[Today's Guide]
○ Economic work highlights stable progress, agricultural supply-side reform to highlight
○ Non-OPEC producers agree on output cut, industry to see improved profits
○ Shanghai Electric Power acquires new energy asset, New Universal Science and Technology bought by Zhou Xingang
○ Sunsea Telecom. launches ESOP, Kee Ever Bright Decorative Tech. proposes high share conversion
[SSN Focus]
○ Economic work highlights stable progress, agricultural supply-side reform to highlight
------
The Political Bureau of the CPC Central Committee held a meeting on Dec. 9 to analyze the economic work in 2017. It underscored stable progress in state governance and required deepening de-capacity, de-inventory, de-leverage, reducing the cost and shoring up weaknesses and actively advancing the agricultural supply-side reform to speed up reforms in SOEs, taxation, finance, social insurance and other key basic areas.
Comment: The medium- and low-end supply of agricultural products in China is relatively sufficient without pricing competitiveness. The high-end products are scarce and they mainly depend on imports. Analysts believe that it should adjust the grain structure, advance agricultural mechanization and improve the use efficiency of pesticides and fertilizers in advancing the agricultural supply-side reform. Institutes are rosy about the transformation of seed companies into suppliers of integrated services, including agricultural capitals, technical and financial services. Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ), which was invested by CITIC Group, is developing agricultural services. The "one-stop grain supply chain management services" of Hainan Shennong Gene Technology Co., Ltd. (300189.SZ) has signed contracts for 3.36 million mu of farmland.
◆ The National Development and Reform Commission (NDRC) and the Ministry of Agriculture released the guidance on promoting government and social capitals cooperation in agricultural areas recently, proposing to focus on high-standard farmlands, seed projects, modern fishing harbors, and the quality safety testing and traceability system for agricultural products in agricultural PPPs.
○ CIRC curbs impulsive measures of insurance funds, insurance funds to maintain as market stabilizer
------
The China Insurance Regulatory Commission (CIRC) announced on Dec. 9 that it would suspend the entrusted stock investment business of Evergrande Life Insurance Co., Ltd. and require to conducting rectification. Based on the notice of the CIRC issued to Evergrande Life, the company was fined for frequent speculations on stocks of listed companies in short term in trusted stock investment businesses. Foresea Life Insurance also announced on Dec. 9 that it would not increase the shareholding in Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) and would gradually exit based on market conditions and its investment strategies.
Comment: As at the end of October, the total investment of insurance funds in A shares and securities investment funds reached nearly 2 trillion yuan, of which blue chips account for over 60 percent. Insiders believe that with the introduction of various systems, barbaric acquisitions and strong reorganizations of listed companies and other compulsive measures will be curbed and regulated. Insurance funds will increasingly play the role as a market stabilizer in the domestic capital market.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) approved the IPO applications of 14 enterprises, including the Rural Commercial Bank of Zhangjiagang, with an expected total fund of no more than 5.4 billion yuan to be raised.
○ The CSRC recently revised the document on issuing regulation recently. The IPO of issuers without mistakes will not be affected by the illicit activities of sponsors.
○ The State-owned Assets Supervision and Administration Commission indicated on Dec. 9 that it has established four guidance funds to implement the innovation-driven strategy. The number of central enterprises will be reduced to less than 100 next year.
○ The 13th Five-year Plan on energy development will be released soon and the supply of clean and low-carbon energy will increase, indicated Li Yangzhe, deputy head of the National Energy Administration, on Dec. 10.
○ The Shenzhen-Hong Kong Stock Connect recorded an net buy of 8,293 million yuan. Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), Midea Group Co., Ltd. (000333.SZ) and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (002304.SZ) saw a net inflow of nearly 1.5 billion yuan, 800 million yuan and 300 million yuan.
○ The three major U.S. stock indexes closed at record highs on Dec. 9. The U.S. treasuries prices, the exchange rates of non-U.S. currencies and gold continued to decline.
