Research On Route Selection And Effect Evaluation Of The Spin-off And Listing Of Shengyi Technology

A spin-off listing is a reorganization of the internal operations of a group of companies,where parts of the internal operations are consolidated into a subsidiary and listed as a separate entity.Spin-off listings add a new financing platform for companies and breathe new life into their quality assets.Companies with large-scale businesses are moving towards diversification as the internet increases in popularity,and spin-off listings are increasingly a key means of seeking new financing platforms and achieving proprietary business strategies.Before the arrival of the science and innovation board,spin-offs of subsidiaries outside of China or listing on the New Third Board became the main route for Chinese companies to achieve spin-off listings,as there were no explicit rules on the entry mechanism for A-share spin-offs.Certain Provisions for Pilot Domestic Listing of Spin-off Subsidiaries of Listed Companies were officially issued by the CSRC at the end of 2019 to strengthen the supervision of spin-offs and the regulation of the process & conditions of spin-offs,enabling the idea of domestic spin-offs of subsidiaries wanted by Chinese companies to take hold.Now,nearly 10 companies have been successfully spun off just over two years after the publication of the Pilot Regulations.This is closely followed by more than 60 companies that have also announced their intention to spin-off listings.It is clear that spin-off listing has become a hot topic in the capital market.Therefore,research into spin-off listings is also imminent.Shengyi Technology’s spin-off of Shengyi Electronics is the first case of an A-share company spinning off its subsidiary to an A-share listing since the introduction of the Pilot Regulations,which is quite timely and typical.In terms of type,Shengyi Technology belongs to the high-tech manufacturing sector which shares many similarities with most of the companies that are currently willing to spin-off.this paper will help listed companies with spin-off ideas in China to make decisions on whether or not to spin off and how to do so via the interpretation of the spin-off listing regulations in different capital markets,the analysis of the motivation of Shengyi Technology’s spin-off listing,the analysis of its choice of path and the evaluation of the effect of Shengyi Electronics’ spin-off listing.It is particularly useful for companies aiming to achieve spin-off listing through the A-share science and innovation board under the registration system.This paper adopts a case study approach to examine why listed companies undergo spin-off listings,what route they take to spin-off listings and how about the effect after spin-off listings.Firstly,a definition of the conditions under which a company’s behaviour falls within the scope of a spin-off is made,to define a clear scope for this study;secondly,the relevant spin-off theories required for this paper are collated and then used as the theoretical support for this case study;then,a summary of the previous studies on spin-offs is presented and the issues that need to be studied in-depth on this basis are identified;next,the options for spin-offs of listed companies in China at this stage are introduced together with a comparison of the spin-off provisions in different capital markets;a description of the successful spin-off subsidiary,Shengyi Electronics and its strategic position within the parent company is presented immediately afterwards in relation to the selected case,and the process of its spin-off is described;next,a detailed analysis of the purpose of the spin-off,the means by which the spin-off was achieved and the effects of the spin-off is presented.Finally,they are the conclusions,recommendations,and shortcomings of the study.The conclusions drawn from a detailed analysis are: firstly,the main drivers for the spin-off listing of Shengyi Electronics are the achievement of a refocusing business strategy and access to finance.Secondly,the overall advantage of choosing A-shares as the location for spin-off listings for technology-based companies with commonalities with Shengyi Electronics is greater than that of overseas capital markets.Thirdly,spin-off listings increase the valuation of both parent and subsidiary companies,with little impact on financial metrics in the short term without changing the company’s business.