| On October 20,2021,China Railway High-Speed Electrification Equipment Corporation Limited(abbreviated as CRHE Co.Limited),a leading enterprise in the industry of electrical equipment manufacturing for railway transportation,under the China Railway Group Limited(abbreviated as CREC),was successfully listed on the Sci-Tech Innovation Board(abbreviated as STAR).This event has received heated attention from the capital market and relevant stakeholders,as being a typical carve-out case in the domestic market.When it comes to macro-economic environment,in recent years,the national railway construction industry has continued to gain momentum,and the macro-economic environment has brought great opportunities to the rail transportation electrification equipment manufacturing enterprises,while also putting forward higher operational requirements for them.It is a topic worth deeper studying that whether or not could CRHE Co.Limited greatly take the advantage of this carve-out and show higher level of “speeding” ability.In this paper,case study,financial analysis and event study method are used to study the event of CREC’s spin-off of CRHE Co.Limited.The main technical line of this thesis is: firstly,summarize the core concepts involved in this paper and the current research results of domestic and foreign spin-offs,which involves summarizing the existing research results in terms of the spin-off motivation,and build a systematic analytical framework for the analysis on the effect of this spin-off.Then,the above theory basis are applied to the study of CRHE’s carve-out on the STAR.Then,the effects of the spin-off event are analyzed in detail through the following comprehensive aspects,operation,corporate governance and market reaction.Finally,on the basis of summarizing the primary findings of the case,possible risk of future operation of the case company are identified with corresponding suggestions are provided for its future development.Main conclusions of this paper are demonstrated as follows: evaluated from the operational aspect,the spin-off has led to a significant improvement in its financial performance,especially in increased profitability and growth capacity.Each capability stands out in cross-sectional comparisons in the industry,although there are some drawbacks in operational capabilities to be alerted.Due to the injection of external funds,the IPO has had a significant positive effect on the expansion of the company’s assets,and the company’s capital management capabilities demonstrated in the process are also noteworthy.From the governance aspect,this carve-out has improved the governance efficiency of CRHE Co.Limited mainly in the areas of organizational structure improvement and effective running,equity optimization as well as regularization of related party transactions.The carve-out has facilitated further strategic transformation and upgrading of CRHE Co.Limited,making its main business structure clearer,enhancing its core competitiveness,and promoting its corporate governance,which helps it to realize core strategic target assigned from its parent company.From the market aspect,the announcement of the carve-out of CRHE seems did not cause strong market reaction.The excess yield rate resulted from the event study indicates that the market reaction was of average level during the selected announcement window period,with a positive reaction only shown two days after the initial announcement. |
