Why didn't I make money on the Covestro convertible bond?
Because I didn't understand the market conditions and failed to analyze the bond's features properly.
Additionally, I overlooked the risks involved and didn't set appropriate stop-loss points.
This led to losses instead of gains, and I missed the opportunity to profit from the investment.

Kewo Convertible Bonds have been held since the initial subscription, and I even kept a spare to analyze the pattern. When the price later dropped to around 110, I continued to buy a few more shares. Who knew that it would keep falling and falling, and now it’s been five full years. Meanwhile, other old Ding convertible bonds have generally risen above 140, but this convertible bond still drags behind, making the holding experience extremely poor. After rebounding to break even in 2025, I finally sold most of it, leaving one to remind myself of the wasted time.

It’s said that bad stocks can have good bonds, and good stocks can have bad bonds. At first, Kewo was very popular, mainly focusing on high-end vacuum cleaners. But as the real estate market cooled, Kewo’s stock price also declined steadily over the years. Last year, when the market started to pick up, the stock only rebounded briefly. Most of the time, it kept falling, and importantly, Kewo never considered a downward revision.

First, the premium rate of Kewo’s convertible bonds has long exceeded 100%, and in recent days, it even surpassed 200%. The stock’s poor performance contrasts with the bond’s excess. The conversion price of Kewo’s convertible bonds is set very high, at 173.8 yuan per share. Perhaps the management didn’t expect their stock price to fall so much when issuing the bonds. Currently, Kewo’s stock price has been hovering below 100, even around 60-70.

Second, the redemption price at maturity for Kewo’s convertible bonds is relatively low, only 110 after six years. This results in low annual interest payments. Rated AA, Kewo’s convertible bonds pay the minimum interest for this grade, with only 2% in the final year. In comparison, other bonds of similar grade pay between 2.5% and 3.2%. So, even holding the bonds for income, the experience is quite poor.

Third, Kewo’s willingness to revise downward is weak, practically nonexistent. The company almost every six months issues announcements stating they will not lower the conversion price of the bonds.

Lesson: If a company repeatedly, persistently, and firmly announces that it will not revise downward, it indicates a strong reluctance to dilute equity and treats the convertible bonds purely as low-interest loans. The bargaining value of such bonds’ downward revisions is very low. If the stock also shows no signs of improvement, it’s better to sell early and look elsewhere.

I’ve been too dull—this is my five-year observation and summary.