China Mobile closed at 58 yuan today, up 0.21%.
The reporter noted that in early trading, China Mobile’s share price fell slightly. At the issue price of 57.58 yuan, there were more than 1.05 million hands of buying, requiring a total of 6 billion yuan. There is a wide gap between the number of purchases of more than one million hands and the prices of other stalls. The market expects that the “green shoe fund” of China Mobile may have begun to enter the market to protect the market.
The reporter noted that in the history of a shares, there are not many cases of green shoe funds entering the secondary market, only three cases. In addition to China Mobile, there are China Telecom Corporation Limited(601728) and Baiji Shenzhou.
China Telecom Corporation Limited(601728) had a good performance in protecting the market, rising sharply on the first day, and the share price was basically above the issue price during the period of protecting the market. However, the new share price of Baiji Shenzhou was not held, and the performance of protecting the market was also discussed by the market. How to better protect the plate and what kind of protection strategy to take have also begun to be concerned by the market.
China Mobile’s “green shoe fund” or has entered the market
The reporter noted that shortly after the opening of early trading today, there were 1055000 hand purchases at the issue price of 57.58 yuan. In the five gear buying, more than one million hands are particularly conspicuous, and there are only hundreds or thousands of hands in other gears. The purchase price of 1055000 hands is 57.58 yuan, which requires a total of about 6 billion yuan.
Who invested 6 billion yuan in the issuance price to protect the market? Insiders told reporters that China Mobile’s “green shoe fund” may have entered the secondary market to stabilize the stock price.
The reporter noted that China Mobile’s announcement showed that the issuer and the joint lead underwriters negotiated to enable the green shoe mechanism and oversubscribed 126855000 shares to online investors according to the subscription of this issuance.
The over allotment shares will be obtained by delaying the delivery to some strategic investors in this offering. All over allotment stocks are placed to online investors. China International Capital Corporation Limited(601995) acted as the co lead underwriter for the specific implementation of green shoes in this issuance. 126 million shares were allotted at the price of 57.58 yuan, and the lead underwriter could obtain a total of 7.3 billion yuan of over allotment funds.
According to the regulations, within 30 natural days from the date of China Mobile’s listing, the authorized lead underwriter can use the fund of 7.3 billion yuan to buy the shares issued this time from the secondary market to stabilize the future market, but each declared purchase price shall not be higher than the issue price of 57.58 yuan, and the cumulative net number of purchased shares shall not exceed the number of over allotment shares, that is, 126 million shares.
Insiders said that the purchase of 1.05 million hands at the issue price in early trading today, that is, 105 million shares, has a high probability that China Mobile’s “green shoe fund” has entered the market. Ordinary investors will not come up with 6 billion at once, and the price is very accurate, just the issuing price. The previous provisions also said that the price of buying stocks from the secondary market to protect the market shall not be higher than the issue price.
there are still 500 million after Baiji Shenzhou green shoes are spent
In addition to China Mobile, Baiji Shenzhou listed in December also used green shoe funds to protect the market in the secondary market.
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 through competitive trading, with a total corresponding payment of RMB 2.827 billion, an average purchase price of RMB 163.80/share, a maximum price of RMB 171.99/share and a minimum price of RMB 155.02/share. The cumulative number of shares repurchased by China International Capital Corporation Limited(601995) has reached the limit of the number of shares issued for this issuance of over allotment option.
Generally speaking, in the face of the continuous decline of stock prices after listing, China International Capital Corporation Limited(601995) has used 2.8 billion yuan of green shoe funds to protect the market. A total of 17.258 million shares of Baiji Shenzhou have been purchased in the secondary market, and the number of shares purchased has reached the upper limit of the previous announcement. The green shoe fund option has been implemented.
Previously, Baiji Shenzhou announced that China International Capital Corporation Limited(601995) has the right to use the funds raised by over allotment of shares (green shoe funds) to purchase the issuer’s shares in the way of our best price declaration during continuous bidding time within 30 natural days from the date of listing of the issuer’s shares on the Shanghai Stock Exchange, that is, before January 13, 2022, so as to maintain the stability of the stock price, And the declared purchase price shall not exceed the issue price of 192.6 yuan.
In this offering, the issuer granted China International Capital Corporation Limited(601995) the green shoe option of no more than 15% of the number of shares initially issued, that is, 17.258 million shares. Specifically, this part of the shares will not be given to institutional investors, but will be placed to online investors at the price of 192.6 yuan per share, obtaining a placement fund of 3.324 billion yuan.
