What does capital injection mean?

Capital injection refers to investing a lot of money for a project or a cause. That is, the parent company of a listed company injects some assets into the listed company, and some powerful shareholders or parent companies have the conditions to speculate on the concept of capital injection, which has a positive effect on the stock price.

If the parent company or major shareholder injects assets into the listed company at a discount, it reflects the intention of the parent company to expand the scale of the listed company and stimulate the stock price. On the contrary, if the parent company injects assets at a high premium, it should be careful, which is not good for listed companies and will bring selling pressure to the stock price.

Capital injection needs to consider profit prospects, return on investment, return on equity, business risks, political risks, investment environment, partners and other factors. For major shareholders, capital injection can improve the structure and make better use of the capital market platform. For minority shareholders, capital injection is a win-win capital game, with high P/E ratio and low P/E ratio, which can improve earnings per share.