On October 28, Shouhua Gas announced that it planned to issue convertible bonds online on November 1, 2021. This time, it raised 1.379 billion yuan. After deducting the issuance expenses, it plans to use 966 million yuan to be used for the phased natural gas development project in Shilou West Block. The remaining 414 million yuan is used to supplement working capital.

Shouhua convertible bonds are issued in the form of priority placement and online issuance, debt and main rating AA. The size of the issue is 1.379 billion yuan, the initial conversion price is 25.02 yuan, the closing price of regular shares on October 28 is 20.11 yuan, the parity price of convertible bonds is 80.38 yuan, and the maturity yield of corporate bonds of the same maturity and rating (October 27, 2021) is 4.53%. The maturity redemption price is 110 yuan, and the value of pure debt is 88.64 yuan. Generally speaking, the scale of bond issuance is on the high side, the liquidity is OK, the rating is OK, and it is not difficult for institutions to put into storage. The terms of the game are well-regulated, and the next revision is loose ("15gamma 3090%"), the redemption clause ("15gamble 30130%") and the resale clause ("30gamma 30jin70%") are all normal.

Convertible bonds first day target price of 106-110 yuan, it is recommended to actively apply for purchase. As of October 28, 2021, Shouhua convertible bond parity is 80.38 yuan, debt bottom 88.64 yuan, reference comparable convertible bond Tuos convertible bond (rating AA, lasting debt balance 670 million yuan, debt bottom 91.60, convertible bond price 109.09, pure debt premium rate 19.20%) and Hangzhou fork convertible bond (rating AA+, persistent bond balance 1.15 billion yuan, debt bottom 71.66, convertible bond price 114.77, pure bond premium ratio 24.39%) The valuation of Shouhua convertible bonds refers to the valuation levels of Tuos and Hangzhou convertible bonds. The level of pure debt premium on the first day of listing of Shouhua convertible bonds should be in the range of [19% 23%], and the target price of convertible bonds on the first day of listing is around 106-110 yuan.

We judge that: 1, the scale of convertible bonds is on the high side, the liquidity is OK, the rating is OK, the protection of the debt bottom is not difficult, it is not difficult for institutions to enter the warehouse, and there is no objection to the first-level participation; 2, the natural gas industry continues to heat up, the market prospect is good; 3, the company's revenue increases year by year, business performance continues to improve; 4, the overall cost control level of the company continues to strengthen, and the expense rate continues to decrease during the period.

Comprehensive analysis, we expect that the first day of listing of Shouhua convertible bonds pure debt premium rate of 19% muri 23%, the corresponding price around 106-110 yuan, it is recommended to actively apply for purchase.

It is expected that the rate of new lottery on the first day will be 0.0071% / 0.0100%. Currently, Shouhua convertible bonds are set up for priority placement and online issuance. With reference to the recently issued Diou convertible bonds (AA-, 1.5 billion yuan) and Bairun convertible bonds (1.128 billion yuan), there are about 9.5 million valid online purchases per 9.83 million households. It is assumed that the number of valid online applications for Shouhua convertible bonds is 9.67 million, and the success rate is around 0.0071% / 0.0100%.

Risk hint: the price of the product fluctuates, the project schedule is not as expected, the risk of policy change.