Dongbei B Throw A Plan Harvest Two Even Board B Share Reform, "Road Resistance And Long" Policy Remains Clear.

Dongbei B's A share plan has made the B-share market, which has already faded out of the investor's perspective, once again attracted attention.

In May 26th, Dongbei B resumed its trading limit for second consecutive days, closing at $1.269 / share, with a total market capitalization of $2 billion 116 million.

Last Friday, Dongbei B threw out a notice on the conversion of shares and merger related transactions. The largest shareholder of Hubei Dongbei electrical and mechanical group Limited by Share Ltd (hereinafter referred to as Dongbei group) intends to issue A shares to all shareholders except Dongbei group in Dongbei B shares, and to absorb the merger of Dongbei B shares by way of exchange.

Over the past 3 years, another pure B-share company's A scheme has left the long B-share market in a frantry for a long time, and even some B shares have taken the opportunity to "rub hot spots".

*ST B, which has already fallen below its face value and has a delisting risk, said on May 25th that the company will actively pay attention to the issue of A shares issued by Dongbei group to Dongbei B-share company except Dongbei group. On that day, *ST B also went straight to the limit.

Some market participants believe that Dongbei B's A program will have an incentive effect on other B-share Companies in the market. But in twenty-first Century, an economic report reporter learned that the b-exit plan is "one thing, one discussion" and does not have universality. Reform can not be pushed forward, slack trading, lack of liquidity and lack of financing function will still puzzle B shares for a long time.

B shares still have no universality. From the past situation, there are four ways to merge B into A, B to H, repurchase and AB shares, and there are also some cases for reference. But to every B-share company, it is not easy to find the right way out. In terms of specific operation, there is basically no big difficulty, but whether the policy is feasible, and it may be necessary to completely solve all kinds of problems existing in B shares from the top level design. " Economist Song Qinghui pointed out to the twenty-first Century economic report reporter.

Dongbei B to A

According to wind data, in recent years, the turnover of A share market is in the hundreds of billions, more than one trillion, and occupies more than 99.95% of the total turnover of A and B shares all the year round.

In view of the B-share market, with more and more enterprises leaving the board, there are only 96 companies in B-shares, including 17 pure B shares. Although there are more than 2 million 370 thousand investors who have opened B-share accounts, far more than the number of new three board accounts, the average monthly turnover is far less than that of the new three boards, and even the turnover of some months is less than that of the new third board 1/3.

At the same time, the A and B share listed companies also felt the valuation difference between the two markets. The price of the 79 B-share Companies was significantly lower than the A share price, and the majority discount rate was over 30%, and the highest discount rate was 79.78%.

Dismal trading and lack of financing function have made B-share gradually lose its appeal. Not only investors have thrown it away, but also some companies have muddled along. This reporter statistics found that in 2019, 15 B-share Companies were in a state of deficit, of which 6 companies suffered losses for the past two years. In addition, the 5 B-share Companies are currently facing less than 1 yuan and are facing a risk of delisting.

Dongbei B-share's A programme has revived some investors' confidence. It is understood that in the draft merger and merger of Dongbei B shares, it was finally determined that the exchange price of Dongbei B shares was 2.479 USD / share, equivalent to 17.59 yuan / share, compared with the current stock price premium of Dongbei B shares 95.35%. The issue price of Dongbei group stock is 9.77 yuan / share, and the share exchange rate is 1:1.8.

In addition, the merger option will also provide cash options for dissenting shareholders of Dongbei B shares, and the Huangshi state owned company as the cash option provider. Dissenting shareholders of Dongbei B shares can pay a premium of 15% based on the average transaction price of 1.061 US dollars / share, that is, the price of 1.220 USD / share (RMB 8.66 yuan / share) will be declared in full or part of the exercise of cash option.

At present, the transaction has yet to be approved by the shareholders' meeting and the CSRC and other government departments. The discussion on whether Dongbei B shares can be successfully transferred to A has been very enthusiastic. Southern China has a senior investment bank analysis pointed out: "Dongbei A risk is not big, the operation speed should be very fast, (Dongbei group) probably take the IPO program."

But there are also some market participants who believe that because of the great differences between the two markets and the difficulty of balancing the interests of all parties, there is also a great deal of risk in the process of transferring B shares to A shares.

"Dongbei B-share transfer to A shares takes longer, and there is a certain risk of failure. After all, the A share market and B share market are two different and segmented markets. There are many problems such as circulation barriers, currency settlement and price differences, as well as different trading rules between them. It is not easy to convert B shares into A shares. Song Qinghui said.

Yu Baoshan, a visiting professor at the SKEMA business school in Suzhou, also pointed out to reporters that the game between major shareholders and small and medium-sized investors may bring uncertainty to the B transfer to A program, such as which kind of conversion cost is lower, the price given is unreasonable, whether the investor can get enough benefits from it and whether he accepts the plan offered by the company.

In May 26th, twenty-first Century economic report reporter telephoned the Dongbei B securities department to inquire about the planning progress, and the connection personnel confirmed that at present, Dongbei group has not submitted the prospectus and other declaration materials, "the specific circumstances will be disclosed in the subsequent announcement".

Where should b shares go?

Dongbei B's choice is only a corner of the current B-share ecosystem.

In recent years, as the B-share market continues to slump, more and more high quality enterprises choose to flee the market, mainly using B to A, B to H, repurchase and AB share merger. So the former Vanke B, Zhongji B, Li Zhu B and other "A+B" listed companies choose B to H; Zeng Neng holdings absorbs the merger of East Electricity B shares, new town holdings absorb new B shares, City Investment Holdings absorb the merger morning B shares, Nanshan holdings absorb deep base B and other B-share Companies successfully transferred to A shares; Changan automobile and so on choose buyback B shares.

However, not all enterprises have the strength and courage to transfer boards. The pure B-share companies such as Dong Feng B, Shun zhe B and Yuehua Bao B have tried to restructure their shares. However, due to the uncertainty of policies, they are all at an end.

In the future, the question of where B shares should go has become an urgent problem for the market.

Wang Jiyue, a former senior sponsor representative, pointed out to reporters: "the voice of" B reform "is not big enough, because the B share effect is too small, but this is indeed a problem to be solved.

In Wang Jiyue's view, B switching to A is not too difficult technically, but it involves many departments and involves the determination and urgent problems of regulatory reform. "Personally, I think they are all in the same stage. Regulation may explore possibilities in terms of technology and then classify them. Besides, this is not a matter of the SFC, but also involves the safe. "

But Song Qinghui pointed out: "whether B-share reform or total withdrawal is a good thing for our capital market, but if we still keep the current situation in a slow motion, B shares will continue to be a burden that most people do not know and easily forget. In fact, B shares are a legacy of history and their historical mission has been completed. The direct abolition of B shares may be the best option.

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