[Today's Guide]
○ Funds increase investments in petrochemical and military engineering industries in Q4 and bullish about sectors to benefit from policies
○ Fundamentals of construction machinery industry improve, mild recovery to continue
○ MIIT inspects progress of C919 airliner program, airliner integrators to benefit from industry development
○ Yitoa Intelligent Control forecasts 400pct. growth and to repurchase stocks, multiple companies forecast performance growth
[SSN Focus]
○ Funds increase investments in petrochemical and military engineering industries in Q4 and bullish about sectors to benefit from policies
------
Over ten fund companies, including Harvest Fund Management Co., Ltd., ABC-CA Fund Management Co., Ltd., Fortune SG Fund Management Co., Ltd. and Lion Fund Management Co., Ltd., released their fourth quarterly reports in 2016 on Jan. 18. Statistics show that such funds mainly increased the investment in petrochemical, military engineering, non-ferrous metals, anti-consumption consumption and other sectors while reduced the investment in TMT and other sectors with high valuation in the fourth quarter.
As for subsequent investments, fund managers believe that theme opportunities are mainly from sectors to benefit from policies. They will make investments based on the themes highlighted at the central economic work conference, including the agricultural supply-side structural reform and the mixed ownership reform in SOEs. They will select individual stocks among growth stocks based their performance growth and the implementation of transformation.
[SSN Selection]
○ The executive meeting of the State Council held on Jan. 18 approved the 13th Five-year Plan on promoting employment, proposing to develop health, aged care and other living service industries with high employment capacity.
○ Social security funds newly opened six A-share accounts in December 2016, the first time since July 2015.
○ The State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government introduced the plan on the first employee shareholding on Jan. 18, proposing to select five to ten enterprises in fully competitive industries to pilot.
○ Sichuan province will wholly integrate four of its provincial-level state-owned enterprises into Sichuan Provincial Investment Group Co., Ltd. in a bid to build a state-owned capital investment company in the area of commerce circulation.
○ Midea Group Co., Ltd. (000333.SZ) saw a block trading of 2.89 billion yuan on Jan. 18. The shares of the company were sold through one institutional seat but purchased through another four institutional seats.
TOP
[Industry Information]
○ Fundamentals of construction machinery industry improve, mild recovery to continue
------
SSN on Jan. 18 learnt from the China Machinery Industry Federation (CMIF) that some construction machinery products apparently picked up during the August-November period of 2016. Take Sany Heavy Industry Co., Ltd. (600031.SH) as an example, the working hours of its excavators expand by 5 percent averagely. The improvement of Xuzhou Construction Machinery Group Co., Ltd. (XCMG) in fundamentals is mainly mirrored by the decrease of financial expense. XCMG's financial expense decreased by 86 percent in the first three quarters of 2016. In addition, since around 20 percent of the company's products are exported, the depreciation of RMB brings positive influence to the company.
Comment: Everbright Securities believes that the construction machinery industry gradually picked up since the second half of 2016. Since the first half of a year usually sees booming sales of construction machinery products, various construction machinery manufacturers might lay a sound foundation for their annual performance as the sales picks up. In addition, due to the constant growth of investment in infrastructure, construction machinery will need to be upgraded. Mild recovery of the industry might continue at least in the first half of 2017. Leading brand companies might benefit from the trend.
TOP
○ MIIT inspects progress of C919 airliner program, airliner integrators to benefit from industry development
------
Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology (MIIT), on Jan. 17 inspected China Commercial Aircraft Corp., Ltd. (COMAC) and debriefed on the progress of C919 passenger airliner program and preparations of its test trial. Xin pointed out that the MIIT will strongly support COMAC's development as well as the research and development of C919 passenger airliner. COMAC chairman Jin Zhuanglong said that the C919 passenger airliner is sprinting for its debut, and the company will ensure a safe and successful flight of C919.
Comment: China Merchants Securities notes in its research report that investors can seek for opportunities along the airliner industrial chain from three aspects. Firstly, complete airliner integrators in the top of the pyramid will monopolize the industry for a long run and become the largest beneficiary for the development of the airliner industry. Comprehensive suppliers at system level will also find a position along the industrial chain by building risk partnership with airliner integrators. Materials, with high technical barrier, stable competition pattern and available for both military and civilian use, will also see a huge market.