TOP
[Industry Information]
○ Non-OPEC producers agree on output cut, industry to see improved profits
------
The Organization of Petroleum Exporting Countries (OPEC) announced at its headquarters in Vienna on Dec. 10 that non-OPEC producers, including Russia, have agreed to reduce the daily oil output by 558,000 barrels from 2017 to boost the oil price. AFP reported that Russia will complete half of the output cut of 558,000 barrels in the first half of 2017. A supervision committee on output cut composed of three OPEC members and two non-OPEC producers will be established soon. The OPEC will hold a meeting on May 25, 2017 to monitor the implementation of the agreement.
Comment: BBC calls it the first international oil production agreement in 15 years. The OPEC reached an output cut agreement on Nov. 30, which drove the surging of the international oil price. Shenwan ＆ Hongyuan Securities believes that the oil price will fluctuate between 50 to 60 U.S. dollars per barrel. The depreciation provision made by North Huajin Chemical Industries Co., Ltd. (000059.SZ) when the price was low may be reversed when it recovers and the capacity reduced may be recovered. Compared with its small market value, it will significantly improve its performance. China Petroleum ＆ Chemical Corporation (00386.HK; 600028.SH) will see its performance boosted as the oil price hikes.
○ Urea producers lift prices for better demands and low inventory
------
Data from www.baiinfo.com shows that the price of urea in both East China and North China increased on Dec. 9. Luxi Chemical Group Co., Ltd. (000830.SZ) and Shandong Hualu-Hengsheng Chemical Co., Ltd. (600426.SH) raised by their factory price by 20 yuan per tonne. Urea prices have increased a cumulative total of 25 percent from August low. At present, urea prices in domestic market saw a stable upward trend. The quoted prices in some regions are showing an upward trend.
Urea demands in North China, East China and Central China have improved. Factory turnover has also increased. With low inventory in the agricultural market, some some large companies begin stocking fertilizer. Relevant manufacturers expect that urea will see a short-term rally, which will further support storage demands in winter season.
TOP
[Announcement Interpretation]
○ Shanghai Electric Power acquires controlling shareholder's new energy asset for RMB 3bln.
------
Shanghai Electric Power Co., Ltd. (600021.SH) proposes to acquire 100 percent stake of Guodian Jiangsu Power Generation Co., Ltd. held by the listed company's controlling shareholder State Power Investment Corporation for a total of 3.01 billion yuan which will be paid by issuing shares at 10.09 yuan per share and in cash. Meanwhile, the company proposes to raise no more than 2,092 million yuan supporting fund by issuing shares at no less than 10.09 yuan per share to pay considerations and invest in 5 projects.
Jiangsu Power Generation is engaged in onshore and offshore wind power and photovoltaic power generation. Its operating revenue for 2015 and the Jan.-Aug. period of 2016 was 573 million yuan and475 million yuan. Its net profit was 116 million yuan and 114 million yuan.
○ New Universal Science and Technology bought by Zhou Xingang to 5 pct. limit
------
Beijing New Universal Science and Technology Co., Ltd. (300472.SZ) on Dec. 8 received an overdue report from Zhou Xingang which says Zhou bought the company's share to the 5 percent limit through secondary market acquisition. As of Mar. 1, Zhou Xingang, Zhou's wife Li Xin, Zhou's daughter and trusts acting in concert with Zhou held 5.08 percent shares in the company to the limit fr report. But as Zhou did not informed the company as he has not promptly noticed the holdings of these trusts, but continued to increase or decrease shareholding in the company. As of Dec. 8, Zhou and parities in concert with him altogether hold 7.87 percent shares of the listed company. Zhou said that his acquisition of the company's share was out of his personal demands for long-term investment, and might continue to increase or decrease shareholding in the company in the coming year.
TOP
○ Sunsea Telecom. launches ESOP, to hold nearly 6pct. stake
------
Sunsea Telecommunications Co., Ltd. (002313.SZ) plans to launch employee stock ownership plan (ESOP) by issuing 55 million shares. The 6 directors, supervisors and senior management will subscribe no more than 59.71 percent shares. The company will authorize Fortune Trust to establish a trust plan with an upper limit of 440 million shares. It will raise funds from the market to buy 220 million preferred shares. The ESOP will subscribe 55 million inferior A shares. Shanghai Runliangtai Internet of Things (IoT)Technology Co., Ltd., a related party of the company's controlling shareholder will subscribe 165 million inferior A shares. Given that the company's latest stock price closed at 22.5 yuan per share, the trust plan can directly and indirectly hold about 5.99 percent shares in the listed company. Currently, the company's controlling shareholder Zhuhai Rundatai Investment Partners and Runliangtai Internet of Things (IoT)Technology, the party acting in concert with the former altogether hold 24.46 percent shares of the listed company.
