IPO Of 11 Subsidiaries Accepted, Chengda Biological Is Expected To Drink "First Meal Soup"

Since December 2019, several provisions on the pilot domestic listing of subsidiaries of listed companies were officially implemented, the A-share market has shown great interest in the spin off and listing. Nearly 100 companies such as BYD, Changchun hi tech and Shengyi technology have launched the spin off plans.

21st century economic reporter learned from investment institutions, enterprises and other channels that many A-share enterprises have launched pre IPO round financing for their subsidiaries.

According to incomplete statistics, since this year, 39 A-share companies have disclosed the plan of splitting and listing. Among them, Chengda biology of Liaoning Chengda has successfully passed the meeting, and announced on the evening of November 5 that it would terminate the listing of the new third board, and Shengyi technology, a subsidiary of Shengyi electronics, also successfully held the meeting on October 30.

"In the past, it was a common way to raise funds to invest in subsidiary companies and sub sectors through refinancing, and it was also a common form of capital operation in the process of transformation of listed companies or development of multiple main businesses. Compared with this mode, it is obviously more in line with the interests of listed companies to put the assets of subsidiaries on the market. " According to an investment bank of a medium-sized securities firm in Shanghai, "due to the corresponding term conflict between refinancing and spin off listing, it is not ruled out that some listed companies with refinancing blood transfusion subsidiary plans will reconsider the possibility of spin off listing."

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A shares welcome the upsurge of spin off

According to the incomplete statistics of 21st century economic report, more than 52 A-share enterprises have disclosed their intention to spin off since this year, of which 39 have disclosed the "plan for spin off", and 11 of their subsidiaries have been accepted on the science and technology innovation board and the growth enterprise market.

Specifically, the fastest-growing companies are Chengda biology and Shengyi electronics, the subsidiaries of Liaoning Chengda and Shengyi technology. The two enterprises held the scientific and technological innovation board meeting in September and October respectively.

Among them, Chengda biology is a biotechnology enterprise mainly engaged in the R & D, production and sales of human vaccines. In 2017 and 2018, the company's sales of human rabies vaccine products ranked first in the world for two consecutive years. This time, Chengda bio plans to raise 2.04 billion yuan, which will be used for the "human vaccine phase I project construction project, human vaccine intelligent workshop construction project, and human vaccine research and development project" of Benxi Branch, and supplement the working capital.

As a matter of fact, before the Listing Rules of A-share split were settled, Chengda bio had been listed on the new third board, waiting for the next independent capital operation. In February this year, the pilot project of spin off was officially launched. Liaoning Chengda disclosed the intention of spin off, and officially disclosed the plan for listing in April. On November 6, Chengda bio stopped listing in the national small and medium-sized enterprise stock transfer system, waiting for the door of the science and technology innovation board to open.

Shengyi electronics is mainly engaged in the R & D, production and sales of all kinds of printed circuit boards. It mainly provides customized PCB products for customers through core technology to obtain profits. In February this year, Shengyi technology disclosed the plan for the spin off. On October 16, Shengyi electronics held its first meeting on the science and technology innovation board.

This time, Shengyi electronics plans to raise 3.961 billion yuan to invest in the expansion and upgrading project of high-speed and high-density printed circuit board in 5g application field of Dongcheng factory (phase IV), multi-layer printed circuit board construction project of Ji'an factory (phase II), construction project of R & D center, and supplementary working capital project.

In addition, Shanghai wind power, a subsidiary of Shanghai Electric, Xiamen Xinneng, a subsidiary of Xiamen tungsten industry, and Baike bio, a subsidiary of Changchun hi tech, have completed their replies to the application for science and technology innovation board, of which Shanghai wind power has replied to the second inquiry. Tianshi biology, a subsidiary of tianshli, has been asked for the first round of scientific and technological innovation board.

