The rating is OK, and the bottom of the debt provides a strong safety cushion.
Huazheng Xincai announced on the evening of January 19 that it will issue convertible corporate bonds on January 24, 2022, and no offline issuance will be arranged this time. Huazheng new materials issue size of 570 million yuan, debt rating AA+, based on January 19 Chinese bonds of the same grade corporate bonds maturity yield 3.5468%, the debt bottom is about 91.53 yuan, January 19 Huazheng convertible bond parity of 93.35 yuan, the debt base and parity provides a strong safety cushion for the purchase.
In terms of terms, the three major provisions are in order.
Deep ploughing copper clad laminate business, rapid expansion of production capacity
Huazheng convertible bond stock is mainly engaged in the design, R & D, production and sales of copper clad laminate materials, functional composite materials, transportation and logistics composite materials and aluminum-plastic composite materials for lithium battery packages. Among them, copper clad laminate business is the company's core business, aluminum and plastic film is the company's key products, 2021H1, copper clad laminate business revenue of 1.2 billion yuan, accounting for 74% of the company's total revenue. In terms of aluminum-plastic film, the company has a "high-performance aluminum-plastic film project with an annual output of 36 million square meters for lithium battery packaging".
From 2018 to the first half of 2021, the company's copper clad laminate production capacity continues to increase, and capacity utilization continues to rise.
The 2021 performance forecast shows that the annual return net profit in 2021 is expected to be 235 million yuan to 255 million yuan, an increase of 88% to 104% compared with the same period last year. This is mainly due to the booming production and sales that promote the company's profitability, while the company continues to upgrade its product structure.
Increase R & D investment, take advantage of domestic instead of Dongfeng, seize the high-end copper clad laminate to break through the golden window period. At present, China's copper clad laminate products are still mainly medium-and low-end products, while high-tech and high value-added copper clad laminates are relatively scarce. in recent years, the structural adjustment of the electronic materials industry has continued to evolve. the epidemic and international trade frictions have accelerated the localization of key materials in the industry. Therefore, the copper clad laminate industry is in a golden period of high-end breakthrough, and there is a lot of room for import substitution. Huazheng New Materials has long focused on the R & D and production of high-grade copper clad laminates, accelerating the breakthrough of a variety of material routes and maintaining high-intensity R & D investment.
The total amount of funds raised in this public offering of convertible corporate bonds is 570 million yuan. after deducting the issuance expenses, the funds raised will be used to invest in the "annual production of 24 million high-grade copper clad laminates Fushan industrial park manufacturing base project."
And replenish liquidity. The project aims to use its own technology to build a new high-grade copper clad laminate production line to form an annual production capacity of 24 million high-grade copper clad laminates.
The success rate is expected to be about 0.00207%, and the risk of applying for purchase in the primary market of Huazheng convertible bond is not high. As of June 30, 2021, Huali Group holds 56902768 shares of the company, accounting for 40.06% of the total share capital, and is the company's controlling shareholder. With reference to the recently issued long 22 convertible bonds (original shareholder placement ratio 62.10%, online effective purchase amount 11.16 trillion) and Bouri convertible bonds (original shareholder placing proportion 55.74%, online effective purchase amount 11 trillion), assuming that the placement ratio of the original Huazheng convertible bonds and the online effective purchase amount are 11 trillion respectively, the online success rate is expected to be about 0.00207%.
According to the closing price of Huazheng Xincai on January 19, 2022, it is estimated that the convertible bond parity is 93.35 yuan, with reference to the big clan convertible bonds with similar parity in the same industry (20-day closing price 131.20, conversion premium rate 40.89%), ultrasonic convertible bond (31-day closing price 131.13, conversion premium rate 32.17%), it is estimated that the conversion premium rate on the first day of Huazheng convertible bond listing is expected to be in the range of 35%. The listing price of Huazheng convertible bonds is expected to be between 126.02 yuan and 130.69 yuan. The sensitivity is calculated according to the stock price and the conversion premium rate, and the results are shown in the following figure. Huazheng has a high convertible bond rating and debt base, and is mainly engaged in copper clad laminates, thermal conductive materials, aluminum-plastic films and other new material products. In recent years, the company has maintained high R & D investment and capital investment, market development and production capacity have continued to increase. Revenue and return net profit maintained rapid growth. Issue convertible bonds to expand and upgrade CCL production capacity to enhance the company's profitability. It is expected that the risk of applying for purchase in the primary market is not high, and active attention can be paid to it after listing.
Risk hint
The cost of raw materials is rising, the production capacity is not as expected, and the demand of the industry is not as expected.
