Research On The Economic Consequences Of The Privatization Of Red Chip Enterprises And Their Return To The Science And Technology Innovation Board

In recent years,the capital market and regulatory policies at home and abroad have undergone significant changes,and as the regulations and management systems of the domestic A-share capital market have become more and more sound,the phenomenon of red chip companies and Chinese companies returning to the domestic market has attracted widespread attention and has become a hot topic of discussion in both theoretical and practical circles.Since the implementation of the pilot scheme in2019,a number of red-chip companies have been successfully listed on the board,making it the first choice for domestic listing of red-chip companies.Based on this background,this paper selects the case study of the privatization and delisting of red-chip enterprise Huaxi Bio to return to the STB,and adopts the event study method and model analysis method to analyze the motivation,process and economic effects of the privatization and delisting of red-chip enterprises to return to the STB,and makes relevant suggestions to the R&D input and output of Huaxi Bio,the red-chip enterprises to be returned and the regulator.Huaxi Bio was delisted from Hong Kong stock in 2016 and returned to China’s capital market in November 2019.First,we review and sort out the relevant literature and theories on the motivation,path and effects of privatization delisting of enterprises at home and abroad;second,we introduce the business situation of the case company Huaxi Bio,and analyze in detail the motivation and process of its return by understanding the background and listing conditions related to the listing of Huaxi Bio on the KSE;finally,we analyze the financial effect,market effect and the impact on enterprise value of Huaxi Bio’s delisting and return to the KSE.We compare the performance changes before and after the return of the company vertically,compare the financial indicators of Haohai Biotechnology,a comparable company in the pharmaceutical manufacturing industry horizontally,and analyze the short-term market effects using the event study method,while analyzing the economic value added of Huaxi Biologicals based on EVA.Based on the above research,the following conclusions are drawn: First,according to the strategic development layout,Huaxi Bio can reduce the phenomenon of undervaluation of enterprise after the regression,and comply with the national policy guidance to carry out capital financing in the science and technology innovation board market,which can meet the enterprise’s demand for capital to a greater extent and optimize capital allocation.Secondly,the listing of Huaxi Bio on the KSE brings positive effects to the enterprise,such as a significant increase in profitability and operating capacity;a rise in stock price,which brings a good short-term market response;and a significant increase in corporate value,which enhances the value creation ability of the enterprise.Based on the experience related to the return of Huaxi Bio to the HKSE after privatization and delisting,the following recommendations are made: First,Huaxi Bio should seize the opportunity of favorable policies and market development after its return,enhance the financial capability of the enterprise,improve the negative financial effect after the return,increase the investment in R&D,improve the innovation capability,and accelerate the layout of the whole industrial chain to achieve long-term development.Second,red-chip enterprises to be returned need to choose the return path carefully,combining themselves and their judgment of the domestic market situation to choose the most favorable way for their listing.Third,the regulator should continue its efforts to improve the rules and regulations of the board and actively guide high-quality enterprises to return to the domestic capital market.