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<Research>CLSA: BABA-W Issues Zero-coupon CB w/ Higher Conversion Premium; Purpose Believed to Not to Be to Cut Stake in ALI HEALTH
Recommend 19 Positive 40 Negative 22 |
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BABA-W (09988.HK) (BABA.US) announced the issuance of over $12 billion worth of zero coupon convertible bonds (CB) exchangeable into shares of ALI HEALTH (00241.HK), with an initial conversion price equivalent to $6.23 per ALI HEALTH share, a premium of 37.8% to its closing price yesterday (3 July). The terms of this deal are similar to that of the zero-coupon CB issued by BIDU-SW (09888.HK) in March 2025 targeting shares of TRIP.COM-S (09961.HK) (TCOM.US), and the conversion price premium is also similar, according to a research report issued by CLSA. If the bonds are fully converted, BABA-W's shareholding in ALI HEALTH will be reduced from 64% to 52%. However, considering the higher conversion premium, the possibility of exercising the call by creditors is relatively low, implying that it is unlikely for BABA-W to reduce its stake significantly in the short term. CLSA believed that BABA-W's main objective is not to cut its stake in ALI HEALTH, but to use its high-quality underlying assets to finance at a low coast. The broker added that BABA-W has already completed the placement before the market opens today, which is believed to minimize the share price volatility. AAStocks Financial News Website: www.aastocks.com |
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