○ Substantial shareholder of Yinge Industrial Investment changes
------
Luohe Yinge Industry Group, the controlling shareholder of Henan Yinge Industrial Investment Co., Ltd. (600069.SH) publicly transfers its 100 percent stake in the listed company to Shenzhen Aoying Investment Management Co., Ltd. Thus, the company's actual controller will change from the State-owned Assets Supervision and Administration Commission of Henan Provincial People's Government to Meng Ping.
○ Hengli Industrial Development Group Co., Ltd. (000622.SZ) plans to sell 80 percent equities of its subsidiary Yuehang Hengtong Industrial Co., Ltd. for about 233 million yuan.
[Financial Reports Express]
○ Kee Ever Bright Decorative Tech. proposes high share conversion
------
The controlling shareholder of Kee Ever Bright Decorative Technology Co., Ltd. (002464.SZ) proposes a 30-for-10 conversion of capital surplus into shares in its annual report. The controlling shareholder of Markor International Home Furnishings Co., Ltd. (600337.SH) proposes a 13-for-10 conversion of capital surplus into shares combined with 3 yuan dividends for every 10 shares in its annual report. Hangzhou Weiguang Electronic Co., Ltd. (002801.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 3 yuan dividends for every 10 shares in its annual report.
○ Leyard Optoelectronic forecasts growth
------
Leyard Optoelectronic Co., Ltd. (300296.SZ) forecasts a growth of 90 to 110 percent in its annual report mainly due to a remarkable increase in its LED lighting business.
[Trading Alarms]
○ Beijing Certificate Authority and Yongji to conduct IPO on Dec. 12
------
Beijing Certificate Authority Co., Ltd.(300579.SZ) will offer shares at 13.32 yuan per share with an upper limit of 20,000 shares for each applicant. The company is mainly engaged in digital certificate service. Yongji Co., Ltd. (732058) will offer shares at 4.76 yuan per share with an upper limit of 12,000 shares for each applicant. The company is mainly engaged in cigarette pack and other printing business.
[Weekly Review]
○ Focus on one among 3,000 stocks
------
December 9, 2016, the same trading day as usual, welcomed the 3,000th listed company in the A-share market. From the earliest 8 listed companies 26 years ago to 3,000 companies, the A-share market has become a place for more leading companies from different industries to raise fund and for more financial institutions to make investment. Beneath the surface of the rotation from bullish to bearish runs is the revolution of the Chinese economy.
As there are now 3,000 stocks in the company, there are fewer and fewer days that these stocks rise or fall simultaneously. In the past week, the battle of secondary market acquisition still continued. The launching of Shenzhen-Hong Kong stock connect program made blue chip much favored. The new round of environmental inspection pushes up prices of steel and chemicals.
Given that the year is coming to an end, SSN highlighted themes that usually performed actively at year end. The first one was the agriculture sector. Financial issues in rural areas are becoming a focus of China's agricultural work. Luoniushan Co., Ltd. (000735.SZ), an agricultural stock SSN mentioned in the report, closed at its recent high on Friday. The second one is new energy vehicles. As policies on adjusted subsidies for new energy vehicles are expected to be issued at the year end, and the restrictions on the application of ternary lithium battery are lifted, cobalt prices surged on Friday.
We don't have to see clear every complicated details of these 3,000 stocks in the market. It will be enough if we could focus on one of them and find a profitability model suitable for ourselves.
