First of all, how the market performance of the subsidiary after the spin-off determines the investment income value of the parent company, that is, the investment income of the equity held by the parent company can be obtained by subtracting the initial investment of the parent company from the market value of the subsidiary after listing.
Secondly, the parent company owns a large part of the equity of the subsidiary, so it still retains control over the assets and operations of the subsidiary.
Third, the spin-off and listing of subsidiaries will often bring a certain proportion of excess returns to the parent company, which can improve its investment value.
According to an American study, spin-off can bring an average of 2-3 percentage points of excess income to the parent company. In China, this excess rate of return may be higher. Fourth, the positive impact of the spin-off and listing of subsidiaries on the parent company also depends on the industry in which the subsidiaries are located and the market prospects of the industry. The market performance of subsidiaries after IPO is related to the development trend of the industry in which the enterprise is located. If the development trend of the industry in which the subsidiary is located is not good or the market performance is not good, it will also cause the operating performance of the parent company to decline and the stock price to fall, which will affect the confidence of investors. Therefore, before the spin-off, we must conduct a comprehensive and in-depth analysis and research on the industry in which the future subsidiaries are located and the market prospects of their products. In addition, it should be noted that if mainland listed companies spin off assets with strong profitability one after another and blindly pursue spin-off financing, it will reduce the quality and efficiency of the parent company's asset operation. It can be seen that when we see the positive role of company spin-off, we should remain sober and calm. The key depends on whether this business split will have a positive or negative impact on the business integration and long-term development of the parent company.