For the securities markets of the mainland and Hong Kong, spin-off listing is showing two-way interaction. Apart from "A split A" and "A split Hong Kong", there have also been many cases of spin-off listing in the form of "Hong Kong spin-off A" in recent years.

The spin-off and listing of Hong Kong stock companies is hotThere are many cases of "Hong Kong dismantling A" in recent years.

A few days ago, lottery new energy, a listed company in Hong Kong, said that the company is considering the possibility of spinning off Shandong lottery new materials co., Ltd. ("Shandong lottery new materials") and its subsidiaries ("Shandong lottery new materials group") for independent listing ("proposed spin-off"). According to the announcement, Shandong Laike New Materials Group is indirectly wholly owned by the company and is mainly engaged in the production and sales of battery material iron phosphate, the main product of the group.

This is just a microcosm of the listing boom of spin-off subsidiaries of some Hong Kong listed companies in recent years, in which many companies have chosen the A-share market as their destination for spin-off and listing.

In addition to the companies that have proposed spin-off listing plans, the process of spin-off subsidiaries of some Hong Kong listed companies to A-share listing is also in full swing.

For example, Tongda Group, a listed company listed in Hong Kong, disclosed not long ago the announcement of the examination results of the 112th meeting of the 18th Development and Review Committee issued by the China Securities Regulatory Commission on September 29, 2022, and the proposed listing of the spin-off company on the main board of the Shenzhen Stock Exchange was approved. According to Tongda Group, the proposed spin-off company is currently a 90%-owned subsidiary engaged in the production of household durable goods, household tools, sporting goods and health care products for large brands in Europe and the United States.

Sihuan Pharmaceutical's recent announcement also showed that Xuanzhu Bio, a subsidiary of the company that is not wholly owned, submitted an application for listing of A shares to the Shanghai Stock Exchange, and received a notice from the Shanghai Stock Exchange to accept the listing application. According to the notice, the Shanghai Stock Exchange has formally accepted Xuanzhu Bio's application for listing. According to the relevant laws and regulations applicable to the listing of A shares, Xuanzhu Bio's prospectus (application draft) has been submitted to the Shanghai Stock Exchange and published on the website of the Shanghai Stock Exchange.

Sihuan Pharmaceutical said that as of the date of the announcement, the company indirectly held a total of 62.3892% of the issued shares of Xuanzhu Biology. After the completion of the proposed A-share listing, Xuanzhu Bio is expected to remain a subsidiary of the company.

Andong Oilfield Services also said this year that the company plans to spin off its subsidiary "Tongao Inspection Group Co., Ltd." ("Tongao Inspection") to be listed independently on the Shenzhen Stock Exchange. On August 29, 2022, Tongao Inspection has formally submitted the registration materials for listing guidance to the Xinjiang Regulatory Bureau of China Securities Regulatory Commission.

Andong Oilfield Service said in the announcement that the testing business with Tongao testing Company as the main body was the core business when Andong started its business. at present, Tongao testing has developed into the largest scale and the most comprehensive technology and qualification in China's natural gas field. in order to improve the use efficiency of oil field equipment and facilities, reduce energy and material consumption, and finally achieve carbon neutralization as the core concept of the testing service company. The market covers major natural gas fields such as Tarim, Sichuan and Ordos in China, and has made phased breakthroughs in the "Belt and Road Initiative" international market in the Middle East, Central Asia and Africa.

China Xinlianxin Chemical Fertilizer, a Hong Kong-listed company, said it was considering a possible spin-off of Henan Xinlianxin Cryogenic Energy Co., Ltd. ("Cryogenic Energy"), a non-wholly-owned subsidiary of the company, and its subsidiaries. The data show that cryogenic energy is a comprehensive gas supplier engaged in gas research and development, production, sales, transportation and service, mainly engaged in on-site gas supply and tail gas recycling business. and the production of high-purity liquid carbon dioxide, liquid oxygen, nitrogen argon, carbon monoxide, krypton, xenon, special gas and other products.

In addition to the above-mentioned companies, during the year, Hong Kong stock listed companies such as AAC Technologies Holdings Inc., Ketong Core City, China Cinda, Man Wah and China Conch Venture disclosed the listing of their subsidiaries, or disclosed the progress of the relevant spin-off and listing. The destinations for the spin-off and listing of subsidiaries of these companies are initially designated as the domestic A-share market.

Behind the spin-off and listing of Hong Kong listed companies

Generally speaking, under the spin-off listing, subsidiaries or subsidiaries will be independent, can carry out separate financing, but also conducive to separate pricing of the assets of subsidiaries or subsidiaries. At the operational level, spin-off listing helps to promote the independent operation of subsidiaries and make the rights and responsibilities more clear.

For Hong Kong stock companies, spin-off and listing generally have such a purpose.

For example, Lottery New Energy explained that the proposed spin-off is expected to promote the expansion of the group's battery materials business on independent platforms, which is in line with the company's overall development strategy. As far as the proposed spin-off is concerned, the company is currently considering introducing a number of investors into Shandong Lottery New Materials Group ("proposed investment") before the proposed spin-off is completed. The company believes that the proposed investment will enrich the shareholder structure of Shandong Lottery New Materials Group and expand its capital strength, thus contributing to its business development, achieving the company's long-term development goals and giving back to all shareholders.

Andong Oilfield Service said in the announcement that the spin-off and listing of the subsidiary Tongao Inspection is the first step in the implementation of the asset securitization plan under the company's multi-agent operation and ecological development strategy. According to the company's market layout and business development, the company will continue to promote more asset securitization projects in the future and continue to strengthen the company's long-term development with diversified capital structure and business structure.

Andong Oilfield Service also said that for the spin-off and independent listing plan of Tongao testing, the company is also introducing strategic investors to further optimize the governance structure of Tongao testing and promote business development. The company has received the intention of several investment institutions to make strategic investments in Tongao testing, which have proposed to the company that they plan to invest no more than 200 million yuan in total to acquire about 14.8 percent of the shares after the investment. These investment institutions plan to support the listing of Tongao testing in A-shares as strategic investors.

Apart from the "Hong Kong spin-off A", cases of spin-off of subsidiaries of A-share listed companies to list in Hong Kong ("A spin-off") still occur from time to time in recent years. In addition, A-share listed companies spin off subsidiaries in A-share listing mode ("A split A") is also increasing.

On the whole, with the closer ties between the capital markets of the mainland and Hong Kong, the sources and destinations of spin-off listed companies are no longer one-way, but show a new trend of two-way intercommunication.