The Motivation And Performance Analysis Of CRCC’s Two Splits

At the end of 2019,after the new rules of China Securities Regulatory Commission on the split and listing of domestic listed companies were issued,the enthusiasm of A-share listed companies for split and listing was quickly ignited.In 2020 alone,63 companies submitted applications,and the number of applications was about twice of the number of overseas listed subsidiaries of domestic listed companies in the 21 years from 2000 to 2020.After China Railway Construction Company completed the overall listing in 2008 and the split of railway construction equipment to Hong Kong Stock Exchange in 2015,it plans to spin off The Railway Construction Heavy Industry Company to the science and Technology Innovation Board of Shanghai Stock Exchange in 2019.In a short period of more than 10 years,CRCC has completed one overall listing and two splits listing,a total of three capital operations,spanning two domestic and overseas markets,which is relatively representative.This paper focuses on three issues to discuss the two splits of CRCC,that is,the performance of The Railway Construction Equipment Company continues to decline after listing on Hong Kong Stock Exchange.Under this background,why does CRCC still insist on the split of The Railway Construction Heavy Industry Company? Are the two splits of CRCC based on short-term tactical considerations or long-term strategic considerations? How to prevent The Railway Construction Heavy Industry Company from repeating the mistakes of The Railway Construction Equipment Company after its listing?The technical route and main contents of this paper are as follows: firstly,this paper summarizes the domestic and foreign literature on the motivation and performance of splits,and then defines the related concepts of splits.Based on the four hypotheses of core strategy hypothesis,asymmetric information hypothesis,industrial chain hypothesis,value chain hypothesis and reconstructed value chain hypothesis,this paper analyzes the motivation of the two splits from the perspective of policy background,corporate strategy,industrial chain and value chain,and then analyzes the causes of the two splits.This paper analyzes the performance of The Railway Construction Equipment Company and The Railway Construction Heavy Industry Company after the separation from three dimensions of short-term excess return,long-term financial performance and strategic competitiveness of the capital market,and finally draws the following conclusions: firstly,the first separation of The Railway Construction Equipment Company was completed in a rush under the policy background at that time,which is to meet the policy requirements of mixed reform and meet the national strategy of made in China 2025.Although the parent company CRCC has achieved short-term excess returns in the capital market,the financial performance of The Railway Construction Equipment Company is not ideal due to the lack of good investment projects and excessive dependence on large customers.Since its listing,the strategic competitiveness of The Railway Construction Equipment Company has also continued to decline.Secondly,the second split is a long-term plan,focusing on the company’s development strategy and taking into account market value management is the main reason for the split;the second split of The Railway Construction Heavy Industry Company has also achieved short-term excess returns in the capital market,which is also helpful for the realization of the company’s strategy,but the long-term financial performance still needs to be considered.Finally,based on the above analysis results of the motivation and performance impact of CRCC’s two splits,suggestions are put forward for CRCC and related companies,regulators and investors.Through the case study of CRCC’s two splits,we can verify the existing theoretical results of splits more vividly and concretely in terms of theoretical significance,and the combination of splits with the theories of industrial chain,value chain and strategic competitiveness may enrich the existing theories.In terms of practical significance,CRCC has successively split its subsidiaries and listed them in H-share and A-share markets.The strategic layout,industrial logic and route planning behind the split and listing provide a practical case for the listed companies in the same industry and ownership with CRCC,which has a certain reference value for the regulatory authorities.As for the regulatory authorities,"combination" and "separation" are the two wheels of asset restructuring.Overall listing and split listing are only two means of enterprise capital operation.Whether split listing or overall listing,it is a good prescription to suit the remedy to the case.Regulatory authorities should pay more attention to the matching relationship between the industrial chain and financial indicators when setting the registration conditions for listing.In addition,the current registration system should be gradually pushed forward and examined in advance Under the background of further weakening of the approval system,we must ensure the realization of policy objectives through more effective supervision of information disclosure in the event and more stringent accountability after the event.