Core Viewpoint - The recent volatility in the A-share market has led to adjustments in the valuation of convertible bonds, with significant price drops observed in specific bonds like Zhongchong Convertible Bond 2 and Jiazhe Convertible Bond, raising concerns about valuation logic and forced redemption risks [1][4]. Group 1: Market Performance - On March 16, the Zhongzheng Convertible Bond Index experienced a maximum intraday decline of over 1.5%, but the drop narrowed to 0.36% due to a rebound in major A-share indices [1]. - Zhongchong Convertible Bond 2 opened down 9.85% and closed down 16.74%, priced at 148.70 yuan per bond [3]. - Jiazhe Convertible Bond also saw a significant decline, closing down 15.53%, which was greater than the 6.98% drop of its underlying stock, priced at 215.714 yuan per bond [4]. Group 2: Forced Redemption and Market Reactions - The sharp decline in Zhongchong Convertible Bond 2 was triggered by a forced redemption announcement from Zhongchong Co., which stated that the bond's conditional redemption clause was activated due to the stock price exceeding 130% of the conversion price for 15 trading days [4]. - The competitive landscape in the pet economy has led to a decline in Zhongchong Co.'s stock price, causing investors to flee as the forced redemption deadline approached, resulting in a price drop of over 18% during the day [4]. - Jiazhe Convertible Bond also triggered its conditional redemption clause, and with its maturity date approaching, high premium rates became unsustainable, prompting investors to exit early [6]. Group 3: Convertible Bond Valuation Trends - The valuation of newly listed convertible bonds has compressed due to recent market conditions, with significant drops observed in bonds like Jin 05 and Nipe 02, despite their high conversion premiums of 65.74% and 71.05%, respectively [10]. - The number of convertible bonds triggering forced redemption has been increasing, with 32 bonds reported in February and 15 in March, indicating a high redemption ratio [10]. - The main pressure on convertible bonds has shifted from redemption risks to liquidity pressures, as market sensitivity to redemption expectations has increased, leading to a compression of premium rates [11]. Group 4: Future Outlook - Tianfeng Securities suggests that while convertible bond valuations are under pressure, some bonds may present trading value post-adjustment, particularly those with low option valuations [12]. - The overall valuation of convertible bonds may face downward pressure due to increased supply expectations, but opportunities may arise for bonds with longer remaining maturities and favorable fundamentals after rapid premium compression [12].

Core Insights - The report analyzes the investment value of the convertible bond "NaiPu Zuan 02" (123265.SZ), highlighting its standard terms and conditions, which provide a safety margin and strong equity characteristics, making it suitable for defensive investors [1][12]. Group 1: Bond Characteristics - The bond has a total issuance size of 450 million yuan, with a maturity of 6 years and a structured coupon rate that increases over time, starting from 0.20% in the first year to 2.50% in the sixth year [13]. - The bond's initial conversion price is set at 38.44 yuan per share, with a redemption price of 114 yuan, and it has an A+ rating for both the issuer and the bond itself, indicating a manageable level of default risk [12][13]. Group 2: Project Overview - The core fundraising project associated with the bond is a new materials mining wear parts manufacturing project in Peru, with a total investment of 571.44 million yuan, of which 32.5 million yuan will be funded by the bond proceeds, accounting for approximately 56.87% of the total project cost [2][14]. - The project aims to produce 12,000 tons of various new materials annually, enhancing the company's global production network across Latin America, Africa, and Central Asia [2][14]. Group 3: Comparable Bonds - The report compares the NaiPu Zuan 02 bond with similar convertible bonds in the machinery equipment sector, noting that their premium rates range from 20% to 70%, reflecting strong growth expectations for the industry [3][16]. Group 4: Fundamental Analysis of the Underlying Stock - The company is projected to achieve a revenue of 1.122 billion yuan in 2024, representing a year-on-year growth of 19.62%, with a net profit of 110 million yuan, reflecting a significant improvement in product structure and gross margin [4][18]. - A decline in profits is expected in 2025 due to the high base effect from 2024's EPC projects and increased depreciation from new production lines, but the core business is expected to remain stable, with double-digit order growth in key segments [4][18]. Group 5: Investment Recommendations - The report suggests that "NaiPu Zuan 02" has a high subscription value in the primary market, recommending an "active subscription and new issuance" strategy, while noting that the bond is priced at a mid-to-high level in a generally expensive market [5][19]. - In the secondary market, the bond is viewed as a trading vehicle rather than a long-term hold, with strategies focusing on dynamic management of positions based on conversion premiums and market conditions [5][19].

