Analysis On The Cost And Benefit Of Gene Test Industry

With the technical breakthrough in recent years,the gene testing industry has entered the fast track of industrial development.Berry Genomics is a leading enterprise with advanced technology and rapid development among the numerous participants in the domestic gene testing industry.It not only has a strong brand advantage in the market,but also has gained a good reputation and market recognition among the main target consumer groups.However,the number of participants in this industry has increased considerably,leading to increasingly fierce market competition.This market environment also forces enterprises to keep forging ahead and seek first-mover advantage.Berry genes as an industry leading enterprises,of course,also hope can through the capital market and make use of its unique advantages,can better get the timing of the development of dividends and the industry reshuffle reforming,so as to further enhance its market competitiveness in the link of genetic testing application requirements,the realization of ultimate main business bigger and stronger.In the same industry,BGI Genomics,Daan Gene and other genetic testing companies are listed by IPO,while Berry Genomics is the first company in the genetic testing industry to choose backdoor listing.It is also the first company to be listed by backdoor after China securities regulatory commission revised the "management measures for major asset reorganization of listed companies" in 2016.Therefore,it is of great significance to select this case for analysis.This paper mainly takes Berry Genomics as the research object,supplemented by the analysis of BGI Genomics for comparison and problem explanation.The case study and comparative analysis method were adopted in the research of Berry Genomics backdoor instrument Tianxing Instrument.Firstly,the relevant concepts and motivations of backdoor listing were stated,and then the relevant academic theories were combined with the case of Berry Genomics backdoor listing to make an analysis and evaluation.This paper focuses on the detailed statistical calculation of the cost and benefit of the backdoor listing of Berry Genomics,and makes a comparative study on the cost and benefit between this case and BGI Genomics with different listing modes in the gene testing industry,and evaluates the advantages and disadvantages of the backdoor listing of Berry Genomics,which provides a reference for the genetic testing companies and other companies planning to go public.From the perspective of cost and benefit of backdoor listing,previous scholars have theoretically concluded that the costs of backdoor listing include acquisition cost of shell resources,equity dilution cost and integration cost,and believed that the benefits brought by backdoor listing are to expand enterprise visibility,obtain enterprise development funds and obtain stock premium returns.This paper innovates and improves on the basis of previous theories.It further refines and quantifies these components and divides the cost of backdoor listing of Berry Genomics into six parts:shell resource acquisition cost,integration cost,equity dilution cost,public opinion publicity cost,valuation variable cost and other expenses.The benefits of backdoor listing are divided into four parts:the value-added benefits of asset evaluation,the enhanced benefits of enterprise indicators,the refinancing benefits,and the value-added benefits of shareholder wealth.After detailed analysis and statistics of each part,four relative indicators that can better explain the problem are calculated:equity dilution ratio,backdoor cost ratio,return on investment and appreciation rate of assets.Through case analysis and comparison,it is found that:the equity dilution ratio of BGI Genomics’IPO is small,the backdoor cost rate is low,the investment return rate is high,and the value-added rate is high;Berry Genomics backdoor listing has obvious time cost advantage,less other expenses and high efficiency of enterprise index.Therefore,for other companies to be listed in the genetic testing industry,which way to choose to go public still depends on the primary problems and major contradictions to be solved at present and how to achieve the optimization of cost and benefit.In addition,in the chapter of equity dilution cost,this paper introduces in detail the most outstanding old stock transfer in the backdoor listing scheme design of Berry Genomics:before being backdoor,the listed company transfers its equity at a 50%premium to a merger and acquisition fund and an investment company associated with the chairman of the target party,making them become the second and third shareholders respectively.In previous cases,supporting financing is often an important interest adjustment tool in backdoor listing.In case of merger and acquisition and backdoor listing,buyers and sellers will often give supporting financing to a "third party" who contributes to the transaction as the benefit compensation.However,according to the new restructuring rules at that time,the supporting financing part of backdoor listing was cancelled,so the interest compensation could not be operated as before.Therefore,through the design of "old stock transfer",this case not only goes out of the shell fees,but also reasonably arranges the interests of a third party under the condition that supporting financing cannot be provided.The page provides an idea for other shell companies to deal with the regulatory restrictions on supporting financing of backdoor listing.Compared with BGI IPO,this paper evaluates the backdoor listing of Berry Genomics from the perspective of cost and benefit.The results are as follows:high premium benefit,large listing dividend,small listing time cost,and new trading scheme to reduce the comprehensive backdoor listing cost.Disadvantages include:high equity dilution ratio,shell resources selection still have room for optimization.Based on the case study of involved in the backdoor listing of companies,regulators,investors and so on various aspects proposed the rationalization proposal,including a shell companies should choose the appropriate shell company,timely follow up the middle management,reasonable to perfect the planning stage,investors should be rational to participate in the secondary market through stock investment,rich regulators to improve hair trial system and the system of delisting.