Source: Securities Times
Author: Hu Huaxiong

Since this year, the A-share market and the Hong Kong stock market have become more active in spin-offs and listings. Recently, a number of listed companies disclosed their spin-off and listing matters.

The reporter combed through the cases since this year and found that the destinations of listed companies spin-off and listed are showing a diversification trend.

In an interview with a reporter from the Securities Times, some experts pointed out that various types of markets, such as the A-share market, overseas markets, Hong Kong markets, and the New Third Board market, provide listed companies with more options for choosing spin-off and listing destinations. He believes that spin-off and listing is a means of capital management and has a positive effect in increasing the securitization rate.

The Hong Kong stock market is active in spin-offs and listings

The reporter combed through and found that since this year, the Hong Kong stock market has been very active in spin-offs and listings since this year. Since December alone, it has included$JINMA ENERGY (06885.HK)$,$LIVZON PHARMA (01513.HK)$,$CITIC (00267.HK)$,$WUXI BIO (02269.HK)$A number of companies, including others, disclosed matters relating to the spin-off and listing.

For example, CITIC Co., Ltd. recently announced that the company proposed the spin-off of CITIC Deca Co., Ltd. (“CITIC Deca”), an indirect non-wholly owned subsidiary of the company, and its shares for independent listing on the Shanghai Stock Exchange.

According to the announcement, CITIC Deca is a limited company founded in May 1988 and is the first aluminum wheel manufacturer in China. CITIC Deca is one of the world's largest manufacturers of aluminum auto parts, with a diverse range of products, including aluminum wheels and lightweight aluminum castings for automotive powertrains, chassis, and body systems.

According to data, at the date of the announcement, CITIC Industrial Investment Group Co., Ltd., an indirect wholly-owned subsidiary of CITIC shares, held 42.11% interest in CITIC Deca. It is expected that immediately after the proposed spin-off is completed, CITIC Deca will maintain its status as a non-wholly owned subsidiary of the company, and that CITIC Deca's financial results will continue to be consolidated into the company's financial statements.

Spin-off destinations show diversity

In recent years, the spin-off and listing destinations of listed companies have shown a diversification trend. Among the spin-off subsidiaries, there are those planning to list on the A-share market and those planning to list on the Hong Kong stock market. Both types of spin-off destinations are quite common in recent years. However, in reality, there are quite a few companies that have chosen other destinations. For example, some are preparing to spin-off and go public in overseas markets. In addition, some listed companies are planning to split their subsidiaries into the National Stock Transfer System (mainly the New Third Board) for listing.

For example$FOSUN INTL (00656.HK)$Recently, an announcement was issued regarding the proposed spin-off of Luz Saúde and an independent listing on Euronext Lisbon. According to the announcement, it is anticipated that the proposed spin-off and independent listing will involve subscribing to Luz Saúde's newly sold shares through private placement and the sale of existing Luz Saúde shares held by Fidelidade. Following the proposed spin-off and independent listing, it is anticipated that Luz Saúde will remain a subsidiary of the company.

According to data, Luz Saúde Group is one of the largest private healthcare groups in the Portuguese healthcare market, providing a wide range of general hospitals and clinical services in Portugal, including intensive care units, operating rooms, emergency rooms (excluding traumatology), obstetrics and cardiology, and specialized departments providing inpatient and outpatient services in the fields of oncology, rehabilitation services, nuclear medicine, radiotherapy and dementia care.

Livzon Pharmaceuticals,$BAIYUNSHAN PH (00874.HK)$Other companies, on the other hand, plan to split their subsidiaries and list them on the equity system.

For example, Livzon Pharmaceutical recently issued an announcement proposing the spin-off of Livzon's reagent and listing on the national SME share transfer system. The above announcement stated that as far as the proposed spin-off to the new third board is concerned, Livzon Reagents will not issue any new shares. According to the announcement, after the proposed spin-off to the New Third Board is completed, the company's shares in Livzon Reagents (or 47.43%) will remain unchanged. Depending on market conditions and required regulatory approval, Livzon Reagent may later transfer to the Beijing Stock Exchange to sell its new A-shares.

In an interview with a reporter from the Securities Times, Kwai Ho-ming, a senior market expert, said that in a spin-off listing, various types of markets, such as the A-share market, overseas market, Hong Kong market, and the New Third Board market, gave listed companies more choices in spin-off and listing destinations, and still had a positive effect on increasing the scale of the spin-off listing. Of course, it will take longer to prove what results can be achieved after the spin-off and listing. Gui Haoming believes that from a practical point of view, spin-off and listing is a means of capital management and has a positive effect in increasing the securitization rate. However, Kwai Ho-ming also believes that whether a spin-off listing can boost the company's stock price must also be judged in light of the specific circumstances. It is not that there is a spin-off listing, but the valuation of the company itself can definitely be greatly increased.

editor/tolk