced by Trump.
Zhuge Liang has to consider specific measures in capturing Meng Huo. But it is more important to consider how to make Meng sincerely convinced. We should conduct specific analysis and have an overall horizon in making investments in the stock market.
TOP
○ Lead and zinc futures surges, profitability of mine enterprises expected to continue to improve
○ China's new-born population grow again, demand of infant industry to increase
○ Equities of Sunlight Machinery transferred at high premium, Zhongzhi Enterprise Group becomes shareholder Huanghe Enterprise sees shareholding increases
○ Tibet Tourism sees shareholding increase by substantial shareholders, Yonggui Electric Equipment obtains military engineering qualification
[SSN Focus]
○ Shenzhen-Hong Kong Stock Connect to open Dec. 5, big market consisted of Shanghai, Shenzhen and Hong Kong bourses comes into being
------
The China Securities Regulatory Commission (CSRC) and Securities and Futures Commission of Hong Kong on Nov. 25 jointly announced that eligible stock trading via Shenzhen-Hong Kong Stock Connect will start on Dec. 5. Charles Li, chief executive of Hong Kong Exchange and Clearing Limited (HKEx) indicated that participants of the market are well positioned for the milestone of interconnection. Shenzhen-Hong Kong Stock Connect will bring more investment opportunities and conveniences for investors on both sides, and contribute to the common prosperity of both markets.
The HKEx on the same day announced in total 881 eligible shares under Shenzhen-Hong Kong Stock Connect, including 267 mainboard shares, 411 medium and small cap shares and 203 ChiNext board shares. 121 members are currently permitted to participate in the Southbound Trading Link under the Shenzhen-Hong Kong Stock Connect. The account-opening work of Shenzhen Hong Kong Stock Connect has already started on Nov. 7, and will continue in the next week.
TOP
○ Lead and zinc futures surges, profitability of mine enterprises expected to continue to improve
------
On Nov. 25, the London lead futures closed 8.58 percent higher, the largest single day rise in nearly 7 years; the London Zinc closed higher 5.09 percent, hitting the new high in nearly 8 years. It is learnt that due to part of China's lead and zinc mines in frigid highlands have already suspended production since this month. Inventory of smelting enterprises are at a low level at present, and the supply of concentrate is tight.
Comment: lead and zinc are major selling products of many mine enterprises. The price fluctuation of zinc and lead will directly affect the profitability of such enterprises. The net profit of Shenzhen Zhongjin Lingnan Nonfemet Co., Ltd. (000060.SZ) in Q3 increased by over 3 times year on year. Interim report of the company shows that the proved lead and zinc metal resource amount approximates tens of millions tons; Yunnan Chihong Zinc ＆ Germanium Co., Ltd. (600497.SH) has two high-grade mines in Huize and Yiliang, which are rare in China, which gives the company advantage of low cost; Western Mining Group Co., Ltd., the largest shareholder of Western Mining Co., Ltd. (601168.SH), has rich businesses, and the listed company proposes to acquire Daliang Mining and Qinghai Lithium from the group company.
[SSN Selection]
○ The China Securities Regulatory Commission (CSRC) on Nov. 25 approved the IPO of 14 enterprises, including Central China Securities. It is estimated the total fundraising will not exceed 11.2 billion yuan.
○ The CSRC has ticketed Hundsun Technologies Inc., Hithink RoyalFlush Information Network Co., Ltd. (300033.SZ) and Mecrt for off-market margin financing. Such companies are confiscated of illegal gains and imposed three times penalty.
○ Shanghai oil and gas trading center was launched on Nov. 26. It signals that China has made a critical step forward on market-based reform of oil and gas market.
○ The central government recently issued opinions on perfecting property right protection mechanism and protecting property right in accordance with the law. The top-level design has resolved 8 property right related issues.
○ Two investigation of the State Council has been dispatched to Hebei Province and Jiangsu Province, which will conduct investigation on violations of a majority of enterprises in the de-capacity of the iron industry.
○ The National Health and Family Planning Commission (NHFPC) has issued the 13th Five-Year Food Safety Standard and Supervision Plan, requiring that risk supervision should cover all county-level administrative region and extended to villages and towns in rural areas.
TOP
[Industry Information]
○ China's new-born population grow again, demand of infant industry to increase
------
The Senior Conference of Population and Development was held in Beijing on Nov. 26. Wang Peian, deputy director of the National Health and Family Planning Commission (NHFPC) said at the conference that China's new-born population has exceeded 17.5 million, increasing by 0.95 million from the last year. This number is comparable with that around 2000. In 2015, China's newborns reached 16.55 million, down 0.32 million from 2014. In addition, to improve supporting policies and measures related to two-child birth policy, the NHFPC and relevant departments on Nov. 25 jointly issued guiding opinions on accelerating the construction of maternal and child facilities.
Comment: institutions believe that the gradual implementation of overall two-child policy will bring opportunities for the infant industry chain to expand. The potential market size of subsectors such as milk-powder, paper diaper, children's medication and healthcare and toy is expected to reach trillions of yuan. As for listed companies, Ningbo David Medical Device Co., Ltd. (300314.SZ) is a leading player in terms of infant incubator and neonatal jaundice treatment equipment; Dyne Pharmaceutical, subsidiary of Shandong Shanda Wit Science and Technology Co., Ltd. (000915.SZ), has built children's health industry focus on "children's health care and treatment".
TOP
[Announcement Interpretation]
○ Equities of Sunlight Machinery transferred at high premium, Zhongzhi Enterprise Group becomes shareholder
------
Controlling shareholder of Dalian Sunlight Machinery Co., Ltd. (002621.SZ) proposes to transfer 29,522,800 shares (representing 13.12 percent of the total share capital) held by it to Zhuhai Rongcheng at 40.65 yuan a share. The controlling shareholder also proposes to irrevocable entrust voting rights corresponding to 35.73 million shares (15.88 percent of the total share capital) to Zhuhai Rongcheng.
