The target of electrolyte integration, it is recommended to actively subscribe – analysis of the subscription value of Tianci convertible bonds | Tianci_Sina Finance_Sina.com

Investment Points

• event:On September 21, Guangdong Tinci New Materials Group Co., Ltd. (hereinafter referred to as “”Godsend material”) announced that it will issue 3.411 billion yuan of convertible bonds on September 23, 2022. After deducting the issuance costs, the raised funds will be used for the annual production of 152,000 tons of lithium battery new material projects (1.264 billion yuan), with an annual output of 2 10,000-ton lithium bisfluorosulfonimide project (494 million yuan), an annual output of 62,000 tons of electrolyte basic materials (607 million yuan), and an annual output of 41,000 tons of lithium-ion battery materials project (Phase I) (935 million yuan) , The annual output of 60,000 tons of daily chemical basic materials project (Phase I) (372 million yuan), supplementary working capital (790 million yuan).

• The current valuation of pure debt is 94.07 yuan, and YTM is 2.34%.The term of Tianci Convertible Bond is 5 years, the debt rating is AA, the face value is 100 yuan, and the coupon rate is 0.30%/0.50%/0.80%/1.50%/1.80% for the first year to the fifth year respectively. The redemption price at maturity is 109% of the face value (including interest in the last year), and the yield to maturity of ChinaBond 5-year AA corporate bonds (2022/9/20) is 3.61% as the discount rate. The value of the pure bond is 94.07 yuan, the YTM corresponding to pure debt is 2.34%, and the debt bottom is well protected.

• The current parity is 96.33 yuan, and the additional terms are quite satisfactory.The conversion period is from March 29, 2023 to September 22, 2027. The initial conversion price is 48.82 yuan per share. As of the close of market on September 20, 2022, the stock price of Tianci Materials is 47.03 yuan per share, corresponding to The par value of convertible bonds is 96.33 yuan. The terms of downward revision of the conversion price of Tinci Convertible Bonds are: 15/30, 85%, the terms of conditional redemption are: 15/30, 130%, and the terms of conditional sale are: the last two interest-bearing years, 30, 70% , the revised provisions are more general for investor protection.

• The company’s equity has a small amount of pledge, and the total share capital dilution rate of this issuance is 3.6%.There is a small amount of pledge in the company’s equity. As of the 2022 interim report, the pledged shares held by Xu Jinfu and Hong Kong Securities Clearing Company Limited, the actual controllers of the company, accounted for 36.28% and 6.19% of the total share capital respectively, and the pledged shares accounted for 0.02% in total, and the pledge risk was low. As of the date of the announcement of the issuance of convertible bonds, the company’s total share capital was 1.927 billion shares, with a total of 1.381 billion shares in circulation. Based on the initial conversion price, the dilution rate of all conversion of convertible bonds to the company’s total share capital was 3.6%. The dilution rate is 5.1%, which is a lower dilution rate.

• It is expected that the listing price of Tianci Convertible Bonds will be between 120.21-126.61 yuan.Taking into account the comparable targets currently in the market, it is expected that the premium rate of Tianci Convertible Bonds on the first day of listing is about 25%, and the corresponding listing price is between 120.21-126.61 yuan.

• It is expected that the original shareholder’s preferential allotment ratio will be 70.5%.As of the 2022 interim report, the pledge of shares held by Xu Jinfu, the actual controller of the company, accounted for 36.28% of the total share capital, and the top ten shareholders held 52.37% of the total shares. As of now, no shareholder has committed to participate in the preferential placement. Assuming that 80% of the top ten shareholders participate in the preferential placement, and 60% of the other shareholders participate in the preferential placement, it is estimated that the original shareholder’s placement ratio is 70.5%, and the placement amount is 2.404 billion yuan.

• It is estimated that the proportion of online investors’ placement is 29.5%, and the probability of winning the lottery online is between 0.0168% and 0.0252%.The remaining amount after the original shareholder’s allotment is 1.007 billion yuan. Assuming that 500 households are the center of the number of online users participating in the subscription, each household subscribes for an average of 1 million yuan, and the probability of winning the online lottery is estimated to be between 0.0168% and 0.0252%.

• To sum up, the current parity of Tianci Convertible Bonds is lower than the face value, and the bond bottom is well protected, which is attractive to a certain extent. Tinci Materials has independently developed and deployed core electrolyte raw materials and additives such as liquid lithium hexafluorophosphate, LiFSI, VC, DTD, and lithium difluorophosphate, forming an integrated layout based on electrolyte raw materials. The self-supplied ratio of electrolyte lithium hexafluorophosphate exceeds 95%. In 2021, the strategic layout of lithium-ion battery material recycling business aims to increase the supply of low-carbon basic raw materials and cultivate new profit growth points through the development of battery recycling and battery material recycling business. The company has a high allocation value, and it is recommended to actively participate in the first-level subscription.

