Market Review - Convertible bonds have continued to rise alongside equities, with the Shanghai Composite Index increasing by 3.74% in July, while the CSI Convertible Bond Index rose by 2.87%, underperforming equities by 0.87 percentage points [8][15] - The average closing price of convertible bonds reached 140.73 yuan as of July 31, marking a 4.44% increase from the end of June and a new high for 2023 [15][17] - The average conversion premium for convertible bonds was 39.20%, with a weighted average of 40.08%, both at the lowest levels since January 2023 [17][19] Strategy Layout - The recommended strategy involves a non-typical barbell approach, focusing on sectors such as military industry, AI computing power, and low-altitude economy, while also including low-volatility dividends and high-cost performance varieties to navigate potential market fluctuations [3][37] - The previous convertible bond selection yielded a return of 19.46% from May to July, significantly outperforming the CSI Convertible Bond Index's 8.17% increase, with all holdings generating positive returns [36][37] - The report suggests maintaining the barbell strategy, emphasizing high-quality stocks in popular themes and low-priced convertible bonds to enhance defensive positions [3][37] Changes in Holder Structure - As of July 2025, the total market for convertible bonds on the Shanghai Stock Exchange was 399.31 billion yuan, a decrease of 6.297 billion yuan from the previous month [2][24] - The top five holders of convertible bonds included public funds (1,419.79 billion yuan, 36%), corporate annuities (734.97 billion yuan, 18%), and insurance institutions (353.05 billion yuan, 9%) [2][24] - On the Shenzhen Stock Exchange, the total market for convertible bonds was 318.65 billion yuan, with public funds increasing their holdings by 8.115 billion yuan [2][24] Primary Market Dynamics - In July, nine new convertible bonds were listed, with four exceeding 1 billion yuan in issuance, indicating a positive market sentiment towards new issues [31][32] - The report notes that all new bonds had initial prices above 127 yuan, reflecting strong demand [31][32] - Several companies have received approval for convertible bond issuance, with ongoing applications and proposals in various stages of the approval process [31][34]

Core Viewpoint - The company held its 19th meeting of the 4th Supervisory Board on August 5, 2025, where it approved the proposal to amend its articles of association, which will be submitted for shareholder approval [1]. Group 1 - The meeting was conducted in accordance with relevant laws and regulations, with all 9 supervisors present [1]. - The proposal to amend the company's articles of association received unanimous support, with 9 votes in favor and no votes against or abstentions [1].

Group 1: Convertible Bond Market Outlook - The convertible bond market showed strong performance in June, with both equal-weighted and weighted indices reaching new highs for 2025, yielding returns of 10% and 7% respectively [11][11] - The revaluation of bank stocks, combined with strong conversion of bank convertible bonds, is expected to sustain the strength of bank convertible bonds due to their increasing scarcity [11] - Small-cap convertible bonds have surged due to favorable industry trends and ample liquidity, supported by the performance of small-cap stocks and the absence of concerns over rating risks [11][11] - A "barbell strategy" combining bank convertible bonds, small-cap growth convertible bonds, and low-priced, low-volatility convertible bonds remains effective [11] Group 2: Recommendations for July - Suggested convertible bonds to focus on in July include: Ziyin Convertible Bond, Qingnong Convertible Bond, Pudong Development Convertible Bond, Green Movement Convertible Bond, Tian 23 Convertible Bond, Aowei Convertible Bond, Daotong Convertible Bond, Liyang Convertible Bond, Chao Sheng Convertible Bond, and Huazheng Convertible Bond [12][11] Group 3: Dollar Weakness and De-dollarization - Recent dollar weakness is primarily driven by expectations of interest rate cuts, with the dollar index dropping below 97, marking a 4.7% depreciation since mid-May [13][14] - The narrative of "de-dollarization" should not be conflated with cyclical dollar weakness; the impact of fundamental trends on the dollar's value may be limited [14][15] - The potential for a dollar rebound exists due to resilient employment and inflation pressures, which could delay interest rate cuts and support the dollar index [15][16] Group 4: Hong Kong Stock Market and Foreign Investment - The Hong Kong stock market has seen increased attention, with foreign capital flowing in, particularly through cornerstone investors in IPOs [21] - The proportion of foreign cornerstone investors in Hong Kong IPOs has risen significantly, indicating a strong demand for Chinese assets [21] - A-H premium has narrowed, with some stocks showing valuation premiums in Hong Kong, reflecting ongoing foreign interest in core Chinese assets [21] Group 5: Pharmaceutical Industry Performance - The pharmaceutical sector has shown a 3.6% increase recently, driven by supportive policies for innovative drugs and the initiation of negotiations for the medical insurance directory [31] - Companies in the pharmaceutical sector are expected to report significant profit growth, with several companies projecting over 100% growth in net profit for Q2 2025 [24][32]

