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TCL Corp, one of China's leading consumer-electronics makers, is making substantial progress on its plan to list its mobile handset unit in Hong Kong by obtaining approval from the China Securities Regulatory Commission (CSRC), analysts say.
The company announced on Tuesday that the CSRC has granted permission for its listing plan.
The approval from the regulator dispelled investors' worries that the company's plan to spin off TCL's handset from the domestic listed A-share company would be delayed as it may not meet the CSRC's requirement.
The CSRC announced last Thursday a new regulation standardizing the issues related to overseas listing of subsidiaries of domestic listed companies.
According to the regulation, the net profit of the subsidiary in the latest fiscal year should account for no more than 50 per cent of the parent company's total. Meanwhile, the subsidiary's net asset should be less than 30 per cent of the domestic-listed parent company's total.
For TCL Corp, the mobile unit contributed 42.4 per cent to its net profit, while the mobile unit accounted for 14.97 per cent of TCL Corp's net asset.
However, the listing plan is yet to be approved by the shareholders of TCL International Holdings Ltd and the Hong Kong Stock Exchange.
Analysts believe that the split-off and listing plan will help the company to become much more focused on its mobile business and find a new way to raise funds from the international market.
"The split-off of its mobile phone business won't have much impact on its domestic listed parent company," said Dai Chunrong, an analyst from China Securities.
"As there is no new share offering by way of introduction, the company's overall performance will not be diluted," she said.
TCL Corp announced early this week that it is to list its mobile phone business via introduction instead of plans for an initial public offering exposed to unfavourable market conditions.
An introduction listing means the company will not offer new shares to the public.
According to TCL Corp, it now holds 36 per cent of the mobile unit, while TCL International Holdings Ltd, the Hong Kong-listed arm of TCL Corp owns 40.8 per cent of the mobile unit.
The rest is held by two Hong Kong venture capital funds and senior managers of the unit.
TCL International is to dispatch 40.8 per cent of stocks to its shareholders via non-cash dividend, said TCL International.
TCL Communication Technology Holdings Ltd (TCL Communication), which owns all the assets of Huizhou TCL Mobile Communications Co (TCL Mobile), will incorporate all mobile phone business units.
To sharpen its competitive edge, TCL Corp is also working hard to seek co-operation.
According to TCL Corp, a joint venture between TCL Communication and Alcatel is likely to be kicked off soon. The formation of the new venture is expected to be completed this month or next.
(China Daily August 19, 2004)
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