10 x MARketsCONTACT US AT: 8351-9531, YYUNFEI@YAHOO.COM

Tuesday June 6, 2017

Stock Indices (Monday)

Shanghai Composite Index

Shanghai B

Shenzhen Component Index

Shenzhen B

Last 318.22 Open 317.26 High 318.58 Low 317.11 Change 0.27%

Last 9,842.60 Open 9,799.81 High 9,866.34 Low 9,799.65 Change 0.49%

Last 1,082.86 Open 1,081.42 High 1,084.63 Low 1,080.30 Change 0.28%

Last 3,091.66 Open 3,102.11 High 3,105.51 Low 3,084.83 Change -0.45%

Chinese RMB

100 Hong Kong dollars 87.21100 U.S. dollars 679.35 100 Japanese yen 6.1522 100 Euros 766.29 100 British pounds 874.25100 Swiss francs 705.3 100 Canadian dollars 503.38 100 Australian dollars 504.76 100 Singapore dollars 491.87

Hong Kong dollar 7.7920 Japanese yen 110.49 Euro 0.8874 British pound 0.7771 Swiss franc 0.9641 Canadian dollar 1.3476 Australian dollar 1.3397 Singapore dollar 1.3797

U.S. dollar

Exchange Rates (Monday)

COAL giant Shenhua Group Corp. and major domestic power producer China Guodian Corp. are in talks to merge some assets, sources said yesterday, as part of a broader shake-up of China’s State-owned sector.

Several of the power fi rms’ listed units suspended trading in their shares yesterday, citing a planned “signifi cant event,” fanning market speculation over a merger. The shares of other listed units that continued trading rose sharply.

The talks come as the gov-ernment seeks to streamline State-owned enterprises (SOEs), including those in the energy sector, by creating huge, globally competitive conglomerates. It has merged 15 SOEs since 2015 and currently manages 103, a number that could eventually fall to about 40, domestic media reported.

In the latest merger talks, a source with direct knowledge of the matter said China’s larg-est coal miner, Shenhua Group, would take over Guodian unit GD Power Development Co.

“After merging Guodian’s GD Power into Shenhua, Shenhua will consider acquiring coal-fi red power assets from the remaining top power fi rms,” said the source.

A second source with knowl-edge of the matter said merger talks were at a preliminary stage,

and that the option of completely merging the two parents was likely to be tabled later.

Shenhua Group, its listed unit China Shenhua Energy Co., China Guodian and GD Power could not be immediately reached for comment.

“We think this merger is very likely to occur,” NSBO Research said in a note to clients, refer-ring to a merger of some form between Shenhua Group and China Guodian. Any merger would be positive for their listed units, NSBO Research said.

China Guodian is one of fi ve State power producers formed in 2002 after the restructuring of China’s State-owned power sector monopoly, along with China Hua-dian Corp., State Power Invest-ment Corp., China Huaneng Group and China Datang Corp.

In March, the chairman of China’s State-owned Assets Supervision and Administration Commission (SASAC) said SOE restructuring would focus on the steel, coal, heavy equipment and coal-fi red power sectors this year to tackle overcapacity.

With China moving toward cleaner fuel, a merger of Shen-hua Group with a major State power provider such as China Guodian — also a leading hydro-power and renewables developer — could ease its dependence on coal. (SD-Agencies)

Shenhua, Guodian in assets merger talks

Company executives of Xinhuanet Co. and offi cials from the Shanghai Stock Exchange celebrate the fi rm’s trading debut on the exchange following an initial public offering (IPO). The securities regulator has rejected more IPO applications from companies amid efforts to improve the quality of listed companies and protect the interests of individual investors. Xinhua

THE securities regulator has rejected more initial public offer-ing (IPO) applications from com-panies amid efforts to improve the quality of listed companies and protect the interests of indi-vidual investors.

The China Securities Regula-tory Commission (CSRC) in May reviewed IPO application documents from 64 companies, while 9 of them, or about 14 percent of the total, failed to get the approval to go public, China Securities Journal reported over the weekend.

