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Zhejiang Shuanghuan Driveline Surges 10% After Scrapping Robotics Unit Spin-Off
Shares of Zhejiang Shuanghuan Driveline Co., Ltd. (SHE:002472) surged to their 10% daily limit in Friday trading after the automotive components maker said it was terminating plans to spin off and list its robotics subsidiary.
Canceled IPO Plans
In a statement, Zhejiang Shuanghuan Driveline announced it would halt the proposed spin-off of its robotics unit, Huandong Technology, and withdraw its application for a public listing on Shanghai’s tech-focused STAR Market. The company attributed the decision to "significant changes in market conditions" since the spin-off was first initiated.
The proposal to cancel the listing was approved by the company's board on Thursday, according to the announcement. The final decision is still subject to approval from the company's shareholders.
AdMarket Reaction
Investors responded positively to the news, driving the company's stock price up 10% to 38.96 yuan in morning trading, the maximum allowed in a single session on the Shenzhen Stock Exchange. The strong rally suggests that shareholders may prefer the company to retain full ownership of the high-growth robotics unit rather than spin it off in a potentially challenging IPO market.
By keeping Huandong Technology in-house, Zhejiang Shuanghuan Driveline preserves a key asset and avoids the uncertainty and potential undervaluation associated with a public offering under current market conditions. The move occurred amid a broader rise in the market, with Hong Kong's Hang Seng index gaining more than 2% during the session.
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