Report summary:
On December 23, Guizhou Gas announced that it plans to issue convertible bonds online on December 27, 2021. This time, it will raise 1 billion yuan of capital. After deducting the issuance costs, it plans to use the raised capital of 303 million yuan for the urban gas pipeline network construction project, with a total project investment of 304 million yuan; it plans to use 66 million yuan of capital raised for the natural gas pipeline project from Xijiuzhen to Xishui County, with a total project investment of 78 million yuan; it plans to use the capital raised for key natural gas infrastructure interconnection projects (Guiyang Natural Gas) Reserve and emergency peak transfer facility construction project), with a total project investment of 1.2 billion yuan; it is proposed to use the raised capital of 300 million yuan to repay bank loans.
The issuance method for Guiran convertible bonds is priority placement and online issuance. The bonds and subject ratings are AA. The issuance scale was 1 billion yuan, and the initial conversion price was 10.17 yuan. Referring to the closing price of the original stock on December 24, the conversion price was equal to 99.21 yuan. The yield to maturity of Chinese corporate bonds rated for the same period (December 24, 2021) was 4.34%, the maturity and redemption price was 110 yuan, and the calculated pure bond value was 89.6 yuan. Taken together, the scale of bond issuance is average, liquidity is average, ratings are fair, and debt base protection is average. The game terms are in order, and the revised terms (“10/20, 85%”), redemption clauses (“15/30, 130%”), and resale clauses (“30/30, 70%”) are all normal.
The target price for the first day of debt conversion is 122-126 yuan. Active subscription is recommended. As of December 24, 2021, the average price of Guiran Convertible Bonds was 99.21 yuan. Referring to comparable convertible bonds of Anhui Tiantian Convertible Bonds (rating AA+, surviving debt balance of 94.87, conversion price 92.62, stock conversion premium rate 27.33%), Guiran Convertible Bonds valuation was based on the valuation level of Anhui Tiantan Convertible Bonds. The premium rate level on the first day of Guiran Convertible Bonds listing should be in the [23%, 27%] range. The target price for the first day of listing of Guiran Convertible Bonds was around 122-126 yuan.
We judged that 1. The scale of bond issuance is average, the liquidity is average, the rating is fair, the debt bottom protection is average, it is not difficult for institutions to store, and there is no objection to first-level participation; 2. Benefiting from the rapid social development of Guizhou Province and the acceleration of the urbanization process, the urban gas industry has potential market development space; 3. In terms of business structure, fluctuations in gross margin of natural gas sales and gas engineering installation play a leading role in changes in the overall gross margin of the main business. Among them, the gross profit margin of the natural gas sales business is limited under policy marketing, and the gross margin of the engineering installation business exceeds 50%, which clearly drives the overall gross profit margin of the project installation business.
The new winning rate on the first day is expected to be around 0.0015% to 0.0023%. According to the latest financial data, the largest shareholder of the underlying stock is Beijing Dongjia Investment Co., Ltd., with a shareholding ratio of 39.5%, and the second largest shareholder is Guiyang Industrial and Commercial Industry Investment Group Co., Ltd., with a shareholding ratio of 35.94%. The total shareholding ratio of the first two largest shareholders is 75.44%, and the shareholding ratio of the top ten shareholders is 83.62%. Assuming that the current placement ratio of old shareholders is 75% to 84%, then the size left to the market by Guiran's debt conversion to the market is 160 million yuan to 250 million yuan.
Risk warning: increased competition in the industry, changes in national policies