Case Study Of WuXi App Tec's Spin-off And Listing In China

In the 1990 s,some high-quality companies in China sought overseas listings and caused a wave of overseas listings.However,the low valuation of Chinese concept stocks overseas has always been a problem faced by these overseas-listed companies.In the face of Wall Street,which only focuses on short-term performance,these companies have no choice.However,with the advent of the financial crisis,Muddy water and other institutions' malicious shorting of Chinese concept stock companies has caused some Chinese concept stock companies to lose confidence in overseas markets.On the other hand,China's economic growth is rapid and the capital market is gradually improving.The country vigorously supports innovative companies,and has successively introduced policies to support the development of these enterprises.Many Chinese concept stock companies have seen hope and sought to return.WuXi AppTec was established in 2000 and is engaged in the pharmaceutical outsourcing industry.It was successfully listed on the New York Stock Exchange in2007.However,even though WuXi AppTec has been in the US stock market for 8years,it has successfully acquired high-quality companies in many industries and continued to expand its business.After showing good development prospects in 2015,the company's stock price did not rise but fell.WuXi AppTec decided to privatize.At the end of 2015,WuXi AppTec successfully privatized.At the same time,China's policies strongly supported the development of the pharmaceutical industry and the development of "unicorn" enterprises,laying a good policy foundation for WuXi AppTec's return.On May 8,2018,after a year and a half,WuXi AppTec successfully listed on A shares,becoming the first company in China to return through an IPO.The return of WuXi AppTec is not a general listing,but a “one split and three”spin-off: WuXi AppTec splits its subsidiary company Hequan Pharmaceutical into the New Third Board.The spin-off business of WuXi AppTec is listed on the Hong Kong stock market.WuXi AppTec was listed on the Hong Kong stock market in December of the same year after being listed on the A-share market in May.This article willintroduce the process of privatization and spin-off of WuXi AppTec,and analyze the return motivation of WuXi AppTec.This article analyzes the spin-off of WuXi AppTec.by comparing the companies that returned to the overall market during the same period,it is concluded that the spin-off of WuXi AppTec significantly reduced the size of privatization and the cost of privatization.The spin-off subsidiary,Hequan Pharmaceutical,also provided assistance to the main WuXi AppTec's late loan guarantee and listing capital issues.Second,the spin-off parts can be financed in different markets,reducing information asymmetry and widening.Channels for corporate financing.This article also analyzes WuXi AppTec four aspects: market effect,financing effect,management effect and management effect.After analysis,we believe that:From the perspective of stock prices,the share price of each part has continued to rise after the spin-off,and has won the favor of investors.However,through the event research method,it was found that the spin-off of WuXi AppTec did not produce an excessive rate of return on WuXi Biologics;from the perspective of financing effects,WuXi AppTec improved the capital institution through the spin-off and listing and improved the company's overall financing capacity;In terms of operating performance,WuXi AppTec's profitability and debt-paying ability have been improved.However,in order to realize the expansion of the company's business,the R & D ability,and the initial investment are also large.Ming Kant's development capacity is still relatively strong,and long-term data analysis is needed;After the listing,WuXi AppTec and Hequan Bio have introduced incentive mechanisms one after another.The effect is relatively good in the short term.In the end,this article believes that the return of WuXi AppTec's "one split and three" IPO is very worthwhile for other Chinese companies to learn from.Chinese stock companies should combine their own conditions,grasp national policy preferences,and find a way to return to their own.