On May 11, BYD issued an announcement that the auto firm has spun off its holding subsidiary BYD Semiconductor Co., Ltd., which will be listed on the SEM Board of Shenzhen Stock Exchange.
After the completion of the spin-off, the shareholding structure of BYD will not change, and BYD will still maintain the control of BYD Semiconductor, whose financial performance and profitability will still be reflected in the consolidated statements of BYD.
According to the announcement, BYD controls BYD Semiconductor by directly holding 72.30% of the company's equity.
In 2019, the net profit of BYD Semiconductor was CNY 85.11 million, a year-on-year decrease of 18%; In 2020, the net profit of BYD Semiconductor was CNY 58.63 million with a year-on-year decline of 31.1%.
BYD said that although the split would result in the dilution of the company's equity in BYD Semiconductor, the development and innovation of the subsidiary will be further accelerated, and its investment and financing capacity and market competitiveness would be further enhanced through the split, which would help to improve BYD's overall profitability.
Regarding the impact of the spin-off, BYD said that BYD Semiconductor continuously maintains a high degree of independence from other businesses of the company, and this spin-off would not have a substantial impact on the sustainable operation of other business sectors of the company.
However, BYD indicated that the split still faces a number of conditions before it can be implemented, including but not limited to obtaining the formal approval of the company's general meeting of shareholders on the split plan and BYD Semiconductor's general meeting of shareholders on the listing plan, performing the corresponding procedures of Shenzhen Stock Exchange and China Securities Regulatory Commission. Whether this spin-off can obtain those approval and the final time are uncertain. There is a risk that this spin-off will be suspended, suspended, or even canceled.
In fact, as early as April 2020, BYD Semiconductor attempted to be split and listed. At that time, BYD announced that BYD microelectronics had completed its internal restructuring and changed its name to 'BYD Semiconductor.' It planned to introduce strategic investors and actively seek independent listing at an appropriate time.
It is reported that BYD Semiconductor completed two rounds of financing totaling CNY 2.7 billion in the first half of 2020, after which BYD Semiconductor had a post-investment valuation of CNY 10.2 billion.
BYD said in the announcement that the IPO would provide an independent fund-raising platform for BYD Semiconductor, which can directly obtain equity or debt financing from the capital market to meet the capital demand of existing and future business expansion, broaden financing channels, improve financing flexibility and enhance financing efficiency.