• risk warning:The development of the downstream new energy vehicle industry fluctuates; the epidemic affects the commissioning of new projects; third-party data is inaccurate.

On September 21, Guangdong Tinci New Materials Group Co., Ltd. (hereinafter referred to as “Tinci Materials”) issued an announcement that it will issue 3.411 billion yuan of convertible bonds on September 23, 2022. The raised funds will be used after deducting the issuance costs. In the project with an annual output of 152,000 tons of lithium battery new materials (1.264 billion yuan), an annual output of 20,000 tons of lithium bisfluorosulfonimide project (494 million yuan), an annual output of 62,000 tons of electrolyte basic materials projects (607 million yuan), Lithium-ion battery material project with an annual output of 41,000 tons (Phase I) (935 million yuan), daily chemical basic materials project with an annual output of 60,000 tons (Phase I) (372 million yuan), and supplementary working capital (790 million yuan). Below we briefly analyze the subscription value of Tinci Convertible Bonds for investors’ reference.

one, Analysis of basic terms of convertible bonds

The current valuation of pure debt is 94.07 yuan, and YTM is 2.34%.The term of Tianci Convertible Bond is 5 years, the debt rating is AA, the face value is 100 yuan, and the coupon rate is 0.30%/0.50%/0.80%/1.50%/1.80% for the first year to the fifth year respectively. The redemption price at maturity is 109% of the face value (including interest in the last year), and the yield to maturity of ChinaBond 5-year AA corporate bonds (2022/9/20) is 3.61% as the discount rate. The value of the pure bond is 94.07 yuan, the YTM corresponding to pure debt is 2.34%, and the debt bottom is well protected.

The current parity is 96.33 yuan, and the additional terms are quite satisfactory.The conversion period is from March 29, 2023 to September 22, 2027. The initial conversion price is 48.82 yuan per share. As of the close of market on September 20, 2022, the stock price of Tianci Materials is 47.03 yuan per share, corresponding to The par value of convertible bonds is 96.33 yuan. The terms of downward revision of the conversion price of Tinci Convertible Bonds are: 15/30, 85%, the terms of conditional redemption are: 15/30, 130%, and the terms of conditional sale are: the last two interest-bearing years, 30, 70% , the revised provisions are more general for investor protection.

There is a small amount of pledge in the company’s equity.As of the 2022 interim report, the pledged shares held by Xu Jinfu and Hong Kong Securities Clearing Company Limited, the actual controllers of the company, accounted for 36.28% and 6.19% of the total share capital respectively, and the pledged shares accounted for 0.02% in total, and the pledge risk was low.

The total share capital dilution rate of this issuance is 3.6%。As of the date of the announcement of the issuance of convertible bonds, the company’s total share capital was 1.927 billion shares, with a total of 1.381 billion shares in circulation. Based on the initial conversion price, the dilution rate of all conversion of convertible bonds to the company’s total share capital was 3.6%. The dilution rate is 5.1%, which is a lower dilution rate.

two,Investment Subscription Advice

1）As of the close on Tuesday, September 20, with reference to parity and debt ratings comparable to the underlying Shenzhen East Lake bonds,Hefeng Convertible BondandHonglu Convertible Bondthe conversion premium rates were 96.23%, 96.98% and 96.48%.

2）As of the close on Tuesday, September 20, with reference to the power equipment sector (Shenwan first-class industry)Jiayuan Convertible Bond、Kohli convertible bondsandTianna Convertible Bondthe conversion premium rate was 72.15%, 66.38% and 76.09%.

3）As of the close on Tuesday, September 20, with reference to recently listedRongtai Convertible Bond、Kelan Convertible BondsandSky Arrow Convertible Bondsthe conversion premium rate was 2.03%, 34.45% and 48.25%.

4） At present, the valuation of the underlying stock is in the 60% percentile since its listing, and the annualized volatility in the past year is 54.92%, and the stock price is highly elastic.

Comprehensive comparable targets,It is expected that the premium rate of Tianci Convertible Bonds will be around 25% on the first day of listing, corresponding to the listing price of RMB 120.21 – RMB 126.61.

It is expected that the original shareholder’s preferential allotment ratio will be 70.5%.As of the 2022 interim report, the pledge of shares held by Xu Jinfu, the actual controller of the company, accounted for 36.28% of the total share capital, and the top ten shareholders held 52.37% of the total shares. As of now, no shareholder has committed to participate in the preferential placement. Assuming that 80% of the top ten shareholders participate in the preferential placement, and 60% of the other shareholders participate in the preferential placement, it is estimated that the original shareholder’s placement ratio is 70.5%, and the placement amount is 2.404 billion yuan.