TOP
○ Economic work highlights stable progress, agricultural supply-side reform to highlight
○ Non-OPEC producers agree on output cut, industry to see improved profits
○ Shanghai Electric Power acquires new energy asset, New Universal Science and Technology bought by Zhou Xingang
○ Sunsea Telecom. launches ESOP, Kee Ever Bright Decorative Tech. proposes high share conversion
[SSN Focus]
○ Economic work highlights stable progress, agricultural supply-side reform to highlight
------
The Political Bureau of the CPC Central Committee held a meeting on Dec. 9 to analyze the economic work in 2017. It underscored stable progress in state governance and required deepening de-capacity, de-inventory, de-leverage, reducing the cost and shoring up weaknesses and actively advancing the agricultural supply-side reform to speed up reforms in SOEs, taxation, finance, social insurance and other key basic areas.
Comment: The medium- and low-end supply of agricultural products in China is relatively sufficient without pricing competitiveness. The high-end products are scarce and they mainly depend on imports. Analysts believe that it should adjust the grain structure, advance agricultural mechanization and improve the use efficiency of pesticides and fertilizers in advancing the agricultural supply-side reform. Institutes are rosy about the transformation of seed companies into suppliers of integrated services, including agricultural capitals, technical and financial services. Yuan Longping High-tech Agriculture Co., Ltd. (000998.SZ), which was invested by CITIC Group, is developing agricultural services. The "one-stop grain supply chain management services" of Hainan Shennong Gene Technology Co., Ltd. (300189.SZ) has signed contracts for 3.36 million mu of farmland.
◆ The National Development and Reform Commission (NDRC) and the Ministry of Agriculture released the guidance on promoting government and social capitals cooperation in agricultural areas recently, proposing to focus on high-standard farmlands, seed projects, modern fishing harbors, and the quality safety testing and traceability system for agricultural products in agricultural PPPs.
○ CIRC curbs impulsive measures of insurance funds, insurance funds to maintain as market stabilizer
------
The China Insurance Regulatory Commission (CIRC) announced on Dec. 9 that it would suspend the entrusted stock investment business of Evergrande Life Insurance Co., Ltd. and require to conducting rectification. Based on the notice of the CIRC issued to Evergrande Life, the company was fined for frequent speculations on stocks of listed companies in short term in trusted stock investment businesses. Foresea Life Insurance also announced on Dec. 9 that it would not increase the shareholding in Gree Electric Appliances, Inc. of Zhuhai (000651.SZ) and would gradually exit based on market conditions and its investment strategies.
Comment: As at the end of October, the total investment of insurance funds in A shares and securities investment funds reached nearly 2 trillion yuan, of which blue chips account for over 60 percent. Insiders believe that with the introduction of various systems, barbaric acquisitions and strong reorganizations of listed companies and other compulsive measures will be curbed and regulated. Insurance funds will increasingly play the role as a market stabilizer in the domestic capital market.
[SSN Selection]
○ China Securities Regulatory Commission (CSRC) approved the IPO applications of 14 enterprises, including the Rural Commercial Bank of Zhangjiagang, with an expected total fund of no more than 5.4 billion yuan to be raised.
○ The CSRC recently revised the document on issuing regulation recently. The IPO of issuers without mistakes will not be affected by the illicit activities of sponsors.
○ The State-owned Assets Supervision and Administration Commission indicated on Dec. 9 that it has established four guidance funds to implement the innovation-driven strategy. The number of central enterprises will be reduced to less than 100 next year.
○ The 13th Five-year Plan on energy development will be released soon and the supply of clean and low-carbon energy will increase, indicated Li Yangzhe, deputy head of the National Energy Administration, on Dec. 10.
○ The Shenzhen-Hong Kong Stock Connect recorded an net buy of 8,293 million yuan. Gree Electric Appliances, Inc. of Zhuhai (000651.SZ), Midea Group Co., Ltd. (000333.SZ) and Jiangsu Yanghe Brewery Joint-Stock Co., Ltd. (002304.SZ) saw a net inflow of nearly 1.5 billion yuan, 800 million yuan and 300 million yuan.
○ The three major U.S. stock indexes closed at record highs on Dec. 9. The U.S. treasuries prices, the exchange rates of non-U.S. currencies and gold continued to decline.
