Hong Kong Warrants Issuance: Key Takeaways

Strategic Insights -

Haitong International Securities Company Limited has announced the issuance of warrants for Xiaomi Corporation, BYD Company Limited, and Meituan Dianping. The issuance consists of three series of warrants, each with distinct features. The market has reacted positively to the news, with implied volatility and premium increasing across the board.

Key Takeaways:

  • The issuance includes three series of warrants for Xiaomi Corporation, BYD Company Limited, and Meituan Dianping, with total issue sizes of 100 million, 70 million, and 100 million warrants, respectively.
  • The warrants are European-style cash-settled, with cash settlement amounts determined by the closing prices of the underlying shares in the five business days preceding the expiry date.
  • The average prices for the warrants are HK$25.05, HK$148.88, and HK$260.20, respectively, which will be used to calculate the cash settlement amounts.
  • The warrants have different entitlements, with one share entitling 10, 50, or 100 warrants, depending on the series.
  • The maximum number of shares related to the warrants is 10 million for Xiaomi Corporation, 1.4 million for BYD Company Limited, and 1 million for Meituan Dianping.
  • The launch date, issue date, and listing date for all series are September 17, 2020, September 21, 2020, and September 22, 2020, respectively.
  • The expiry dates are February 23, 2021, for Xiaomi Corporation and Meituan Dianping, and March 22, 2021, for BYD Company Limited.
  • The implied volatility for the warrants is 59.00%, 77.00%, and 54.00% for Xiaomi Corporation, BYD Company Limited, and Meituan Dianping, respectively.
  • The effective gearing and gearing for Xiaomi Corporation are 4.47x and 10.65x, for BYD Company Limited are 3.42x and 8.78x, and for Meituan Dianping are 4.54x and 9.26x, respectively.
  • The premium for the warrants is 27.00%, 47.11%, and 18.85% for Xiaomi Corporation, BYD Company Limited, and Meituan Dianping, respectively.

Statistics:

  • Total issue size: 270 million warrants
  • Cash settlement amounts per board lot: HK$22.7 million for Xiaomi Corporation, HK$467.1 million for BYD Company Limited, and HK$230.4 million for Meituan Dianping
  • Average prices: HK$25.05, HK$148.88, and HK$260.20
  • Implied volatility: 59.00%, 77.00%, and 54.00%
  • Effective gearing: 4.47x, 3.42x, and 4.54x
  • Gearing: 10.65x, 8.78x, and 9.26x
  • Premium: 27.00%, 47.11%, and 18.85%

Sources:

  • Haitong International Securities Company Limited announcement