＜Research＞Citi: Delta Hedging From PING AN's CB Issue Will Bring Short Term Pressure on Its H-shrs

　　Citi Research covered in a report that PING AN (02318.HK) -2.050 (-5.687%) Short selling $678.13M; Ratio 30.437% has announced plans to issue US$3.5 billion 0.875% five-year convertible bonds (CBs) at a premium of more than 21%, with the proceeds to be used to further develop its core business, replenish its capital requirements, and support the strategic development of its new business. As reported by foreign media, the terms of the bonds stated that the joint bookrunners would conduct a delta placing of PING AN H-shares at the same time as the CB issue to facilitate hedging by participating investors.

　　The broker estimated that if all US$3.5 billion of CBs are fully converted, PING AN's number of issued shares will increase by 3.2% to 3.3%. Meanwhile, a US$3.5 billion injection into Ping An Life would theoretically raise its core solvency ratio to 125.3%, up from 118.8% in 1Q24.

　　Related NewsUBS: If PING AN (02318.HK) Issues US$2B-US$5B CB, Full Exercise Will Cause 1.8-4.9% Dilution Impact

　　Although the issuance will help strengthen PING AN's capital strength, Citi expected the group's H-shares to come under short-term pressure due to the delta hedging actions brought about by the CBs. Citi currently has a Buy rating on PING AN, with an H-share target price of HK$52.6.

　　(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2024-07-16 12:25.)

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