Case Analysis Of Re-listing Of Erzhong Heavy Equipment Company

Before 2018,the approval system was adopted for listing companies in Chinese capital market,which required extremely high time cost.This,to some extent,boosted the speculation on the value of "shell resources" of listed companies,which indirectly led to the reluctance of companies to voluntarily leave the capital market and the lack of confidence in re-listing after delisting.Over the past decade,the delisting rate on Shanghai and Shenzhen stock exchanges has been less than 0.5%,compared with around 7% on the New York and Nasdaq stock exchanges.At the re-listing level,only three companies had successfully re-listed after delisting by the end of 2021.Compared with the capital markets of developed countries,the delisting rate of Chinese capital market is low,and the successful re-listing companies after the delisting are rare.The market utility of survival of the fittest in capital market cannot be brought into effect effectively.Since November 2018,China has started the registration system reform,and the supporting delisting and re-listing systems are also constantly improving.The "shell resources" of listed companies have a tendency to shrink in value.And as the mandatory delisting standards become stricter,forced delisting re-listing will face many restrictions.Under this background,it can be foreseen that in the future,there will be more and more companies choose to active delisting from the capital market and apply for re-listing in the future.Erzhong Group(Deyang)Heavy Equipment Co.,LTD.(hereinafter referred to as "Erzhong Heavy Equipment")is the first and only company in China to successfully re-list after voluntarily delisting.Exploring the whole planning and implementation process before its re-listing can not only provide useful reference for other companies considering re-listing at the corporate level,but also provide certain policy suggestions to the regulatory level.This paper first introduces the case,and expounds the background of A-share capital market delisting and re-listing,the company’s profile and the whole process of the delisting of the Erzhong Heavy Equipment company.Then Case analysis is carried out,from internal and external two aspects to explore the Erzhong Heavy Equipment company’s motivation of active delisting,and analyse decision-making rationality of the active delisting,especially emphasis on the question about "compared to being delisted by the stock exchange,choosing to take the active delisting will bring back on what benefits",then analyse the reason of re-listing,and finally through the analysis of the financial performance of the company to explore its marketing effect.This case shows that: Firstly,compared with forced delisting,active delisting can effectively avoid stock price collapse,and the company will be less restricted when applying for re-listing in the future.Secondly,having sustained profitability is the key to a successful re-listing.Thirdly,the delisting system is not perfect,and the interests of small and medium investors need to be further protected.Finally,the following suggestions are put forward for the company and the regulatory layer: the company should reasonably control the scale of liabilities;Timely adjust the development strategy according to the changes of market environment;Optimize business structure and improve profitability;When necessary,choose to active delisting to protect the interests of small and medium investors.Regulators should deepen the reform of registration system and reduce the value of "shell resources" of listed companies.Improve the construction of relevant systems to protect the interests of small and medium investors.