The amount of funds raised by Shunbo alloy convertible bonds is 830 million yuan, which will be used for 400000 tons of recycled aluminum projects and liquidity supplement after deducting the issuance costs. the listing date is September 7.
Domestic leading company of recycled aluminum. The company's main products are recycled aluminum alloy ingots (mainly ADC12), upstream waste aluminum is mainly from domestic, suppliers are mostly state-owned holding enterprises; downstream is mainly used for aluminum die-casting, nearly 50% supply automotive industry, other including motorcycles, machinery and equipment and other industries, mainly domestic sales. By the end of 21, the company's aluminum alloy ingot production capacity of 639400 tons, with Chongqing, Guangdong Qingyuan, Jiangsu Liyang, Hubei Xiangyang four major production bases, output of 553100 tons, domestic market share of 6.66%, the market share steadily ranked in the top four in the domestic industry and the first in the southwest region. The recycled aluminum industry mainly earns the price difference between waste aluminum and aluminum alloy, the gross profit margin is generally low, high ROE is mainly driven by high turnover, the company has strong operating capacity, working capital turnover and inventory turnover is much higher than that of its peers, and ROE is maintained at a high level of more than 10%; due to the difference between the spot cash of waste aluminum in the upstream and the average 2-month account period downstream, there is a certain advance pressure, and the cash flow level is general.
Follow the trend of automobile lightweight to rapidly expand production and expand categories at the same time. Under the general trend of "carbon neutralization", the demand for waste aluminum recovery and recycled aluminum is a major trend, but driven by automobile lightweight, aluminum die casting will have a greater demand for recycled aluminum. East China, as an important manufacturing base for automobile lightweight and new energy vehicle parts in the main downstream plate of the recycled aluminum industry, has more room for growth in demand for recycled aluminum. The company's Jiangsu Shunbo production capacity is about to be full, and the funds raised by convertible bonds will be used for new 400000 tons of recycled aluminum projects to consolidate the leading position in the industry and drive the company's performance growth; in terms of categories, the company acquired Chongqing Aobo to enter the deformed aluminum alloy material business. it is expected that this part of production capacity will reach 500000 tons in the future. On the other hand, with the growth of the company's sales scale and the embodiment of scale effect in the future, profitability is expected to be further improved. According to the unanimous forecast of Wind, the net return profit of 2022 Company2023 will be 420 million / 537 million respectively, and the corresponding PE will be 16.57X/12.91X.
The valuation is in the middle and low position since the listing, the stock price is flexible, and the institutional attention has increased recently. From the valuation point of view, the company's latest closing price corresponds to PE (TTM) of 17.42X, which is in the middle and low level since listing, while the comparable company Lizhong Group / Yiqiu Resources PE (TTM) is 41.67X/14.45X. Considering that the company is firmly in the top four in the industry in terms of size, the valuation is reasonably low at present. The company's current A-share market capitalization of 6.9 billion yuan, the stock price flexibility is good, the report of the latest 20 positions, institutional attention is OK.
Parity, debt protection in general. The interest rate clause of Shunbo convertible bond is higher than the average level, and the additional terms are regular. Based on the closing price of the corresponding company on September 2, the parity of convertible bonds is 77.44 yuan, which is generally protected; under the assumption of this article, the value of pure debt is 79.67 yuan, YTM is 2.17%, and the protection of debt bottom is low.
The listing price is expected to be between 115 and 120 yuan. Shunbo convertible bond rating AA-, the latest parity 78.41 yuan, the convertible bond market can refer to the underlying Jintian (latest closing price of 113.27 yuan, conversion premium rate of 55.87%), Mingtai (latest closing price of 325.68 yuan, conversion premium rate of 9.13%). It is expected that the conversion premium rate of Shunbo convertible bonds on the first day of listing is between 50-55%, and the listing price is between 115-120 yuan.
Risk Tip: downstream demand decline; customer payback does not meet expectations