The Impact Of Property Spin-off And Listing On The Parent Company’s Value Creation

Benefiting from the reform and opening up and the advancement of the urbanization process,the reform of our country’s housing system in 1998 opened the era of commercial housing,thus driving our country’s real estate industry into a "golden age" of development.However,with the gradual saturation of real estate development increments and the pressure of the state’s regulatory policies such as "housing,not for speculation," "three red lines," and "two centralized land supply",the real estate industry has gradually slowed down and gone into the "Silver Age".In this environment,companies with real estate development as their main business have begun to carry out strategic transformation,extending vertically around the value chain of the entire life cycle of real estate,and developing diversified business operations.Among them,the property management industry has become a business segment that major real estate companies are competing to expand due to its huge market demand and the development opportunities brought by the continuous expansion of diversified business services with the help of the Internet and smart technology.Due to the limited financial support of real estate companies and the fact that the capital market is very optimistic about the development prospects of the property management industry,major real estate companies have been getting together and splitting their properties for listing since 2014.The popularity of spin-off and listing continues,and more property companies will enter the list in the future.So,can the spin-off and listing create value for the company? How to choose asuitable spin-off and listing path according to the company’s own situation?These are the issues that need to be considered and resolved by companies planning to spin off their properties for listing in the future.Therefore,this paper selects the case of China Merchants Shekou spin-off property listing,as the first case of A-share listed real estate company spin-off property to A-share listing.The study of real estate companies’ spin-off property listing provides a realistic basis,and also provides a reference for real estate companies that plan to spin off their properties for listing in the future on the choice of spin-off paths.Based on the related theories of spin-off motivation and value creation,as well as the current situation of spin-off and listing in our country,this paper analyzes the motivation of China Merchants Shekou spin-off and listing from the internal and external environment,and uses event research method,entropy value method combined with grey correlation degree analysis method to measure the impact of spin-off and listing on enterprise value creation from market value and intrinsic value.After research,it is concluded that: First,the motivation for China Merchants Shekou to spin-off and listing China Merchants Property Operation &Service are mainly from the development of the real estate industry and property management industry,the needs of the company’s own strategic development,the release of the value of the property sector,and the incentives for management.Second,through the analysis of stock price response,price-earnings ratio and excess cumulative rate of return,it can be found that China Merchants Shekou’s spin-off and listing of properties can have a short-term positive impact on the creation of market value of the company;third,from the perspective of operation,fundraising and investment activities,this paper analysed the impact of spin-off and listing on the company’s intrinsic value creation,and found that spin-off property listing can improve the efficiency of the parent company’s economic activities,allowing the parent company to focus on strategic transformation and development of the three main businesses;simultaneously,it can also completely liberate the subsidiary’s own value,make it become the market leader,and bring more economic value to the parent company.However,the subsidiary also faces challenges brought about by intensified competition in the industry.The enlightenment obtained after studying the case of this paper is that spin-off and listing cannot fundamentally improve the business performance of the company and bring value creation.In the future,companies that plan to spin off their properties for listing should choose appropriate paths based on their own strategies.