Core viewpoints
603585.SH is a leading pesticide and flame retardant company in the industry. Convertible bonds, Suli convertible bonds (118005.SH) issued a moderate scale (960 million yuan), debt rating of AA- grade, debt protection in general, parity below face value, comprehensive view of the purchase safety pad is not strong. In terms of pricing, the current price of Suli shares is 16.80 yuan, corresponding to the parity price of convertible bonds is 83.58 yuan. With reference to similar coupons such as Yatai, Xiangxin and Xinxing, and combined with the fundamentals of positive stocks, we expect that the reasonable parity premium rate of Suli convertible bonds should be around 35%. The corresponding price is around 112 yuan.
Fine chemical leading enterprises, product performance industry is well-known, with high market competitiveness Suli shares for agricultural fine chemical enterprises, mainly pesticides and flame retardants. In terms of the industry, the market demand for pesticides is stable, and under the influence of the adjustment of the national pesticide product policy, the original highly toxic products will be eliminated, and the supply of new environmental protection pesticides will continue to increase; as for flame retardants, due to the promotion of compulsory flame retardant standards, the demand for downstream building materials, plastics and other fields continues to rise. The company realized revenue / return net profit of 22.84 / 226 million yuan in 2021, an increase of 46.54% and 29.58% over the same period last year. The key points of the company are: 1) it has strong technical research and development capability, and has remarkable advantages in the development of pesticide and flame retardant dosage forms; 2) the main customers are in a leading position in the industry. the product demand is stable; 3) the main products have perfect self-supporting supply capacity of intermediates to ensure the efficient production and development of enterprises and strong market competitiveness.
The mid-market value style is on the high side, and the risks such as the price changes of products and raw materials are on the high side. Suli shares belong to the pesticide sector of the chemical industry, with a total market capitalization of 3 billion, an annualized volatility of 27.94% and an asset-liability ratio of 25.44%. The asset-liability ratio of 2021Q3 is 25.44%, which is relatively suitable for PE valuation method. The current price of Sully shares is 16.80RMB, and PE TTM/2021E (Wind consensus expectation) is 15.94x20.53x; if Hualu Hengsheng (PE TTM is 11.60x), Luxi Chemical (7.65x), Xin'an shares (10.05x) are used as comparable companies, the valuation is at a high level in the industry. From the perspective of the driving force in the future, with the improvement of national environmental protection standards, the demand for environmentally friendly products downstream of pesticides and flame retardants will continue to rise, and the company is expected to rely on its strong product research and development capability. quickly occupy the gap of new products in the current market. In terms of risk, it mainly focuses on: 1) the risk of product price fluctuation; 2) the risk of raw material price change; 3) the risk of safety and environmental protection policy change.
Clause analysis: the rating is moderate, the protection of the bottom of the debt is general, the par interest rate of the conversion bond whose parity is lower than the face value of Sully is 0.4%, 0.6%, 1.0%, 1.5%, 2.0%, 3.0%, respectively, the redemption price due is 115 yuan (including the last interest), the term is 6 years, and the YTM corresponding to the face value is 3.22%. The debt / body rating is AA-/AA- (Shanghai New Century), and the maturity yield of the above 6-year AA- medium-and short-term bills is 6.46% (2022-3-1) as the discount rate, the value of the debt is 83.36 yuan, the protection of the debt is general. The next revision clause is [15Compact 3090%], conditional redemption clause [15Universe 30130%], conditional resale clause [Last 2 years, 3050,70%]. The current share price is 16.80 yuan, corresponding to a parity of 83.58 yuan.
Analysis of listing orientation
The current stock price of Suli convertible bond is 16.80 yuan, corresponding to a parity of 83.58 yuan. You can refer to Jidong of similar size and the same rating (parity 83.51 yuan, parity premium rate 36.4%) and Qizheng (parity 83.75 yuan, 35.8%). We believe that: 1) the scale of Suli convertible bond issuance is moderate, but there is no advantage in rating, and it may be difficult for large-scale funds to be stored; 2) the performance of the main products of positive stocks is excellent, and the advantage of technological research and development is obvious. Downstream demand for environmentally friendly products will continue to grow, and the demand space is broad; 3) in terms of convertible bonds, Suli belongs to the scarcity of agricultural fine chemicals, and the company's performance is expected to continue to improve, and the market prospect is expected to be good. To sum up, it is judged that the reasonable parity premium rate of Suli convertible bonds is around 35%, and the corresponding price is about 112 yuan.
Risk tips: product price fluctuations; raw material price fluctuations; safety and environmental protection policy changes.
