Hong Kong Warrants Issuance: BYD, Alibaba, Zijin Mining, and Sinopharm Emissions

Strategic Insights -

Hong Kong's financial market has witnessed a recent issuance of warrants by Haitong International Securities Company Limited, covering prominent companies such as BYD Company Limited, Alibaba Group Holding Limited, Zijin Mining Group Co., Ltd., and Sinopharm Group Co. Ltd. The warrants were issued with varying characteristics, including European-style cash settlement, different exercise prices, average prices, and entitlements. These warrants are aimed at providing investors with a chance to profit from the potential rise in the share prices of these companies.

Key Takeaways:

  • The total issue size of the warrants is 40,000,000 for BYD Company Limited, 80,000,000 for Alibaba Group Holding Limited, 60,000,000 for Zijin Mining Group Co., Ltd., and 80,000,000 for Sinopharm Group Co. Ltd.
  • The warrants are listed on the Hong Kong Stock Exchange and were issued on June 24, 2020, with a listing date of June 26, 2020.
  • The warrants expire on October 20, 2020, for BYD Company Limited, December 24, 2020, for Alibaba Group Holding Limited, November 18, 2020, for Zijin Mining Group Co., Ltd., and October 23, 2020, for Sinopharm Group Co. Ltd.
  • The implied volatility of the warrants ranges from 34.00% to 55.00%, with an average price basis of the closing prices of one share in respect of each of the five business days immediately preceding the expiry date.
  • The effective gearing of the warrants varies from 5.11x to 7.84x, indicating a high potential for gearing and leverage.

Statistics:

  • Total issue size: Byd 40,000,000, Alibaba 80,000,000, Zijin 60,000,000, Sinopharm 80,000,000
  • Issue date: June 24, 2020
  • Listing date: June 26, 2020
  • Expiry dates: Byd October 20, 2020, Alibaba December 24, 2020, Zijin November 18, 2020, Sinopharm October 23, 2020
  • Implied volatility: BYD 50.00%, Alibaba 34.00%, Zijin 55.00%, Sinopharm 55.00%
  • Effective gearing: BYD 5.11x, Alibaba 7.84x, Zijin 5.23x, Sinopharm 5.99x

Sources:

  • Haitong International Securities Company Limited, announcement (PDF) available at https://www1.hkexnews.hk/listedco/listconews/sehk/2020/0619/2020061901148.pdf