Case Study Of China-based Shares JA SOLAR Return To A-share By Backdoor Listing

With the continuous pace of reforming and opening up,China’s economy has achieved rapid development.In order to meet the demand for fund,Chinese enterprises chose to go to the United States and other overseas capital markets for listing.However,after 2010,the over-embellished of financial data of some China-based shares made foreign capital markets lose trust in them,and some short-selling institutions also began to go short these China-based shares.At the same time,the requirements of foreign capital markets for China-based shares were also becoming higher and higher,making the listing maintenance costs that Chinese enterprises need to pay higher and higher.On the other hand,China’s capital market is constantly developing,and enterprises can obtain funds from the domestic capital market easier than before.Therefore,Chinese enterprises that had previously chosen to go overseas for listing began to withdraw from the overseas capital market and then return to domestic listing.This article takes the photovoltaic company JA SOLAR as an example to analyze the behavior of JA SOLAR’s backdoor return to A-shares.First of all,this article analyses the reasons for JA SOLAR to backdoor return to A-shares are the cost of listing in the overseas capital markets is high,and China’s enterprises cannot get enough fund from these overseas capital markets.Instead,China’s capital market developed very rapid,and the Chinese government had policy support for the photovoltaic industry.Then,this article analyses the risks that JA SOLAR faced in the process of its return,which include the risk of policy change,the risk of a shortage of funds,and the risk that the performance commitment cannot be realized.In order to reduce these risks,JA SOLAR disclosed its information timely,raised required funds actively,and improved profitability actively.Next,through analyzing the financial indicators,this article finds JA SOLAR’s backdoor return to A-share has brought positive effects on its profitability,operating capacity and growth capacity,but it has not brought much effect on its solvency.As for the response of the market,through event research method,this article finds that the market is optimistic to JA SOLAR’s backdoor return in short term,but not very optimistic in long term.At last,the problems of JA SOLAR’s backdoor return to A-share are that the debt ratio of JA SOLAR is too high,the return brought a large fluctuation to the stock price of the shell company,and there is a large gap between the business scope of JA SOLAR and the shell company.The reasons are the investment and dividend distribution are unreasonable,the investors are irrational,and JA SOLAR did not consider the business scope of the shell company.Through this case,this article also puts forward some suggestions for China-based shares,investors,and government regulators: China-based shares should invest and distribute dividends reasonably to control the company’s debt ratio,guide the investors correctly,and select appropriate shell companies to return;Investors should make long-term value investments in the returned stocks and adhere to invest rationally;And the regulatory authorities should guide the China-based shares and investors correctly,and then actively develop new returning paths.