TOP
[Announcement Interpretation]
○ Yitoa Intelligent Control to repurchase stocks, New Huangpu Real Estate and others see shareholding increase
------
Shenzhen Yitoa Intelligent Control Co., Ltd. (300131.SZ) forecasts a 400 percent growth in its annual report. The company plans to repurchase no more than 400 million shares which will be canceled or used for staff incentives. Shanghai Lingtou Private Equity Fund Partnership plans to increase shareholding in Shanghai New Huangpu Real Estate Co., Ltd. (600638.SH) by over 20 million shares in the next 6 months after acquiring its shares to the 5 percent limit in the secondary market. The actual controller of Beijing Watertek Information Technology Co., Ltd. (300324.SZ) plans to increase shareholding in the company with no less than 200 million yuan in the next 12 months. In addition, the controlling shareholder of Shahe Industry Co., Ltd. (000014.SZ) has increased shareholding in the company by a total of 2.53 million shares from Aug. 12, 2016 up till now. Two senior managers of Insigma Technology Co., Ltd. (600797.SH) increased shareholding in the company by a total of 0.8 million shares from Jan. 17 to 18.
○ Proposal of Shaanxi Blower transferring equity of Dagang Road Machinery approved by SASAC of Shaanxi
------
The proposal of Shaanxi Blower (Group) Co., Ltd., state-owned shareholder of Xi'an Dagang Road Machinery Co., Ltd. (300103.SZ), on transferring equity publicly has been approved by the State-owned Assets Supervision and Administration Commission (SASAC) of Shaanxi Province. The group plans to transfer 20-29.95 percent equity of Dagang Road Machinery by negotiating and the final transferred price will be decided after taking various factors into consideration. According to transfer condition, intended transferee and its important related party should not have competitive relation and conflict of interest with the existing principal business of Dagang Road Machinery and should not be major rival of the company.
○ Heilongjiang Agriculture Company and Zhongnan Construction Group to set up agricultural e-commerce company of block chain
------
Heilongjiang Agriculture Company Limited (600598.SH) plans to set up a joint-ventured e-commerce company with Jiangsu Zhongnan Construction Group Co., Ltd. (000961.SZ). They will introduce block chain technology based on the agricultural Internet of Things of Heilongjiang Agriculture Company, set up closed agricultural product supply and authentication and tracing system of block chain of agricultural products and development agricultural e-commerce platform. The joint venture will be established with registered capital of 300 million yuan with Heilongjiang Agriculture Company holding 20 percent equity by contributing 1 yuan in currency and the remaining 80 percent equity held by Zhongnan Construction Block Chain Agricultural Development (Shenzhen) Company, partnership of Zhongnan Construction Group.
Zhongnan Construction Group indicated that this cooperation accords with the company's strategy of making transformation towards block chain. In last November and December, it announced it would invest in two block chain companies, which are mainly engaged in financial field.
○ Hubei Guochuang Hi-tech Material to buy entire equities of YunFang Network Technology with RMB3.8 bln
------
Hubei Guochuang Hi-tech Material Co., Ltd. (002377.SZ) proposes to buy the entire equities of Shenzhen YunFang Network Technology Co., Ltd. at the valuation of 3.8 billion yuan, which will be satisfied by issuing 257 million shares at 8.53 yuan per share through private placement and cash payment of 1,607 million yuan; at the same time, the company also proposes to raise no more than 2,097 million yuan through private placement. The counterparty committed that net profits of the subject company from 2016 to 2019 will be no less than 243 million yuan, 258 million yuan, 323 million yuan and 365 million yuan respectively. Upon completion of the transaction, the company's main businesses will be traditional modified asphalt industry and real estate intermediary services.
[Financial Reports Express]
○ Multiple companies forecast performance growth
------
Dezhan Healthcare Company Limited. (000813.SZ) expects 10,458 percent growth in the annual report, primarily due to the approval of major assets restructuring. Jiangsu Huaxicun Co., Ltd. (000936.SZ) revises higher its growth to 588 to 617 percent, primarily due to revenue from financial investment beat expectation. Shanghai Wanye Enterprises Co., Ltd. (600641.SH) forecasts 220 to 260 percent growth in its annual report, primarily due to increase of revenue from delivery of Baoshan project; Xi'an Longi Silicon Materials Corp. (601012.SH) forecasts 169 to 208 percent growth in its annual report, primarily due to significant increase of operational revenue. Xin Jiang Ready Health Industry Co., ltd. (600090.SH) forecasts 3,225 to 3,567 percent growth in its annual report, primarily due to the completion of major assets restructuring.
