More Than 40 A-Share Companies Plan To "Spin Off And Go Public" To Guard Against "Swindle" Spin Off Disorder

On August 10, Lizhu group announced that Lizhu Group intends to spin off its subsidiary Lizhu reagent A shares. According to the incomplete statistics of 21st century economic report, more than 40 listed companies have announced their plans to split up and list since the new regulations were issued, including 9 pharmaceutical enterprises which announced the domestic listing of their subsidiaries. Prior to that, there were more than 100 listed companies in the A-share market that met the conditions of spin off and listing, according to a person close to the regulatory authorities.

According to Shi lichen, founder of Beijing Dingchen Pharmaceutical Management Consulting Co., Ltd., the group's multi-disciplinary layout does not affect the development of the main body. At the same time, after the separate business is listed, it can develop and operate independently, broaden financing channels, and achieve a win-win situation. Wang Yi, an analyst with Great Wall Securities, also believes that the implementation of the new rules on spin off listing will help improve the basic system of the capital market, give full play to the role of direct financing, especially equity investment, and further improve the efficiency of capital formation.

A number of Listed Companies in China have been listed for three consecutive years (hereinafter referred to as "the listing of Listed Companies in China for three consecutive years") and the listed companies have been listed for three consecutive years.

According to the CSRC, the next step is to strengthen the supervision of the whole process of spin off, and crack down on market chaos such as "swindle style" spin off, false spin off and speculation on the concept of spin off, as well as illegal behaviors such as insider trading and market manipulation.

According to Shen Wan Hongyuan research paper, improper spin off listing may also lead to problems such as "hollowing out" of parent company's business, inability of substantial independence of subsidiary business, excessive proportion of related party transactions, weakening of parent-child synergy effect, cash arbitrage by large shareholders through spin off listing, and implementation of benefit transmission, which will harm the interests of small and medium-sized shareholders. It is suggested that the separation of listed companies should not be conducive to enhancing the liquidity of the parent companies, but also from the perspective of enhancing the liquidity of the listed companies.

A number of pharmaceutical companies split up for listing

Lizhu group announced on August 10 that it intends to spin off its holding subsidiary, Lizhu reagent A shares. After the spin off, the equity structure of Lizhu group will not change, and the control right of Lizhu reagent will still be maintained.

Through this separation, Lizhu reagent was listed independently as a supplier of diagnostic reagents and equipment of Lizhu group. The capital strength was enhanced through listing financing, and the dominant position of Lizhu group in the aspect of diagnostic reagents and equipment was strengthened with the help of capital market. The spin off will further enhance the profitability and comprehensive competitiveness of the company and its subsidiaries.

In addition to Lizhu group, there have been a number of pharmaceutical listed companies said that they will be listed separately. According to incomplete statistics, the companies that have announced the spin off and listing since this year include Changchun hi tech, Hualan biology, Kelun pharmaceutical, Liaoning Chengda, tianshli, Dean diagnostics, Huabang health and Yan'an Bikang.

Among them, tiansheli has a high degree of concern in the above companies. Prior to that, tianshli biological intends to be listed on the main board of Hong Kong. To August, the company will be listed on the board of bioscience.

In Shi lichen's view, many pharmaceutical listed companies pile up to be listed on the stock market. On the one hand, it can enhance the competitiveness of the company and its subsidiaries, obtain more support from the capital market, and the independent financing of the subsidiary will no longer need to rely on the blood transfusion of the parent company; on the other hand, due to the characteristics of the medicine itself, there are many risks in the research and development of innovative drugs, so it is more advantageous to split up various sectors for listing in the company Moreover, it is a better way to avoid risks by holding shares.

Before that, some people close to the regulatory disclosed that the number of companies meeting the threshold of the new rules for spin off is less than 100. According to the reporter's incomplete statistics of the 21st century economic report, more than 40 listed companies have announced plans to spin off and list on the stock market.

Among them, one-third of the listed companies are state-owned enterprises and two-thirds are private enterprises. Most of them choose to be listed on the growth enterprise market and the science and technology innovation board, accounting for about 70%, and some of them have made substantial progress. For example, after the announcement of the new regulations, China railway construction heavy industry Co., Ltd., which was the first to announce the separation of its subsidiary, applied for listing on the science and Technology Innovation Board of its subsidiary Tiejian Heavy Industry Co., Ltd., which was accepted on June 15 this year, and its project dynamic was updated to "inquired" on July 14.

Whole process supervision of spin off

Before the implementation of the new deal, sun nianrui, deputy director of the supervision department of listed companies under the CSRC, said in response to media questions that the spin off would not harm the interests of listed companies. From the market level, enterprises have their own constraints on the spin off listing. After the spin off, the subsidiaries are still within the scope of the consolidated statements of the listed companies, and the listed companies still have the right to return. Second, it can promote the more reasonable valuation of the spin off subsidiaries and the valuation of the parent company.

Wang Yi, an analyst at Great Wall Securities, also believes that the split listing is conducive to the operation and development of the parent company and subsidiary companies. On the one hand, it can improve the stock price of parent company and subsidiary company, and obtain stock price income. On the other hand, the split listing is conducive to the implementation of the core strategy and the long-term development of each.

For example, Tongrentang was the first company to be listed on the stock split. In 2000, Tongrentang spun off its biomedical business and its technology was listed on the Hong Kong stock exchange. Since then, the market value and performance of Tongrentang and Tongrentang technology have been greatly improved.

From the above company announcements, listed companies including Lizhu group have said that "spin off listing" will help to further improve the overall market value of the company, enhance the profitability and comprehensive competitiveness of the company and its subsidiaries, and will not have a substantial impact on the continuing operation of other business sectors, nor will it lead to changes in the equity structure of the company.

At the same time, the regulatory authorities are also closely strengthening supervision. Previously, the CSRC said that the next step is to strengthen the supervision of the whole process of spin off, and crack down on market chaos such as "swindle style" spin off, false spin off, speculation on the concept of spin off, and illegal behaviors such as insider trading and market manipulation.

Yan'an Bikang is a typical case under strict supervision.

On March 25 this year, Yan'an Bikang issued a plan to spin off its holding subsidiary, Jiu Jiu, to be listed on the Shenzhen Stock Exchange's gem. At the same time, Yan'an Bikang also said that whether the spin off can be carried out smoothly is uncertain.

However, on the same day of issuing the plan, Yan'an Bikang received a letter of concern from the management department of the small and medium board company of Shenzhen Stock Exchange. Shenzhen Stock Exchange asked Yan'an Bikang to explain whether the main body of the split listing, Jiujiu, belongs to the same asset as the subject of initial listing in May 2010, and whether there is repeated listing.

In the morning of March 26, Yan'an Bikang announced that the company was placed on file for investigation by the CSRC for suspected illegal information disclosure. During the investigation period, the company will suspend the application for listing of the spin off subsidiaries.

According to the data, the company was listed on the SME Board of Shenzhen Stock Exchange in May 2010. Its main business is the research and development, production and sales of new energy, new materials and pharmaceutical intermediates, and raised 562 million yuan.

According to the above plan, the company achieved revenue of 1.069 billion yuan and net profit of 117 million yuan in 2018. From January to September of 2019, it realized revenue of 1.33 billion yuan and net profit of 65.9069 million yuan (without audit). In fact, Kangbi was listed in September 2015.

In the view of Shen Meng, executive director of Xiangsong capital, although the split listing is one of the important reform measures in the current capital market, it does not mean that some people can use it as a means to capture money, and it is imperative for the regulatory authorities to strengthen supervision.