Beijing Stock Exchange is the new place to split

The Beijing Stock Exchange, which serves innovative small and medium-sized enterprises, is becoming a new place for many enterprises to spin off subsidiaries, and a number of spin-off subsidiaries “rerouted” to the Beijing Stock Exchange for listing.

IC697CGR935-EB For example, on the evening of January 3, Chenxin Pharmaceutical announced that the board of directors of the company agreed to the holding subsidiary Fodu Pharmaceutical plan to apply for listing in the Beijing Stock Exchange. Previously, Chenxin Pharmaceutical had disclosed that it planned to spin off Fodu Pharmaceutical to the Shenzhen Stock Exchange main board listing. In December 2023, Chenxin Pharmaceutical terminated the spin-off plan and said that Fodu Pharmaceutical planned to apply for listing on the New Third Board and seek to list on the Beijing Stock Exchange in the future.

IC697CGR935-EB Also planning to send the “child” landing on the Beijing Stock Exchange there are Lizon Group, CIMC Group and other industry segmentation leaders. In November 2023, Lizon Group terminated the planning of spin-off of its holding subsidiary Lizon Reagent to the GEM listing, and intends to apply for listing on the New Third Board, and will seek to list on the Beijing Stock Exchange in the future. Cimc also disclosed at the end of December 2023 that its indirectly controlled subsidiary CIMC Anrui Alcohol Technology Co., Ltd. planned to apply for listing on the New Third Board and plan to list on the Beijing Stock Exchange.

IC697CGR935-EB “The Beijing Exchange has become a listing destination for many companies to spin off assets because its listing conditions are relatively relaxed, trading rules and systems are relatively flexible, and it can be more realistic to implement spin-off listing and more convenient to carry out financing.” Tian Lihui said that with the optimization of the system and the attention of investors, the market size and liquidity of the Beijing Stock Exchange are gradually increasing, and its attraction is also expected to further improve.

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Looking back at 2023, Angel Yeast, Zong Shenpower, Western Materials, Jiangsu Leili and other subsidiaries have been successfully spun off and listed on the Beijing Stock Exchange. At the same time, CIMC Group, Fangda Carbon, China Baoan, Lier Chemical, Jingda Shares have clearly indicated that they intend to spin off their subsidiaries to the Beijing Stock Exchange listing, and the spin-off is progressing.

IC697CGR935-EB Independence and sustainable business ability are indispensable

Compared with the previous situation in full swing, the spin-off listing of A shares has cooled down. In 2023, there are 13 A-share company spin-off plans to press the “end key”.

Some investors told reporters that the listed company will spin off some of its promising businesses, which may have an impact on the parent company’s profit expectations. Some companies sell “reassurance” that there is no break-up plan when communicating with investors.

IC697CGR935-EB “Investors need to be rational about spin-offs.” ‘After the spin-off, the parent company’s business scope will change, and investors need to pay attention to the impact of these changes on the company’s long-term development and profitability,’ Mr. Tian said. At the same time, the business model, market prospects and profitability of the subsidiary will also change, which may be different from the expectations before the spin-off.

“Analyzing the termination cases since 2023, the reasons for failure to pass the audit mainly include independence, industry competition, sustainable business ability and other issues.” The bankers said the requirements for a spin-off are high, with the assets meeting all the requirements for an IPO and the listed company continuing to meet those requirements. If the Great Wall information has passed the review of the exchange, but the parent company of China Great Wall “performance can not meet the requirements of the spin-off listing”, can only regret to terminate the spin-off. In addition, the separation also requires the parent and subsidiary companies to maintain independence, there is no industry competition and so on.