Group 1 - The core viewpoint of the news is that the recent surge in the convertible bond market is driven by changes in supply-demand dynamics, shifts in capital allocation preferences, and the unique characteristics of new bonds [1][6][8] - The new convertible bonds launched in January 2026 have shown remarkable performance, with all new issues starting strong and maintaining high prices, indicating a robust market sentiment [2][3] - The concentration of new bond issuers in the technology innovation and high-end manufacturing sectors aligns with current market investment themes, providing fundamental support for their performance [5][6] Group 2 - The supply of convertible bonds has been shrinking, leading to a scarcity of quality bonds, which has attracted significant investor interest and is expected to continue driving up valuations [6][7] - Strong capital support in a low-interest-rate environment has led to increased demand for yield-enhancing assets, further bolstering the convertible bond market [7][8] - New bonds have unique advantages, such as no strong redemption pressure and good liquidity, which contribute to their strong market performance despite fluctuations in underlying stocks [7][8] Group 3 - The high premium rates of new bonds, such as the 115.52% for Lianrui Convertible Bond, indicate that investors are willing to pay a significant premium for equity-like rights, reflecting optimistic expectations for the equity market [3][8] - Market participants are advised to focus on structural opportunities rather than a broad market rally, emphasizing the importance of individual bond selection in a high-valuation environment [8][9] - The anticipated issuance of new convertible bonds in 2026 is expected to be around 600 billion, which will further test the sustainability of current valuation levels in the market [9]

Group 1 - The China Convertible Bond Index rose by 1.54% to 515.97 points on February 3rd [1] - Notable gainers included Shuangliang Convertible Bond, Naipu Convertible Bond 02, Baichuan Convertible Bond 2, Huachen Convertible Bond, and Hangyu Convertible Bond, with increases of 15.74%, 13.90%, 12.45%, 8.42%, and 7.63% respectively [1] - The largest decliners were Huazhong Convertible Bond, Lianrui Convertible Bond, Weice Convertible Bond, Xinzhi Convertible Bond, and Huazheng Convertible Bond, with decreases of 6.53%, 1.32%, 0.99%, 0.87%, and 0.81% respectively [1]

1. Report Industry Investment Rating - There is no information provided regarding the report industry investment rating in the given content. 2. Core Viewpoints of the Report - Last week, the equity market style switched, with the small - cap style continuing to weaken. The convertible bond market adjusted with reduced volume, showing anti - decline properties, and the Wind Convertible Bond Weighted Index outperformed the Wind Convertible Bond Underlying Stock Weighted Index by 0.43 pcts. Convertible bond ETFs had a net subscription of 2.545 billion yuan, supporting the convertible bond valuation. [2] - In the short term, convertible bonds are expected to follow the underlying stocks in volatile consolidation, maintaining a structural market with rapid rotation. Large - cap and dividend convertible bonds are expected to continue to dominate. However, during the wide - range volatility period, convertible bonds have an asymmetric advantage. After the performance announcements, the risk - aversion sentiment in small - and micro - cap stocks will gradually ease, and the regulatory attitude will warm up. Before the Spring Festival, a new round of favorable and policy - game market is expected to start, with the market style switching back to small - cap dominance, which will drive the convertible bond market. [2] 3. Summary by Relevant Catalogs Policy Tracking - On January 27, the State Council issued the "Regulations for the Implementation of the Drug Administration Law of the People's Republic of China", which will come into force on May 15, 2026. It supports the development of new industrial formats, promotes the implementation of pharmaceutical innovation results, and improves various aspects of drug management. [3] - On January 29, the State Council issued the "Guidelines on Performance Comparison Benchmarks for Publicly Offered Securities Investment Funds", proposing 12 policy measures and identifying key service consumption areas such as transportation and household services, and strengthening support for cultivating new growth points in service consumption. [2][3] Secondary Market - **Equity Market**: Last week, major equity market indices closed down. The Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index fell 0.44%, 1.62%, and 0.09% respectively. Overseas, the Fed's hawkish nomination and the sharp adjustment in the precious metal market affected the global capital market. Domestically, although the profits of industrial enterprises above designated size increased in 2025, the January PMI index declined, and the market risk preference decreased. The small - and micro - cap stocks weakened, and the large - cap dividend stocks strengthened. [6] - **Convertible Bond Market**: Major convertible bond market indices followed the decline. The CSI Convertible Bond Index, Shanghai Convertible Bond Index, and Shenzhen Convertible Bond Index fell 2.61%, 2.56%, and 2.61% respectively, with an average daily trading volume of 9.0209 billion yuan, a marginal decrease of 308.6 million yuan from the previous week. Convertible bond ETFs showed differentiation, with a net subscription of 2.545 billion yuan in total, supporting the valuation. [7] - **Structural Analysis**: The large - cap style in the convertible bond market was dominant due to its anti - decline property. The median prices of convertible bonds and their underlying stocks were still at a high level, the conversion value quantile decreased, and the median valuation level increased slightly. The trading activity of underlying stocks decreased, while that of convertible bonds increased. [9] - **Industry Analysis**: All industries' convertible bonds fell. Construction materials, agriculture, forestry, animal husbandry, and fishery, food and beverage, and public utilities had relatively small average declines, while national defense and military industry and computer industries had larger average declines. The valuation of convertible bonds in different industries was differentiated. [10] - **Individual Bond Analysis**: Most convertible bonds rose. Baichuan Convertible Bond 2 led the rise with an increase of over 12%, while high - position convertible bonds such as Xinzhi Convertible Bond and Hangyu Convertible Bond had significant declines. [13] - **Price and Valuation**: The arithmetic average and median of convertible bond prices decreased. The arithmetic average of the conversion premium rate increased, and the median decreased. The arithmetic average and median of the pure - bond premium rate decreased. [24] Primary Market - **Issuance and Listing**: No new convertible bonds were issued last week. Lianrui Convertible Bond and Naipu Convertible Bond 02 were listed, and several convertible bonds were redeemed early and delisted. As of last Friday, the convertible bond market's outstanding scale was 55.2588 billion yuan, a decrease of 4.596 billion yuan from the beginning of the year and 3.682 billion yuan from the previous week. [30] - **Conversion**: Ten convertible bonds had a conversion ratio of over 5%, one more than the previous week. Some bonds had announced early redemption or were about to trigger the strong - redemption condition. [33] - **Approval Progress**: Star Semiconductor's convertible bond issuance was approved by the exchange. One convertible bond passed the review of the Issuance Examination Committee, with a total scale of 1.5 billion yuan. As of last Friday, eight convertible bonds were approved by the CSRC to be issued, with a total scale of 6.164 billion yuan. [34] - **Clause Tracking**: One convertible bond announced a downward revision of the conversion price, and two announced early redemption. Some bonds announced not to revise the conversion price downward or were about to trigger the downward - revision condition, and many bonds were expected to trigger the early - redemption condition. [35]

1. Report Industry Investment Rating - No industry investment rating is provided in the report. 2. Core Viewpoints of the Report - The sustainability of the polarized valuation depends on the direction of the equity market. The report makes three conjectures about the possible trends of the equity market and formulates corresponding convertible bond response plans [2][20]. - In the case of convertible bond prices and valuation indicators approaching the historical 100% quantile, if the spring rally continues, the Shanghai Composite Index breaks through 4200, and the market style shifts from small - cap to large - cap stocks, it is recommended to select individual convertible bonds in the growth technology sector [2][20]. - If the broad - based index continues the January shock trend and the small - cap style remains dominant, it is advisable to focus on core targets in popular sectors [2][20]. - If the equity market turns down, it is recommended to reduce positions first and then pay attention to defensive sectors [2][20]. 3. Summary by Relevant Catalogs Market Trends (2026/1/26 - 2026/1/30) Stock Market - The daily trading volume of the market remained high last week, with rapid rotation among sectors. The precious metals sector led the gains but had a large decline on Friday. Affected by the potential conflict risk between the US and Iran, the oil price soared, driving the performance of the A - share oil and gas sectors. The previous popular sectors such as commercial aerospace and space photovoltaics had significant corrections [8]. - Most of the Shenwan primary industries declined last week. The top - performing sectors were petroleum and petrochemicals (7.95%), communication (5.83%), coal (3.68%), non - ferrous metals (3.37%), and agriculture, forestry, animal husbandry, and fishery (1.82%); the bottom - performing sectors were national defense and military industry (-7.69%), power equipment (-5.10%), automobiles (-5.08%), and computers (-4.77%) [9]. Bond Market - The central bank's open - market operations were mainly net injections last week, and the capital market changed from tight to loose. The bond market sentiment was generally strong due to the intensified volatility of the equity market, frequent positive signals from the monetary policy, and rumors about new monetary policy tools. The 10 - year Treasury bond yield closed at 1.81% on Friday, down 1.86bp from the previous week [9]. Convertible Bond Market - Most convertible bond issues declined last week. The CSI Convertible Bond Index fell 2.61% for the whole week, the median price dropped 2.22%, and the calculated arithmetic average parity decreased 3.70% for the whole week. The overall market conversion premium rate increased 1.12% compared with the previous week [1][9]. - Most industries in the convertible bond market declined last week. The top - performing sectors were coal (0.57%), banks (-0.84%), agriculture, forestry, animal husbandry, and fishery (-0.87%), and building materials (-1.07%); the bottom - performing sectors were social services (-8.65%), national defense and military industry (-6.45%), computers (-5.51%), and electronics (-4.88%) [13]. - At the individual bond level, Tianzhun (machine vision), Baichuan Zhuan 2 (fine chemicals), Outong (data center power supply), Haomei (aluminum profiles), and Yunji (transportation machinery) led the gains; Xinzhi (AI application), Hangyu (commercial aerospace), Dongshi (driver training), Guanzhong (ecological restoration), and Huicheng (waste catalyst treatment) convertible bonds led the losses [1][14]. - The total trading volume of the convertible bond market last week was 422.855 billion yuan, with an average daily trading volume of 84.571 billion yuan, a slight decrease from the previous week [18]. Valuation Overview - As of January 30, 2026, for equity - biased convertible bonds, the average conversion premium rates for bonds with a parity in the ranges of 80 - 90 yuan, 90 - 100 yuan, 100 - 110 yuan, 110 - 120 yuan, 120 - 130 yuan, and above 130 yuan were 61.11%, 40.98%, 36.66%, 26.78%, 20.18%, and 20.8% respectively, at the 100%/100%, 98%/99%, 99%/100%, 98%/99%, 96%/99%, and 99%/99% quantiles since 2010/2021 [21]. - For bond - biased convertible bonds, the average YTM of bonds with a parity below 70 yuan was -4.65%, at the 1%/3% quantiles since 2010/2021 [21]. - The average implied volatility of all convertible bonds was 49.75%, at the 95%/99% quantiles since 2010/2021. The difference between the convertible bond implied volatility and the long - term actual volatility of the underlying stock was 8.36%, at the 96%/98% quantiles since 2010/2021 [21]. Primary - Market Tracking - No convertible bonds were announced for issuance last week (2026/1/26 - 2026/1/30). Lianrui Convertible Bond and Naipu Zhuan 02 were listed [28]. - Lianrui Convertible Bond (118064.SH): The underlying stock is Lianrui New Materials (688300.SH), belonging to the basic chemical industry. As of January 30, its market value was 16.128 billion yuan. The issued convertible bond scale is 695 million yuan, with a credit rating of AA. The funds after deducting issuance fees are planned for specific projects [28]. - Naipu Zhuan 02 (123265.SZ): The underlying stock is Naipu Mining Machinery (300818.SZ), belonging to the machinery equipment industry. As of January 30, its market value was 8.368 billion yuan. The issued convertible bond scale is 450 million yuan, with a credit rating of A+. The funds after deducting issuance fees are used for a project in Peru and to supplement working capital [29]. - As of the announcement on January 30, there are no convertible bonds announced for issuance or listing in the next week (2026/2/2 - 2026/2/6). Last week (2026/1/19 - 2026/1/23), 4 companies' applications were newly accepted by the exchange, 4 companies' plans passed the general meeting of shareholders, and 3 companies announced board plans. As of now, there are 100 convertible bonds awaiting issuance, with a total scale of 155.9 billion yuan, among which 8 have been approved for registration, with a total scale of 6.16 billion yuan [30][31].

Report Industry Investment Rating No relevant content provided. Core Viewpoints of the Report - The sustainability of polarized valuations depends on the direction of the equity market. The report presents three scenarios for the equity market and corresponding convertible bond strategies: 1) If the spring rally continues, the Shanghai Composite Index breaks through 4,200, and the market style shifts from small - cap to large - cap, it is recommended to select convertible bonds related to the battery, automotive/robot/intelligent driving, edge - side AI, and innovative drug/CDMO sectors in the growth technology sector; 2) If the broad - based index continues the January oscillation and the small - cap style remains dominant, focus on core targets in popular tracks such as commercial space, AIDC - related gas turbines/liquid cooling, semiconductor equipment and materials, power semiconductors, and chemical industries; 3) If the equity market turns down, it is recommended to reduce positions first and then focus on defensive sectors like banks, power, and pig farming [2][20]. Summary According to Relevant Catalogs Market Focus from January 26 - January 30, 2026 - **Stock Market**: Daily trading volume remained high with rapid sector rotation. The precious metals sector led the gains but had a significant decline on Friday. The A - share oil and gas sector performed well due to the potential conflict risk between the US and Iran. Some previously popular sectors such as commercial space and space photovoltaics had significant pullbacks. Different sectors rose and fell on different days. In terms of industries, most Shenwan primary industries declined, with petroleum and petrochemicals, communications, coal, non - ferrous metals, and agriculture, forestry, animal husbandry, and fishery leading the gains, while national defense and military industry, power equipment, automotive, and computer sectors performing poorly [8][9]. - **Bond Market**: The central bank's open - market operations were mainly net injections, and the money market shifted from tight to loose. Bond market sentiment was generally strong. The 10 - year Treasury bond yield closed at 1.81% on Friday, down 1.86bp from the previous week [9]. - **Convertible Bond Market**: Most convertible bond issues declined. The CSI Convertible Bond Index fell 2.61% for the week, the median price dropped 2.22%, the arithmetic average parity fell 3.70%, and the overall market conversion premium rate increased 1.12% compared to the previous week. The arithmetic average conversion premium rates of convertible bonds in different parity ranges changed, and they were at high percentile values since 2023 [9]. Viewpoints and Strategies from February 2 - February 6, 2026 - After the convertible bond market adjusted with the equity market last week, the sustainability of polarized valuations depends on the equity market's direction. Three scenarios and corresponding strategies are proposed as mentioned in the core viewpoints [2][20]. Valuation Overview - As of January 30, 2026, the average conversion premium rates of equity - biased convertible bonds in different parity ranges were at high percentile values since 2010 and 2021. The average YTM of debt - biased convertible bonds with a parity below 70 yuan was at a low percentile value. The average implied volatility of all convertible bonds and the difference between the convertible bond implied volatility and the long - term actual volatility of the underlying stocks were at high percentile values [21]. Primary Market Tracking - **Last Week (January 26 - January 30, 2026)**: No convertible bonds were announced for issuance. Lianrui Convertible Bond and Naipu Convertible Bond 02 were listed. Lianrui Convertible Bond has a scale of 695 million yuan, and Naipu Convertible Bond 02 has a scale of 450 million yuan [28][29]. - **Future Outlook**: No convertible bonds are announced for issuance or listing in the next week (February 2 - February 6, 2026). As of now, there are 100 convertible bonds waiting to be issued, with a total scale of 155.9 billion yuan, of which 8 have been approved for registration, with a total scale of 6.16 billion yuan [30][31].

Core Viewpoint - The recent surge in convertible bond valuations, particularly the consistent 57.3% first-day increase for new bonds, reflects a high market enthusiasm but also raises concerns about potential risks due to overvaluation [1][2][4]. Group 1: Market Performance - New convertible bonds have been experiencing significant first-day price increases, with "耐普转02" rising 57.3% on its debut, following a trend observed since 2026 [1][3]. - The average first-day increase for new convertible bonds has consistently reached 57.3%, indicating a strong market demand [2][4]. - The "联瑞转债" bond saw a cumulative increase of over 126% within three days of its listing, showcasing the robust performance of new bonds [3]. Group 2: Valuation Concerns - Current pricing of new convertible bonds suggests an overly optimistic outlook for the stock market, with many bonds priced significantly above market averages [4][6]. - The average conversion premium for new bonds, such as "联瑞转债" at 115%, is substantially higher than the market average of 46%, indicating high valuations [6][7]. - The convertible bond market is currently at historical high valuation levels, with premium rates at the 100th percentile for both the past year and five years [7][8]. Group 3: Market Dynamics - Despite a 1.73% decline in the 中证转债 index, the new bond market remains strong, driven by limited supply and high demand [9]. - The average success rate for new bond applications this year is only 0.0014%, highlighting the competitive nature of the market [9]. - Investors are increasingly favoring stock purchases over convertible bonds due to high valuations, with new bonds attracting speculative capital [9]. Group 4: Historical Context and Future Outlook - The current market conditions echo the 2015 scenario where high-priced convertible bonds underperformed due to overvaluation [10]. - Historical trends suggest that high premium convertible bonds often fail to meet expectations, leading to potential losses for investors [10]. - Long-term issuance of new bonds may be necessary to cool down the market, as the demand from fixed-income investors remains strong [11].

Core Viewpoint - The China Convertible Bond Index experienced a decline of 1.47%, closing at 521.94 points on January 30, indicating a negative trend in the convertible bond market [1]. Group 1: Declining Bonds - The following convertible bonds saw significant declines: Jin 25 Convertible Bond (-12.56%), Xin Zhi Convertible Bond (-9.87%), Fu Li Convertible Bond (-7.50%), Xin Fu Convertible Bond (-6.60%), and Hang Yu Convertible Bond (-6.42%) [1]. Group 2: Rising Bonds - Conversely, the following convertible bonds reported notable gains: Nai Pu 02 Convertible Bond (+30.00%), Lian Rui Convertible Bond (+17.39%), Fu Miao Convertible Bond (+7.22%), Bai Chuan 2 Convertible Bond (+6.25%), and Guang Lian Convertible Bond (+4.73%) [1].

Core Viewpoint - The Shenzhen Stock Exchange announced a temporary suspension of trading for the convertible bond "Nai Pu Zhuan 02" (123265) after its trading price increased by 30% or more compared to the issuance price [1] Group 1 - The trading suspension began at 9:30 AM and is set to resume at 2:57 PM [1]