daiwamegaforcetele90| The first "demon debt" will be released in 2024: Zhengdan shares have risen nearly 180% in a month, and there is an undercurrent of funds behind it

Zhengdan shares, which are still in the stage of suspension and self-examination (300641)Daiwamegaforcetele90.SZ)Daiwamegaforcetele90Due to the 20% violent rise before the May Day holiday to become the hottest A-share stock, it was called "demon stock"; and because the sharp rise in positive shares led to the same rise in the price of Zhengdan convertible bond (123106), since April 10 this year, the convertible bond price has gone out of the same trend as the stock price, and the convertible bond price has been pulled from 115RMB per share directly to 317before the suspension.Daiwamegaforcetele90.689 yuan / Zhang, an increase of nearly 180%.

"from the perspective of the whole market, the overall rising trend of the chemical sector is relatively good recently, first, because the dividend yield of traditional petroleum and petrochemical enterprises is relatively high, and second, due to the economic recovery, the market reported net profit growth of more than 50% in the first quarter. There are 432 companies with earnings per share of more than 0.10, of which 37 belong to the chemical industry, accounting for a relatively high proportion. Third, domestic demand is optimistic. Consumption during the May Day holiday is hot. Manufacturing PMI data in April show that the ex-factory price of raw materials has risen, indicating that the traditional chemical industry and other raw materials industry is expected to maintain strong profitability. " Xu Jiaying, general manager of Shanghai Qianfulai Asset Management Co., Ltd., which focuses on quantitative trading in the convertible bond market, pointed out in an interview with the Huaxia Times.

What is noteworthy is that compared with the four-fold increase in positive shares, the increase in Zhengdan convertible bonds has nearly tripled, but because the convertible bond transactions are mainly institutions, the daily trading volume before the start of the convertible bond market has reached 10 billion yuan. more institutional funds make a lot of money through convertible bond trading.

Large funds have been ambushed in advance.

In the view of a number of people in the convertible bond industry interviewed, the trading of the convertible bond market has been relatively stable, especially in recent years, the focus of the market has become "talking about capital" around a series of bank convertible bond redemption events. Institutions and large households are doing their own things silently. In terms of returns, due to the relatively high security of convertible bond transactions, although they can not earn high returns. However, in the stock market has been in a period of volatility, annualized returns are still relatively sound.

However, with the sudden outbreak of Zhengdan convertible bonds, little attention has been paid to the convertible bonds, which is more like dropping a stone in a calm market.

"from the perspective of Zhengdan convertible bond trading volume, the main force and the banker entered the market around 4 days before and after 2023, and the total volume was 9 days, and the volume was very large, which began to rise sharply on April 11 this year; in fact, before, for example, Zhengdan convertible bonds also had large funds to build positions on October 11, 2022, when the stock price was mainly adjusted by horizontal market shocks. However, as Zhengdan's share price rose, so the convertible bond market funds also began to pull bond prices, rising from 115 yuan to 317 yuan. The trend of convertible bonds after the resumption of trading depends on the capital reaction of the two markets. " Wang Bin (pseudonym), the trading director of another convertible bond institution in Shanghai, pointed out to the reporter.

However, Xu Jiaying holds different views on calling Zhengdan convertible bonds "demon bonds". In her view, the rise in the price of Zhengdanzheng shares or convertible bonds is supported by fundamentals.

According to public data, Zhengdan Co., Ltd., headquartered in Zhenjiang, is a chemical enterprise specializing in chemical raw materials and new materials. It has long focused on the industrial chain of comprehensive utilization of C _ 9 aromatics. We have successfully developed special fine chemicals such as metatoluene, trimellitic anhydride, trioctyl trimelliate, vinyl toluene, dioctyl terephthalate, tetramethylbenzene and high boiling point aromatics solvents. It has created raw material supply advantage and cost advantage for the company, realized the full and fine utilization of C _ 9 aromatic hydrocarbon components, and greatly enhanced the added value of the industrial chain. The company has a professional R & D team and strong technical force. The self-developed "key Technology and Application of continuous Oxidation production of trimellitic Anhydride" won the third prize of Jiangsu Science and Technology Award, the first prize of scientific and technological progress of Zhenjiang City and the second prize of scientific and technological progress of all-China Federation of Industry and Commerce.

Judging from its annual report in 2023 and financial data in the first quarter of 2024, there is also a reason for the popularity of capital. The data show that Zhengdan shares received 1.538 billion yuan in 2023, and its gross profit and attributable net profit were 59.17 million yuan and 9.875 million yuan respectively, while by the end of March this year, Zhengdan shares had revenue of 518.1 million yuan in a single quarter. The net profit attributable to Zhengdan shares reached 74.27 million yuan and 58.99 million yuan respectively, with a five-fold increase in net profit. This is undoubtedly quite beautiful data for a chemical enterprise.

"the main reason for the rise in the two trading varieties is also from the supply and demand of the company's main product TMA. TMA is still a minority chemical product on the whole, with China's production capacity accounting for nearly 70%. It is mainly produced by Zhengdan, Baichuan and Teda New Materials, of which Zhengdan accounts for the majority, with a production capacity of 86000 tons, Baichuan 40, 000 tons and Taida 22000 tons. Foreign production capacity is mainly 70,000 tons of US chemical giant Ineos. According to a notice issued by Ineos on April 3, 2024, they decided to stop the TMA production line after an in-depth analysis of the plant situation, cost pressure, market share loss, raw material prospects and global TMA supply. " Xu Jiaying said.