TOP
[Industry Information]
○ Non-OPEC producers agree on output cut, industry to see improved profits
------
The Organization of Petroleum Exporting Countries (OPEC) announced at its headquarters in Vienna on Dec. 10 that non-OPEC producers, including Russia, have agreed to reduce the daily oil output by 558,000 barrels from 2017 to boost the oil price. AFP reported that Russia will complete half of the output cut of 558,000 barrels in the first half of 2017. A supervision committee on output cut composed of three OPEC members and two non-OPEC producers will be established soon. The OPEC will hold a meeting on May 25, 2017 to monitor the implementation of the agreement.
Comment: BBC calls it the first international oil production agreement in 15 years. The OPEC reached an output cut agreement on Nov. 30, which drove the surging of the international oil price. Shenwan ＆ Hongyuan Securities believes that the oil price will fluctuate between 50 to 60 U.S. dollars per barrel. The depreciation provision made by North Huajin Chemical Industries Co., Ltd. (000059.SZ) when the price was low may be reversed when it recovers and the capacity reduced may be recovered. Compared with its small market value, it will significantly improve its performance. China Petroleum ＆ Chemical Corporation (00386.HK; 600028.SH) will see its performance boosted as the oil price hikes.
○ Urea producers lift prices for better demands and low inventory
------
Data from www.baiinfo.com shows that the price of urea in both East China and North China increased on Dec. 9. Luxi Chemical Group Co., Ltd. (000830.SZ) and Shandong Hualu-Hengsheng Chemical Co., Ltd. (600426.SH) raised by their factory price by 20 yuan per tonne. Urea prices have increased a cumulative total of 25 percent from August low. At present, urea prices in domestic market saw a stable upward trend. The quoted prices in some regions are showing an upward trend.
Urea demands in North China, East China and Central China have improved. Factory turnover has also increased. With low inventory in the agricultural market, some some large companies begin stocking fertilizer. Relevant manufacturers expect that urea will see a short-term rally, which will further support storage demands in winter season.
TOP
[Announcement Interpretation]
○ Shanghai Electric Power acquires controlling shareholder's new energy asset for RMB 3bln.
------
Shanghai Electric Power Co., Ltd. (600021.SH) proposes to acquire 100 percent stake of Guodian Jiangsu Power Generation Co., Ltd. held by the listed company's controlling shareholder State Power Investment Corporation for a total of 3.01 billion yuan which will be paid by issuing shares at 10.09 yuan per share and in cash. Meanwhile, the company proposes to raise no more than 2,092 million yuan supporting fund by issuing shares at no less than 10.09 yuan per share to pay considerations and invest in 5 projects.
Jiangsu Power Generation is engaged in onshore and offshore wind power and photovoltaic power generation. Its operating revenue for 2015 and the Jan.-Aug. period of 2016 was 573 million yuan and475 million yuan. Its net profit was 116 million yuan and 114 million yuan.
○ New Universal Science and Technology bought by Zhou Xingang to 5 pct. limit
------
Beijing New Universal Science and Technology Co., Ltd. (300472.SZ) on Dec. 8 received an overdue report from Zhou Xingang which says Zhou bought the company's share to the 5 percent limit through secondary market acquisition. As of Mar. 1, Zhou Xingang, Zhou's wife Li Xin, Zhou's daughter and trusts acting in concert with Zhou held 5.08 percent shares in the company to the limit fr report. But as Zhou did not informed the company as he has not promptly noticed the holdings of these trusts, but continued to increase or decrease shareholding in the company. As of Dec. 8, Zhou and parities in concert with him altogether hold 7.87 percent shares of the listed company. Zhou said that his acquisition of the company's share was out of his personal demands for long-term investment, and might continue to increase or decrease shareholding in the company in the coming year.
