Early Bird

Early Bird 24-January-2017

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2017-01-24 14:12

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[Today's Guide]
○ NDRC arranges rural work for 2017, agricultural supply-side reform to highlight
○ Guideline for new material industry development to release, graphene to take lead
○ HNA Group buys shares of Northeast Electric Development at premium, Shareholders of Dalian Sunlight Machinery transfer equity
○ Taiji Computer to buy PDE Soft, Billions Chemicals to repurchase shares 

[SSN Focus]
○ NDRC arranges rural work for 2017, agricultural supply-side reform to highlight

The economic work conference in rural areas under the National Development and Reform Commission (NDRC) was held on Jan. 23. It proposed to firmly focus on the agricultural supply-side reform and speed up in restructuring and strengthen the reform in rural areas. Among the five key tasks, the agricultural restructuring enjoys priority. It requires adjusting the product structure and making breakthroughs in the adjustment of corn structure to promote the coordinated development of grains, commercial crops and fodders. It will comprehensively improve the safety and quality of agricultural products, promote the standard production of agricultural products and improve the comprehensive recycling of waste from planting and breeding.
Comment: Various documents on advancing the agricultural supply-side reform have been released in the previous month. Institutes believe that the adjustment of the corn structure will benefit the development of quality seed companies and the deep processing of corn, such as fuel ethanol. It requires further advancing technologies and policies on agricultural machinery and the transfer of the right to use lands to promote the standard production of agricultural products.

[SSN Selection]
○ The central government released the opinions on strengthening the protection of farmland and balanced occupation and compensation, proposing to develop high-standard farmland through various measures.
○ The State Council released the 13th Five-year Plan on market regulation, proposing to eliminate unreasonable restrictions and hidden barriers on private investments in power, telecommunication, transportation, oil and gas as well as other industries.
○ The non-performing loan ratio in the banking industry in Shanghai reached 0.68 percent as at the end of December. It has been decreasing for several consecutive quarters since the beginning of 2016.
○ Beijing Municipal Commission of Economy and Information Technology released its annual work report on Jan. 23, proposing to initiate the pilot on 5G programs this year.
○ Mobike and Foxconn reached strategic cooperation on Jan. 23, proposing to double the capacity of bikes from its own capacity at the current level.

[Industry Information]
○ Guideline for new material industry development to release, graphene to take lead

The Ministry of Industry and Information Technology (MIIT), the Development and Reform Commission (NDRC), the Ministry of Science and Technology, the Ministry of Finance jointly released the guideline for the development of the new material industry to guide a healthy and orderly development of the new materials industry during the 13th Five-Year Plan period. The guideline proposes to launch leading projects in cutting-edge new material in the field of graphene, ramming materials, nanomaterials, superconducting materials and extreme environmental materials. The guideline also proposes to make breakthroughs in common key technologies, including the preparation of graphene material on a large scale and the representation of micro-nano structure measurement. It also sets target in developing the large graphene film preparation equipment and the measurement and detection equipment for graphene materials use.
Comment: Institutions believe that once breakthroughs are made in the preparation and application of graphene technology, the market will have a huge potential, which will bring subversive changes to many industries. According to data from ASKCI, the graphene industry has achieved a substantial progress in recent years. Its revenue in 2015 reached 600 million yuan. The graphene industry or will see rapid development in the future. 

○ Imidacloprid prices rise further, industry continue to boom

SSN learnt that imidacloprid prices continue to rise on short supply. Latest data shows that some of 95 percent imidacloprid powder products rise to 150,000 yuan a tonne, and the price in delivery in Shanghai rose to 135,000 yuan to 140,000 yuan per tonne. The price of 97 percent imidacloprid in delivery in Shanghai rose to 135,000 yuan to 140,000 yuan per tonne, recording a cumulative growth of as high as 30-40 percent since last October.
Comment: Imidacloprid manufacturers in Shandong and Anhui will shut down for overhaul, further intensifying the tension in supply. It is learnt that the cost of imidacloprid is about 100,000 yuan per tonne. A continuous hike in price will improve the industry's profitability. In addition, driven by the supply-side reform in agriculture and environmental pressure, the supply and demand conditions in the entire pesticide industry, including herbicide and pesticide, have improved remarkably. Listed companies Nanjing Red Sun Co., Ltd. (000525.SZ) and Jiangsu Changqing Agrochemical Co., Ltd. (002391.SZ) are engaged in the production of imidacloprid.