○ Jouder Precision Industry (Kunshan) Co., Ltd. forecasts 16 to 21 percent growth in its annual report. The actual controller proposes 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for each 10 shares. Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) forecasts 25 to 46 percent growth in its annual report. The board passed the distribution plan of 10-for-12 conversion of capital surplus into shares combined with 0.1 yuan dividend for each 10 shares. The controlling shareholder will reduce shareholding.
[Trading Trends]
○ Offline subscription for new shares explosive, IPO investment funds stable
------
Investors recently still keep their enthusiasm to invest in new shares offline, data shows. Even during fierce fluctuation of stock index last week, offline subscription for several new shares with a market value threshold of 30 million yuan were still explosive. The number of investors reaching the threshold of 50 million yuan also constantly increases in recent period, even after this threshold commonly rises.
Investors are not very possible to aggressively dump the new shares now, many insiders indicated in the interview. On the contrary, along with the rising threshold of investing in new shares, IPO investment funds still increase the market value position recently. The pace to issue new shares speeds up, which will possibly impact on growth rate of new shares in a short run, but based on issuance of new shares low in "stock price, circulating equity and valuation", the growth rate of new shares is not pessimistic in a long term. Referring to C-grade investors, IPO investment return of over 10 percent will continue to attract more funds.
[Trading Alarms]
○ IPOs of Tuna Environmental Science ＆ Technology, Yankershop Food and Enpack Packaging on Jan. 19
------
Zhejiang Tuna Environmental Science ＆ Technology Co., Ltd. (732177.SH) mainly engaged in fume treatment will issue new shares at 3.6 yuan per share with upper subscription limit of 20,000 shares; an offering price of 9.14 yuan per share and upper subscription limit of 12,000 shares for Yankershop Food Co., Ltd. (002847.SZ) mainly engaged in snack food; an offering price of 8.33 yuan per share and upper subscription limit of 12,000 shares for Guangdong Enpack Packaging Co., Ltd. (002846.SZ) mainly engaged in metaled easy-open end.
TOP
○ Funds increase investments in petrochemical and military engineering industries in Q4 and bullish about sectors to benefit from policies
○ Fundamentals of construction machinery industry improve, mild recovery to continue
○ MIIT inspects progress of C919 airliner program, airliner integrators to benefit from industry development
○ Yitoa Intelligent Control forecasts 400pct. growth and to repurchase stocks, multiple companies forecast performance growth
[SSN Focus]
○ Funds increase investments in petrochemical and military engineering industries in Q4 and bullish about sectors to benefit from policies
------
Over ten fund companies, including Harvest Fund Management Co., Ltd., ABC-CA Fund Management Co., Ltd., Fortune SG Fund Management Co., Ltd. and Lion Fund Management Co., Ltd., released their fourth quarterly reports in 2016 on Jan. 18. Statistics show that such funds mainly increased the investment in petrochemical, military engineering, non-ferrous metals, anti-consumption consumption and other sectors while reduced the investment in TMT and other sectors with high valuation in the fourth quarter.
As for subsequent investments, fund managers believe that theme opportunities are mainly from sectors to benefit from policies. They will make investments based on the themes highlighted at the central economic work conference, including the agricultural supply-side structural reform and the mixed ownership reform in SOEs. They will select individual stocks among growth stocks based their performance growth and the implementation of transformation.
[SSN Selection]
○ The executive meeting of the State Council held on Jan. 18 approved the 13th Five-year Plan on promoting employment, proposing to develop health, aged care and other living service industries with high employment capacity.
○ Social security funds newly opened six A-share accounts in December 2016, the first time since July 2015.
○ The State-owned Assets Supervision and Administration Commission of Shanghai Municipal Government introduced the plan on the first employee shareholding on Jan. 18, proposing to select five to ten enterprises in fully competitive industries to pilot.
○ Sichuan province will wholly integrate four of its provincial-level state-owned enterprises into Sichuan Provincial Investment Group Co., Ltd. in a bid to build a state-owned capital investment company in the area of commerce circulation.
○ Midea Group Co., Ltd. (000333.SZ) saw a block trading of 2.89 billion yuan on Jan. 18. The shares of the company were sold through one institutional seat but purchased through another four institutional seats.