Zhuhai Rongcheng is an enterprise under Zhongzhi Qixing Investment Management Co., Ltd. The purpose of the equity alteration is to gain controlling right of the listed company. It cannot be rolled out that the new controlling shareholder will not carry out plan to change the assets and businesses of the listed company in the next 12 month. Upon completion of the equity alteration, the actual controller of the company will be Xie Zhikun. The company closed at 24.9 yuan before suspension of trading.
○ Huanghe Enterprise sees shareholding increases
------
Lanzhou Huanghe Enterprise Co., Ltd. (000929.SZ) announced that Zhang Lin increased the shareholding in the company with 471,400 shares on Nov. 24 with an average price of 20.99 yuan per share. The fund established by Hanxin Asset as the fund manager, Pan Juanmei and Zhang Lin totally hold 9,308,100 shares in Huanghe Enterprise after the equity changes, accounting for 5.01 percent of its total share capital.
TOP
○ Tibet Tourism sees shareholding increase by substantial shareholders
------
Guofeng Group, the controlling shareholder of Tibet Tourism Co., Ltd. (600749.SH), increased the shareholding in the company with a total of 9,456,900 shares from Sept. 6 to Nov. 25, accounting for 5 percent of its total share capital. The total payment was 231 million yuan and the average cost was 24.38 yuan per share. Guofeng Group totally holds 25 percent of the shares of the company after the completion of the shareholding increase. The latest stock price of the company is 24.58 yuan.
The substantial shareholder of Wuhan DDMC Culture Co., Ltd. (600136.SH) increased the shareholding in the company with 4,958,000 shares with 20.28 yuan per share through bulk trading on Nov. 25, accounting for 1.02 percent of the total share capital of the company.
The controlling shareholder of Hengtong Optic-electric Co., Ltd. (600487.SH) increased the shareholding in the company with 4,453,900 shares on Nov. 25, accounting for 0.36 percent of its total share capital. It may further increase the shareholding in the company in the following six months with a total proportion of no more than 2 percent of the total share capital and a total amount of no more than 500 million yuan.
○ Yonggui Electric Equipment obtains military engineering qualification
------
Yonghui Technology, a wholly-owned subsidiary of Zhejiang Yonggui Electric Equipment Co., Ltd. (300351.SZ), was granted the registration certificate for the manufacturing of equipment by the development department of the Central Military Commission. It has obtained the qualification for the research and development and production of electronic integrated systems for top 12 military engineering groups in China. It also obtained the qualification for bidding in the network for procurement information about arms and equipment for the whole army.
[Trading Trends]
○ Five institutional seats buy Quanxin Cable Technology
------
The trading volume ranking list on Nov. 25 shows that Nanjing Quanxin Cable Technology Co., Ltd. (300447.SZ) was bought through five institutional seats with a total of 111 million yuan, accounting for 19.51 percent of its intraday turnover.
Comment: The company is principally engaged in high-performance cables and components for military uses. Institutes believe that the company proposes to acquire Changzhou Connect Environmental ＆ Technology Co., Ltd. to develop desalination equipment. The P/E of this acquisition is about 12 times and it will dilute the valuation of the company. In addition, the company will complete the Phase-II shareholding incentive plan, which shows the confidence over the future development of the company.
[Trading Alarms]
○ Rutong Petro-Machinery and Beiken Energy Engineering Stock to conduct IPOs on Nov. 28
------
Jiangsu Rutong Petro-Machinery Co., Ltd. (603036.SH), principally engaged in equipment for oil drilling and production, issues shares at 6.84 yuan per share with an upper subscription limit of 20,000 shares for each account. Xinjiang Beiken Energy Engineering Stock Co., Ltd. (002828.SZ), principally engaged in technical services for drilling projects, issues shares at 12.02 yuan per share with an upper subscription limit of 11,500 shares for each account.
[Weekly Review]
○ Measures in capturing Meng Huo for seven times and emerging bullish news
------
There is a story about capturing and releasing Meng Huo seven times in the Romance of the Three Kingdoms. When Meng Huo was captured by Zhuge Liang for the first time, he thought that it was just because of his carelessness and required for fighting again. However, Meng was captured again and again later and captured for seven times. Meng finally realized that his failure was not caused by technical failures and it was because the fundamentals of Zhuge Liang were better than his.
We also saw bullish news one after another in the recent hikes of the stock market. The tasks in de-capacity have been completed. Insurance funds have bought blue chips. Capitals out of the stock market have been enthusiastic about IPOs. The Shenzhen-Hong Kong Stock Connect will be launched soon. Although they have significant influence individually, we should think over if there are news neglected by the market and if they have more far-reaching changes.
The Chinese economic growth has been slowing down for five consecutive years since 2011. Stock investors considered most stocks as "sunset industries". The P/E ratio of certain blue chips has been reduced to single digit. With the property investment growth bottoming at the beginning of 2016, the prices of coal and steel ＆ iron also stopped declining. The manufacturing PMI, the railway freight and the social power consumption have been surging since August. The sales volume of passenger vehicles and heavy trucks also increased. The profit of industrial enterprises above the designated size increased 9.8 percent in October compared with 7.7 percent in September. The recovery of the fundamentals is irresistible even if there is such external disturbance as the new policies introduced by Trump.
Zhuge Liang has to consider specific measures in capturing Meng Huo. But it is more important to consider how to make Meng sincerely convinced. We should conduct specific analysis and have an overall horizon in making investments in the stock market.
TOP
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