Summary

Shenzhen Branch Convertible Bond will be listed on Monday, August 29, with a size of 360 million yuan. We think that according to the current market conditions, its listing position may be around 134yuan.

Positive stock analysis

The company's main products are dedicated assembly and testing equipment used in flat panel display devices, semiconductors, cameras and other fields, and extended to the field of key components of intelligent equipment. 2022H1 realized revenue / return net profit of 353 million yuan (yoy-14.71%) / 19 million yuan (yoy-27.15%) respectively, which was due to the decline in the corresponding flat panel display equipment income due to the downturn in the consumer electronics market. In 2021, the company's gross profit margin fell 5.42ppt to 33% compared with the same period last year, which is due to an increase in human capital, and 2022H1 has been repaired.

In terms of specific business:

1) the substitution trend of new display technologies such as Mini/Micro-OLED will further promote the technological upgrading of closed test equipment, and accelerate the process of localization of flat panel display industry and flat panel display device production equipment. At present, the company has achieved sales of Mini-LED backlit display solution, and this investment will help the company to strengthen its research and development of high-end display devices such as MIni/Micro-LED; the company has worked deeply in the field of flat panel display for many years, but its revenue contribution has decreased in recent years. Due to the impact of the epidemic on production capacity release and the extension of client equipment installation and acceptance time in 2022, the company's flat panel display equipment revenue has also decreased. 2) the company continues to develop the linear motor market, used in semiconductors, laser processing, machine tools, lithium batteries and other industries. The company has started this business since 2016, and now has MIC series flat panel motors, E series economical linear modules and other motors, and the business has a high gross profit margin, which is expected to improve the company's profitability with the further expansion of production capacity sales.

3) through its subsidiary Shenkoda Semiconductor, it has cut into the field of semiconductor closed test equipment to create a new growth point. At present, it has established cooperation with Yang Jie Technology, Huatian Technology and other enterprises. According to the company announcement, this investment will help the company to develop new semiconductor advanced packaging and testing equipment and extend the product line.

Positive stock valuation is not low, flexibility is not weak, there is a certain downward momentum in the short term, you can first take the half-yearly line as the observation point. The latest PE (TTM) of positive stocks is 45.65x, which is high in its own history and similar enterprises, with a total market value of 2.226 billion yuan and a free circulation market value of 1.294 billion yuan. The volatility of nearly 180 days is 66.34%. In March 2023, 1.013 million shares (2.15% of the shares outstanding before the lifting of the ban) were released from the initial strategic placement, and we believe that the impact may be limited. Positive stocks have fallen 34.45% since 2022, and there is a certain downward momentum in the short term, so we can first take the half-yearly line as the observation point.

Terms and pricing

The scale of convertible bonds is small, the protection of debt bottom is weak, and the three major provisions remain in the mainstream form. The current convertible bond size is 360 million yuan, the initial conversion share price is 26.68 yuan, and the latest parity is about 102.96 yuan. The convertible bond has a maturity of 6 years, with a coupon rate of 0.3%, 0.5%, 1.0%, 1.8%, 2.5% and 3.0%, respectively, and the maturity redemption price is 115 yuan, the face value of the corresponding YTM is 3.3%, and the debt bottom is about 74.57 yuan.

At the pricing level, pay attention to the company's market expansion ability under the trend of localization of high-end display equipment such as MIni/Micro-LED and semiconductor equipment. Positive stock valuation is not low, flexibility is not weak, there is a certain downward momentum in the short term, you can first take the half-yearly line as the observation point. The scale of convertible bonds is small, the protection of debt bottom is weak, and the three major provisions remain in the mainstream form. We believe that according to the current market conditions, its listing positioning may be around 134 yuan.

Risk.

The progress of R & D is not as expected and the risk of default of convertible bonds.