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B-share listed companies to improve governance efficiency, improve corporate performance, may be the most correct way to save themselves.
The B-share market plummeted some time ago, and Dongbei B-shares announced on May 15 that Dongbei Group, the company's controlling shareholder, was planning to issue A-shares to all shareholders of the company except Dongbei Group, and to absorb the merger of Dongbei B-shares by way of stock exchange. The author believes that B-share companies looking for a way to save themselves, A-share is a choice, but also in line with enterprise conditions, and the ultimate way to save the company is to improve business performance.
Dongbei B shares as a pure B-share company, major shareholders intend to absorb and merge Dongbei B shares, and then seek to be listed in A shares as a whole. In fact, there have been successful cases of this operation before. For example, Zhejiang Neng Electric Power issued A shares in 2013 to absorb and merge Southeast Power B shares, Zhejiang Electric Power achieved the overall listing; after that, Metro B shares and China Merchants B shares were also absorbed and merged by the controlling shareholders and then listed as a whole.
Major shareholders issue A shares to absorb B shares in the hands of merged B share investors, and B share investors become A share investors. however, most B share investors are foreigners or institutions, but the A share market is not yet fully open to foreign personnel. until 2018, the measures for the Administration of Securities Registration and settlement only allowed "foreigners who meet the regulations" to open A-share securities accounts. In this regard, Tepco B to An and other cases provide a solution example, China Clearing to all overseas B-share account investors, unified free allocation of "A-share special securities account", the account can only be sold but not bought. This way is worth using for reference from B shares to A shares in the future.
The conversion of B-share listed companies to A-shares does not mean that anyone who wants to turn can be transferred, the company must meet the listing threshold of A-shares, and the same is true of B-shares to H-shares. Only when the B-share listed company is excellent in all aspects can it be successfully transferred to A-share or H-share listing without considerable potential, and talk about the conversion to A-share or H-share in vain.
For A shares B listed companies, that is, to issue An and B stocks, the main way to solve the B-share problem is for listed companies to buy back B-shares. Previously, Shangchai B, Lutai B and Chenming B all carried out B-share repurchase in the way of centralized bidding, but this requires listed companies to have a lot of capital. In fact, some repurchase cases have not fully completed the buyback plan. Moreover, the repurchase of B shares by A shares listed companies obviously involves the interests of A share shareholders. If the market price of B shares is too high than the intrinsic value, it will harm the interests of A share shareholders.
Therefore, in the decision-making process of repurchasing B shares of listed companies, it is best to standardize the process, implement a classified voting mechanism, and let A-share investors vote separately. Some B-share valuations are more reasonable, the share price is much lower than the net assets, after the buyback will increase the net assets per share, net profit, which is beneficial to A-share shareholders, the buyback plan should also be supported by A-share investors.
Obviously, some listed companies that issue B shares are miserable, and delisting is also a way out or a destination. For example, Dongfang B announced on May 8 that the closing price of the company's shares has been lower than the face value of 1 yuan per share for 20 consecutive trading days (April 8-May 8, 2020). The shares have been suspended since May 11 and are at risk of being terminated.
The establishment of B-share market has contributed to the introduction of foreign investment, of course, B-share investors have also shared the fruits of China's rapid economic development in recent years, and B-share investors have enjoyed super-national treatment to a certain extent. For example, the issue price of B-shares of A-share listed companies is often lower than that of A-shares, and B-share investors do not suffer losses. Due to the lack of liquidity of B shares, the valuation of B shares is lower than that of A shares, but this can not be used as a reason for B shares to return to A shares to enjoy a high liquidity premium.
Whether it is the B-share market or A-share market, investors should adhere to the concept of value investment to buy stocks, do not covet the market liquidity premium, the intention to make other investors' money.
The true meaning of stock investment is to obtain the development profits of the enterprise. therefore, the B-share market does not have to be cancelled, and listed companies do not have to seek a so-called way out. As long as the enterprise shares are good value for money, investors buy B-shares and wait for corporate dividends. Isn't that good? The B-share market can even absorb new listed companies. Therefore, B-share listed companies to improve governance efficiency, improve corporate performance, may be the most correct way to save themselves.