Abstract: The Huayuan Convertible Bonds were issued on a scale of 1.2 billion yuan, with a term of 6 years, rated AA-, issued online, and listed on March 23. The initial average price of the converted debt was 94.34 yuan (based on the closing price on March 22), the bottom of the debt was 82.55 yuan, and the pure debt YTM was 3.182%. The revised terms (15-30, 85%), the redemption clauses (15-30, 130%), and the resale clauses (30,70%) look at overall debt bottom protection in general, and the terms are in line with the rules. We expect the listing price range to be around 120-125 yuan. After listing, it is recommended to pay attention to the appropriate price.
Garden Bio is a leading company in the global vitamin D3 industry. The company's main business includes R&D, production and sales of upstream and downstream vitamin D3 products and chemical products. Upstream in the industrial chain, the company successfully developed and industrialized a novel “molecular distillation” NF grade cholesterol production process, becoming the world's largest supplier of NF grade cholesterol, and successfully developing high-value-added 25-hydroxyvitamin D3 products downstream. With its unique industrial chain advantages, the company has built a complete competitive advantage for integrating the upstream and downstream vitamin D3 industry chains, forming the company's core competitiveness. In terms of underlying stocks, the company's PE-TTM is currently in a low position for the past three years. The total amount of equity pledges accounts for 13.54% of the company's total A-shares. There has been no pressure to lift the ban recently.
Risk warning: technology research and development falls short of expectations, production capacity absorption risks, adverse changes in the international trade environment and policies 1. Debt transfer terms and subscription information
Debt bottom protection is average. The Huayuan Convertible Bonds were issued on a scale of 1,200 million yuan, with a term of 6 years. The principal credit rating was AA-, and the credit rating of the debt was AA-. Coupon interest rate: 0.30% for the first year, 0.50% for the second year, 1.00% for the third year, 1.50% for the fourth year, 2.00% for the fifth year, 2.50% for the sixth year, and 115 yuan for the maturity and redemption price. According to the calculation of the yield of corporate bonds of the same grade on March 21, the corresponding debt bottom was 82.63 yuan, and the maturity yield of pure bonds was 3.182%. The debt bottom protection was average.
The terms are in order. After entering the stock conversion period six months later, the initial conversion price was 15.19 yuan/share. Based on the calculation of the closing price of the underlying stock on March 22, the equivalent conversion price was 94.34 yuan. Revision terms (15-30, 85%), early redemption clauses (15-30, 130%), resale clauses (30,70%).
Published online, available on March 23, 2023.
2. Pricing analysis and investment recommendations
The dilution of debt conversion is too high. If the full amount of shares is converted to shares, the dilution of the total share capital is about 14.3%, and the dilution of tradable shares is about 14.6%.
The current stock price may be around 120-125 yuan for Huayuan Convertible Bonds. In terms of pricing, with reference to convertible bonds that are similar in price, we expect the premium rate of Huayuan Convertible Bonds on the first day of listing to be around 24%-28%. If Huayuan Biotech's stock price is between 13.9 and 14.7 yuan after listing, the corresponding convertible bond price center may be around 122 yuan.
After listing, it is recommended to pay attention to the appropriate price. Garden Bio is a leading company in the global vitamin D3 industry. The company's main business includes R&D, production and sales of upstream and downstream vitamin D3 products and chemical products. Upstream in the industrial chain, the company successfully developed and industrialized a novel “molecular distillation” NF grade cholesterol production process, becoming the world's largest supplier of NF grade cholesterol, and successfully developing high-value-added 25-hydroxyvitamin D3 products downstream. With its unique industrial chain advantages, the company has built a complete competitive advantage for integrating the upstream and downstream vitamin D3 industry chains, forming the company's core competitiveness. In terms of underlying stocks, the company's PE-TTM is currently in a low position for the past three years. The total amount of equity pledges accounts for 13.54% of the company's total A-shares. There has been no pressure to lift the ban recently. In terms of debt conversion, debt base protection is average, and the terms and regulations are in line. Judging from the fundamentals of underlying stocks, we think we can pay attention to the appropriate price after the bond conversion is listed.
Risk warning: stock market decline, low prices on the first day of listing, liquidity risk.