Yong22 convertible bond, application code 754681, rating AA-, conversion value 105.22. Its positive stock Yongguan Xinmai (27.040, -1.11, -3.94%) (603681) share price is higher than the conversion price.
1. Basic information on the convertible bonds
The debt is currently valued at $84.24 at the bottom, with a YTM of 3.29%. Yong 22 convertible bonds have a duration of 6 years, a joint rating of AA-/AA-, and a face value of $100. The coupon rate is 0.40%, 0.60%, 1.00%, 1.50%, 2.50% and 3.00% from the first year to the sixth year, and the redemption price at maturity is 115% of the face value (including the last installment of interest).
Yong 22 convertible bonds subscription
The current conversion parity is 101.72 yuan, parity premium rate is -1.69%. The conversion period is the first trading day after 6 months from the issue date of the convertible bonds to the maturity date, i.e. February 3, 2023 to July 27, 2028. The initial conversion price is 26.81 yuan per share, and the closing price of Yongguan New Material's original shares on July 25 was 27.27 yuan, corresponding to a conversion parity of 101.72 yuan, with a parity premium of -1.69%.
The terms of the convertible bonds are quite satisfactory. The following terms are "15/30, 85%", the conditional redemption terms are "15/30, 130%", and the conditional resale terms are "30, 70%". These terms are satisfactory.
Total equity dilution is 13.06%. Based on the initial conversion price of RMB 26.81, the dilution ratio of 770 million convertible bonds to total equity and outstanding shares is 13.06% and 13.06% respectively, causing less dilution pressure on equity.
2. Recommendations on investment purchase
We expect the price of Yongguan 22 convertible bonds to be between RMB 118.40-136.20 on the first day of listing. Based on the closing price of Yongguanxin on July 25, 2022, the current conversion parity is 101.72 yuan.
1)Refer to the parity, rating and comparable size of Shenghui convertible bonds (conversion parity of 101.73 yuan, rating AA-, issue size of 700 million yuan), Shanbo convertible bonds (conversion parity of 106.83 yuan, rating AA-, issue size of 600 million yuan), Jinki convertible bonds (conversion parity of 102.31 yuan, rating AA-, issue size of 6.
2)Refer to the recently listed Chen Zhong convertible bonds (conversion parity of 103.60 yuan at the time of listing), the conversion premium rate on the day of listing is 23.55%.
3)Based on our empirical model of conversion premium on the first day of listing, we explain the conversion premium (Y) of convertible bonds on the first day of listing according to the regression result of Y =-89.75+0.22 x _ 1-1.04 x _ 2+0.10 x _ 3+4.34 x _ 4. The chemical conversion premium (x1) is 16.08%, and the AA-CCB's yield to maturity on July 25, 2022 (x2) is 6.35%.The first quarter report of 2022 shows that the percentage of shares held by the top ten shareholders of Yongguan Xinmai (x _ 3) is 65.65%.On July 25, 2022, the conversion premium (Y) for the first day of listing of the Yong22 convertible bond can therefore be calculated as 23.65%.
Based on the comparison of underlying and empirical results, considering that Yong22 convertible bonds have general debt protection, general rating and attractive size, we expect the conversion premium rate on the first day of listing to be around 25%, corresponding to a listing price between RMB 118.40-136.20.
We expect the preferential placement ratio for original shareholders to be 69.70%. As of March 31, 2022, the aggregate shareholding of the top ten shareholders of Yongguan New Material was 65.65%, with a concentrated shareholding structure. As at July 27, 2022, shareholders holding more than 5% of the issuer's shares, directors, supervisors and senior management other than independent directors and employee representative supervisors have undertaken to participate in the issuance and subscription of convertible bonds in accordance with relevant laws and regulations. Assuming that 80% of the top ten shareholders participate in the preferential placement and 50% of the other shareholders participate in the preferential placement, we expect that the preferential placement ratio of the original shareholders will be 69.70%.
We expect the winning rate to be 0.0021%. The total amount of convertible bonds issued by Yong22 is 770 million yuan. We expect the preferential placement ratio of original shareholders to be 69.70%, and the remaining online investors can subscribe for RMB233 million. Yong22 convertible bonds will only be issued online. The number of online subscribers for the recently issued Songlin convertible bonds is about 11,539,100 households, the number of online subscribers for Gaoxue convertible bonds is about 11,277,100 households, and the number of online subscribers for TOP convertible bonds is about 11,266,300 households. We expect the number of valid online subscription households for Yong22 bonds to be 11,347,500, with an average subscription amount of 1 million yuan for a single household. We expect the online winning rate to be 0.0021%.
3. Fundamental Analysis of Positive Stock
The company is a leader in the adhesive tape industry. The company specializes in R&D, production and sales of a variety of civil adhesive materials, industrial adhesive materials and chemical materials. Our main products include cloth-based adhesive tapes, striped paper tapes, PVC tapes, OPP tapes, double-sided adhesive tapes, biodegradable environmental tapes, automotive wiring harness tapes, medical tapes and so on. Our products are widely used in civil, industrial and medical fields, and are suitable for daily DIY, building decoration, packaging, stationery, automobile manufacturing and beauty, electronic and electrical appliances, aviation, shipping, high-speed railroad and other scenarios. After years of technical precipitation and customer accumulation, the company's products now include three categories: cloth-based, paper-based and film-based, with sales markets covering more than 110 countries and regions, including China, Europe, the United States, Japan, the Middle East, Southeast Asia and India. At present, the company has developed into one of the few comprehensive tape enterprises in China with rich product types and the ability to supply the whole industrial chain, and has won the trust of internationally renowned customers, including 3M, Nitto Denko, Sartor, SF and so on.
The company's revenue and profit continued to grow. 2022 first quarter, the company realized operating income of 1.074 billion yuan, an increase of 51.26% year-on-year, and net profit of 0.68 billion yuan, an increase of 11.85%. The company's operating income has continued to grow in the past three years, with growth rates of 26.05%, 12.58% and 59.07% from 2019-2021, and a compound growth rate of 31.18% from 2018-2021. Meanwhile, the net attributable profit has also increased, and the growth rate of net attributable profit is 12.86%, 18.36% and 28.50% from 2019-2021, respectively.
Tape products are the main source of revenue. 2019-2021 high-performance water reducer revenue accounted for 91.98%, 91.02%, 90.41%, respectively. It's gone down, but it's still a staple product.
The company's net profit margin is relatively stable, and the sales expense rate has declined.From 2019 to 2021, the company's net profit margin was 6.92%, 7.27% and 5.87%, and the gross profit margin was 17.10%, 14.41%, and 12.99%.From 2019 to 2021, the company's sales expense rate was 2.96%, 0.80%, 0.68%, decreasing.
/uploadfile/2022/0728/20220728093448122.jpg