Maybe not so easy!
SDIC Power (600886) company comment: SDIC Power copied Huatai Shen operation arbitrage GDR?
Maybe not so easy!
Recently, SDIC Power intends to issue GDR to raise overseas funds to build European wind power projects. There is discussion in the market to copy Huatai Securities’ “short A + long GDR” for arbitrage. Recently, the number of securities sold by SDIC Power increased sharply, and SDIC Power suffered a decline.
Can SDIC Power really replicate Huatai Securities’ GDR arbitrage? Perhaps history may not repeat itself.
The equity structure, shareholder structure, and valuation levels of the two cities are different. The GDR issue discount of SDIC Power will be much lower than that of Huatai Securities. We analyze the reasons why Huatai Securities’ GDR arbitrage is feasible: the GDR issue discount is high, there is a very large gap between A shares and GDRWith a high premium rate, the prices of the two cities have converged, so there is a contradictory arbitrage space.
Through analysis, we find that there are differences in the equity structure, shareholder structure, and evaluation levels of the two cities, such as SDIC Power and Huatai Securities. SDIC Power does not need to adopt the strategy of Huatai Securities to lower the GDR price. At the same time, due to shareholder pressure, GDR prices are also easyDifficult to create a discount (it will replace the shareholding of the first and second largest shareholders).
We estimate that SDIC Power’s GDR discount will not be less than 10%.
The original arbitrage space is 无锡夜网 small, the cost of margin trading, and changes in prices and exchange rates of the two cities will continue to reduce the arbitrage space.
35%, then the arbitrage space will be less than 7%, which is much lower than 37 of Huatai Securities.
At the same time, various factors such as price fluctuations and exchange rate changes in the two cities will affect the arbitrage space. If financial derivatives such as swaps are used to avoid exchange rate risks, this fee will further reduce the arbitrage space.
Therefore, we believe that SDIC Power cannot replicate Huatai Securities’ GDR arbitrage.
Profit forecast: We are optimistic about the company at the current point in time.
It is expected that the company’s net profit attributable to its parent in 2019-2021 will be 48.
85 trillion, corresponding to 0 EPS.
81 yuan / share.
Maintain “Buy” rating.
Risk warning: macroeconomic downturn, insufficient electricity demand, lower electricity prices, and poor water supply