Core Viewpoint - Jiangsu Zijin Rural Commercial Bank maintains a stable credit rating of AA+ for both its entity and its convertible bonds, indicating strong financial health and operational stability [1][4]. Company Overview - Jiangsu Zijin Rural Commercial Bank was established in March 2011 and has a registered capital of 3.661 billion yuan as of the end of 2024 [10][20]. - The bank operates primarily in Nanjing, with a total of 135 branches, including 1 head office, 3 branches, and 122 secondary branches [10][22]. Financial Performance - As of the end of 2024, the bank's total assets reached 269.944 billion yuan, with a net profit of 1.624 billion yuan, reflecting a stable financial performance despite a slight decline in net interest margin [10][9]. - The non-performing loan ratio was reported at 1.24%, indicating a relatively healthy asset quality compared to industry standards [10][14]. Market Position - The bank holds a market share of 3.51% in deposits and 2.72% in loans within Nanjing, ranking in the upper-middle tier among local competitors [22][24]. - The bank's core liabilities are stable, with a high proportion of savings and time deposits, contributing to its financial stability [6][14]. Business Strategy - The bank focuses on serving agriculture, small and medium enterprises, and urban-rural integration, with a strategic emphasis on the "Ning-Zhen-Yang" integration plan [22][25]. - It has introduced various financial products tailored for small and micro enterprises, enhancing customer engagement and service delivery [26]. Risk Factors - The bank faces challenges from a competitive local banking environment and macroeconomic pressures, which have led to a decrease in corporate deposits by 9.24% year-on-year [25][9]. - The bank's asset quality is under scrutiny, particularly in the real estate and construction sectors, where non-performing loans are higher than the overall average [7][14]. Future Outlook - The bank's position in the Yangtze River Delta and its role as a pilot for financial reform provide a favorable growth outlook, although increased competition and economic conditions warrant close monitoring [5][12]. - Potential factors for rating upgrades include significant improvements in profitability and capital strength, while downgrades could arise from deteriorating financial conditions or market position [5][4].

Core Viewpoint - The recent announcement by Nanjing Bank regarding the early redemption of its convertible bonds indicates a trend in the banking sector where multiple banks are triggering conditional redemption clauses due to rising stock prices [1][2][5]. Group 1: Convertible Bonds Redemption - Nanjing Bank's "Nan Yin Convertible Bonds" have triggered the conditional redemption clause, leading to the decision for early redemption [1][2]. - The stock price of Nanjing Bank has been above 130% of the conversion price for 15 out of 19 trading days, which meets the criteria for redemption [2]. - Other banks, including Suzhou Bank and Hangzhou Bank, have also seen their convertible bonds trigger similar redemption clauses this year [4]. Group 2: Market Trends and Predictions - The banking sector has experienced a significant upward trend, contributing to the triggering of early redemptions for several convertible bonds [5][6]. - As of June 10, various bank stocks, including Jiangsu Bank and Nanjing Bank, reached new highs, indicating strong market performance [6][7]. - Analysts predict that the market may face a supply-demand imbalance for convertible bonds due to the lack of new issuances, potentially leading to price increases for existing bonds [4]. Group 3: Future Outlook for Banking Stocks - Institutions remain optimistic about the absolute value of banking stocks, especially during the traditional dividend distribution period in June and July [8]. - Historical data shows that the banking sector has had positive absolute and relative returns during this period in many years [8]. - The implementation of expansionary policies aimed at stabilizing the economy is expected to benefit the banking sector in the medium to long term [8].

Core Viewpoint - The rapid redemption of bank convertible bonds is driven by the strong performance of underlying bank stocks, leading to a decrease in the number of outstanding convertible bonds in the market [1][2][4]. Group 1: Bank Convertible Bonds Redemption - Hangzhou Bank announced the early redemption of "Hangyin Convertible Bonds" due to triggering conditional redemption clauses, marking it as the third bank convertible bond to undergo forced redemption this year [2][3]. - As of May 26, 2025, Hangzhou Bank's stock price had closed above 130% of the bond's conversion price for 15 trading days, triggering the redemption [2][3]. - The number of outstanding bank convertible bonds is expected to decrease from 10 to 7 by the end of the year, with several bonds nearing redemption conditions [4]. Group 2: Market Dynamics and Trends - The strong performance of the banking sector, supported by high dividends and market risk aversion, has led to a rise in the China Securities Bank Index by over 7% this year [2][4]. - The scarcity of large convertible bonds is expected to increase due to the accelerated redemption process and the lack of new issuances in 2023 [4][5]. - Institutional reports indicate that the supply-demand imbalance for large convertible bonds will become more pronounced, with the total outstanding amount potentially decreasing from 170 billion to around 100 billion [4][5]. Group 3: Conversion Rates and Capital Supplementation - Historically, the conversion rates of bank convertible bonds have been low due to factors such as depressed stock prices and high conversion premiums [5][6]. - However, with rising stock prices, conversion rates are expected to improve, as evidenced by previous forced redemptions where conversion rates exceeded 99% [6]. - As of May 28, the unconverted balance of Hangyin Convertible Bonds has decreased significantly, indicating a trend towards higher conversion rates [6].

