Recently, CIMC Vehicles announced that the company's H shares have been withdrawn from the Hong Kong Stock Exchange (hereinafter referred to as the "Stock Exchange"). This decision marks the official departure of CIMC Vehicles from the Hong Kong stock market and the start of the privatization process.
So, why did CIMC Vehicles choose to end its journey to Hong Kong stocks at this time? What will the privatization decision bring to commercial vehicle companies?
Ended more than 4 years of Hong Kong stock journey
CIMC Vehicles is a world-renowned manufacturer of semi-trailers and special vehicles, and has also made in-depth exploration and layout in the field of new energy special vehicles. The company's business mainly covers semi-trailer manufacturing, special vehicle bodywork, high-end envelope manufacturing, muck truck business, etc. According to public information, CIMC Vehicles was successfully listed on the Hong Kong Stock Exchange in July 2019 with an issue price of HK$6.38 per share. However, it is regrettable that less than five years after its H-share listing, CIMC Vehicles chose to withdraw from the Hong Kong stock market.
Looking back on the entire delisting process, CIMC Vehicles held a meeting of the board of directors on November 27, 2023, and unanimously agreed to plan the H-share repurchase and delisting plan and preliminary preparations. In the preliminary plan, the company plans to repurchase and cancel the issued H shares of the company by way of general offer (other than those held by CIMC and its concert parties). Subsequently, CIMC Vehicles disclosed the latest progress of the repurchase planning work on November 29, 2023, December 27, 2023, January 26, 2024 and February 26, 2024.
On March 11, CIMC Vehicles held the second meeting of the second session of the board of directors in 2024 and announced the specific implementation plan, planning to repurchase all the issued H shares of CIMC Vehicles at HK$7.5 per share, and voluntarily delist from the Stock Exchange. The repurchase plan is expected to cost about HK$1.1 billion, and the company's A-share listing status remains unchanged.
On the evening of June 3, CIMC Vehicles issued an announcement announcing that the delisting of the company's H shares will officially take effect at 16:00 on June 3, 2024. As of the last date of the Offer, CIMC Vehicles received 143 million valid shares of the H-share repurchase offer, representing 25.443% of the Company's total issued H shares and 7.111% of the total issued share capital. Since its listing on the Hong Kong stock market, CIMC Vehicles has risen by nearly 61% (before the resumption).
CIMC Vehicles said that with the effective effect of the delisting of the company's H shares, it will no longer be subject to the rules governing the listing of securities on the Stock Exchange, and will no longer have to comply with the Hong Kong Code on Takeovers, Mergers and Share Buy-backs. In accordance with relevant laws and regulations, the follow-up company will cancel all the repurchased H shares, reduce the registered capital of the company accordingly, go through the relevant industrial and commercial change registration procedures, and disclose the relevant progress in a timely manner.
At this point, CIMC Vehicles officially bid farewell to the A+H equity structure and ended its journey to Hong Kong stocks for more than 4 years.
The scheme of privatization and delisting at a premium
In the development of CIMC Vehicles' Hong Kong stock market for more than 4 years, investors and enterprises have made great gains. On the one hand, since the listing of the Hong Kong stock market, CIMC Vehicles has never carried out additional issuance and placement refinancing operations, but has chosen a steady development strategy, and has implemented a total of 4 dividends, with a total dividend of 1.25 yuan per share, estimated at the current exchange rate of about 1.35 Hong Kong dollars, fully protecting the rights and interests of investors; Further consolidating its leading position in the global semi-trailer market.
According to the "2022 Global Semi-trailer OEM Ranking List" released by Global Trailer, CIMC Vehicles is the world's No. 1 semi-trailer manufacturer, ranking first for ten consecutive years. According to the performance forecast, in 2023, the non-net profit attributable to shareholders of listed companies will be 1.533 billion ~ 1.613 billion yuan, an increase of 67% ~ 76% over the same period last year.
Although CIMC Vehicles' overall profitability was relatively stable, it still decided to privatize and delist at a premium. What are the considerations?
