2014-07-06

Investors Look To A-Shares in New Shell Company Strategy

After swamping the U.S. with reverse mergers, investors are looking to go the other way, acquiring A-share companies in order to push asset prices up to the higher A-share P/E ratios.

A股“壳”疯狂
"BAT did not want to cook is not a good cook." Enter the first day of July, A-share listed companies in the catering industry Xiangeqing announced that, in order to complete the transition to the big Internet Data Corporation, intends to change the company name to "cloud Branch Network Technology Group Ltd. "in order to create a comprehensive transformation of the company's new image.

The beauty of video that launched last year, reality show langma information, but also transformation. June 27, langma information announced its intention to issue shares to a total of 650 million yuan and 22 times the premium paid in cash to buy 100% stake in the Kai raw information to obtain it's 39 health networks, since the stock once again boarded the helicopter. Its chairman Wang Wei rhetoric, Ma Lang online medical information will have big data + + virtual human tumor detection + wearable + images + gene sequencing Dianzaikeda + Internet + beautiful + hospital + Guizhou government support. Participants lamented: langma information is a human health technology company! Last year, Lang Ma information only twice invested 2 million yuan, and 300 million acquisition of equity interest in hand travel companies on hand to catch a tour of this capital market's fastest ride. Even after the listing of its main business profit growth decreased significantly, but after several capital operations, its current market value of nearly 10 billion at the beginning than the listing turned several repeated.

For the A-share listed companies, the concept of what went close what popular. And because the IPO door closed, the urgent need for public financing of the company, also put into the listed company as a viable option. Three years ago, a Beijing-based PE firms invested in a company to be listed after the IPO application materials submitted by the second half of 2012, he has been lined up so far. Not long ago, the company informed the sponsor of CITIC Securities, the current trend from the audit, the "invisible" barriers in increasing the difficulty of the final audit by not smaller than ever. They make recommendations to make this enterprise listed in Hong Kong. However, this PE firms worried about the Hong Kong market is undervalued, are trying to find an A-share listed companies, to discuss the possibility of mergers and acquisitions exit.

According to Wind statistics, in the first half of this year, A-share listed company has completed the refinancing of yuan-denominated high as 558 M & A transactions, involving an amount of 215.4 billion yuan, significantly more than the same period last year. Information technology, software, pharmaceuticals, media and entertainment is the most concentrated several major industries.

In the IPO lake background, A-share listed companies have become curious "shell" of resources. Mergers and acquisitions, will be the next few years, the A-share market a new direction.

Twelve hot merger market interaction

In transition economies continues to decline, the 2014 A-share market is undoubtedly the hottest segment "theme" Investment, from land reform, the regional economy to the internet banking, to the military and information security, all kinds of new economic reforms in transition theme round dance.

Zhu Ping, deputy general manager of Guangdong Development Fund noted that the recent rise of the tide in the A-share merger, there has never been a secondary market for the first time "interactive", an investor in the secondary market for health care, Internet education, IT finance, information security consensus, several major industry stocks rose, and these types of companies most active in mergers and acquisitions.

Senior secondary market stock investors can feel the "shell" is popular in the market.

Whether the Shanghai market, the Shenzhen market, whether small plates or GEM, small-cap stocks rose are much better than large cap stocks. Zhu Ping opinion, largely because small capitalization companies backdoor low cost, after the injection of new equity through convertible, imagine a greater future growth. "Shell" is not a loss to the delisting of ST those companies, but mainly those 3 billion market capitalization of less traditional sense of small companies, the industries with economies in transition to the new economy label, if the industry's leading companies are more segments Well, have a certain valuation premium.

Of course, there are many "shell" in the magnificent turn. SHUNRONG is undoubtedly one of the best cases. Everbright Securities has just raised its rating SHUNRONG, the main fuel tank of this car twice pass through the acquisition of companies hand travel company thirty-seven play finally succeeded. SHUNRONG continuous sharp decline in profits in recent years, in 2013 net profit remaining 3.68 million yuan, or even keep up with executive pay totals more than 500 million. But from the second half of 2013 planned acquisition of mobile game company whose stock was nine word limit, the current share price has risen by nearly five times.

Equity + Cash is the most common way to acquire such information Panax play 60% stake in the company in accordance with its disclosure SHUNRONG valued at 1.92 billion yuan. It seems that some investment bankers, accounting for 1.92 billion yuan SHUNRONG 2013 audited total assets of more than 200%, the Acquisition Wing Shun Panax play has constituted a "backdoor" listing, in accordance with the provisions of the Commission shall be equal to the IPO process, although the Commission concerted action was to deny its restructuring plan issues, but ultimately through these efforts, Anhui business or pass through this successfully.

SHUNRONG from a quarterly perspective, Huaxia Fund, Shen Ling letter, the League of Nations and a number of large institutional investors to buy the stock recently. As one fund manager told reporters: get the restructuring of listed companies and market capitalization growth, is to obtain a high premium and wealth acquirer, we earn a share price rise, which is a pile multi-beneficiary of the game, why not be happy to see .

