Gome can take a stake in Bain Wong Kwong Yu is not a problem

The Bank of China (0493) yesterday announced a financing plan and a deal yesterday, after a 7-month suspension of trading by former President Huang Guangyu for economic crimes. As companies can raise HK $3.3 billion by placing and issuing convertible bonds, we believe the main risk of bankruptcy has been eliminated. 　　With the cooking 魍 squat release U? Participate in placing and convertible bonds subscription and a large stake in Gome, corporate governance issues will be gradually resolved. Gome's share price missed a rebound in the market because of its prolonged suspension. We expect the price of the suspension to be equal to 7.7 times times the 10 expected P/E. On the basis of overall dilution, it is 13-18 times more obvious than that of domestic retailers. On the basis of the 13 times-fold expected P/E ratio (in view of corporate governance, at the low end of the peer valuation) and the expected earnings per share in 10, we raised the target price of the unit from HK $0.91 to HK $1.90 (at $1.89). 　　We raised the rating of Gome from selling to buying. Bankruptcy risk elimination favorable rating raising financing plan eliminates investors ' concerns about Gome's ability to redeem its 2014 convertible bond. The company plans to raise 199 million dollars through public placements. Existing shareholders can subscribe to 18 shares per 100 shares at the price of HK $0.672/unit. Subscription prices are discounted by 60% before the closing price of the suspension. The right to subscribe is non-transferable. The last day of trading of shares in the benchmark is July 2, 09. Bain Capital will act as underwriter for the public offering and participate in the IPO, with a lock-up period of 12 months. In addition, Bain Capital agreed to contribute 233 million US dollars to subscribe to a convertible bond that expires in 2016 and has an annual interest rate of 5%. The exchange price was HK $1.18, a premium of 5% before the suspension. Upon the completion of the public offering, the conversion price will be adjusted to HK $1.108 per share. The 2016 subscription lock for the convertible bond is also scheduled for 12 months. Public placements and issuance of convertible bonds will raise 432 million dollars (about HK $3.3 billion). 　　At the end of 08, the company held 3 billion yuan in cash, so the company had enough money to redeem the convertible bonds that expired in 2014 before May 11, 10. Whether Mr Huang is offering shares is not a question of whether the current Gome's largest shareholder, Huang Guangyu, is involved in the subscription. Huang Guangyu and the rhododendron couple submitted their resignation to the company in November 08. When asked whether Mr Huang would participate in the public placement, Gome chairman Chen Xiao said Huang had the right to participate in the subscription and decided on its own. 　　But he thinks that the subscription price is very attractive and that all shareholders, including Huang, will participate in the subscription. We do not rule out the possibility that Mr Huang will not take part in the subscription and let the underwriters ' Bain Capital subscribe for new shares. In this case, if the convertible bond expires in 2016, Bain will eventually hold a 14.65% stake in Gome, which we consider to be higher and more meaningful. Mr Huang's stake will be diluted to 27.18% per cent, suggesting he is willing to lower his influence among shareholders. We believe that minority shareholders will recognizeThis kind of equity structure is more beneficial to the protection of its interests. Bain Capital, the strategic investor, is a global private equity firm that manages assets of about 60 billion dollars. Since its inception in 1984, Bain has made private equity investments and additional acquisitions for more than 300 companies. Bain had already invested in China's retail business, and Gome was the sixth company to invest at Bain in China. Bain decided to invest in Gome in view of the high growth of the retail industry, Gome's leading position and management's historical performance. 　　Benco recommended three members to join the board as Non-executive director. We noted that Gome's fundamentals continued to improve in 08 4 to 09 1, and we expect the company's business to continue to rise in 09. Same-store sales fell from 36% in the 4 quarter of 08 to 09-year-1-quarter 20.7%. The rebound in the stock market and the rise in real estate volumes paved the way for a pick-up in electrical demand in the coming months. We expect that in the 2 quarter of 09, same-store sales will shrink to a high number of units, the 3 quarter will be further narrowed to low units, 4 quarters will remain stable. 　　We are conservative forecasts that 09 sales will fall 5%, 2010 and 2011 Year-on-year growth of 1% and 3% respectively. The company decided this year and added 谔 Gosausee at the same rate. The total number of stores will remain at last year's level, but will close about 100 loss-making shops, excluding one-off provisioning, which will still bring some cost savings. We assume that in the 2010 and 2011, Gome will increase the number of stores per year by 5%. Extract)