TOP
[Industry Information]
○ Fundamentals of construction machinery industry improve, mild recovery to continue
------
SSN on Jan. 18 learnt from the China Machinery Industry Federation (CMIF) that some construction machinery products apparently picked up during the August-November period of 2016. Take Sany Heavy Industry Co., Ltd. (600031.SH) as an example, the working hours of its excavators expand by 5 percent averagely. The improvement of Xuzhou Construction Machinery Group Co., Ltd. (XCMG) in fundamentals is mainly mirrored by the decrease of financial expense. XCMG's financial expense decreased by 86 percent in the first three quarters of 2016. In addition, since around 20 percent of the company's products are exported, the depreciation of RMB brings positive influence to the company.
Comment: Everbright Securities believes that the construction machinery industry gradually picked up since the second half of 2016. Since the first half of a year usually sees booming sales of construction machinery products, various construction machinery manufacturers might lay a sound foundation for their annual performance as the sales picks up. In addition, due to the constant growth of investment in infrastructure, construction machinery will need to be upgraded. Mild recovery of the industry might continue at least in the first half of 2017. Leading brand companies might benefit from the trend.
TOP
○ MIIT inspects progress of C919 airliner program, airliner integrators to benefit from industry development
------
Xin Guobin, Vice Minister of the Ministry of Industry and Information Technology (MIIT), on Jan. 17 inspected China Commercial Aircraft Corp., Ltd. (COMAC) and debriefed on the progress of C919 passenger airliner program and preparations of its test trial. Xin pointed out that the MIIT will strongly support COMAC's development as well as the research and development of C919 passenger airliner. COMAC chairman Jin Zhuanglong said that the C919 passenger airliner is sprinting for its debut, and the company will ensure a safe and successful flight of C919.
Comment: China Merchants Securities notes in its research report that investors can seek for opportunities along the airliner industrial chain from three aspects. Firstly, complete airliner integrators in the top of the pyramid will monopolize the industry for a long run and become the largest beneficiary for the development of the airliner industry. Comprehensive suppliers at system level will also find a position along the industrial chain by building risk partnership with airliner integrators. Materials, with high technical barrier, stable competition pattern and available for both military and civilian use, will also see a huge market.
TOP
[Announcement Interpretation]
○ Yitoa Intelligent Control to repurchase stocks, New Huangpu Real Estate and others see shareholding increase
------
Shenzhen Yitoa Intelligent Control Co., Ltd. (300131.SZ) forecasts a 400 percent growth in its annual report. The company plans to repurchase no more than 400 million shares which will be canceled or used for staff incentives. Shanghai Lingtou Private Equity Fund Partnership plans to increase shareholding in Shanghai New Huangpu Real Estate Co., Ltd. (600638.SH) by over 20 million shares in the next 6 months after acquiring its shares to the 5 percent limit in the secondary market. The actual controller of Beijing Watertek Information Technology Co., Ltd. (300324.SZ) plans to increase shareholding in the company with no less than 200 million yuan in the next 12 months. In addition, the controlling shareholder of Shahe Industry Co., Ltd. (000014.SZ) has increased shareholding in the company by a total of 2.53 million shares from Aug. 12, 2016 up till now. Two senior managers of Insigma Technology Co., Ltd. (600797.SH) increased shareholding in the company by a total of 0.8 million shares from Jan. 17 to 18.
○ Proposal of Shaanxi Blower transferring equity of Dagang Road Machinery approved by SASAC of Shaanxi
------
The proposal of Shaanxi Blower (Group) Co., Ltd., state-owned shareholder of Xi'an Dagang Road Machinery Co., Ltd. (300103.SZ), on transferring equity publicly has been approved by the State-owned Assets Supervision and Administration Commission (SASAC) of Shaanxi Province. The group plans to transfer 20-29.95 percent equity of Dagang Road Machinery by negotiating and the final transferred price will be decided after taking various factors into consideration. According to transfer condition, intended transferee and its important related party should not have competitive relation and conflict of interest with the existing principal business of Dagang Road Machinery and should not be major rival of the company.
○ Heilongjiang Agriculture Company and Zhongnan Construction Group to set up agricultural e-commerce company of block chain
------
Heilongjiang Agriculture Company Limited (600598.SH) plans to set up a joint-ventured e-commerce company with Jiangsu Zhongnan Construction Group Co., Ltd. (000961.SZ). They will introduce block chain technology based on the agricultural Internet of Things of Heilongjiang Agriculture Company, set up closed agricultural product supply and authentication and tracing system of block chain of agricultural products and development agricultural e-commerce platform. The joint venture will be established with registered capital of 300 million yuan with Heilongjiang Agriculture Company holding 20 percent equity by contributing 1 yuan in currency and the remaining 80 percent equity held by Zhongnan Construction Block Chain Agricultural Development (Shenzhen) Company, partnership of Zhongnan Construction Group.
