Research On The Motivation And Performance Of Poly Developments Spinning Off Poly Property Services Listing

In the deepening of the national Macroeconomic regulation and control,the real estate industry "dividend era" has long passed.In such an environment,the property management industry,as a promising blue ocean market,is in its unique way to attract investors.Since 2010,the China Securities Regulatory Commission has approved overseas spin-offs of domestic companies.In 2014,Colour Life Services Group Company Limited became the first property management company to spin off in Hong Kong,and its market value surpassed that of its parent company Fantasia in just three days after its listing,which led the real estate companies turning their eyes to the property management industry,and beginning to spin off their own property service subsidiaries.In the following years,due to the normative and efficient operation of the Hong Kong Stock Exchange,a large number of enterprises rushed into the Hong Kong Stock Exchange for spin-off listing.At the end of 2019,the China Securities Regulatory Commission issued the "Several provisions on pilot domestic listing of subsidiaries under spin off of listed companies",which clearly clarified the target conditions for listed companies to spin off their subsidiaries for listing in China,it also provided a new path for the spin off and listing of Chinese enterprises and was expected that the number of domestic spin-off listings would increase in the future.The case company Poly Property Services studied in this paper is a property management enterprise successfully spun off and listed by Poly Developments in2019.Since the spin off and listing,Poly Property Services’ business performance and comprehensive strength significantly improved.In 2020,Poly Property Services was selected as the second place in the “Comprehensive strength ranking of Chinese property enterprise”.Therefore,this paper analyzes the case of Poly Developments spin off Poly Property Services listing,which can provide a useful reference for other real estate companies.This paper uses the case study method to analyze the case of Poly Developments spin off Poly Property Services listing.First of all,the development status and current situations of property management industry in China are summarized.Secondly,it introduces the development of Poly Developments and Poly Property Services,using SWOT analysis method to analyze its strengths,weaknesses,opportunities and external threats.Thirdly,it analyzes the motivation of Poly Developments spinning off Poly Property Services listing.Then it introduces the process of the spin off and listing of Poly Property Services and shows its equity structure in various stages in the listing process.Finally,it analyzes the reaction of the capital market after the split listing by using the event study approach,this paper has carried on the thorough analysis of the changes of Poly Property Services’ performance before and after the split by means of business performance analysis,financial index analysis and EVA,so as to draw the research conclusions of this paper.Through the full paper analysis,this paper has drawn the following research conclusions.In terms of motivation,there are four reasons for Poly Developments to develop the divestment of Poly Property Services: widening the financing channel of Poly Property Services,driving the strategy of the centralization of Poly Property Services,enhancing the enterprise value of Poly Property Services,and strengthening the role of management incentives.By analyzing the short-term capital market response of Poly Developments,it is found that the share price of Poly Developments rises steadily and the cumulative excess return remains positive,and the spin off and listing has positive economic consequences for the parent company.In terms of business activities,spin off and listing will help Poly Property Services achieve largescale development and full format layout;at the same time,equity incentive plan and executive compensation incentive also help to improve the operating efficiency of Poly Property Services.The analysis of financial indicators shows that since the listing of Poly Property Services,its solvency and growth ability have improved,but the improvement of profitability and operating ability is limited,and the long-term performance needs to be further observed.And the spin-off listing has helped Poly Property Services realize EVA value-added,effectively using the funds raised to create value for the enterprise and shareholders.Finally,this paper summarizes three inspirations and enlightenments: firstly,spin-off listing should be based on the industry prospects and their own strategic planning;the second is to choose the appropriate location and manner of spin-off;thirdly,after the spin off,we should make reasonable use of resources to achieve high-quality development.