After listing, the share price of Baiji Shenzhou continued to decline. For the need of maintaining the share price, China International Capital Corporation Limited(601995) began to use the fund of 3.324 billion yuan to buy shares in the secondary market. However, due to the decline in price, CICC spent only 2.827 billion yuan after buying 17.258 million shares of Baiji Shenzhou. These 17.258 million shares will be returned to the initial institutional investors.
the original capital of 3.324 billion yuan only spent 2.827 billion yuan, that is, about 500 million yuan remains. According to relevant regulations, China International Capital Corporation Limited(601995) will hand over the 500 million yuan to the insurance fund.
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. 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 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) .
On September 25 this year, China Telecom Corporation Limited(601728) announced that the future stability period of China Telecom Corporation Limited(601728) is within 30 natural days from the date of listing and Trading (including the 30th natural day. If it is a holiday, it will be postponed to the next trading day). The end time of the future stability period is September 22, 2021. During the post market stability period of China Telecom Corporation Limited(601728) this offering (i.e. from August 20, 2021 to September 22, 2021), China International Capital Corporation Limited(601995) uses the funds obtained from the over allotment of this offering to buy 1380784889 shares of this offering from the secondary market in the form of competitive trading, corresponding to 6254955547.17 yuan, all at 4.53 yuan / share.
The reporter noted that the issuing price of new shares of China Telecom Corporation Limited(601728) is 4.53 yuan per share, that is, the average price of protecting the market is bought at the issuing price. China Telecom Corporation Limited(601728) rose 25% on the first day of listing. During the stock price protection period, the stock price of China Telecom Corporation Limited(601728) was basically above 4.53 yuan, rarely below the issue price.
disk protection strategy is controversial
In fact, after the completion of Baiji Shenzhou’s “green shoe fund” protection, the stock price was not held. There is also speculation in the market. Is it because the price of 192.6 yuan is too high? Investors also directly ask the company’s secretaries on the interactive platform.
The company responded that the price of this offering was determined by offline investors who submitted the pricing basis and the suggested price or price range given in the internal research report through the offline subscription platform of Shanghai Stock Exchange. After excluding the highest part of the quotation, the company and the joint lead underwriters comprehensively evaluate the company’s reasonable investment value, the secondary market valuation level of comparable companies and the secondary market valuation level of their industry according to the inquiry and quotation of offline issuance, and fully consider the effective subscription multiple, market conditions, demand for raised funds, underwriting risk and other factors of offline investors, Carefully evaluate whether the pricing exceeds the lower of the median and weighted average of the remaining quotations of offline investors after excluding the highest quotation, as well as the median and weighted average of the remaining quotations of securities investment funds and other partial equity asset management products established by public offering, national social security fund and basic endowment insurance fund.
The company said that the pricing of this public offering is the fair quotation of offline investors for the company’s value, and the company’s final pricing did not exceed the lowest value of the four quotation median and weighted average.
“The prices are quoted by the inquiry object, and the voice of securities companies in the A-share pricing mechanism is not large,” a senior market person told reporters. “The stock price reflects the market expectation. The whole pharmaceutical sector has a large decline from pricing to listing, and the breaking of Baiji Shenzhou after listing is expected.”.
The source said that the high issue price is from the current point of view, because the share price broke. However, at the time of pricing, the price may be reasonable. After pricing, there are new variables, which have a negative impact on the whole industry.
In addition to pricing, the strategy of securities companies to protect the market in the secondary market has also attracted attention. In 4 days, 2.8 billion yuan was smashed up, and the protection ended, and the secondary market did not improve. The reporter noted that even after the protection has ended, some investors still asked the company when to start the protection of green shoe funds on the interactive platform, and investors still believe that the protection has not started. In fact, the secondary market support of China Telecom Corporation Limited(601728) has persisted for a month.
“There may be room for improvement in the operation of the protection plate, China Telecom Corporation Limited(601728) is a big purchase. Once you put it there, the market psychology will stabilize. It is mainly the securities companies that make money and do not operate the protection plate. If they make money, the securities companies may better plan,” the interviewee told reporters.
The reporter noted that China Mobile’s protection strategy is also to put a purchase of more than one million hands there. At present, there is no decline for the time being, and the follow-up situation is unknown. “Disk protection is also a very complex activity. There are too many influencing factors, so we can’t be too critical of the disk protection strategy,” some people told reporters.
(brokerage China)