Zhongnan Construction Group indicated that this cooperation accords with the company's strategy of making transformation towards block chain. In last November and December, it announced it would invest in two block chain companies, which are mainly engaged in financial field.
○ Hubei Guochuang Hi-tech Material to buy entire equities of YunFang Network Technology with RMB3.8 bln
------
Hubei Guochuang Hi-tech Material Co., Ltd. (002377.SZ) proposes to buy the entire equities of Shenzhen YunFang Network Technology Co., Ltd. at the valuation of 3.8 billion yuan, which will be satisfied by issuing 257 million shares at 8.53 yuan per share through private placement and cash payment of 1,607 million yuan; at the same time, the company also proposes to raise no more than 2,097 million yuan through private placement. The counterparty committed that net profits of the subject company from 2016 to 2019 will be no less than 243 million yuan, 258 million yuan, 323 million yuan and 365 million yuan respectively. Upon completion of the transaction, the company's main businesses will be traditional modified asphalt industry and real estate intermediary services.
[Financial Reports Express]
○ Multiple companies forecast performance growth
------
Dezhan Healthcare Company Limited. (000813.SZ) expects 10,458 percent growth in the annual report, primarily due to the approval of major assets restructuring. Jiangsu Huaxicun Co., Ltd. (000936.SZ) revises higher its growth to 588 to 617 percent, primarily due to revenue from financial investment beat expectation. Shanghai Wanye Enterprises Co., Ltd. (600641.SH) forecasts 220 to 260 percent growth in its annual report, primarily due to increase of revenue from delivery of Baoshan project; Xi'an Longi Silicon Materials Corp. (601012.SH) forecasts 169 to 208 percent growth in its annual report, primarily due to significant increase of operational revenue. Xin Jiang Ready Health Industry Co., ltd. (600090.SH) forecasts 3,225 to 3,567 percent growth in its annual report, primarily due to the completion of major assets restructuring.
○ Jouder Precision Industry (Kunshan) Co., Ltd. forecasts 16 to 21 percent growth in its annual report. The actual controller proposes 10-for-10 conversion of capital surplus into shares combined with 2 yuan dividend for each 10 shares. Sichuan Hebang Biotechnology Co., Ltd. (603077.SH) forecasts 25 to 46 percent growth in its annual report. The board passed the distribution plan of 10-for-12 conversion of capital surplus into shares combined with 0.1 yuan dividend for each 10 shares. The controlling shareholder will reduce shareholding.
[Trading Trends]
○ Offline subscription for new shares explosive, IPO investment funds stable
------
Investors recently still keep their enthusiasm to invest in new shares offline, data shows. Even during fierce fluctuation of stock index last week, offline subscription for several new shares with a market value threshold of 30 million yuan were still explosive. The number of investors reaching the threshold of 50 million yuan also constantly increases in recent period, even after this threshold commonly rises.
Investors are not very possible to aggressively dump the new shares now, many insiders indicated in the interview. On the contrary, along with the rising threshold of investing in new shares, IPO investment funds still increase the market value position recently. The pace to issue new shares speeds up, which will possibly impact on growth rate of new shares in a short run, but based on issuance of new shares low in "stock price, circulating equity and valuation", the growth rate of new shares is not pessimistic in a long term. Referring to C-grade investors, IPO investment return of over 10 percent will continue to attract more funds.
[Trading Alarms]
○ IPOs of Tuna Environmental Science ＆ Technology, Yankershop Food and Enpack Packaging on Jan. 19
------
Zhejiang Tuna Environmental Science ＆ Technology Co., Ltd. (732177.SH) mainly engaged in fume treatment will issue new shares at 3.6 yuan per share with upper subscription limit of 20,000 shares; an offering price of 9.14 yuan per share and upper subscription limit of 12,000 shares for Yankershop Food Co., Ltd. (002847.SZ) mainly engaged in snack food; an offering price of 8.33 yuan per share and upper subscription limit of 12,000 shares for Guangdong Enpack Packaging Co., Ltd. (002846.SZ) mainly engaged in metaled easy-open end.
TOP
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