Research On The Value Creation Of Spin-off And Listing

Spin-off is an important way of shrinking assets restructuring.With the restructuring of China’s capital market,the macroeconomic structure is gradually shifting from a crude development model to an intensive development model,and more listed companies want to shrink their assets to adapt to market development,as one of the effective tools,spin-offs have thus received more attention.2019’s national release of "Certain Provisions on Pilot Domestic Listing of Subsidiaries of Listed Companies" broke the market deadlock and also represent a loosening of the policy,a wave of spin-offs swept through the market,with nearly 110 companies announcing that they would choose to spin-off after the policy was released,more than twice the total number of spin-offs in the 20 years before the policy was released.On this basis,in January 2022,the SFC issued the "Rules for Spin-offs of Listed Companies(for Trial Implementation)",which consolidated the original regulations and unified the requirements related to spin-offs,further providing a clear path for spin-offs,and it is expected that spin-offs will be adopted by more companies in the future.So far,due to the late development of domestic spin-offs,there are significantly fewer relevant cases and studies than overseas.Based on the above background,this paper selects the case of Jinko Solar Holdings’ spin-off of Jinko Solar and Jinko Solar Technology as a case study.In the first place,this paper analyzes the motivation of Jinko Solar’s spin-off.Firstly,as a leading PV company,Jinko Solar was threatened by the technological breakthrough of Longi Green Energy and the profit impact of the raw material price increase,so it needed to take measures to improve its competitiveness in the market;secondly,as a US-listed company,Jinko Solar intended to broaden its financing channels and alleviate its financing dilemma through the spin-off because the market value of the company had seriously decreased due to the coldness of the American PV industry.Thirdly,Jinko Solar intends to spin off its module and power plant businesses,which have different business models and characteristics,in order to improve its operational efficiency and avoid negative synergies.Then,this paper analyzes the specific value creation path of the spin-off.The spin-off achieves value creation through three main dimensions: financing,business operation and equity premium,which in turn improves operational performance.Furthermore,this paper examines the performance impact results of the spin-off.The performance test is divided into two aspects: market performance and financial performance.On the one hand,the event analysis method is used to analyze the market response of the spin-off,and on the other hand,the financial performance after the spin-off is analyzed in terms of revenue,expense control,capital structure and liquidity.Finally,the results of this case study show that a spin-off can create corporate value and thus improve corporate performance.On the one hand,a spin-off can send signal to the market that a subsidiary is undervalued,which can lead to a positive response from market investors,so the enterprise can earn excess profits and improve market performance;on the other hand,a spin-off can help companies alleviate financing difficulties,improve business efficiency,and enhance information transparency,which in turn can improve corporate performance.The research and conclusions of this paper have certain theoretical and practical significance in the current policy and capital context.Firstly,the case study of Jinko Solar Holdings,a representative industry leader,choose to spin off its U.S.shares to return to the A-share market,and has realized the listing of its group companies on three boards in two places,which has certain significance for other companies in terms of the motivation,process and results of the spin-off.Secondly,this paper broadens the perspective of value creation by spin-offs by not only focusing on the market share value reaction,but also by focusing on the performance after spin-off.Thirdly,based on the research,this paper makes recommendations from the perspectives of both regulators and enterprises: on the one hand,regulators should further improve the relevant policies and mechanisms,face up to connected transactions and avoid a broad-brush approach;on the other hand,enterprises should carefully implement the spin-off strategy and choose the appropriate spin-off method according to their own situation and market trend,and should not choose the spin-off simply to "capture money".