Research On The Value Creation Path Of Huabang Health Spin-Off Listing

Since the wave of mergers in the global capital field at the end of the 19 th century,diversified group companies with various operations have emerged.Due to the continuous expansion of their respective business areas,negative synergy effects,investment restrictions,and management chaos have gradually emerged.The asset restructuring method of spin-off listing,which is opposite to mergers and is a resource divestment type,has emerged.With the globalization of the world economy,China has also been under tremendous pressure from global competition.In the early 2000 s,Beijing Digital Telecom and Tongrentang successively spun off subsidiaries to overseas listings,setting a precedent for spin-off listings in China.Due to inadequate regulation,it was not until 2004 that the China Securities Regulatory Commission issued the "Notice on Spin-off Overseas Listing",allowing A-share listed companies to spin off subsidiaries to overseas listings.In 2010,the China Securities Regulatory Commission clearly stated the regulations for spin-offs to be listed on the Growth Enterprise Board for the first time.In 2019,the China Securities Regulatory Commission issued the "Several Provisions on the Pilot Domestic Listing of Subsidiaries of Listed Companies",which set off a wave of spin-off listings in China.In 2023,China’s stock issuance registration system reform will be officially launched,the listing process will be streamlined,regulations will be improved,and coupled with the increasingly mature domestic capital market,many companies announced plans to spin off and list.Many well-known scholars predicted that spin-off listing would become popular.Huabang Life Health Co.,Ltd.is a diversified group company.Shandong Kaisheng New Material Co.,Ltd.is a subsidiary under its fine chemicals and new materials business segment.In 2021,Kaisheng New Material was listed on the GEM,marking the birth of the first spin-off listing on the GEM after the implementation of the new policy,with significant research value.Starting from the theory,this paper summarizes the related literature of scholars at home and abroad on the motives,performance,value creation and influencing factors of spin-off listings,and sorts out the three major paths of value creation,financing effects,operational effects,and governance effects.Combined with the case of Huabang Health’s spin-off listing,this paper verifies the value creation of spin-off listing and analyzes the value creation path.The paper is divided into four parts: first,it summarizes the relevant literature and expounds the related theories and concepts,and summarizes the three major paths of value creation;second,it introduces the relevant case companies and sorts out the process of spin-off listing.Using the event study method,the short-term financial performance of the case company is analyzed,and the Tobin’s Q value and the economic value-added method are used to test the enterprise value before and after the spin-off listing.After obtaining positive improvement in enterprise value,based on the three paths of value creation,this paper analyzes in detail the financing effects,operational effects,and governance effects on the process of enterprise value improvement,and uses financial analysis to test the effects of each value creation path.Finally,the paper puts forward suggestions for the value improvement of Huabang Health and Kaisheng New Materials,relevant companies and market regulators,and draws research conclusions.The paper concludes that: firstly,spin-off listing has increased the company’s value;secondly,spin-off listing has helped subsidiaries obtain a large amount of funds,promoted capacity release,and achieved specialized management;finally,spin-off listing has improved the short-term performance of the parent company.Spin-off listing is an opportunity but also has risks.Enterprises need to seize the opportunity and regulatory authorities need to strictly review it to welcome the prosperity of China’s capital market.