TOP
○ Sunsea Telecom. launches ESOP, to hold nearly 6pct. stake
------
Sunsea Telecommunications Co., Ltd. (002313.SZ) plans to launch employee stock ownership plan (ESOP) by issuing 55 million shares. The 6 directors, supervisors and senior management will subscribe no more than 59.71 percent shares. The company will authorize Fortune Trust to establish a trust plan with an upper limit of 440 million shares. It will raise funds from the market to buy 220 million preferred shares. The ESOP will subscribe 55 million inferior A shares. Shanghai Runliangtai Internet of Things (IoT)Technology Co., Ltd., a related party of the company's controlling shareholder will subscribe 165 million inferior A shares. Given that the company's latest stock price closed at 22.5 yuan per share, the trust plan can directly and indirectly hold about 5.99 percent shares in the listed company. Currently, the company's controlling shareholder Zhuhai Rundatai Investment Partners and Runliangtai Internet of Things (IoT)Technology, the party acting in concert with the former altogether hold 24.46 percent shares of the listed company.
○ Substantial shareholder of Yinge Industrial Investment changes
------
Luohe Yinge Industry Group, the controlling shareholder of Henan Yinge Industrial Investment Co., Ltd. (600069.SH) publicly transfers its 100 percent stake in the listed company to Shenzhen Aoying Investment Management Co., Ltd. Thus, the company's actual controller will change from the State-owned Assets Supervision and Administration Commission of Henan Provincial People's Government to Meng Ping.
○ Hengli Industrial Development Group Co., Ltd. (000622.SZ) plans to sell 80 percent equities of its subsidiary Yuehang Hengtong Industrial Co., Ltd. for about 233 million yuan.
[Financial Reports Express]
○ Kee Ever Bright Decorative Tech. proposes high share conversion
------
The controlling shareholder of Kee Ever Bright Decorative Technology Co., Ltd. (002464.SZ) proposes a 30-for-10 conversion of capital surplus into shares in its annual report. The controlling shareholder of Markor International Home Furnishings Co., Ltd. (600337.SH) proposes a 13-for-10 conversion of capital surplus into shares combined with 3 yuan dividends for every 10 shares in its annual report. Hangzhou Weiguang Electronic Co., Ltd. (002801.SZ) proposes a 10-for-10 conversion of capital surplus into shares combined with 3 yuan dividends for every 10 shares in its annual report.
○ Leyard Optoelectronic forecasts growth
------
Leyard Optoelectronic Co., Ltd. (300296.SZ) forecasts a growth of 90 to 110 percent in its annual report mainly due to a remarkable increase in its LED lighting business.
[Trading Alarms]
○ Beijing Certificate Authority and Yongji to conduct IPO on Dec. 12
------
Beijing Certificate Authority Co., Ltd.(300579.SZ) will offer shares at 13.32 yuan per share with an upper limit of 20,000 shares for each applicant. The company is mainly engaged in digital certificate service. Yongji Co., Ltd. (732058) will offer shares at 4.76 yuan per share with an upper limit of 12,000 shares for each applicant. The company is mainly engaged in cigarette pack and other printing business.
[Weekly Review]
○ Focus on one among 3,000 stocks
------
December 9, 2016, the same trading day as usual, welcomed the 3,000th listed company in the A-share market. From the earliest 8 listed companies 26 years ago to 3,000 companies, the A-share market has become a place for more leading companies from different industries to raise fund and for more financial institutions to make investment. Beneath the surface of the rotation from bullish to bearish runs is the revolution of the Chinese economy.
As there are now 3,000 stocks in the company, there are fewer and fewer days that these stocks rise or fall simultaneously. In the past week, the battle of secondary market acquisition still continued. The launching of Shenzhen-Hong Kong stock connect program made blue chip much favored. The new round of environmental inspection pushes up prices of steel and chemicals.
Given that the year is coming to an end, SSN highlighted themes that usually performed actively at year end. The first one was the agriculture sector. Financial issues in rural areas are becoming a focus of China's agricultural work. Luoniushan Co., Ltd. (000735.SZ), an agricultural stock SSN mentioned in the report, closed at its recent high on Friday. The second one is new energy vehicles. As policies on adjusted subsidies for new energy vehicles are expected to be issued at the year end, and the restrictions on the application of ternary lithium battery are lifted, cobalt prices surged on Friday.
We don't have to see clear every complicated details of these 3,000 stocks in the market. It will be enough if we could focus on one of them and find a profitability model suitable for ourselves.
TOP
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