In December 2019, the "Several Provisions on the Pilot Domestic Listing of Subsidiaries of Listed Companies Spin-off" was implemented, and the number of enterprises willing to spin off has gradually increased. Since the spin-off listing was allowed, there are more possibilities for the listing channels of A-shares.
What is a spin-off? To put it simply, it allows a listed company to make an initial public offering** or listing or reorganize and list part of its business or assets in the form of subsidiaries directly or indirectly controlled by it in the domestic or overseas market.
For the parent company, the spin-off of the business that is not strongly related to the main business can focus more on the main business and improve operational efficiency; secondly, it is conducive to expanding financing channels and alleviating financial pressure; In addition, if the profitability and growth ability of the subsidiary are recognized by the market, it can increase its own valuation, which is also conducive to improving the valuation of the parent company.
For subsidiaries, they can raise funds as an independent entity in the A** market after listing, which is conducive to enhancing market competitiveness and profitability; Secondly, after the spin-off, they can get an independent valuation, and good development prospects can also win more opportunities for themselves and their parent companies to increase their valuations.
Of course, there are also certain drawbacks in spin-off listing, such as: benefit transfer or lack of profitable business of the parent company, which may not only damage the interests of the listed company itself, but also may damage the interests of many small and medium-sized shareholders.
In 2023, a total of 54 A-share companies have disclosed their intention to spin off, of which 9 have been successfully split and 13 have been terminated. From the perspective of the reasons for the termination of related companies, changes in the current market environment have become an important factor in the recent termination of spin-offs and listings.
1. The spin-off madness requests to be suspended.
On February 1, Han's Laser [002008SZ] announcement: the termination of the spin-off subsidiary Han's Closed Beta to be listed on the GEM and the withdrawal of relevant listing application documents are mainly due to the great changes in the current market environment.
Han's Laser's main business is the R&D, production and sales of intelligent manufacturing equipment and its key components, including general components and industry popularization products, industry special aircraft products, and extreme manufacturing products, which are used in consumer electronics, new energy, electronic and electrical, smart home and other industries.
Han's Packaging & Testing Co., Ltd., a subsidiary to be spun off, is mainly engaged in the R&D and production of special equipment for semiconductor and pan-semiconductor packaging and testing, and Han's Laser directly holds Han's Packaging & Testing 5928% of the equity is its controlling shareholder, of which Gao Yunfeng is the actual controller.
Han's Laser spun off Han's Packaging and Testing based on its business strategic planning, emphasizing that there is no competition between the parent company's business and the subsidiary's business, and that their independence will be more conducive to future development.
As early as March 2022, Han's Closed Beta submitted a prospectus, and received three rounds of inquiries before and after, which lasted more than a year. The focus of the inquiry is on the issuer's main business, the reasonableness of performance fluctuations, the reasonableness of the rapid growth of accounts receivable and the risk of impairment, the risk of pledge and solvency of the controlling shareholder.
As far as the main business is concerned, whether Han's Sealing & Testing can independently expand the sales channels of its products and does not rely on its controlling shareholders to obtain orders is one of the focuses, which is related to whether it has the ability to develop in the long term in the future. In addition, there are some overlapping customers and ** merchants with the controlling shareholder, which makes people question the existence of intra-industry competition between the two parties.
In the reply announcement, Han's Closed Beta emphasized that it has the ability to obtain orders independently. In 2022, the operating income of comparable companies in the same industry will show a slight decline, while the revenue of Han's packaging and testing will increase by 26% year-on-year77%, and the top five customers have been established for a short time.
At the same time, the revenue and net profit of companies such as Guoxing Optoelectronics, Mulinsen, Hongli Zhihui and other domestic leading LED packaging manufacturers in the downstream industry have declined to varying degrees in 2022, mainly due to the decline in market demand.
Downstream customers are tightened, and the revenue of upstream companies can still grow significantly, and first.
First, the fourth quarter revenue increased significantly year-on-year.
Second, the revenue in the third quarter decreased significantly, while the proportion of revenue of comparable companies in each quarter was relatively stable, so the stock exchange required to explain the reasonableness of its performance fluctuations.