The 14 percent rate was higher than the 12 percent in April and

the 11.6 percent for the fi rst fi ve months of this year, the news-paper reported, citing data from Wind Info, a leading domestic fi nancial information provider.

Inability to generate sustain-able profi t growth and malprac-tices in business operations and information disclosure were among the main reasons for the IPO rejections, the report said.

Under the current IPO system, new shares are subject to approval from the CSRC.

In a similar vein, the CSRC on Friday approved the IPO applications of four companies,

fewer than the seven approved a week ago.

The four companies will raise no more than 1.5 billion yuan (US$220 million), much less than the 2.3 billion yuan approved to be raised by the seven IPOs in the previous week.

The move has widely been regarded as the regulator’s efforts to slow the pace of approval for IPOs amid worries that a fl ood of new listings are sucking up liquidity.

Previously, the CSRC typically approved a batch of 10 IPOs Fri-days that raised roughly 6 billion yuan in total. (SD-Xinhua)

Regulator rejects more IPO applications

CHINA Huishan Dairy Hold-ings Co. said yesterday that it will miss a June deadline for publishing its full-year results as the indebted fi rm faces “tre-mendous diffi culties” getting a clear picture of its fi nances.

Huishan’s stock has been sus-pended from trade since March 24, when it plunged 85 percent. Since then, most of the fi rm’s directors have quit, it has missed loan payments and lost contact with a key executive in charge of its fi nances and cash.

Huishan said details on its cash position, receivables,

payables and borrowings were particularly unclear.

“The fi rm will not be in a posi-tion to publish the audited results of the group for the year ended 31 March 2017 on or before June 30,” it said in a fi ling.

The fi rm said last week it was facing legal action in more than a dozen court proceedings over money owed to creditors, ramp-ing up pressure on a fi rm whose recent travails have laid bare the risks of excess leverage and fi nancial engineering in hidden corners of corporate China.

Huishan said its total debt

pile reached 26.73 billion yuan (US$3.9 billion), though it added it could not guarantee the accu-racy of its numbers.

The dairy fi rm also said it would hire a forensic accoun-tant to investigate the gaps in its fi nancial statements.

Huishan’s board was left paralyzed in April after a spate of resignations left it with just two executive directors, includ-ing embattled chairman Yang Kai and fi nance director Ge Kun. Ge has now been missing for over two months.

(SD-Agencies)

Huishan Dairy to miss results deadline

GUANGZHOU Rural Commer-cial Bank Co. (GRCB) launched a Hong Kong initial public offering (IPO) worth as much as US$1.1 billion yesterday, seeking funds for potential mergers and acqui-sitions and to open new branches as it expands its lending and investment businesses.

The deal, which could value the mainland’s fi fth-largest rural commercial bank by assets at some US$6.7 billion, is relying on cornerstone investors to take up 40 percent of the offering.

That is a signifi cant level but far below a record of nearly 80 percent set by China Develop-ment Bank Financial Leasing Co. last year. High levels of cornerstone investment often

indicate less confi dence that a deal will meet with strong demand from institutional and retail investors.

Dependence on cornerstones by many mainland fi rms going public comes at a time when the Central Government has made it mandatory for mainland cornerstone investors in Hong Kong IPOs to repatriate funds when they sell their shares, a rule likely to hit listings that rely heavily on them.

GRCB set the indicative range for the 1.58 billion shares on offer at HK$4.99 (US$0.64)-HK$5.27 each, according to a term sheet of the deal. The shares would be equivalent to around 16.5 percent of the lender after the offering.

It secured commitments worth about US$431 million from three investors, including US$195.1 million each from a unit of HNA Group and from Aeon Life Insurance Co.

Investment fi rm International Merchants Holdings plans to buy US$40 million worth of shares.

The IPO had been due for a May 15 launch, but was delayed as some anchor and cornerstone investors were not ready at the time to sign onto the deal, said a source with direct knowledge of the plans, without elaborating.

GRCB’s IPO is set to be priced June 13, with its debut on the Hong Kong stock exchange slated for June 20. (SD-Agencies)

Guangzhou Rural Commercial Bank launches HK IPO