Core Points - The company announced a cash dividend distribution of 0.05 yuan per share for the fiscal year 2024, approved at the shareholders' meeting on May 20, 2025 [2][15] - The total cash dividend to be distributed amounts to approximately 183 million yuan, based on a total share capital of 3,660,984,783 shares [4][15] - The dividend will be distributed to all shareholders registered with the China Securities Depository and Clearing Corporation Limited Shanghai Branch as of the close of trading on the registration date [3][4] Distribution Details - The cash dividend will be distributed through the China Securities Depository and Clearing Corporation, with shareholders who have completed designated transactions able to receive their dividends on the payment date [5] - For shareholders who have not completed designated transactions, the dividends will be held by the China Securities Depository and Clearing Corporation until the transactions are completed [5] - The company will not withhold individual income tax for natural person shareholders and securities investment funds at the time of dividend distribution, with tax obligations calculated based on the holding period of the shares [9][10] Convertible Bond Adjustment - Following the dividend distribution, the conversion price of the company's convertible bonds (Ziyin Convertible Bonds) will be adjusted from 3.70 yuan to 3.65 yuan per share, effective June 6, 2025 [15][16] - The adjustment is in accordance with the terms outlined in the bond issuance prospectus, which stipulates that the conversion price will be adjusted based on cash dividends distributed [14][15] - The trading of the convertible bonds will be suspended from May 28, 2025, until the registration date for the dividend distribution [16]

Core Viewpoint - Hangzhou Bank has announced the early redemption of its convertible bonds, indicating a potential further shrinkage in the scale of bank convertible bonds in China [1][7]. Group 1: Early Redemption Announcement - Hangzhou Bank triggered the conditional redemption clause for its convertible bonds (Hangyin Convertible Bonds) on May 26, as the stock price exceeded the conversion price for 15 trading days [3][5]. - The conversion price for the bonds is set at 11.35 CNY, while the stock price reached a new high of 16.02 CNY on May 27, resulting in a conversion premium rate of approximately -0.11% [1][3]. Group 2: Financial Implications - The early redemption allows Hangzhou Bank to utilize the funds to strengthen its capital base, enhancing its financial stability [1][7]. - The mechanism of forced redemption is designed to protect both the issuing company and investors, while also maintaining market stability [5]. Group 3: Market Trends - The market for bank convertible bonds has been declining, with several small and medium-sized banks opting for early redemption as their stock prices rise [7][10]. - Currently, there are only 10 types of bank convertible bonds remaining in the market, indicating a significant reduction in the overall scale of bank convertible bonds [8][9].

Group 1 - The company will implement a cash dividend distribution of 1 yuan (including tax) for every 10 shares held by ordinary shareholders, with 0.5 yuan (including tax) as the dividend portion [2] - The profit distribution plan has been approved by the company's 2024 annual general meeting held on May 20, 2025 [2] - The adjustment of the conversion price for the convertible bonds will be made according to the terms outlined in the company's prospectus [2] Group 2 - The company will disclose the implementation announcement of the dividend distribution and the adjustment of the convertible bond conversion price on May 29, 2025 [3] - The "Ziyin Convertible Bond" will be suspended from conversion from May 28, 2025, until the record date for the dividend distribution, and will resume conversion on the first trading day after the record date [3] - Holders of convertible bonds wishing to enjoy the dividend distribution must convert their bonds before May 27, 2025 [3]

Core Viewpoint - Zijin Bank (601860) announced a temporary suspension of the conversion of its convertible bonds during the period from May 28, 2025, to the equity distribution record date, with conversion resuming on the first trading day after the record date [1] Summary by Relevant Sections - **Dividend Distribution** - The 2024 annual equity distribution plan includes a cash dividend of 1 yuan (before tax) for every 10 shares, with a mid-year cash dividend of 0.5 yuan (before tax) already distributed [1] - The proposed cash dividend of 0.5 yuan (before tax) will be distributed in addition to the mid-year dividend [1] - **Impact on Convertible Bonds** - The implementation of the profit distribution plan will lead to an adjustment in the conversion price of the convertible bonds for the current period [1]