(Original title: Why are Qilu convertible bonds disliked when listed?)
Financial Associated Press, December 19 (Reporter Shi Sitong)December 19 was the day of listing and trading of Qilu Bank’s public offering of 8 billion convertible bonds.
In general, new stocks/bonds usually have greater profit potential and room for growth, especially convertible bonds, and new bonds can be described as “stable profit without loss”, which is hailed by investors as “the purchase is earned”. But what is unexpected is that on the first day of listing, Qilu Convertible Bonds (N Qilu Convertible) not only failed to rise as expected, but also quickly ushered in an opening pause.
According to the data, Qilu convertible bonds opened at a low price of 98.01 yuan that day, then rose slightly to the day’s high of 98.87 yuan, and then started to fall all the way down, not managing to exceed the original face of 100 yuan value throughout the day. By the close, its price had dropped to 95.128 yuan, down 4.87% on the day. That is to say, investors who win the lottery will not only lose money, but will lose nearly 50 yuan for each lottery (1,000 yuan).
As for Qilu convertible bonds’ rare breakout this time, Wang Pengbo, chief financial sector analyst at Broadcom Consulting, believes it could be mainly due to factors such as the large number of 8 billion convertible bonds and the high conversion price. of the shares. “The size of the convertible bonds issued this time is relatively large, which could increase the pressure on future stock conversions. The long term for interest payments, the low shareholder allocation rate and the high price comparison conversion rate and the current share price can all be reasons for the breakup.
8 billion of huge convertible bonds
On November 25, Qilu Bank issued the “Announcement on the Public Issuance of Convertible Corporate Bonds”, stating that the bank and China Securities Securities have arranged the implementation of this public offering of convertible corporate bonds. This time, 8 were issued billion yuan of convertible bonds The face value is 100 RMB, a total of 80 million copies, 8 million lots, issued at face value. The convertible corporate bonds issued this time are called “Qilu Convertible Bonds” and the bond code is “113065”.
Among them, the convertible bonds issued this time are favored by the original shareholders. The preferential subscription of the original shareholders is carried out through the trading system of the Shanghai Stock Exchange. The allotment is denoted as “Qilu Distribution Bond” and the allotment code is “764665”.
The remaining portion after the original shareholder’s preferential allocation (including the portion of the original shareholder’s waiver of the preferential allocation) will be sold to online social public investors through the trading system of the Shanghai Stock Exchange, and the social public investors will purchase the November 29, 2022 .
However, judging from the results, Qilu Bank’s convertible bond shareholders did not have a high degree of approval, while the success rate of ordinary investors was relatively high. On November 30, Qilu Bank released the winning results of its convertible bonds, which showed that the shareholder allocation rate that was preferentially allocated to the original shareholders was only 43.15%; while public investors had a total of 4,548,183 lottery numbers, and each lottery number could only subscribe for 1 lot (1,000 yuan) of Qilu convertible bonds, accounting for 56.85% of the total issue, and the rate of the online lottery is 0.04258181%.
In this regard, Wang Pengbo, chief financial industry analyst at Broadcom Consulting, believes that, on the one hand, the total amount of Qilu Bank’s convertible bonds this time is too high, and its conversion price is also at a high price. Less it is also one of the reasons.
Regarding the reason for issuing convertible bonds, Qilu Bank stated in its prospectus that all funds from convertible bonds will be used to support the development of various businesses in the future, and will be used to supplement core businesses in accordance with the relevant regulatory requirements after conversion of convertible bondholders Tier 1 capital.
“Most banks issue convertible bonds to replenish Tier 1 capital.” Wang Pengbo pointed out that small and medium-sized banks face increased capital pressure, and issuing convertible bonds is one of the main ways for commercial banks to replenish core tier 1 capital. The cost of convertible bonds it is lower and the upward allocation allows institutions to raise more funds.”
It is understood that Qilu Bank’s capital adequacy ratio indicators are lower than the overall level of commercial banks. Data show that at the end of the first half of this year, the capital adequacy ratio, tier one capital adequacy ratio and tier one capital adequacy ratio of Qilu Bank were respectively 14.46%, 11, 22% and 9.33%, while the corresponding indicators for commercial banks in the same period were 14.87%, 12.08%, 10.52%. At the end of the third quarter of this year, the bank’s above three indicators fell further to 14.27%, 11.10% and 9.27%.
The one rare break of the year
Since newly listed stocks or bonds are usually hot spots in the market, under normal circumstances, new stocks/bonds usually have higher profit potential and room for growth, so many investors are eager to launch new ones.
According to market participants, the number of companies listed on IPOs has gradually increased in recent years, and new shares will often break out, posing certain risks. In contrast, the risk of new convertible bonds is relatively low and investors are more likely to make a profit: “Typically, what you buy is what you earn.”
In fact, judging by the convertible bonds listed this year, data shows that over 140 convertible bonds listed this year have all seen increases at varying degrees, and none of them have “broken.” Among them, the convertible bond of Gonggong Pharmaceutical Co., Ltd., just listed a few days ago, soared as much as 57.3% on the first day of listing. Today, the Qilu convertible bond broke when it went public, becoming the first convertible bond to break this year. It is understood that the last time a convertible bond broke on the first day of listing was the “Zhongzhuang Zhuan 2” convertible bond issued by China Construction Construction which was listed in May 2021.
From a bank convertible bond perspective, Qilu convertible bonds became the first “broken” bank convertible bonds in the past four years. It is understood that in history there have been very few bank convertible bonds that have been listed on the market. Only three bank convertible bonds, Jiangyin Convertible Bonds, Wuxi Convertible Bonds and Sunong Convertible Bonds, were broken on the first day. the convertible bond also became the fourth convertible bank bond to default on the first day of listing.
“The size of the convertible bonds issued this time is relatively large, which could increase the pressure on future stock conversions. The long term for interest payments, the low shareholder allocation rate and the high price comparison conversion rate and the current share price may all be the reasons for the breakdown.As for Qilu Bank’s inability to issue convertible bonds on the first day of listing, Wang Pengbo believes that there are many reasons.In addition to the large market, the bank’s convertible bonds have weak flexibility and are relatively unsought by funds.
According to the data, as of the close of trading on the 19th, the conversion price of Qilu convertible bonds was 5.87 yuan, the conversion value was 71.04 yuan, and the conversion rate was 33.69%.
It is understood that Qilu Bank was established in June 1996 as a joint-stock commercial bank and was listed on the Shanghai Stock Exchange on June 18, 2021.
In terms of performance, Qilu Bank’s performance in recent years has been stable and has experienced rapid growth in the first three quarters of this year, with revenue and net profit achieving double-digit growth. The third quarter report shows that Qilu Bank’s operating profit in the first three quarters of this year was 8.405 billion yuan, a year-on-year increase of 17.21%; net profit attributable to shareholders of listed companies was 2.527 billion yuan, one year annual increase of 19.93%.
In terms of the stock market, Qilu Bank’s listing price was 5.36 yuan per share. At the beginning of its listing, its share price soared to a high of 12.07 yuan, but then fell rapidly and after ups and downs, it basically remained around 4 or 5 yuan. As of the close on December 19, Qilu Bank closed at 4.17 yuan per share, down 2.57% from the day, with a total market value of 19.1 billion yuan.
