For two consecutive days, three listed companies announced to issue global Depositary Receipts (GDRs) on the Swiss stock exchange, which attracted market attention.
On March 16, Gotion High-Tech Co.Ltd(002074) and Lepu Medical Technology (Beijing) Co.Ltd(300003) respectively announced that in order to broaden international financing channels, they planned to issue GDR overseas and list on the Swiss stock exchange. The day before that, Sany Heavy Industry Co.Ltd(600031) also announced its plan to issue GDR and list it on the Swiss stock exchange Sany Heavy Industry Co.Ltd(600031) is also the first enterprise planning to issue GDR overseas and list after the revision of the rules of Shanghai Luntong.
It is rare for Chinese enterprises to issue global depositary receipts in European capital markets. Previously, only five Chinese enterprises went to overseas capital markets to issue GDR In 2019, Huatai Securities Co.Ltd(601688) became the first listed company to issue Hulun Tong GDR and register on the London Stock Exchange. Subsequently, China Yangtze Power Co.Ltd(600900) , China Pacific Insurance (Group) Co.Ltd(601601) , Sdic Power Holdings Co.Ltd(600886) issued Hulun Tong GDR and listed on the London Stock Exchange, while Haier Smart Home Co.Ltd(600690) issued GDR and listed on the Frankfurt Stock Exchange.
Figure: Huatai Securities Co.Ltd(601688) gdr’s trend after listing on the London Stock Exchange.
Figure: China Yangtze Power Co.Ltd(600900) gdr’s trend after listing on the London Stock Exchange.
On February 11 this year, the CSRC issued the revised regulations on the supervision of interconnected depositary receipts business of domestic and foreign stock exchanges, one of which is to expand the scope of application and expand overseas to major European markets such as Switzerland and Germany.
On March 16, the financial stability and Development Commission of the State Council held a special meeting to study the current economic situation and capital market problems. Following the response of the central bank and the China Banking and Insurance Regulatory Commission, the CSRC also responded on the afternoon of March 16. Among them, it is clear to speed up the implementation of new regulations on the supervision of overseas listing of enterprises, support all kinds of qualified enterprises to list abroad, and keep the channels of overseas listing unblocked.
three companies why issue GDR
For the purpose of this GDR issuance and listing, Gotion High-Tech Co.Ltd(002074) , Lepu Medical Technology (Beijing) Co.Ltd(300003) and Sany Heavy Industry Co.Ltd(600031) all focus on accelerating the international strategic layout, making use of capital market support, arranging overseas business / global system, improving corporate governance and optimizing shareholder structure.
In terms of international strategic layout and expanding overseas business, Gotion High-Tech Co.Ltd(002074) said that as one of the leading global power lithium battery manufacturing enterprises, the company adheres to the business strategy of “industry as king and talent as foundation”, and actively expands the global market while increasing investment in R & D technology. In recent years, the shipment volume of the company’s power battery products has increased rapidly, and the global market share has remained at the forefront. In particular, the order demand of overseas customers for the company’s products has increased significantly. Up to now, the company has reached strategic cooperation with a number of international customers and signed product sales orders to gradually build a global market system. This GDR issuance and listing will help to expand the global market share of the company’s products, improve the company’s operating performance and continuously promote the healthy development of the company.
Lepu Medical Technology (Beijing) Co.Ltd(300003) believes that the company has become one of the leading enterprises of cardiovascular devices in China. The bioabsorbable stent neovas and fully degradable occluder developed by the company have been approved for listing in China, and the ai-ecg ECG ECG analysis and diagnosis products of artificial intelligence have been approved for listing by FDA of the United States, CE of the European Union and nmpa of China. The follow-up company will further promote the research and development of innovative products, including the third-generation aortic interventional biological valve TAVR 3.0, ultrasonic radiofrequency ablation catheter, etc. In the future, the company will continue to promote overseas clinical trials and product registration of innovative products in the fields of coronary intervention, peripheral intervention, structural heart disease and electrophysiological devices. Due to the high cost of overseas clinical trials and product registration, cumbersome procedures and long cycle, with the continuous enrichment of the company’s R & D pipeline, continuous overseas capital and other resources are needed.
