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Key investment points:
1. Baosteel resumed trading today. Baosteel warrants will be listed for trading on the 22nd.
2. G Long term electricity rose 12.8% on the day when it resumed trading. With this as a reference, Baosteel's share price should have more than 10% short-term rising space after the resumption of trading. If the consideration of Baosteel Shares is taken into consideration, its resumption price can at least stand above 4.63 yuan. Calculated according to B-S model,
The initial listing price of Baosteel warrants should be 0.5703 yuan - 0.6404 yuan, and its initial intrinsic value is only about 0.13 yuan. Most warrant prices reflect time value.
3. If the opening price is low, it is a good time to intervene: the time value is temporarily calculated as 0.1 yuan, and the internal value is calculated as its resumption price minus 4.5 yuan. If the opening price is on the high side, for example, the time value is above 0.3 yuan, you can wait and see. At present, the fund can only sell and exercise two options, but cannot buy warrants.
4. Baosteel warrants will remain in price for half a year. At the initial stage of listing, it should be slightly within the price (the actual leverage is slightly higher). With the improvement of the market and the rise of Baosteel shares, Baosteel warrants are expected to gradually become moderately within the price (the actual leverage is slightly lower).
5. The initial listing of Baosteel's warrants is a good time to intervene, but it does not fully reflect the market's expectation of Baosteel's share price in the next few years. At that time, the warrant price may have overreacted, and investors should control the risk by combining their judgment on the stock price.
6. At the initial stage of listing, Baosteel warrants should make full use of T+0 trading rules, focusing on short-term speculation, and should not be held continuously. A stop loss point should be set for the short term, and it is recommended to set it at about 20%.
1、 Analysis of Baosteel's share reform process
The shareholders' meeting of Baosteel on August 12 successfully passed its share reform plan. As part of the consideration, the listing of Baosteel warrants is expected to be carried out simultaneously with the consideration paid by Baosteel. It is expected that Baosteel warrants will be officially born and listed for trading on August 19 at the latest.
According to the share reform plan, investors holding Baosteel's tradable shares will receive 2.2 shares of consideration and 1 warrant for every 10 shares. Baosteel Group promises that its shares of Baosteel Co., Ltd. will not be listed or transferred for at least 12 months from the date of obtaining the listing and circulation right, and will not be listed and traded for 24 months from the date of obtaining the listing and circulation right; Within 12 months after the expiration of the above 24 months, the number of shares of Baosteel Co., Ltd. sold by Baosteel Group through listing on the stock exchange shall not exceed 5% of the total shares of Baosteel Co., Ltd., and the selling price shall not be less than RMB 5.63 per share; Within three years from the date when the shares of Baosteel Co., Ltd. held by Baosteel Group Company obtained the right of listing and circulation, the shares of Baosteel Co., Ltd. held by Baosteel Group Company will account for no less than 67% of the current total share capital of Baosteel Co., Ltd. The company also promises to maintain at least an annual cash dividend of no less than 0.32 yuan in the next three years. If the dividend payout rate is calculated at the price of 5.14 yuan, the dividend payout rate will reach 6%, and the dividend payout rate will reach 8% when considering the ex dividend factors.
2、 Positive share analysis of Baosteel
Baosteel is the largest steel producer in China. At present, Baosteel Group has an annual steel production capacity of about 20 million tons, and its profitability is leading in the world. As the leader of China's steel industry, Baosteel will become one of the world's top three in 2010. A few days ago, BHP Billiton, the world's largest resource group, signed an agreement with Baosteel. The two sides will jointly conduct technical research to improve the use of raw materials in the iron and steel smelting process. At the same time, the company is also favored by institutional investors (this can be proved by the large increase in positions of institutional investors in the second quarter of this year).
The current P/E ratio and P/B ratio of the company are at a relatively low level in the A-share market. Even in the global market, the P/E ratio and P/B ratio of China's steel industry are also low. Although the steel industry is a cyclical industry, its value has been interpreted by the market. The growth rate of China's GDP in the past two decades shows that China's future economic development will have at least years of reasonable and sustainable growth, providing a strong backing for the development of the company.
In the short term, since the suspension of Baosteel, the Shanghai Composite Index has risen by more than 13%, and the whole steel sector has basically outperformed the market. In addition, the trend of G shares is hot, so Baosteel will have to make up for the increase after the resumption of trading. In addition, if we refer to the 12.8% increase on the day of the listing of G Changdian, considering that the increase before the resumption of trading of G Changdian is greater than that of Baosteel, the increase after the resumption of trading of Baosteel may be slightly higher than that of G Changdian. According to our analysis, Baosteel shares will rise by at least 10%. Considering its consideration, the price of resumption of trading of Baosteel shares should be above 4.63 yuan.
From the perspective of the central line, since Baosteel Group has promised that if the share price of Baosteel is lower than 4.53 yuan after the share reform, the controlling shareholder Shanghai Baosteel Group will spend a total of 4 billion yuan to purchase tradable shares through the secondary market within six months after the share reform, the bottom price of 4.50 yuan of Baosteel should not be a problem, so Baosteel's warrants cannot fall to zero. In addition, from a technical point of view, Baosteel's share price will reach a high point of 6.1 yuan in the next year.