In this regard, some industry insiders believe that CIMC Vehicles' withdrawal from the Hong Kong stock market is one of the typical cases in the wave of privatization of A+H listed companies in recent years. Generally speaking, depressed stock prices, inactive market trading, resource consolidation and strategic adjustment of major shareholders are the three main drivers for the privatization of Hong Kong-listed companies. CIMC's decision to delist vehicles is undoubtedly also affected by these factors.
Specifically, from the perspective of the market environment, the volatility and uncertainty of the Hong Kong stock market have intensified in recent years, which has brought a lot of pressure to listed companies. In this case, CIMC Vehicles may believe that in the current Hong Kong stock market, its true value and development potential are difficult to be fully reflected. Therefore, opting for privatization allows companies to gain more autonomy and thus better plan their future development paths.
In addition, privatization may also be the need for CIMC Vehicles to adjust its strategy. As your business grows, so does your strategic focus. Through privatization, CIMC Vehicles can implement long-term strategic layout more freely and get rid of the shackles of short-term performance pressure in the capital market. This will help enterprises focus more on the improvement of core business, technological innovation and market expansion to achieve higher quality development.
As for the reasons for the voluntary withdrawal of the listing status, CIMC Vehicles gave three explanations in the announcement: first, the trading volume of H-shares is low and the liquidity is limited, which makes it difficult for the company to carry out effective financing on the Hong Kong Stock Exchange; second, if the H-share repurchase offer is implemented, it will generate a one-time investment income for the accepted H-share shareholders; Third, if the voluntary delisting is implemented, the company will be able to save the costs and expenses associated with regulatory compliance with H-share listings.
Focus on long-term sustainability
In the eyes of industry insiders, CIMC Vehicles' decision to delist Hong Kong stocks is a wise choice made based on changes in the market environment and the adjustment of its own development strategy. This will not only help improve the efficiency of corporate governance and optimize the capital structure, but also enable it to be more agile in seizing market opportunities and responding to industry changes. For other companies in the commercial vehicle industry, this strategic change of CIMC Vehicles undoubtedly has important enlightenment and reference significance.
First of all, companies need to pay close attention to market dynamics and constantly review and evaluate their value in the capital markets. In view of the complexity and volatility of the capital market, enterprises should have keen insight in order to timely discover the impact of changes in the market environment on themselves, and accurately assess whether the market valuation is consistent with the true value of the enterprise. Once a significant deviation is found between the two, companies should carefully consider how to adjust their strategies to adapt to new market trends; Second, companies must be strategically agile, able to respond quickly to market changes and adjust their strategic direction. Privatization can give companies greater strategic freedom, allowing them to focus more on their long-term development plans with less external interference in the decision-making process. This will help companies better grasp market opportunities and respond to industry changes; Finally, innovation and core competitiveness are the key to sustainable development. After CIMC Vehicles chooses to privatize, it will create more possibilities for its technology research and development, product innovation and other aspects. Commercial vehicle companies should learn from this experience, continue to increase investment in innovation, and continuously improve their core competitiveness to ensure that they maintain a leading position in the fierce market competition.
Not only that, internal management also plays a pivotal role in the long-term development of enterprises. In the privatization process, enterprises need to carefully manage the relationship with shareholders, investors and other stakeholders to ensure that the whole process is legal, compliant, fair and transparent. At the same time, enterprises also need to actively optimize their internal management mechanisms and improve operational efficiency and management levels, so as to lay a solid foundation for sustainable development in the future.
In addition, the privatization of CIMC Vehicles also reflects the current challenges and potential opportunities in the commercial vehicle industry. In the context of increasingly fierce market competition and accelerating industry changes, commercial vehicle companies can only be invincible in the industry if they continue to innovate and upgrade; At the same time, it is also necessary to flexibly adjust the development strategy, optimize the corporate governance structure, keenly grasp market opportunities, and actively explore and expand diversified financing channels to ensure the long-term steady growth of corporate performance. These efforts not only create more value for the company, but also make an important contribution to the overall progress of the commercial vehicle industry in China.
Text: Li Yanan Editor: Sun Weichuan Layout: Liu Xiaoye
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