Summary

Chun 23 convertible bonds will be listed on Tuesday, April 11, with a size of 570 million yuan. according to our new coupon pricing model, we think that under the current company stock price, the convertible bonds may be listed at around RMB132.

Positive stock analysis

The issuer Chunqiu Electronics mainly deals with notebook structure modules and its supporting moulds. More than 80% of its revenue is for export, and its business is highly dependent on Lenovo and Samsung. It has recently begun to expand its automotive structural parts business. 1H22's two main products, PC and intelligent terminals (mainly notebook computers), structures and moulds respectively contribute to revenue ratio of 95.41% and 4.59% respectively. Three times of financing expansion over the past 20 years (including this convertible bond issue), the market share has increased with the release of capacity expansion, and the company accounts for about 10% of the global notebook computer structure. The downstream customers of the company are highly concentrated, accounting for about 60% of the revenue from Lenovo in 19-21 and 1H22. Samsung, the second largest customer, has rearranged the industrial chain in recent years, and its proportion of the company's revenue has dropped from 22.54% in 20 years to 11.05% of 1H22. Due to the strong bargaining power of downstream customers, the company has a high proportion of accounts receivable (the par value of 1H22 accounts receivable accounts for 36.9% of current revenue), and the turnover speed is slow. The upstream raw materials are mainly electronic components, plastics, aluminum alloy, etc., the overall price fluctuation is small and can be transmitted downstream, and the gross profit margin fluctuation is mainly affected by the scale effect of new production capacity and labor costs. In addition, 1H22's export income accounts for 89.52% of its revenue, and most of them sell foreign currency (mainly in US dollars) to domestic enterprises in the domestic bonded area. its performance is less affected by trade frictions but is greatly affected by exchange rate fluctuations. The company hedges the impact of US dollar exchange rate fluctuations through forward settlement and sale of foreign exchange. The forward settlement and sale loss caused by the appreciation of 1-3Q22 US dollars is about 50 million yuan.

The company's three-year revenue CAGR from 2019 to 2021 was 31.01%, and the net profit CAGR was 41.25%, which was mainly due to the successive commissioning of the company's production expansion projects. The revenue of 1-3Q2022 was 3.05 billion yuan (YoY+4.11%), and the net profit returned to the mother in the same period was 200 million yuan (YoY-13.91%). The company's latest annualized return on net assets is 9.95%, current ratio / quick ratio is 1.36x1.0, sales gross margin / net profit rate is 18.42% / 6.20% respectively. The company disclosed 22-year performance KuaiBao in 2023-03-09 and realized revenue / return net profit of 3.83 billion yuan (YoY-3.94%) / 160 million yuan (YoY-49.09%) respectively. Mainly affected by the overall decline in laptop shipments, the previous projects of the superimposed company have been put into operation, which has not yet formed an effective scale effect, resulting in a decline in the company's profitability.

The company intends to raise no more than 570 million yuan by issuing convertible bonds to unspecified objects, of which 400 million yuan is used for the annual production of 5 million sets of automotive electronic magnesium-aluminum structures and 170 million yuan for supplementary working capital. We believe that the project will help the company to enrich its product structure, reduce the impact of declining demand for notebook computers on the company's performance, and open up new growth points through the layout of the new energy auto parts market.

The valuation of positive shares is relatively medium in the same industry, the market is generally hot, and the elasticity is weak. The current TTM of the company is 26.85x, which is at a high level of its own history, while that of MRQ is 1.56x, which is at a low level of its own history. The total market capitalization of the underlying shares is 4.184 billion yuan, the proportion of tradable shares accounts for 100%, and the proportion of equity pledge is 15.99%. The actual controller of the company is Xue Gewen (of a personal nature). As of September 30, 2022, the largest shareholder (Xue Gewen) held 32.88% of the company's shares. The attention of equity institutions is low (0.12% held by public offering), and the volatility in the past 180 days is 29.96%, with weak elasticity.

Compared with the industry, the company's current market heat is 38.46%, individual stock valuation is 38.21%, growth capacity is 58.97%, cash ability is 53.1%, profitability is 76.67%, and momentum performance is 14.39%.

Terms and pricing

The scale of convertible bonds is small, and the protection of debt bottom is general. The current convertible bond size is 570 million yuan, the initial conversion stock price is 10.4 yuan, the starting point of the conversion period is September 23, 2023, the latest parity is about 91.63 yuan, the term is 6.0 years, the coupon rates are 0.30%, 0.50%, 1.00%, 1.50%, 2.00%, 2.50% respectively, the maturity redemption price is 115.0 yuan, the par value corresponding to YTM is 3.18%, the debt bottom is about 82.89 yuan, and the debt bottom protection is general. The next revision clause is 85% redeeming 15max 30 (net worth and face value is at the bottom), the foreclosure clause is 130% redemption clause is 130% redemption clause, and the resale clause is 70% redemption clause 30.

At the pricing level, the corporate equity institutions have low attention, weak flexibility, medium valuation, small convertible bonds and general debt bottom protection. According to our new coupon pricing model, we think that under the current situation of the company's stock price, its convertible bond listing may be located around 132 yuan.

Risk

Downstream demand weakens; exchange rate fluctuates sharply; production expansion projects are lower than expected.