[Announcement Interpretation]
○ HNA Group buys shares of Northeast Electric Development at premium with above 100 pct.

Suzhou Qingchuang Trade Group Co., Ltd., the biggest shareholder of Northeast Electric Development Company Limited (000585.SZ), plans to transfer its 81,494,900 shares (accounting for 9.33 percent of the listed company’s total share capital) to Beijing Haihongyuan Investment Management Co., Ltd. at a price of 15.95 yuan per share. The consideration totals 1.3 billion yuan, enjoying a premium with 109.59 percent when compared with the stock price of 7.61 yuan per share before trading suspension. Haihongyuan Investment Management hence becomes the listed company’s biggest shareholder.
Northeast Electric Development signed agreement on subscribing new H shares with HNA Hotel Group Co., Ltd. on Jan. 2. The latter and Haihongyuan Investment Management are subsidiaries under HNA Group. After Northeast Electric Development finishes issuing H shares, HNA Hotel Group may be company’s biggest shareholder.
○ Shareholders of Dalian Sunlight Machinery transfer 9.84 pct. equity at premium with over 40 pct.

Yu Jianmu and Yu Yang, shareholders of Dalian Sunlight Machinery Co., Ltd. (002621.SZ), intend to transfer their shares accounting for 9.84 percent the company’s total capital to Zhuhai Rongcheng Investment Center (Limited Partnership) at a total cost of 900 million yuan. The share is priced at 40.64 yuan per share, enjoying a premium with 46.77 percent when compared with the company’s latest stock price of 27.69 yuan per share. This transfer will make shareholding proportion of Zhuhai Rongcheng Investment Center increase to 22.69 percent and the company will have the voting right of 6.04 percent equity entrusted by Yu Jianmu and Yu Yang. Xie Zhikun is still the actual controller of the listed company. Zhuhai Rongcheng Investment Center will adjust the listed company’s asset structure and business structure and is likely to buy more shares in the future.

○ Taiji Computer to buy PDE Soft with RMB 450 mln

Taiji Computer Corporation Limited (002368.SZ) proposes to buy the entire equities of PDE Soft at the valuation of 450 million yuan, which will be satisfied by issuing 12.93 million shares at 28.32 yuan per share (equivalent to 366 million yuan) and cash payment of 83,775,700 yuan. At the same time, the company proposes to issue shares through private placement at no less than 28.32 yuan per share, to raise supporting fund of no more than 366 million yuan.
PDE Soft is a leading archival management software and archival data service provider in China. Its major customers include large and medium sized insurance and banking institutions. The counterparty committed that the audited net profits of PDE Soft for 2017, 2018 and 2019 deducted of non-recurring profit or loss will be 42.35 million yuan, 54.5 million yuan and 63.74 million yuan respectively.
○ Henan Billions Chemicals Co., Ltd. (002601.SZ) proposes to repurchase 4.92 of the company’s shares at no more than 20 yuan per share for an employee stock ownership plan (ESOP). The total amount of repurchase will be no more than 1.2 billion yuan. Actual controller of Zhongzhu Healthcare Holding Co., Ltd. (600568.SH) on Jan. 20 and 23 in total increased holding 1.38 million shares of the company. It plans to increase holding no less than 1 percent and no more than 2 percent share capital of the company in the next two months when the price is lower than 21 yuan per share. Largest shareholder of Sealand Securities Co., Ltd. (000750.SZ) on Jan. 23 increased holding 18.31 million shares of the company, and one of the directors plans to increase holding no more than 100 million yuan.
○ Humon Smelting to launch ESOP, adopting 2-times leverage

