The rating is not dominant in scale, and the bond base parity provides a strong safety cushion. Double Arrow shares announced on the evening of February 8 that convertible corporate bonds will be publicly issued on February 11, 2022, and no offline issuance will be arranged this time. The issuance size of Shuangjian shares is 513.64 million yuan, and the debt rating is AA. According to the 4.1904% maturity yield of Chinese bonds of the same grade on February 8, the debt bottom is about 91.99 yuan, and the parity price of Shuangjian convertible bonds on February 8 is 98.36 yuan. The debt base and parity price provides a strong safety cushion for the purchase. In terms of terms, the three major provisions are in order.

Rubber conveyor belt leading enterprises, production equipment operation at full load

The company is mainly engaged in the research and development, production and sales of rubber conveyor belts. In the first three quarters of 2021, the company's rubber conveyor belt business accounted for more than 98% of the sales revenue. The company is a rubber conveyor belt manufacturer with the largest domestic production capacity, output and sales volume, and ranks first in China's rubber conveyor belt industry for many years. At present, it has formed a complete product chain from ordinary conveyor belt to high-end conveyor belt. At the same time, in terms of conveying system, the company has the ability to provide one-stop overall solution.

With the continuous enhancement of the company's leading position in the industry, and benefiting from the macroeconomic recovery, the prosperity of downstream industries such as cement, coal, mining, iron and steel, ports, power, machinery and other industries has gradually improved, and the company's rubber transportation business income has continued to grow in recent years. However, affected by the delay in the progress of downstream customers' own projects in 2021, the company's steel strip sales decreased compared with the same period last year, affecting the overall revenue growth of the company. In the first three quarters, operating income reached 1.334 billion yuan, an increase of 4.60% over the same period last year. At the same time, affected by the rise in the price of some raw materials, the net profit in the first three quarters was 139 million yuan, down 39.73% from the same period last year. The company recently issued an annual performance forecast for 2021, which is expected to achieve a net profit of 141.9379 million yuan to 173.4797 million yuan in 2021, down 55% from the same period last year.

The production equipment is operating at full capacity, and the investment in the main industry will be increased in the next few years. At present, the company has an annual production capacity of 65 million square meters, and in recent years, the company's capacity utilization rate and production and marketing rate have remained high, and the production equipment is basically operating at full capacity. In order to further expand the production scale, the company has actively expanded production and built a number of new production projects. The main projects under construction are shown in the table below. According to the 2020 annual report, the company will increase investment in the main industry of conveyor belt in the next few years, and the production capacity will exceed 150 million square meters at the end of the 14th five-year Plan, further increasing the market share of conveyor belt.

The implementation of this investment project will further expand the company's production capacity, meet the needs of the company's rapid development of production capacity, and help to further optimize the product structure and maintain the company's leading position in the industry.

The success rate of convertible bond application is expected to be about 0.00256%, and it is expected that the risk of applying for purchase in the primary market is not high. As of September 30, 2021, Shen Gengliang directly holds 20.92% of the shares of the company and is the controlling shareholder and actual controller of the company. With reference to the recently issued Tiannai convertible bonds (original shareholder placement ratio 70.58%, online effective purchase amount 9.91 trillion) and Haomei convertible bond (original shareholder placing proportion 79.79%, online effective purchase amount 10.76 trillion), assuming that the original shareholder placement ratio of Shuangjian convertible bonds and the online effective purchase amount are 10 trillion respectively, the online success rate is expected to be about 0.00256%.

With reference to Sanli convertible bonds with the same industry and similar parity (30.04%) and Tongcheng convertible bonds (34.52%), it is estimated that the first day of listing of Shuangjian convertible bonds is expected to be in the range of 35%. For the February 8 parity, the listing price of Shuangjian convertible bonds is expected to be between 127.87 yuan and 132.79 yuan. The scale of Shuangjian convertible bond is not too large, and it is a leading enterprise in the field of rubber conveyor belt in China. Affected by the rising prices of raw materials, profitability declined in 2021, taking into account the company's increasing investment in the main industry, the market share is expected to further increase in the future. At the same time, the company's business layout is also involved in the pension industry. It is expected that the risk of applying for purchase in the primary market is not high, and active attention can be paid to it after listing.

Risk Tips:

The price of raw materials rises, the recovery of accounts receivable falls short of expectations, and downstream demand falls short of expectations.