海通证券股份有限公司 姜超,周霞,张卿云
Topic: analysis of the fundamentals of Sany CB
The soaring sale of excavators is expected to drive up the performance of Sany Industry. In 2016, thesale in the excavator sector rose dramatically, and in January 2017, the sector maintained rapid growth, withthe sale of small excavators (used for urban construction) and big excavators (used for mining) growingsignificantly. In 2016, Sany Heavy Industry’s sale of excavators increased 41%, much higher than theindustry average growth of 25%, and its market share went up to 20%, a new high since 2008. Moreover, thecompany’s sale of automobile cranes in 2016added 19%, marking positive growth for the first time since2012. On the whole, due to the pick-up of sale of heavy machines, the lower base of performance for theprevious period and the rise of its market share, the company’s performance is expected to rebound; drivenby the “One Belt and One Road” initiative, the ratio of its revenue from overseas business activities willcontinue to rise; moreover, last year, the company securitized its receivables and transferred somereceivables, which was conducive to the optimization of its asset structure.
Sany CB has great flexibility and good liquidity. Since 2016H2, Sany CB has underperformed itsunderlying stock, but the convertible premium rate has shrank to ~16%, and Sany CB has shown moreequity sensitive and greater flexibility. Apart from that, Sany CB also has good liquidity, with the daily averageturnover reaching almost RMB53mn, ranking the first among all 24individual CBs. It’s underlying stockaccords with the “One Belt and One Road” initiative, infrastructure construction and other hot issues.
The negative factor is the pressure coming from CB and EB conversion in the future. The value ofSany CB and two privately-placed EB totaled RMB11.85bn, and the quantity of convertible/exchangeablebonds accounted for 20.7% of the total equity. Sany CB and the first installment of privately-placed EB haveentered the conversion/exchange period, and the second installment of privately-placed EB worth RMB2bnwill enter the exchange period on April 18, 2017. Generally speaking, when the share price is close to theprice of early redemption, investors will have strong momentum to convert bonds into shares, and as ofFebruary 17, Sany Heavy Industry closed at RMB7.29, which means that when the share price rises to themandatory redemption price of RMB9.7(up 33%), the pressure of centralized conversion on the share pricewill emerge. Potential risks: the decline of macro economy, slowing recovery of the sector and pressure fromthe conversion/exchange of CB/EB.
Topic: analysis of the fundamentals of Sany CB
The soaring sale of excavators is expected to drive up the performance of Sany Industry. In 2016, thesale in the excavator sector rose dramatically, and in January 2017, the sector maintained rapid growth, withthe sale of small excavators (used for urban construction) and big excavators (used for mining) growingsignificantly. In 2016, Sany Heavy Industry’s sale of excavators increased 41%, much higher than theindustry average growth of 25%, and its market share went up to 20%, a new high since 2008. Moreover, thecompany’s sale of automobile cranes in 2016added 19%, marking positive growth for the first time since2012. On the whole, due to the pick-up of sale of heavy machines, the lower base of performance for theprevious period and the rise of its market share, the company’s performance is expected to rebound; drivenby the “One Belt and One Road” initiative, the ratio of its revenue from overseas business activities willcontinue to rise; moreover, last year, the company securitized its receivables and transferred somereceivables, which was conducive to the optimization of its asset structure.
Sany CB has great flexibility and good liquidity. Since 2016H2, Sany CB has underperformed itsunderlying stock, but the convertible premium rate has shrank to ~16%, and Sany CB has shown moreequity sensitive and greater flexibility. Apart from that, Sany CB also has good liquidity, with the daily averageturnover reaching almost RMB53mn, ranking the first among all 24individual CBs. It’s underlying stockaccords with the “One Belt and One Road” initiative, infrastructure construction and other hot issues.
The negative factor is the pressure coming from CB and EB conversion in the future. The value ofSany CB and two privately-placed EB totaled RMB11.85bn, and the quantity of convertible/exchangeablebonds accounted for 20.7% of the total equity. Sany CB and the first installment of privately-placed EB haveentered the conversion/exchange period, and the second installment of privately-placed EB worth RMB2bnwill enter the exchange period on April 18, 2017. Generally speaking, when the share price is close to theprice of early redemption, investors will have strong momentum to convert bonds into shares, and as ofFebruary 17, Sany Heavy Industry closed at RMB7.29, which means that when the share price rises to themandatory redemption price of RMB9.7(up 33%), the pressure of centralized conversion on the share pricewill emerge. Potential risks: the decline of macro economy, slowing recovery of the sector and pressure fromthe conversion/exchange of CB/EB.
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