Lepu Medical Technology (Beijing) Co.Ltd(300003) also believes that Chinese enterprises’ investment in overseas markets is an important way for China’s opening to the outside world and international development. The company plans to build production bases in overseas countries or regions, which will help the company shorten the production radius, reduce production costs, better enter the local countries and global markets, and increase the proportion of overseas sales.
Sany Heavy Industry Co.Ltd(600031) believes that at present, the company has achieved the first global market share of excavation machinery and concrete machinery, and the global market share of construction machinery such as hoisting machinery has increased rapidly. The company is in the rapid development stage of internationalization, and will continue to increase resource investment and channel construction in overseas markets, so as to achieve breakthrough progress in overseas markets, especially in Europe and the United States. The funds raised by the company’s overseas issuance of GDR will be mainly used for the company’s international business to further promote the company’s internationalization process.
In terms of corporate governance, Gotion High-Tech Co.Ltd(002074) has previously introduced Volkswagen as a strategic investor. Therefore, the overseas issuance and listing of global depositary receipts will further optimize the company’s equity structure. By introducing internationally renowned investors and drawing on advanced management concepts, processes and methods, we can continuously improve the corporate governance structure, effectively improve the governance level, and provide a solid foundation for the internationalization and high-quality development of the company Lepu Medical Technology (Beijing) Co.Ltd(300003) also intends to introduce overseas professional investment institutions and industrial investors by issuing global depositary receipts and listing on the Swiss stock exchange, so as to further optimize the company’s equity structure and improve the level of corporate governance.
decryption of Swiss Exchange
The place where the three listed companies issued GDR for overseas listing is the Swiss Exchange.
In 1993, the three stock exchanges in Geneva, Zurich and Basel merged into the Swiss Exchange. In 2008, the Swiss Exchange, telkurs and SIS group merged into six groups (six Group Ltd (six)). The new group covers securities trading, financial information services and payment trading services. In 2020, group VI acquired the Spanish stock exchange.
At present, the sixth group is an unlisted public limited company headquartered in Zurich. The company is owned by 121 financial institutions outside China, which are also the main users of its services. According to the data released by the group, at present, the equity of the group is mainly distributed in large banks (holding 33.4%), commercial banks and investment banks (holding 18.6%), foreign banks (holding 15.2%), etc.
The shareholders’ agreement ensures the long-term stability of the ownership structure. Shares can only be transferred on a limited basis. The board of directors must approve any changes to the shareholder structure. According to the principle of “user ownership and user governance”, the composition of the board of directors reflects the user and ownership structure.
Figure: equity structure of group VI
According to the latest annual report released by the sixth group in March this year, the group’s operating revenue in 2021 reached 1498.3 million Swiss francs (equivalent to 10.1 billion yuan), an increase of 8.9%, and the group’s net profit totaled 73.5 million Swiss francs (equivalent to 500 million yuan), a year-on-year decrease of 83.2%. However, excluding the one-time significant related impact, the group’s net profit increased by 37.3% year-on-year.
As for the Swiss Exchange, five companies were listed on the Swiss Exchange in 2021, including the first spac In terms of transaction data, in 2021, the transaction amount of Swiss stock exchange was 1281 billion Swiss francs, a year-on-year decrease of 26.9%.
Swiss market index (SMI) is the blue chip stock market index of the Swiss Exchange, covering the 20 largest and most liquid companies listed on the Swiss stock exchange, covering about 80% of the total market value of the Swiss stock market. Including pharmaceutical giant Roche, luxury goods company Richemont group, manufacturing giant abb, and financial enterprises such as UBS group, Swiss Re and Swiss Life Insurance are constituent stocks of the SMI index.
The reporter sent an email to the sixth group to interview a number of Chinese enterprises on Issuing GDR on the Swiss Exchange. As of press time, no reply has been received.