There are still many questions like this, but this is not the first time that Han's Laser has spun off its subsidiary and listed it, and it is not surprising. In February 2022, the company successfully spun off Han's CNC to be listed on the GEM, and in November of the same year, it also announced a plan to spin off its subsidiary Han's Fuchuangde Technology to be listed on the GEM, but it has not submitted a prospectus.
In August 2023, the China Securities Regulatory Commission (CSRC) issued the "Regulatory Arrangements for the CSRC to Coordinate the Balance of the Primary and Secondary Markets to Optimize IPO and Refinancing", which includes tightening the pace of IPOs in stages according to recent market conditions to promote the dynamic balance between investment and financing.
I wonder if this is one of the major changes in the market environment that Han's Laser said?
2. The performance of the parent company has regressed one after another.
In addition to changes in the external environment, Han's Laser's performance has declined for two consecutive years, and the spin-off may be even worse at this time.
In the first three quarters of 2023, the company achieved revenue of 938.7 billion, a year-on-year decrease of 1112%；Net profit attributable to the parent company was 63.2 billion, a year-on-year decrease of 3759%, mainly due to insufficient demand from downstream customers and a decrease in orders.
In addition to declining profitability, high asset impairment and credit impairment losses further weighed on earnings.
As of the third quarter of 2023, the company's accounts receivable reached 7.3 billion, an increase of 7% year-on-year; The turnaround days further increased to 209 days, an increase of 46 days year-on-year.
With the increase in turnover days, the risk of ** payment increased simultaneously, and the credit impairment loss recognized in the first three quarters was 86.82 million, although it decreased by 20% year-on-year, but there is a problem that cannot be ignored is that the proportion of bad debts is lower than that of other enterprises in the same industry.
Comparable companies typically make a provision for bad debts on receivables aged 7-12 months at a rate of 5%, while Han's Laser makes a provision for 3%.
In this regard, the company has explained: the credit rating of the main customer is in the B or A range, the credit qualification is good, and the possibility of bad debts within one year is not high, so it does not distinguish between 1-6 months and 7-12 months of aging, and makes provision for bad debts on accounts receivable within one year at 3%.
If, as in the case of comparable companies, the provision for bad debts is increased by 10.9 billion, which is enough to have a significant impact on net profit.
In addition, the company's inventory balance has exceeded 5 billion for three consecutive years, and the inventory turnover days are about 221 days. An increase in turnover days means a decrease in the rate at which inventory can be realized, a gradual increase in the risk of damage, and an increase in asset impairment losses.
Due to the unclear disclosure of the data in the third quarter, we can only find the answer from the annual report, and the inventory price loss in 2022 will be about 1300 million, double the number in 2021.
In addition, the company has a lot of foreign debts, and the capital chain is relatively tight, so the actual controller has also continued to pledge shares, and has also been questioned by the stock exchange, questioning its solvency.
3. What does the high proportion of pledges by the actual controller expose?
In the first three quarters of 2023, Han's Laser's long-term and short-term borrowings were close to 3 billion, and the interest expense was about 1800 million. The shares pledged by Gao Yunfeng, the actual controller of the company, account for 92% of the shares held by him78%, and Han's Holdings, which is controlled by it, also pledged 723% of the shares, and the total pledged shares account for 20% of the A shares.
As of December 5, 2023, the repayment amount of the pledge financing corresponding to the share pledge is about 2.9 billion yuan within one year. The stock exchange once questioned the pledge when Han's Laser was going to be listed, and if Han's Laser could not repay the loan in time, whether the subsequent treatment of the shares would lead to the instability of its control, which would then affect Han's Closed Test.
Although the IPO process was later terminated, once the loan cannot be repaid, the high proportion of the pledge of the actual controller may still be forcibly liquidated, and Han's Laser still has the risk of breaking the capital chain.
4. Summary. For more than a year, Han's Laser abruptly terminated the listing process of its subsidiaries after submitting information to spin off its subsidiaries and being questioned one after another.