However, industry insiders generally believe that in the long run, the development of independent financing after the spin off and listing of subsidiaries is conducive to the realization of value maximization. With the opening of the policy and the former exploring the way, more and more companies will embark on the road of separation.
First local state owned assets split meeting
More and more companies have chosen the path of spin off and listing since Chengda biological Co., Ltd. completed the first a split a case and successfully passed the meeting.
According to the reporters understanding, Shanghai Electric was the second listed company to disclose the plan of a dismantling a after China railway construction. After the successful meeting, the IPO process of electric wind power is faster than that of China Railway Construction Corporation, and the audit status of the latter is still in the inquired state. If successful, electric wind power may become the first local state-owned assets spin off listing case.
Electric wind power is a holding subsidiary of the old state-owned Shanghai Electric, belonging to the new energy and environmental protection equipment sector of Shanghai Electric. Its main business is the design, research and development, manufacturing and sales of wind power equipment, as well as post market supporting services.
The parent company, Shanghai Electric, is a veteran of Chinas wind power industry. It has experienced the ups and downs of Chinas wind power from weak to strong, and now it has become one of Chinas leading wind power enterprises. In recent years, Shanghai Electric has increased its support to the wind power industry. Wind power has become an important business sector of Shanghai Electric, especially the offshore wind power has achieved good results.
According to the annual report of 2019, the energy equipment sector, which accounts for about 30% of Shanghai Electrics revenue, has realized an operating revenue of 45.944 billion yuan, an increase of 12.06% over the previous year, mainly due to the rapid growth of wind power business.
After splitting the wind power sector, electric wind power will naturally become Chinas largest offshore wind turbine manufacturer and service provider. According to the statistics of authoritative institutions, in 2019, the companys new installed capacity is 1.257 million kilowatts, with a market share of 4.7%, ranking the sixth in China; in terms of offshore wind power, the electric wind power with newly added installed capacity in 2019 ranks first, with a total of 647000 kW, accounting for 26.0%; by the end of 2019, the cumulative installed capacity of electric wind power of offshore wind power has led the market with 41.4% market share, ranking first.
In addition, it is worth noting that due to the policy driven rush to install wind power, the performance of many companies in the industry has increased significantly this year. When Shanghai Electric chose this time point to split up, it can be said that it has caught up with the good time.
Electric wind power said that through this separation, Shanghai Electric will further realize business focus, better serve the high-end equipment industry scientific and technological innovation and high-quality economic development; at the same time, electric wind power will rely on the science and technology innovation board platform of Shanghai stock exchange for independent financing, so as to realize the expansion and strength of its main business.
At the same time, Shanghai Electric is also looking forward to improving the valuation after the spin off. The spin off is conducive to further improving the overall market value of Shanghai Electric and enhancing the profitability and comprehensive competitiveness of Shanghai Electric and its subsidiaries, the prospectus said
A number of science and technology stocks to be spun off
According to the incomplete statistics of the reporter of the 21st century economic report, since the implementation of the policy of spin off and listing at the beginning of this year, at least 50 A-share companies plan to be listed separately. The science and technology innovation board and the growth enterprise market have become popular choices, and some enterprises choose overseas markets as their destinations.
In the past month, four popular technology stocks, namely torch electronics, gol shares, UFIDA network and Hagrid communications, have proposed a plan to spin off and list on the stock market. The first three companies choose the science and technology innovation board, and Hagrid communications chooses the gem as its destination.
It is not difficult to find that the assets of the above four companies are core high-quality assets of the company. From the point of view of each statement, on the one hand, this is conducive to the subsidiarys expansion and development through the capital market, on the other hand, it is conducive to the parent companys business focus. Focus on the secondary market, which is also conducive to the improvement of valuation of both sides. Therefore, spin off listing is considered to be an effective channel for enterprises to maximize their value.
An investment banker believes that the recent sharp increase in spin off listing cases is mainly due to the opening of A-share split policy and the rapid implementation of early-stage transactions. On November 20, Shanghai issued 17 measures to promote the quality of Listed Companies in Shanghai. Among them, it proposed to support listed companies to speed up industrial upgrading through asset restructuring, acquisition of domestic and foreign assets and domestic and foreign split listing.
However, in the short term, investors have doubts about the spin off. For example, the investors of UFIDA network pointed out that they opposed the split listing of loss making enterprises cutting leeks; the investors of goer shares asked questions on the interactive platform, worried that the spin off would affect the performance of the parent company.
From the stock price reaction, in the second trading day after the above-mentioned four companies announced the spin off, in addition to Hagrid communications rose slightly, the other three companies weakened one after another.
A private equity source said, the spin off is helpful for financing, and the customers view has no impact on the parent companys valuation. This part of the gain may be considered when the market environment is good, and certainly not at this stage.
GUI Haoming, chief market expert of Shenwan Hongyuan, further explained that since the spin off is all high-quality assets, and the spin off listing will inevitably dilute the ownership of these assets of the listed company. In the case of no growth in its income, this will also dilute its profits. From a short-term point of view, spin off listing on the companys financial benefits, not necessarily very prominent. Especially when the spin off assets are not the varieties standing in the market outlet, investors expectations of spin off listing are not so high.
Source: Yang Bin, editor in charge of economic report in the 21st century_ NF4368