In terms of gem, the first round of inquiry has been obtained from the Shenzhen stock exchange for the first round of inquiries by China bond health subsidiary Kaisheng new materials and Lianmei holding subsidiary zhaoxun media. The progress of Deshi, a subsidiary of Jierui Co., Ltd., has been accepted. The company only disclosed its prospectus on November 9.

It is worth mentioning that although CIMC vehicle, a subsidiary of CIMC group, was accepted as early as July 31 and received the first round of inquiry on August 30, the company suspended the audit on September 7 due to the updating of financial report data and other reasons.

In addition to the enterprises that have disclosed the application materials, according to incomplete statistics of the reporter, about 15 subsidiaries of listed companies have carried out "guidance and filing registration", which is only one step away from the IPO declaration.

The 21st century economic report reporter noted that most of the listed companies to be spun off are pharmaceutical companies, large groups and state-owned enterprises, such as Kelun pharmaceutical, Ningchuan biology, Lepu medical, Lepu diagnosis, etc., all of which are the subdivisions of biomedical enterprises. The separation of China Railway, China Railway Electric, radio and television express, Zhongke Jiangnan, etc. are typical examples of state-owned enterprise spin off. In addition, domestic large-scale high-tech enterprises have also incubated many high-quality business sectors, such as the separation of zhaochi shares from zhaochi Guangyuan and Dongshan's division of Aifu electronics.

Sun nianrui, deputy director of the listing Department of China Securities Regulatory Commission, pointed out: "through spin off, listed companies can further focus on the business areas they are good at, which is conducive to improving the core competitiveness of enterprises. When the two companies are listed, they need to separate their financial statements. Finally, the market positioning of the spin off company is more focused, avoiding the problems of difficult valuation and unreasonable valuation caused by business confusion. "

The reserve army strides forward

In addition to these companies that have announced their plans, there are many listed companies in the trillion class A-share market preparing for the upcoming spin off and listing. These "reserve forces" are a force that can not be underestimated.

According to the relevant rules, the spin off of a listed company must meet the following conditions: "the company has made continuous profits in the last three accounting years, and the accumulated net profit attributable to the shareholders of the listed company shall not be less than RMB 1 billion after deducting the net profit of the subsidiary company to be spin off according to equity" in the latest three accounting years.

According to the forecast of Everbright Securities, in the A-share market, if only according to the profit standards in the new regulations of the CSRC, by the end of May 2020, there will be about 1200 A-share companies meeting the requirements, accounting for about one-third of the total number. In addition, with other restrictions, the number of companies meeting the standards will be even fewer.

According to the analysis of insiders, there are several types of companies that are motivated to spin off and go public: first, the company has huge assets, diversified businesses, and certain debt pressure, and it has subsidiaries with strong profitability and in the growth period; second, incubation platform companies, such as equity investment portfolio, are distributed in social, entertainment, financial payment, e-commerce, education and other fields Third, there are options for state-owned companies to withdraw from the stock market, such as the reform of railway companies and the reform of power companies.

As a matter of fact, diversified group businesses have begun to accumulate strength for the spin off of subsidiaries. In June this year, BYD issued an announcement on the introduction of strategic investors to its holding subsidiary, and BYD semiconductor completed a + round of financing. Prior to that, the news about BYD's plan to separate its battery business into a separate listing has been spread in the market.

In addition, seven A-share companies, including Hikvision, Han's laser, Huayu software, Chujiang new materials, greenway, Riad and Henghua technology, have disclosed that they have authorized the company's management to start the preparatory work for the domestic listing of the spin off subsidiaries.

Wang Jiyue, a senior investment bank observer, said: "the biggest significance of spin off and listing is not to rebuild a shell, but to encourage the core team of new business and new plate by listed companies as an incubation platform. The incentive effect is obviously much worse than expected by the policy. I previously suggested that there should be no restrictions on the shareholding of directors and senior executives of subsidiary companies, as long as the corresponding procedures are followed, the pricing is reasonable, and the interests of listed companies are not damaged. "

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