3、 Value Analysis of Baosteel Warrants
The value of warrants consists of intrinsic value and time value. As the maturity date approaches day by day, the time value will gradually shrink, and the price of the warrant will slowly evaporate, so when investing in the warrant, you must pay attention to the remaining maturity of the warrant.
The warrants issued by Baosteel to support the split share structure reform are European style warrants, that is, the warrant holders can exercise their rights only 378 trading days after the issuance and listing of the warrants. During the exercise, each Baosteel warrant can purchase one Baosteel share at a price of 4.5 yuan. Although the warrants cannot be exercised, they can be bought and sold in the secondary market during this period. The issuer of Baosteel Warrants this time is Baosteel Group Corporation, with a total issuance scale of 387.7 million.
We chose the Maanshan Iron and Steel (Hong Kong) warrant with similar terms as Baosteel warrant for reference.
If the price of regular shares is 4.63 yuan (estimated) after the resumption of trading, the initial price of Baosteel's warrants should be 0.5703 yuan - 0.6404 yuan according to the B-S model, then the intrinsic value of the warrants is only about 0.13 yuan, and most of the warrant prices are reflected in the time value.
If the opening price is low, it is a good time to intervene: the time value is temporarily calculated as 0.1 yuan, and the internal value is calculated as its resumption price minus 4.5 yuan. If the opening price is on the high side, for example, the time value is above 0.3 yuan, you can wait and see. At present, the fund can only sell and exercise two options, but cannot buy warrants.
Baosteel shareholders who have been granted warrants have no risk in holding the warrants, but have the right to obtain potential benefits. Therefore, investors who choose to sell Baosteel warrants after listing are limited. However, the liquidity of warrants may be poor at the beginning of listing, which increases the investment risk of warrants. For investors who have received warrants, we recommend holding them temporarily. Because the warrants are free of charge, there is no risk in holding them, but the potential income is large. The selling occurs when the holder cashes the proceeds ahead of time to avoid the expiration of the warrants by putting down the stocks, or the market raises the price of the warrants to an unreasonable position.
4、 The trend of Baosteel warrants after listing
New things are always concerned. Besides, there is always a complex of speculation in the stock market. However, Liu Xiaodong, Deputy General Manager of Shanghai Stock Exchange, said first that once the secondary market trading price of warrants fluctuates abnormally, Shanghai Stock Exchange will have the right to suspend its trading at any time in accordance with the relevant provisions of the Interim Measures for the Administration of Warrants. Liu Xiaodong also said that the warrant trading market maker system will be introduced to balance the supply and demand risks of warrants.
At the initial stage of listing of Baosteel's warrants, it is unlikely that there will be speculation. It is likely that there will be a small fluctuation pattern following the fluctuation of Baosteel's share price. The reason why ordinary investors without Baosteel warrants buy warrants should be that they are optimistic about the stock price of Baosteel. We do not recommend investors to intervene only because of the speculative nature of warrants. The current P/E ratio and P/B ratio of the company are at a relatively low level in the A-share market. Even in the global market, the P/E ratio and P/B ratio of China's steel industry are also low. Although the steel industry is a cyclical industry, its value has been interpreted by the market. On this basis, we are optimistic about Baosteel's share price and believe that Baosteel's warrants can be appropriately involved.
However, the initial listing of Baosteel's warrants may be a good time to intervene, because the opening price of the warrants may be low due to the limitation of the calculation model, which does not fully reflect the market's expectation of Baosteel's share price in the next few years. If we correctly judge the price of Baosteel after the resumption of trading, then the stock price is close to the exercise price. Buying can obtain a higher leverage ratio, and the capital utilization efficiency is the highest. However, the initial listing of warrants is also the most speculative time. In addition to our concerns about liquidity, the warrant price may overreact at this time, and investors should combine their own judgment on stock prices to control risks.
5、 Practical strategy of Baosteel Warrants
Baosteel warrants are company equity warrants, and there is no market maker, so its information disclosure is difficult to complete and relevant data is difficult to grasp, which increases the possibility of market speculation. From the terms of Baosteel's warrants, the possibility of exercise in 378 days is close to 100%, which will also have an impact on the pricing of its regular shares. Since the Group will use 4 billion yuan of capital to stabilize the positive share price at more than 4.53 yuan within 6 months after the share reform, the warrants will remain within the price for half a year. At the initial stage of listing, it should be slightly within the price (the actual leverage is slightly higher). With the improvement of the market and the rise of Baosteel shares, Baosteel warrants are expected to gradually become moderately within the price (the actual leverage is slightly lower).
It is worth noting that warrants have a deadline. As the maturity date approaches, its time value will gradually shrink and the warrant price will also evaporate. Therefore, if the actual trend of warrants is not in line with expectations, investors should stop loss in a timely manner, and should not wait for them to unwind one day just as they do for regular shares.
At the initial stage of listing, Baosteel warrants should make full use of T+0 trading rules, focusing on short-term speculation, and should not be held continuously. A stop loss point should be set up for the short term, and it is recommended to control it within 20%.
When investors invest in A-shares, they often have the habit of waiting for unwinding and covering positions, and sometimes they get deeper and deeper. Please note that warrants have time value losses.
It is suggested that the investment proportion of warrants should be controlled within 10% - 20% of the total capital, and no covering positions should be considered.
Author: Jinxin Securities Warrant Center
Sina statement: The content of this article is purely the author's personal view, only for investors' reference, and does not constitute investment advice. Investors operate accordingly at their own risk.
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