It is estimated that the proportion of online investors’ placement is 29.5%, and the probability of winning the lottery online is between 0.0168% and 0.0252%.The remaining amount after the original shareholder’s allotment is 1.007 billion yuan. Assuming that 500 households are the center of the number of online users participating in the subscription, each household subscribes for an average of 1 million yuan, and the probability of winning the online lottery is estimated to be between 0.0168% and 0.0252%.

three,Fundamental Analysis of Underlying Stocks

1. Enjoy the development dividends of the downstream industry and have a strong revenue driving force

Tianci Materials belongs to the fine chemical industry, and has a strong correlation with downstream lithium-ion battery products, and the market application field has grown strongly.The company’s main products are lithium-ion battery materials, daily chemical materials and specialty chemicals. The lithium-ion battery materials produced by the company are mainly lithium-ion battery electrolyte and cathode material lithium iron phosphate, which are the key raw materials for lithium-ion batteries. Lithium-ion battery material products are the main component of its operating income. In 2022H1, lithium-ion battery materials account for 92.9% of operating income.

The new energy vehicle industry maintains a good momentum of development, driving the demand for electrolytes for lithium-ion battery materials to continue to grow.The downstream application fields of lithium battery materials are lithium-ion battery products, which are used in consumer electronics products (smartphones, cameras, notebook computers, etc.), power fields (new energy vehicles, electric bicycles, power tools, etc.) and energy storage fields, etc. Among them, the development of new energy vehicle industry is the main driving force for the development of lithium-ion battery and its upstream lithium-ion battery material industry.According to data from the China Automobile Association, from January to June 2022, the domestic new energy vehicle market continued its previous growth momentum, with production and sales reaching 2,653,500/2,591,900 units, a year-on-year increase of 118%/117%, respectively. In July 2022, the production and sales volume reached 616,500/592,900 units respectively, hitting a record high.

2. Speed ​​up business layout and enhance leading advantages

Deploy integrated production of lithium hexafluorophosphate, with a self-sufficiency rate of over 95%.The company has successively deployed core electrolyte raw materials and additives such as liquid lithium hexafluorophosphate, LiFSI, VC, DTD, and lithium difluorophosphate through independent research and development, and formed an integrated layout strategy based on electrolyte raw materials. In the non-public offering and investment project in 2020, the company once again improved the industrial chain integration of “sulfuric acid-hydrofluoric acid-lithium fluoride/phosphorus pentafluoride-lithium hexafluorophosphate-electrolyte”, and the self-supply ratio of electrolyte lithium hexafluorophosphate exceeded 95%.

Deploy lithium-ion battery material recycling business to cultivate new profit growth points.In 2021, the company strategically deploys the lithium-ion battery material recycling business, aiming to increase the supply of low-carbon basic raw materials through the development of battery recycling and battery material recycling business, while cultivating new profit growth points, and enhancing the company’s profitability and market competition. force. At present, Tianci Resource Recycling Company has been established, and the construction of waste lithium battery recycling project has been carried out.According to Xinyu information data, Tianci materials accounted for as high as 33.1% of the domestic electrolyte production.

The company’s operating income maintained a high growth trend.In the first half of 2022, the company’s operating income reached 10.363 billion yuan, a year-on-year increase of 180.16%, and the net profit attributable to the parent was 2.906 billion yuan, a year-on-year increase of 271.14%.

The overall operating capacity and solvency have stabilized.In the first half of 2022, the company’s inventory turnover rate was 4.53 times, a year-on-year increase of +0.56 times; the accounts receivable turnover rate was 2.95 times, a year-on-year increase of +0.8 times. From 2018 to 2021, short-term solvency has gradually climbed since 2020 after experiencing a trough caused by a sharp increase in accounts payable in 2019. In 2022H1, the company’s current ratio and quick ratio were 1.54/1.35, a year-on-year decrease of 0.16/0.18.

To sum up, the current parity of Tianci Convertible Bonds is lower than the face value, and the bond bottom is well protected, which is attractive to a certain extent. Tinci Materials has independently developed and deployed core electrolyte raw materials and additives such as liquid lithium hexafluorophosphate, LiFSI, VC, DTD, and lithium difluorophosphate, forming an integrated layout based on electrolyte raw materials. The self-supplied ratio of electrolyte lithium hexafluorophosphate exceeds 95%. In 2021, the strategic layout of lithium-ion battery material recycling business aims to increase the supply of low-carbon basic raw materials and cultivate new profit growth points through the development of battery recycling and battery material recycling business. The company has a high allocation value, and it is recommended to actively participate in the first-level subscription.

4. Risk Warning

risk warning:The development of the downstream new energy vehicle industry fluctuates; the epidemic affects the commissioning of new projects; third-party data is inaccurate.

Equity Research:For the target of electrolyte integration, it is recommended to actively purchase – analysis of the purchase value of Tianci Convertible Bonds

External release time:September 22, 2022

Report issuing agency:Zhongtai Securitiesgraduate School

Participant information:

Zhou Yue | SAC No.: S0740520100003 | Email: [email protected]

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