Shandong Humon Smelting Co., Ltd. (002237.SZ) proposes to launch an employee stock ownership plan (ESOP) to raise no more than 170 million yuan. The lockup period of the plan is 12 month, and will set prime and subprime units at the proportion of 2:1. The total fundraising will be no more than 500 million yuan.
○ Zhongrong International Trust to deploy in Vantone Real Estate

K. Wah Orient Holding (Group) Co., Ltd., substantial shareholder of Beijing Vantone Real Estate Co., Ltd. (600246.SH), proposes to transfer the equities of Vantone Holdings Co., Ltd., second largest shareholder of the listed company, to Zhongrong Dingxing Investment Management Co., Ltd., and the latter will directly or indirectly hold the equities of no more than 35 percent of Vantone Holdings. Detailed transaction price and mode will be negotiated. This transfer is a strategic cooperation between K. Wah Orient Holding and Zhongrong International Trust Co., Ltd., and will not change the controlling right of K. Wah Orient Holding on Vantone Real Estate and Vantone Holdings. The registered capital of Zhongrong Dingxing Investment Management is 1.5 billion yuan, wholly owned by Zhongrong International Trust, public data shows.
[Financial Reports Express]
○ Biocause Pharmaceutical, Garden Bio-chemical High-tech and others announce growth forecast

Hubei Biocause Pharmaceutical Co., Ltd. (000627.SZ) announces a performance growth forecast of 588 to 628 percent in its annual report, mainly due to combined financial statement with Guohua Life Insurance Co., Ltd.; annual net profit growth of 263 percent and growth forecast of 137 to 161 percent for Zhejiang Garden Bio-chemical High-tech Co., Ltd. (300401.SZ), mainly due to sales growth of cholesterol and VD3 products; performance growth forecast of 270 percent for Hangxiao Steel Structure Co., Ltd. (600477.SH), mainly due to gross margin growth of new businesses; annual performance growth forecast increased to 45,488 to 49,312 percent by Neoglory Prosperity Inc. (002147.SZ), mainly due to sales growth of real estate business in Q4.
Jinguyuan Holding Co., Ltd. (000408.SZ) predicts an annual net profit of 950 million yuan in its annual report, greatly from losses, and mainly due to restructuring a potash fertilizer company located in Golmud; annual net profit forecast of 250 million to 300 million yuan for Zhejiang Qianjiang Motorcycle Co., Ltd. (000913.SZ), mainly due to investment yield growth.
○ Zhejiang Qianjiang Motorcycle Co., Ltd. (300422.SZ) announces a growth forecast of 43 to 53 percent in its annual report, and its actual controller proposes a 15-for-10 conversion of capital surplus into shares combined with 0.6 yuan dividend for every 10 shares; growth forecast of 10 to 20 percent for All Winner Technology Co., Ltd. (300458.SZ), with chairman proposing a 10-for-10 conversion of capital surplus into shares combined with 3 yuan dividend for every 10 shares, and vice general manager planning to decrease 200,000 shareholdings.
[Trading Alarms]

○ IPOs of Anzheng Fashion Group, SI-TECH Information Technology and Oupai Door Industry on Jan. 24

Anzheng Fashion Group Co., Ltd. (732839.SH) mainly engaged in women’s dress will issue new shares at 16.78 yuan per share with an upper subscription limit of 28,000 shares; an offering price of 16.16 yuan per share and upper subscription limit of 16,500 shares for SI-TECH Information Technology Co., Ltd. (300608.SZ) mainly engaged in software development; an offering price of 24.83 yuan per share and upper subscription limit of 7,000 shares for Jiangshan Oupai Door Industry Co., Ltd. (732208.SH).

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