One quarter of 2022 has passed, and new changes have taken place in the A-share refinancing market.
Since this year, the secondary market has fallen sharply. As of the closing on April 29, the Shanghai index had fallen by 16.28% compared with the beginning of the year, the Shenzhen composite index had fallen by 25.82%, and the gem index had the largest decline, falling by 30.20%. At the same time, the A-share private placement market also shows a trend of year-on-year decline in the scale of listing and fund-raising and frequent termination of projects. According to wind statistics, from January to April 2022 (by share listing date), a total of 105 A-share companies completed non-public offering of shares, raising a total of 162117 billion yuan, a year-on-year decrease of 39.7% and 41.3% respectively.
“The contraction of fixed increase fund-raising scale in the first quarter was mainly affected by the decline of the secondary market.” In mid April, Ruan Chao, the founder of Wenyi Fuxin (Hangzhou) Financial Consulting Co., Ltd., which is engaged in M & a boutique investment banking, told the daily economic news through wechat: “since the fixed increase pricing is a discount on the average price of the company’s shares, if the company’s share price is in a falling range, the investor’s willingness to subscribe is not very strong.”
In addition to the decline in the scale of fund-raising, according to incomplete statistics by reporters, 68 listed companies announced the termination of private placement in the first quarter, of which 27 appeared in March.
Compared with the contraction of the fund-raising scale in the fixed growth market, the decline of the issuance scale of convertible bonds is relatively low. Compared with the issuance scale of 108.92 billion yuan from January to April last year, it decreased by about 19% year-on-year in the first four months of this year.
The decline in the secondary market is the main reason for the reduction of fixed increase fund-raising scale
Since the implementation of the new refinancing regulations in 2020, the A-share refinancing market has entered a new period of development. Moderately loose regulatory policies give the market new vitality.
With the recent overall decline of the secondary market, the refinancing market has also seen a reduction in the scale of fund-raising. According to the statistics of wind data, from January to April 2022, the fund-raising amount of A-share refinancing (including additional issuance, allotment and convertible bonds, the statistical caliber is A-share listed companies, excluding Beijing stock exchange companies) was 284173 billion yuan, a year-on-year decrease of 26.4%, of which the actual fund-raising amount of private placement (calculated based on the listing time of additional shares) was 162117 billion yuan, a year-on-year decrease of 41.3%; The actual fund-raising amount of allotment was 33.78 billion yuan; Convertible bonds actually raised 88.28 billion yuan, a year-on-year decrease of 19%.
“The contraction of the fixed growth market in the first quarter was mainly affected by the decline of the secondary market.” Ruan Chao told reporters, “since the fixed increase pricing is based on the average price of the company’s shares with a discount, if the company’s share price is in a falling range, the investor’s willingness to subscribe is not very strong.”
According to the reporter’s reply, the non-public offering of 68 companies has been terminated since March (including one company whose non-public offering has been fully terminated since March).
Ruan Chao said that the frequent termination of fixed value-added projects was mainly due to the decline of the secondary market and the disappearance of pricing discounts, which reduced the willingness of investors to subscribe and made the project impossible to continue.
The reporter of the daily economic news noted that Shanghai Bright Power Semiconductor Co.Ltd(688368) ( Shanghai Bright Power Semiconductor Co.Ltd(688368) . SH), a manufacturer of LED driver chips, was among the list of fixed increase projects terminated in March. On March 1, Shanghai Bright Power Semiconductor Co.Ltd(688368) issued an announcement on the resumption of the review of issuing shares, paying cash to purchase assets and raising supporting funds, and announced the termination of the above matters on March 18. Meanwhile, the company’s share price fell from 303 yuan / share to 190 yuan / share in the first quarter.
According to the plan released by the company in July 2021, Shanghai Bright Power Semiconductor Co.Ltd(688368) plans to issue shares and pay cash to purchase 95.75% equity of Lingou Chuangxin held by Li Peng and other 14 shareholders of Nanjing Lingou Chuangxin Electronics Co., Ltd. (hereinafter referred to as Lingou Chuangxin), and the company plans to issue shares to no more than 35 specific objects to raise matching funds.
Lingou Chuangxin is a national high-tech enterprise specializing in the design of MCU, gate driver and DC / DC power management chip. Shanghai Bright Power Semiconductor Co.Ltd(688368) plans to acquire Lingou Chuangxin to coordinate business development, expand the company’s product line and improve the company’s profitability and anti risk ability.
However, the final acquisition was not completed. According to the termination announcement issued on March 18, 2022, Shanghai Bright Power Semiconductor Co.Ltd(688368) said that due to the recent great changes in the market environment, it decided to terminate the reorganization and withdraw the application documents. At the subsequent termination briefing, Shanghai Bright Power Semiconductor Co.Ltd(688368) said: “MCU chip is an important domestic alternative chip. There are other companies in the same industry in the market. At present, the company has no plan to negotiate on potential business targets.”
From the actual situation of the current market, the reduction of investors’ subscription intention caused by the decline of share price has affected the business development of some enterprises. Ruan Chao believes that enterprises that need financing now may have to increase debt financing or postpone raised investment projects to deal with the current situation.
The minimum guarantee mechanism of convertible bonds is more attractive, and the continuous decline of share price may trigger the revised terms
Different from the contraction of fixed growth market, the scale of convertible bond market remains relatively stable. From January to April 2022, according to wind data statistics, the actual fund-raising of convertible bonds was 88.28 billion yuan, a year-on-year decrease of 19%.
Ruan Chao said: “due to the nature of ‘minimum guarantee’ of convertible bonds, when the stock price performance is poor, investors can choose not to convert shares and charge the coupon paid by listed companies, so as to reduce the impact of stock price fluctuation on investment income. At the same time, in the secondary market, convertible bonds are relatively popular varieties and investors have high subscription enthusiasm, so at present, convertible bonds are less affected by the fluctuation of stock price in the secondary market.”
However, not all listed companies can issue convertible bonds to meet the financing needs, because compared with the subject conditions of fixed increase, the issuance conditions of convertible bonds are more stringent, and many conditions such as profitability and asset liability ratio need to be met.
In terms of industry, listed banks are still the main force of issuing convertible bonds for fund-raising. In the first quarter of 2022, Bank Of Chongqing Co.Ltd(601963) ( Bank Of Chongqing Co.Ltd(601963) . SH) and Bank Of Chengdu Co.Ltd(601838) ( Bank Of Chengdu Co.Ltd(601838) . SH) issued 13 billion yuan and 8 billion yuan of convertible bonds respectively. In addition, the non-ferrous metal industry has made frequent moves, among which the largest amount of fund-raising is 7.6 billion yuan of convertible bonds issued by Zhejiang Huayou Cobalt Co.Ltd(603799) ( Zhejiang Huayou Cobalt Co.Ltd(603799) . SH).
The initial conversion price of the above convertible bonds is 110.26 yuan / share. According to the announcement of the company, when the closing price of the company’s shares is lower than 80% of the current conversion price for at least 15 trading days in any 30 consecutive trading days, the board of directors of the company has the right to propose a downward correction scheme for the conversion price and submit it to the general meeting of shareholders of the company for deliberation and voting.
In Ruan Chao’s view, for refinancing investors, especially financial investors, there is no specific preference for the industry, and they pay more attention to pricing discounts and price differences. However, relatively speaking, industries with good development trend are more likely to be favored by investors, such as new energy, semiconductor, etc. However, due to the huge individual differences of Companies in the industry, investors still need to make a specific analysis of their fundamentals.
