Case Study On Convertible Bond Financing Of Jue Wei Food Company

In 2017,the private placement policy was tightened,making it more difficult for companies to obtain funds through private placement,while the relaxation of the application conditions for convertible bonds has promoted the hot market of convertible bonds.Under the influence of these two factors,the number of enterprises that choose convertible bonds for financing is increasing rapidly.In 2018,67 new convertible bonds were issued,with a scale of 78.753 Billion Yuan.There are 118 convertible bonds in the market,with an amount of 189.519 Billion Yuan.By 2019,the number of newly issued convertible bonds was more than twice that of 2018,reaching 151,showing a blowout development.Among them,a large number of small amount convertible bonds were issued in 2019,with 102 convertible bonds issued with a scale of less than 1 Billion Yuan,accounting for the absolute majority.The number of small-scale convertible bonds(less than 1 Billion Yuan)has doubled year by year since 2017.It can be seen that smallscale convertible bonds have increasingly become the mainstream of issuing convertible bonds.However,academic research on small-scale issuance of convertible bonds domestic are still limited.Jue Wei Food is a food processing company listed on the Shanghai Stock Exchange in2017,which issued 1 Billion Yuan convertible bonds on March 11,2019,namely “Juewei Convertible Bonds”.For such companies that have just listed on stock exchange and developed rapidly,how to raise funds and whether it can raise funds efficiently determine the company’s continuous development.Juewei convertible bonds only took two months to complete the conversion of shares after being convertible,with a conversion rate of 98.73%.The speed of share conversion and the high proportion of share conversion are rare in China.Therefore,the thesis chooses this case to analyze the motivation of Jue Wei Food issuing Juewei convertible bonds,the terms of issuance and the impact of stock conversion on its financial performance and equity with the aim of providing effective advice to other companies that issue convertible bonds.Firstly,the thesis introduces the specific situation of Jue Wei Food issuing Juewei convertible bonds,including the operation situation before issuing Juewei convertible bonds and the whole financing process of Juewei convertible bonds.Secondly,it analyzes the financing motivation of Jue Wei Food,which is divided into two levels,including: financing demand and financing mode.Thirdly,the thesis analyzes the rationality of the clause design of Juewei convertible bonds.Then,it explores the impact of the announcement of Juewei convertible bonds on the positive shares of Jue Wei Food,and analyzes the particularity of the response of the small-scale convertible bond market through comparison.Finally,it examines the impact of Juewei convertible bonds’ rapid conversion of shares on the financial performance and equity of Jue Wei Food.The analyses of financial performance start with the impact of turnover,profitability,solvency and economic added value.Through the case study,the thesis puts forward five suggestions at corporate level,including choosing the financing method according to your own situation and the timing of the issuance of convertible bonds in combination with the market environment,designing the terms of convertible bonds according to the financing purpose,improving the understanding of convertible bonds,fully considering the changes in financial performance brought about by convertible bonds,and paying attention to the changes in equity and governance structure after convertible bonds.There are two macro-environmental implications for investors,such as deepening their understanding of convertible bonds and improving the operating efficiency of the convertible bond market.