She further said that the financial strength should come from some subjective bulls, retail investors with hot money, and some event-driven quantitative funds. Zhengdan convertible bonds issued 320 million yuan, with a market capitalization of 11.8 billion yuan. Compared with the trading volume of positive shares, the trading volume of convertible bonds is about 10 times higher, and the daily trading volume of convertible bonds has exceeded 10 billion yuan, which is mainly due to the low handling fee of convertible bonds and the characteristics of Toner 0, which makes convertible bonds more attractive than their underlying stocks.

"the rise of Zhengdan convertible bonds can not be simply classified as a general 'demon debt', because its rise is traceable, and the value of convertible bonds is not separated from its positive stock value. The most important thing is that before the price increase, the price of TMA is just over 10, 000 yuan, and the cost of the industry is about 10, 000 yuan, which belongs to the break-even line for Zhengdan shares. Market data show that the current price of TMA is about 38000 yuan, and the price in some areas has exceeded 40, 000 yuan. if the price remains at 40, 000 yuan, Zhengdan can earn 2.7 billion yuan a year, and at present, TMA is still in short supply, and how much the final price will rise is still unknown. This situationDaiwamegaforcetele90We believe that it has a positive impact on the convertible bond market, and it is believed that the normal rise caused by this marketization and the moneymaking effect it brings will also attract more capital attention. " Xu Jiaying pointed out.

Or there are more high-quality targets.

"the reason why Zhengdan shares have become a double-rising variety of stocks and bonds in recent years, the bigger reason is that the company's own performance has greatly improved. In the past few years, there have also been some so-called demon stocks, but these stocks have not issued convertible bonds, so they have aroused the pursuit of stock market funds, while most of the listed companies that issue convertible bonds have mediocre performance. therefore, the fluctuation of stock price and bond price is relatively small, and even go down. On the other hand, Zhengdan shares are due to the sudden outbreak of performance and the market is expected to make a net profit of 2.7 billion yuan this year, which will increase by several hundred times compared with the net profit of less than 10 million in 2023, coupled with the expectation of future dividends and other potential advantages, it is difficult not to let market funds pay attention to and buy. Our forecast is also because a lot of funds can not buy stocks on the trading board, so turning around to buy its convertible bonds can also achieve excess profits. " On May 12, Huang Yunfan, head of the bond research department of a large securities firm in Shanghai, analyzed in an interview.

Xu Jiaying also holds the same view on this. She also said that the sharp rise in the stock and debt of listed companies cannot simply be defined as "demon debt" or "demon stock". If the rise is supported by fundamentals, rather than simply chasing after the rise or fall caused by funds, it is beneficial to the overall market. Only by bringing the effect of making money, the market will become better and better, and investors and listed companies can also cooperate and win-win. On the contrary, the sharp rise and fall in prices caused by market speculation or other abnormal factors may trigger market panic, damage investors' confidence in the market, and thus reduce market participation. If there are too many demon debts, it will even affect the credibility of the whole market and eventually attract regulatory attention.

A reporter from the Huaxia Times combed and found that Zhengdan convertible bonds were issued in March 2021 with a rating of AA-, with the latest coupon rate of 1.5 per cent. The amount of convertible bonds issued is 320 million yuan. At present, it has entered the conversion period, with the latest balance of 181 million yuan. At present, the conversion price of Zhengdan convertible bonds is 7.4 yuan. after both stocks and convertible bonds have risen sharply, the conversion value of Zhengdan convertible bonds is 322.7027 yuan, and the conversion premium rate is-1.55%.

For the recent changes in stock and bond prices, Zhengdan shares said that there is no information that should be disclosed but not disclosed. On April 29, Zhengdan shares also disclosed the "indicative announcement that Zhengdan convertible bonds are expected to trigger redemption conditions". According to the relevant agreement in the prospectus, during the conversion period, if the closing price of at least 15 trading days in any 30 consecutive trading days is not less than 130% of the conversion price in the current period. The company has the right to redeem all or part of the unconverted convertible bonds at the par value of the bonds plus the interest accrued for the current period. As of April 30, the closing price of Zhengdan convertible bonds has been no less than 130% (that is, 9.62 yuan per share) of the current conversion price (7.40 yuan / share) in 11 of any 30 consecutive trading days. The company hints that if the "Zhengdan convertible bond" triggers the redemption clause and the company decides to redeem it, the convertible bonds held by investors, in addition to continuing trading through the secondary market within the specified time limit or converting shares according to the conversion price of 7.4 yuan, can only choose to be forcibly redeemed at a face value of 100 yuan plus current accrued interest, which may face greater investment losses.

"at present, the premium rate of Zhengdan convertible bonds is negative, and there is no excessive operation, and the value of convertible shares is higher than the price of convertible bonds. If the shares remain strong after the resumption of trading, there will be no downside risk of convertible bonds prices. The advantages of foreclosure itself outweigh the disadvantages for the company, for issuers, it can reduce the debt burden and interest expenses; for major shareholders, it can reduce stock dilution; for convertible bond investors, strong redemption shows that the price of the underlying shares has risen compared with the time of issue, and investors have made positive returns on the whole. " Xu Jiaying said.

Investors in the market may expect more high-quality stocks like Zhengdan shares to appear.

(source: Huaxia Times)