China Fund News Jiang You
Ordinary investors, avoid the "inflated" valuation of high premiums and high absolute prices!
On April 30, the closing day of A-shares in April, there was a "flash crash" of overvalued convertible bonds, and Haibo convertible bonds rose by more than 5% in early trading, and then dived all the way until the end of the 20% fall limit, closing at 131.44 yuan, and the volume fell sharply, with a turnover of up to 1 billion yuan and a turnover rate of 466%.
Generally speaking, the performance of convertible bonds will be correlated with the underlying stock, but the underlying stock of Haibo convertible bond performed normally, rebounding from a decline in early trading, closing up more than 2%.
For the sudden flash crash of Haibo convertible bonds, some market participants said that it may be that the price of Haibo convertible bonds has deviated significantly from the fundamentals and valuation of the underlying stock and convertible bonds recently, and the price of the convertible bonds has been rising recently, and the amount of energy is also expanding.
Indicators such as the conversion premium rate and the yield to maturity of pure bonds are important indicators to reflect the valuation of convertible bonds. Even if the price of the underlying stock rises on April 30 and the convertible bond plummets by 20%, the conversion premium rate of Haibo convertible bonds is still obviously too high, as high as 81.24%, and the price of Haibo convertible bonds exceeds 130 yuan, even if it is held according to the maturity of pure bonds, it will have to lose money, and the annualized yield at maturity as pure bonds is -2.2628%.
From the perspective of bond balance, the balance of Haibo's convertible bonds is 159 million yuan, which is a small-scale convertible bond and is easily affected by capital transactions.
Founded in 1994, Haibo Heavy Industry Co., Ltd., the underlying stock of Haibo Convertible Bonds, is a high-tech enterprise dedicated to the design, manufacture and installation of bridge steel structures. The company has the qualifications of first-class professional contracting of steel structure engineering, special grade of China Steel Structure Association, etc., and has participated in the construction of hundreds of steel structure bridges, and its engineering performance is all over the country.
The "flash crash" of Haibo convertible bonds is not an isolated case, and there are often "flash crashes" in the convertible bond market with high premiums and high valuations that deviate from the price fundamentals, especially some convertible bonds with small bond balances, and the price is easily affected by speculation funds. According to statistics, there are still more than 80 convertible bonds with a conversion premium rate of more than 100%, and many of them have an absolute price of more than 200 yuan.
Therefore, for ordinary investors, it is necessary to stay away from convertible bonds with high absolute prices and high conversion stock prices, and be wary of the risk of "flash crash" in the price of convertible bonds.
Editor: Xiao Mo
Review: Muyu