A number of large State-owned enterprises (SOEs) are qualified to fully list on the stock markets by floating both A shares and H shares, Ji Xiaonan, chairman of the Board of Supervisors with Large Key SOEs, noted in an article published on the China Securities News Tuesday.
Full listing can boost SOE performance and value premium, according to the article. By the end of 2006, total assets of the central government-owned enterprises amounted to 12.2 trillion yuan (1.63 trillion U.S. dollars). Meanwhile their net totaled assets 3.6 trillion yuan, sales revenue 8.1 trillion yuan, profits 750 billion yuan.
Domestically-listed central enterprises had combined assets of 2.6 trillion yuan, net assets of 700 billion yuan, sales revenue of 4.9 trillion yuan, and profits of 400 billion yuan. Full listing of such a large number of high-quality assets will remarkably raise the Chinese domestic stock market value.
Ji advised SOEs to inject their assets into as many listed units as possible and spin off the non-related assets first before full listing. Enterprises planning full listing step by step should be cautious about initially listing only part of their assets, and avoid partially listing their main business, he said. It is better for them to issue A shares and H shares simultaneously with the same number and price, he added.
There are still problems on full listing for large SOEs, according to Ji. The first is who will be the shareholding entities after listing, the State-owned Asset Supervision and Administration Commission of the State Council or State-owned asset management companies.
The second problem is parent companies' functions. Parent companies will be responsible for restructuring assets. Also problematic is determining what role full listing can play in perfecting company structure and transferring operations mechanisms. The last problem is controlling the number of listed subsidiaries.
Source: China Daily
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