On February 9, China Mobile’s share price rose by the limit to 67.43 yuan / share.
On the same day, China Mobile announced the exercise of green shoe funds. The exercise period of green shoes expired on February 7. During this period, the Underwriters spent a total of about 4 billion yuan to protect the market in the secondary market, buying a total of 69.79 million shares.
According to the rules, the Underwriters need to issue an additional 57.07 million shares, raising about 3.3 billion yuan. Correspondingly, the underwriting fees of underwriters also need to be increased. Previously, if 127 million more shares were issued, the underwriting fee would be 75 million yuan.
Looking at the history of a shares, a total of three stocks used green shoe funds to protect the market in the secondary market. The difference between China Mobile and Baiji Shenzhou in the green shoe fund protection is that all the over allotment shares of Baiji Shenzhou come from the secondary market and do not need additional issuance; China Mobile is partly from the secondary market and partly from the additional issuance. China Telecom Corporation Limited(601728) similar to China Mobile.
previously, China Mobile also released an increase plan. The actual controller, China Mobile Group, plans to increase its holdings of A-Shares of China Mobile at an opportunity from 2022, with a cumulative increase of 3 billion yuan to 5 billion yuan. In addition, a number of head brokers including Citic Securities Company Limited(600030) , China International Capital Corporation Limited(601995) also collectively sing more about China Mobile.
4 billion green shoe fund tray
China Mobile and the co lead underwriters negotiated and decided to enable the green shoe mechanism according to the subscription of this issuance. According to the issuance price of 57.58 yuan / share, 126.855 million shares were oversubscribed to online investors, accounting for about 15% of the number of shares initially issued. The oversubscribed shares are obtained by delaying the delivery to the strategic investors in this offering.
According to relevant rules, the authorized lead underwriter may use the funds obtained from the over allotment of shares to buy the shares of this issuance from the secondary market to stabilize the future market, but the purchase price declared each time shall not be higher than the issuance price of this issuance, and the cumulative net number of shares purchased shall not exceed the number of over allotment shares.
The end time of this aftermarket stabilization period is February 7, 2022. During the post market stabilization period of China Mobile’s issuance (i.e. from January 5, 2022 to February 7, 2022), CICC used the funds obtained from the over allotment of the issuance to buy 69787133 shares of the issued shares from the secondary market in the form of competitive trading, with a response of about 4 billion yuan and a purchase price of 57.58 yuan / share.
The number of over allotment shares determined by China Mobile is 127 million shares, and now it has obtained 69.79 million shares from the secondary market, leaving 57.07 million shares. The remaining 57.07 million shares will be obtained through additional issuance, and the total amount of funds raised by the issuer will be about 3.3 billion yuan. Correspondingly, the underwriting fee of the lead underwriter will also increase to a certain extent.
China Mobile said that the authorized lead underwriter will submit an application and provide corresponding materials within two working days after the end of the post market stability period to transfer the additional shares issued by the over allotment option and the shares purchased by the authorized lead underwriter from the secondary market to the delayed delivery object.
China Mobile will also receive an increase of 5 billion yuan
in addition to the green shoe capital support, China Mobile also has a shareholding increase plan from major shareholders.
On January 24, China Mobile announced its plan to increase its A-share holdings. The actual controller, China Mobile Group, plans to increase its A-share holdings of China Mobile at an appropriate time from January 21, 2022 to December 31, 2022, with a cumulative increase of 3-5 billion yuan. As of the closing on January 27, it has increased its holdings by about 1.509 billion yuan. In addition, on January 5, China Mobile also released a Hong Kong stock repurchase plan.
In addition, there are also some head brokers who sing more about the share price of China Mobile. This week, Citic Securities Company Limited(600030) , China International Capital Corporation Limited(601995) and other leading securities companies released the Research Report on individual stocks of China Mobile, focusing on the prospect of the company’s share price.
Huang Yayuan, chief analyst of Citic Securities Company Limited(600030) communication, said that China Mobile is the leader of global operators, has the world’s largest communication network, and the number of mobile and broadband users ranks first in the world. Citic Securities Company Limited(600030) believes that China Mobile is a high-quality core asset with both technology and consumption attributes. It has great configuration value due to the reconstruction of growth logic in 5g era.
China International Capital Corporation Limited(601995) it is estimated that the EPS (earnings per share) of China Mobile from 2021 to 2023 will be 5.40 yuan, 5.88 yuan and 6.55 yuan respectively, with a compound growth rate of 10.1%. Based on the segment aggregation method, the target market value of the company is 1727 billion yuan, which is rated as “outperforming the industry” for China Mobile A shares for the first time, and the target price is 81.00 yuan / share.
Both Citic Securities Company Limited(600030) and China International Capital Corporation Limited(601995) are underwriters of China Mobile’s A-share IPO.
in history, only three stocks entered the market with green shoe funds
Looking at the history of a shares, there are few precedents for the introduction of green shoe mechanism. According to incomplete statistics by Chinese reporters of securities companies, a total of 11 enterprises in Shanghai and Shenzhen have introduced the green shoe mechanism. These enterprises include Agricultural Bank Of China Limited(601288) , Industrial And Commercial Bank Of China Limited(601398) , Postal Savings Bank Of China Co.Ltd(601658) , China Telecom Corporation Limited(601728) , China Everbright Bank Company Limited Co.Ltd(601818) , Baiji shenzhou-u, China Resources Microelectronics Limited(688396) , China Railway Construction Heavy Industry Corporation Limited(688425) , Everdisplay Optronics (Shanghai) Co.Ltd(688538) – u, as well as Semiconductor Manufacturing International Corporation(688981) and China Mobile.
Interviewees told reporters that the green shoe mechanism will be introduced only when the fund-raising scale is large. The fund-raising scale of the four banks is very large, and the other Baiji China and Semiconductor Manufacturing International Corporation(688981) are all tens of billions.
From the performance of these 11 companies on the first day of listing, only Baiji Shenzhou fell, with a decline of about 20%. Other enterprises have increased more or less. The reporter noted that among the 11 enterprises, only 3 have adopted the practice of buying stocks from the secondary market to stabilize the stock price. In addition to China Mobile and Baiji Shenzhou, the other one is China Telecom Corporation Limited(601728) .
The reporter noted that in terms of the protection of green shoe funds in the secondary market, the two telecom giants China Mobile and China Telecom Corporation Limited(601728) are relatively similar, while Baiji Shenzhou is another scene.
Baiji Shenzhou announced that as of December 20, 2021, the lead underwriter China International Capital Corporation Limited(601995) had used the funds obtained from the over allotment of this offering to buy 17.258 million shares from the secondary market in the form of competitive trading, with a total amount of 2.827 billion yuan, an average purchase price of 163.80 yuan / share, a maximum price of 171.99 yuan / share and a minimum price of 155.02 yuan / share. The cumulative number of shares repurchased by China International Capital Corporation Limited(601995) has reached the limit of the number of shares issued under the over allotment option.
In other words, the over allotment shares of Baiji Shenzhou are all obtained from the secondary market. There is no need for additional issuance. China Mobile and China Telecom Corporation Limited(601728) did not reach the limit of the number of shares issued by the over allotment option after the specified protection period.
Therefore, China Mobile and China Telecom Corporation Limited(601728) need to issue additional shares. For underwriters, the issuance of additional shares also means new underwriting fee income.
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