In fact, although the Commission has specifically listed on a major restructuring of the Ministry involved in the game to make the company's financial audit requirements and stressed, but there is much hand travel companies have been able to maintain a sustained performance that no one really cares.

A central province of a listed company engaged in manufacturing, chairman of the past year have been looking at the project. Original content with the chairman of the industry on the capital market does not care, but now he could not stand each broker, private home lobbied. In the last two years, the bank loans difficult, high cost to borrow large troubled world, he also began to realize how the main listed companies have an advantage in resources, but he realized that the project must be installed in the secondary market also like. Six months, he saw the project is no longer just downstream, a few years ago is no longer hot, mineral, but no shortage of hand travel, software, and even robot concept. However, brokers recommend watching these capital projects, mediocre performance but high valuations, they have played his heart question mark.

Nevertheless, M & A-share market heat almost to all major shareholders of listed companies around the corner. Door lobbying capital intermediaries have also told them that there is a new term called "market management" asset loaded in, two by the market, the share price rose, the major shareholder of course benefit.

Granville shares are also listed on the A-share market, a veteran of the company, there has been a full decade since the Main Board Listing in 2004, the company is one of only two A-share market aquatic feed enterprises. Close to Granville shares of sources, Granville shares has maintained a steady management style, only in the last decade to implement the listing once the refinancing, but now people see the actual control of the company on the market after another M & A transactions, but also had to start greater strides in mergers and acquisitions, capital operation. Not long ago, Granville shares began working with Paradise Valley, the two sides signed a "strategic consulting and merger integration services agreement", began in full swing to promote mergers and acquisitions.

Qing Branch Group NiZhengDong obviously felt the pursuit of potential acquisitions major shareholders of listed companies. He told reporters that this year he met with at least 50 listed company's chairman, chairman of the board, or 95% of the people want to do the actual control of mergers and acquisitions.

Wind statistics show that this year private placement announced refinancing plan has not been implemented, but the company is reviewing more than 300, is expected to raise a total amount of 440 billion yuan in the first half of this year to refinance have already implemented the actual funds raised 263.7 billion yuan .

There are two main institutional placement needs: one is the financial type of refinancing, to institutional investors borrow cash for the development of new businesses or to supplement working capital, repay bank debt.

One is M & Refinancing: acquisition of listed companies outside companies through private placement, issuing their investment by way of subscription of assets or a combination of assets and cash acquisitions manner, which also includes fixed increases shareholder reverse takeover of listed company or group assets.

The above release plans but not yet implemented the issuance of approximately 300 companies, 160 companies given the purpose of increasing inter-company asset replacement, the overall market, shell resource restructuring, supporting the financing, or the actual controller and other assets acquired assets into relevant plans, Such M & Pre-refinancing Total 230.348 billion yuan to raise funds, accounting for more than half of the A-share plan to refinance scale.

Over the past few years, the annual Refinancing between 350 billion -3800 million. Data can be expected from the current year, the A-share market refinancing will greatly over the last few years and the assets of M & refinancing are becoming the new mainstream.

JiQuanShengTian

Enlight Media and Huayi Brothers recently thrown up while 2.5 billion and $ 2.8 billion refinancing program, conducted primarily to raise cash for film shooting. Even the media in which the emerging film industry, for such a "big and beautiful" exclude financial assets into the type of refinancing, capital markets are not so concerned.

Shanghai, a fund industry researcher bluntly: the two companies to refinance such a high body mass over the total size of the recent IPO and secondary market investors are not so reluctant to borrow too much money, we like the new economic concepts injection. As langma information last week because of merger news boosted the stock appeared five daily limit.

Has many years of overseas investment in a U.S. stock fund manager experience seems, for all refinancing program, the first reaction is wary of the old shareholders, including large shareholders, including because of all the old shareholders are reluctant to dilution of equity and earnings, in Foreign investors are most valued EPS (earnings per share), involving the acquisition of additional, can bring EPS thickening is the key. However, in front of the A-share market seems to not care about this, they are more concerned about the increase in market value, rose, so projects and acquisitions of listed companies where the industry has become more important.

In this context, the scarcity of shell resources listed companies have even strength in the secondary market, have entered the M & A market. For the A-share market many listed companies, in the throes of economic transformation urgent need to find a high-growth industries to replace the current business downturn fade, the secondary market price rise is also an important driving force. In the context of economic restructuring, mergers and acquisitions of the new economy, are keen to be a secondary market capital game.

As observed Zhu Ping, A shares merger events that have been implemented in the first half of this year, the company involved in the medical, pharmaceutical, bio-technology, the largest number, a total of 64, software, Internet-related companies 54, electronic components and other equipment 34 , culture, media, home entertainment 20, occupy the mainstream.

