China Unicom, a Chinese state-owned telecommunications company, announced on March 8 that it would be spinning off its subsidiary, China Unicom Smart Connection (CUSC), and listing it on the Science and Technology Innovative Board (STAR Market) at the Shanghai Stock Exchange. This move follows the trend of other central State-owned enterprises taking on spin-off listings since the China Securities Regulatory Commission released provisions on the domestic listing of subsidiaries of listed companies in 2019.
CUSC, which was founded in 2015, has always focused on the Internet of Vehicles and has developed three major business segments: Internet of vehicles connectivity, IoV operation, and innovative applications for the evolving demand of IoT and derivative business. In 2022, the operating revenue of CUSC amounted to 809 million yuan ($116.06 million), which was an increase of 235 million yuan from 574 million yuan in 2021. The net profit of the company from 2020 to 2022 stood at 75 million yuan, 117 million yuan, and 100 million yuan, respectively.
This spin-off listing of CUSC marks a significant milestone for the company and the STAR Market. The STAR Market was launched in 2019 as part of China’s efforts to boost its technology sector and allow innovative and high-tech companies to raise funds more easily. Companies listed on the STAR Market are subject to fewer regulatory requirements than those listed on other Chinese exchanges. As a result, the STAR Market has attracted many companies in the technology and biotech sectors.
China Unicom’s spin-off listing of CUSC is not the first of its kind. China Railway Construction Heavy Industry Co Ltd, a subsidiary of China Railway Construction Co Ltd, was the first company spun off from central State-owned enterprises and listed on the STAR Market. In October 2021, China Railway Group Ltd also spun off its wholly-owned rail transportation power supply equipment company, China Railway High-Speed Electrification Equipment Co Ltd, to list on the STAR Market.
China Communications Construction also announced in December its plans to restructure and list its subsidiaries to further enhance the core competitiveness of the design business. The trend of central State-owned enterprises taking on spin-off listings is likely to continue as China continues to encourage technological innovation and investment in high-tech companies.
Read More: