Longji Shares Group Convertible Bond Pricing Case Study

At the end of 1990,my country created an A-share trading market.Since the pilot program of the A-share market began,the openness and standardization of my country’s secondary market has deepened year by year,and innovative financial instruments have also emerged one after another.The emergence of the stock market and innovative financial instruments has greatly eased the investment and financing difficulties of some companies.At the same time,these financial instruments have also been sought after by a large number of investors.Among them,the convertible bond market has been extremely hot in recent years.It combines the nature of "shares" and "debts" and is favored by both investment and financing parties.For enterprises,after the issuance and listing of convertible bonds,it is in the form of debt issuance to raise funds,but there are implicit options embedded in it,that is,this method reduces the financing cost of the issuing enterprise.For investors,convertible bonds can choose to hold for a long time,or they can be bought and sold in the market.This not only gives investors a stable and continuous interest income,but also helps some investors expand a certain profit margin.However,because my country’s convertible bonds are inlaid with many clauses when they are issued,the structure is very complicated,making it difficult for ordinary investors to make accurate judgments on the value of convertible bonds when purchasing convertible bonds.Under this circumstance,this article uses a combination of case analysis and pricing analysis to take the Long 20 convertible bond(113038)issued by the Ashare listed company Longji shares(601012)in 2020 as the target,and conduct a review of its issuance process.Perform quantitative analysis on the underlying price.This article uses case analysis methods and model quantitative analysis methods to analyze the convertible bonds Long 20 convertible bonds issued by the listed company Longji shares in the A-share market as a case.The basic terms and special terms of Long 20 Convertible Bond(113038)are introduced in detail,the research results of domestic and foreign scholars on convertible bonds are sorted out,the commonly used convertible bond pricing model methods are explained,and the factors affecting the price of convertible bonds are analyzed and put forward.The BS pricing method and the least square Monte Carlo simulation method(LSM)were used to quantitatively analyze the value of the convertible bonds of Longji shares,and the results of the convertible bond pricing based on these two methods were compared.On the basis of the above analysis and research,take the convertible bonds issued by Longji shares as an example,analyze the impact of various terms in the issuance on the convertible bonds,and discuss the pricing of the Long 20 convertible bonds.Provide a certain reference to convertible bond investment and financing in the market.This paper conducts a series of analysis and quantitative calculations from the issuance and listing of convertible bonds to pricing and valuation.Through the analysis of empirical results,this paper believes that the value of Shanglong 20 convertible bonds is undervalued by the market at the point of valuation before the listing of convertible bonds.There is a lot of room for new appreciation in the issue price.And through the analysis of the deviation of the pricing results of the two models,the discussion on the pricing of Long 20 convertible bonds is extended to the entire convertible bond market,and the following conclusions are drawn: The first is the error of the pricing model,which is mainly reflected in the applicability,which affects the accuracy of pricing to a certain extent;the second is that the relevant terms of the convertible bond are not perfect,and the terms of the issuer of the convertible bond are the same,and there is no innovation based on the different circumstances of the enterprise.;Third,there is no authoritative convertible bond index in the convertible bond market as a reference;fourth,the supervision is not in place,and the “t+0” system is implemented for convertible bonds,which amplifies investors’ speculative psychology and requires regulators to conduct appropriate measures.Guidance and strict supervision.In response to the above problems,this article puts forward corresponding suggestions from different angles,which improves the practicability of this article.Finally,the full text is summarized and suggestions are made,aiming to provide issuers with an idea of issuing convertible bonds and pricing them,and also give investment a certain reference value,reduce blindly following the trend of investment,and reduce the investment risk of investors.