Scale and rating are not dominant, parity provides a strong safety cushion
Zhongtian hardcover announced on the evening of February 17 that it will issue convertible corporate bonds on February 22, 2022, and no offline issuance will be arranged this time. Zhongtian hardcover issue size of 577 million yuan, debt rating AA-, based on February 18 Chinese bonds of the same grade corporate bonds maturity yield 6.6308%, the debt bottom is about 82.39 yuan, February 18 hardcover convertible bond parity is 96.60 yuan, the debt base is not high, parity provides a strong safety cushion for purchase. In terms of terms, the three major provisions are in order.
Focus on batch fine decoration, customer diversification has achieved considerable results
The company is a leading provider of batch fine decoration services in China, mainly providing residential batch fine decoration and design services for large domestic real estate developers, of which batch fine decoration is the most important business of the company, accounting for 99.75% of 2021H1 revenue. The company has been ploughing the field of batch fine decoration for more than ten years, and has won more than 100 awards since its inception. It is a member of China Architectural Decoration Association, Guangdong Construction Industry Association and Shenzhen Decoration Industry Association. It has strong technical strength and good market reputation, and can meet customers' various batch fine decoration service requirements with high quality.
On January 17, 2022, the company issued a performance forecast for 2021. It is estimated that the net profit attributed to shareholders of listed companies in 2021 is 110 million yuan to 140 million yuan, down 41.75% to 25.86% compared with the same period last year. This is mainly due to the tightening of the state's macro policy on the real estate industry. For prudent consideration, the company has increased the loss of credit impairment and asset impairment. In addition, the price of bulk materials has increased, resulting in an increase in the cost of engineering materials as a whole.
Has accumulated rich business experience, and has a large number of delivery capabilities. The company has been engaged in batch fine decoration business for more than ten years, and has accumulated rich business data, business experience and proprietary know-how in the field of batch fine decoration. The company has the first-class qualification of special contracting for architectural decoration and decoration engineering and the special qualification of grade B for architectural decoration engineering design, as well as a good credit grade in the industry, and has been awarded the enterprise credit evaluation AAA credit enterprise by China Architectural Decoration Association. At present, the company has the ability to deliver 65000 sets of fine decoration houses annually, and has cumulatively completed the delivery of 300000 sets of fine decoration houses.
According to the prospectus for convertible bonds, after the completion of this project, it will help to enhance the financial strength of the company, enable the smooth and high-quality completion of the project on hand, and effectively enhance the company's market influence and core competitiveness. Escort for the company's further business development and rapid growth of performance; help the company to optimize supplier cooperation and further improve the profitability of the project.
The success rate of convertible bond application is expected to be about 0.00144%. It is expected that the risk of applying for purchase in the primary market is not high. Qiao Rongjian holds a total of 6759 shares (44.64% of the total share capital) of the company through direct and indirect means, and is the actual controller of the company. With reference to the recently issued Suli convertible bonds (original shareholder placement ratio 89.84%, online effective purchase amount 10.61 trillion) and Tiannai convertible bond (original shareholder placing ratio 70.58%, online effective purchase amount 9.91 trillion), assuming that the original shareholder placement ratio of hardcover convertible bonds and the online effective purchase amount are 10 trillion respectively, the online success rate is expected to be about 0.00144%.
According to the closing price of hardcover on February 18, 2022, the parity of convertible bonds is estimated to be 96.60 yuan. With reference to Yatai convertible bonds with the same rating and similar parity, Yatai convertible bonds (conversion premium rate 17.42%) and China Shipping convertible 2 (conversion premium rate 18.29%), the conversion premium rate of hardcover convertible bonds on the first day of listing is expected to be in the range of 20%. For February 18 parity, the listing price of hardcover convertible bonds is expected to be between 115.92 yuan and 120.75 yuan. Although the scale and rating of hardcover convertible bonds do not have an advantage, the company is the leading provider of batch fine decoration services in China, focusing on economically developed areas such as East and South China. In 2021, affected by the tightening of policies in the downstream real estate industry and rising prices of raw materials, the company's performance has declined slightly, but considering the broad market space of residential decoration business, the company's profitability is expected to improve. It is expected that the risk of applying for purchase in the primary market is not high, and it may be possible to pay attention to double-low convertible bonds after listing.
Risk Tips:
Real estate regulation and control policies have been tightened, the degree of competition in the industry has intensified, and the prices of raw materials have continued to rise.