Some mergers and acquisitions of listed companies but also from the impulse to whitewash the results. This acquisition is a big uncertainty, the running cost of the investment, the results release time lag is more. In 2013 the hottest hand travel merger wave, the 2013 A-share market completed a total of 17 hands swim acquisitions, only a few large proportion of equity acquired company to achieve the financial results and tables. For example, palm interesting technology and performance Zqgame indeed appear in the post-merger growth. But most of the other listed companies in the acquisition and does not reflect the results in the earnings report. As another example Datang Telecom main business losses, the premium rate 15 times higher to play entertainment acquisition of Guangzhou, was also seen as profitable by the hand of the peak travel stock whitewash report. These assets are the results of future mergers and acquisitions of listed companies is the high valuation of sustainability are still suspense.

There are some major shareholders during the asset injection, the injection of in vitro cultivation of high-priced items subject listed company, disguised arbitrage. Last year a group of pharmaceutical companies will be its other assets into a listed company, but people know that the injection has been saddled with a huge amount of trust assets debt, but because the project involves medicine, is also a high valuation of the asset injection.

Currently this occurs in the A-share stock merger fever has several characteristics: First, the promoters involved in the project or acquisition has a new economic concepts, followed by injection of projects with high valuations, and the third is the main small cap listed companies, mergers and acquisitions messaging the market value of shares sought by the secondary market to grow. As mentioned fund manager who said, in the short term, profitable acquisitions parties involved, but the future can be thickened EPS in the end how much, who really pay unknown.

Blame IPO lake

IPO closed the door leading to sustained shell resource scarcity, but also stimulate M & A-share market continued to hit.

SFC has just revealed that the ongoing corporate pre-disclosure would be just over 40, 589 aborted review, means that the future they still line up, and continue to supplement the reported three quarterly or annual report 2014 financial data, the listed road indeed long.

The last six months of the IPO system tuning and rhythm IPO has been completely broken for many people had high expectations of the original registration system. They found that the door is still hard for the A shares.

A source close to the Commission issuance admitted that now seems certain is increasingly difficult IPO, listed companies is still a scarce resource, the next few years will be the general direction of M & A shares, which will lead to great changes in the securities market.

IPO reform rhythm tone has directly stimulate the M & A market heating. Within the Commission, compared with the issuance examination committee, mergers and acquisitions committee of the Listing Division of even more wind and water. From the Commission's announcement to see, last month, almost every day or may be granted on a 1-3 home mergers and acquisitions program. Single-June the Commission has received 41 applications 38 mergers and acquisitions company.

In his opinion, IPO is still the principal contradiction in the Commission's work, the key is to prevent fraud and misappropriating listed. Accordingly, the Commission re-financing and mergers and acquisitions on hold to clear and supportive attitude. Meanwhile, the stock market's main function is to direct financing to support the real economy, IPO door difficult to open, the Commission also intends to open a window to refinance.

In addition to major shareholders of listed companies have a strong "plug in the wings of the capital market", "big market capitalization," the willingness of various agencies on the capital market also all eyes on the M & A market. Vision changes in PE institutions and perhaps a microcosm. Pre-IPO business a few years ago was very popular, so there has been universal PE thermal wonders. Mergers and acquisitions and now is become of these PE firms are currently keen direction. And listed companies, the investment project will be sold to a listed company or listed companies to jointly establish and fund acquisitions, project after hatching and then sold to a listed company, it became more common PE industry's business model. In essence, these institutions is aimed at mergers and acquisitions of listed companies the opportunity to operate in the capital arbitrage, mergers and acquisitions has become a profitable new entry point.

Essence Securities Statistics, 2013 A-share market has had 27 listed companies with a combined push PE buyout funds, fund size of up to 30 billion yuan, an average of one billion.

The three new board has also become the subject of restructuring and M & A share pool. Recently, some local equity trading center secretaries frequently organize training sessions, mainly listed companies that, in order to recommend the subject, landing three new board is also to a large part of the enterprise being acquired for the purpose.

Galaxy Securities, a sponsor representative lament, to convince a company to abandon IPO and sell listed companies is still a very difficult thing. In his view, those who have obvious flaws, listed the possibility of low or short-term profitability and strong ability to make quick money in this part of the field, those willing to accept the merger founder way back, but this is a mergers and acquisitions and Deal or No Deal.

Currently active M & A market like few one-shot deal, rhythm and volume of mergers and acquisitions are accelerating. Overall, it seems that things are not so difficult merger occurs, like a capital-maneuvers surgery.

Needless to say, A-share market is the rise of an M & A boom, which is also the economic transformation of the capital market financing function play an important manifestation. United States and Japan as the representative of developed markets and the Asian tigers as the representative of the emerging markets have appeared merger wave. Taiwan after the completion of the high economic growth from the transition to middle speed has also experienced a rapid development of M & A activity.

July 4, the Commission released draft delisting program. However, for such M & A boom, A shares delisting still seems to be a very small probability event.

Commission on the end of June a routine press conference, asked about the IPO market-oriented reforms, the Commission spokesman evaded proposed registration system program launched before the end of the argument. This is interpreted by the market as "a smokescreen" in the IPO system changed and changed, control the tempo, price, number of return "control" of the IPO Deal registration system in the distant future. The next 2-3 years, can still landing A shares of the company will be scarce "shell" and "incubator."

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