Is Youngor's bond is too abundant?

The total market value of the shares of the seven listed companies held by the company reached 19.2 billion yuan, of which the value of the circulating stock market was about 13.9 billion yuan.

Recently, Youngor (600177) disclosed that the China Securities Regulatory Commission's scrutiny and review committee recently reviewed the company’s plan to issue convertible corporate bonds, and the issuance application has not been approved. According to informed sources, the contents of the notice issued by the China Securities Regulatory Commission to Youngor were very simple and did not indicate any reason. In the reply, there was only one sentence. "The application plan did not pass." It is understood that Youngor also expressed surprise at this. Yesterday afternoon, the reporter of this newspaper repeatedly called the company. Somehow it was not connected.

However, the reporter found that the various brokerage analysts recently rated Youngor's rating as “hold” or “buy” and “strong buy”, both optimistic about Youngor's performance in the market. Guowei Junan analyst Zhang Weiwen also said that although the unexpected release of the convertible bond was not approved, it has no major impact on Youngor’s business development and future development strategies.

It is understood that the size of the convertible bond that Youngor applied for issuance is 1.8 billion yuan, and the term of the bond is 3 years. All the raised funds are used for the company's four real estate projects. Youngor had previously indicated that before the funds raised from the convertible bonds are available, it will temporarily invest in self-raised funds according to the actual situation of the project progress, and will repay the funds after the convertible bonds have been put into place. As Youngor recently announced that he would not participate in the issuance of CITIC Securities, the issuance of convertible bonds has caused some investors to further raise doubts about whether “Younger’s funding is tight”.

Zhang Weiwen said that although this doubt is reasonable, it is completely unnecessary. According to wind statistics, as of September 4 this year, Youngor held shares in 7 listed companies such as CITIC Securities, Ningbo Bank, Bank of Communications, E-Tech, Shanghai Jiubai, Bailian, and China COSCO, with a total market value of 19.2 billion yuan. Among them, the value of the circulating stock market reached around RMB 13.9 billion. Zhang believes that the SFC has rejected Youngor’s convertible bond issuance, which may also be related to Youngor’s own large saleable financial assets. Because these assets are nearly equal to cash assets, the SFC may think that Youngor itself is not short of money and there is no urgent need for funds. It is not appropriate to issue convertible bonds to raise funds.

Judging from the various operations of Youngor, Zhang Weiwen stated that Youngor has currently formed three business units: textile and apparel, real estate and investment. Among them, textile and clothing provide Younger cash flow, but will not contribute too much profit in the past two years. She explained that Youngor has been doing the integration of domestic sales channels for the past two years and has achieved certain results. Endogenous growth is significant. In the first half of the year, when business income increased by 15%, net profit increased by about 20-30%, but The reflection in the entire report is not obvious. She believes that the profitability of apparel business may have to wait until the end of 2008 or even 2009.

In terms of real estate business, Zhang believes that Younger’s land reserve has increased by 60%-70% since the beginning of this year, and the profit growth of real estate business in 2007-2008 may exceed Youngor’s expected growth target of 25%.

It is reported that in terms of investment business, Youngor has established two investment companies, and formed certain strategic cooperation relationships with some brokerage firms and banks, and is currently operating some projects outside the securities secondary market.

Taken together, analysts believe that the issuance of convertible bonds has had no impact on Youngor's long-term development, and yesterday's market performance of Youngor's stocks also indicates that investors have not excessively interpreted the news of the issuance of convertible bonds. Yesterday, Youngor fell 3.6% to close at 30 yuan/share.