Summary
Yong 22 convertible bonds will be listed on Friday, August 26, with a size of 770 million yuan. We think that according to the current market conditions, its listing position may be around 132 yuan.
Positive stock analysis
Issuer Yongguan new material is a domestic head adhesive tape export enterprise, the product basically covers the whole industry of adhesive tape, and has actively explored the domestic market in recent years. The company started with the export business of cloth-based adhesive tape, gradually expanded the range of products, and developed into a comprehensive viscose tape enterprise. At present, film-based tape (mainly OPP tape, corresponding to logistics demand) accounts for the largest proportion of the company's main products, accounting for 49.89% of revenue in 21 years; paper-based tape (mainly American tape, corresponding to interior decoration needs) and cloth-based tape (mainly to overseas leader 3M Company) account for 26.22% and 14.31% respectively in 21 years. The company's main sales / net profit CAGR in 19-21 was 32.23% / 25.19% respectively, mainly due to the rapid growth of film-based tape with low gross profit, and the film-based revenue CAGR reached 50.18% in the same period. On the whole, it is worth noting that:
1. The company accounts for a relatively high proportion of overseas business, mainly through ODM and OEM exports to Europe and the United States. The company's 21-year overseas business accounted for 68.17%, mainly ODM OEM, downstream customers are mainly 3M Company, Tesa and other leading enterprises in the international industrial tape market. In order to reduce the possible performance fluctuations caused by trade frictions, the company set up a new Vietnam factory in 19 years, and the revenue / net profit of Vietnam Yongguan in 21 years was 73.67 million yuan / 12.44 million yuan respectively, accounting for less of the company's overall performance. In recent years, the company is gradually strengthening the development of the domestic market. Focus on the layout of OPP tape-based low-margin film-based products, and mainly radiate East and South China with Jiangxi Fuzhou base as the core, and North and East China with Shandong base as the core. According to the company's 21 annual report, three new BOPP film production lines will be added in 22 years. We believe that the company's scale advantage will be further enhanced, and the performance is expected to continue to increase.
The convertible bond fund-raising is mainly used for Jiangxi Lianguan functional film production and research integration construction project, focusing on the development of automotive, consumer electronics, OCA optical film and other functional film, the layout of high-performance new material products, we believe that this will help the company in the field of high value-added tape to promote domestic substitution, optimize product structure, improve the added value and competitiveness of the company's products. In addition, some of the funds raised will be used for Jiangxi intelligent three-dimensional warehousing projects and global marketing channel construction projects, which we believe will help the company shorten the product supply cycle and achieve cost reduction and efficiency.
The valuation of positive shares is medium, and the flexibility is general. The company's current TTM is 22.8x and MRQ is 2.32x, which is basically at the average level of enterprises in the same industry. The total market capitalization is 5.3 billion yuan, all of which are tradable share capital, and the ownership structure is relatively concentrated. As of the end of 1Q22, Lu Xinmin, the real controller of the company, and his wife totaled 51.06% of the shares in the company. In the past 180 days, the volatility is 44.84%, the elasticity is general, and the rebound trend is strong since the end of April. We can observe the support position in the near future.
Terms and pricing
The scale of convertible bonds is small, and the protection of debt bottom is weak. The current convertible bond size is 770 million yuan, the initial conversion share price is 26.81 yuan, and the latest parity is about 103.58 yuan. The convertible bond rating AA-, has a maturity of 6 years, with a coupon of 0.4%, 0.6%, 1%, 1.5%, 2.5% and 3%, respectively, with a maturity redemption price of 115 yuan, a par value of 3.29%, a debt bottom of about 84.95 yuan, and a weak protection of the debt bottom, and the rest of the terms are consistent with the mainstream.
At the pricing level, the company's OPP tape release speed is expected to continue, the follow-up need to pay attention to the downstream logistics demand and the company's high value-added products production and marketing. The valuation of positive shares is medium, the flexibility is general, and the trend is good. The scale of convertible bonds is small and the terms are conventional. We think its listing position may be around 132 yuan.
Risk.
The price of raw materials fluctuated greatly and the production of new projects fell short of expectations.