Recently, the A-share market has entered a period of fluctuation and consolidation, with hot topics emerging like mushrooms after rain. However, considering the duration of these hot topics and the increase in the stock prices of concept stocks, the concept of mergers and acquisitions (M&A) and reorganizations should be one of the strongest themes, with many stocks doubling in value. In the view of industry insiders, the M&A and reorganization concept aligns with policy expectations and is an important theme at present.

From this perspective, it has become particularly important to screen companies with expected M&A and reorganization prospects in advance, especially those with similar characteristics to stocks that have doubled in value. So, who are these companies?

M&A and Reorganization is a Key Theme in the Current A-Share Market

On October 25th, the A-share market continued to fluctuate and consolidate, but there were still several stocks with outstanding performance. Stocks such as Zhizheng Shares, Electric Power Production and Finance, Songfa Shares, Shuangcheng Pharmaceutical, and Emperor International, among more than 10 others, all hit the daily limit on that day, and they all share a characteristic: they are undergoing M&A and reorganizations.

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By definition, M&A and reorganization refer to the implementation of plans formulated and controlled by enterprises that will significantly change the organizational form, business scope, or business methods of the enterprise. The matters belonging to reorganization mainly include: 1. Selling or terminating part of the enterprise's business operations; 2. Making significant adjustments to the organizational structure of the enterprise; 3. Closing part of the enterprise's business premises, or transferring business activities from one country or region to another. The forms mainly include the acquisition of assets, asset swaps, sale of assets, leasing or entrustment of assets, acceptance of donated assets, and reorganization of corporate liabilities.

Taking Zhizheng Shares as an example, the company issued a suspension announcement on October 11th regarding the planning of asset swaps, issuance of shares, and cash payment for asset purchases, as well as the raising of supporting funds. The stock resumed trading on October 24th and immediately hit the daily limit, and it hit the daily limit again on the 25th.

Looking at a longer statistical period, the M&A and reorganization concept has been rising for nearly a month. Taking the Wind Reorganization Concept Index (884031.WI, companies in the reorganization process, excluding those that have completed reorganization) as an example, since the "9·24" market started, it has accumulated a nearly 50% increase.

From the news perspective, on September 24th, the state introduced a series of "combination punches" to encourage cross-border M&A and the acquisition of unprofitable assets, increase tolerance for matters such as reorganization valuation, performance commitments, competition within the same industry, and related party transactions, establish a simplified review process for reorganization, and establish a mechanism for installment payment of reorganization share consideration. This is also referred to as the "M&A Six Articles" in the market. In response, Kaiyuan Securities stated, "The 'M&A Six Articles' ushers in a new era of M&A and reorganization for listed companies."

Standing at the present moment, many research institutions remain optimistic about the M&A and reorganization concept. Among them, Galaxy Securities stated, "With the increased policy support for M&A and reorganization, the number of listed companies participating in M&A and reorganization is expected to gradually increase. Listed companies can improve asset quality, enhance operational efficiency, and increase valuation space through M&A and reorganization to achieve industrial integration or diversification strategies, thereby increasing investment value."

Hua Chuang Securities pointed out that the current policy has taken multiple measures to stimulate the vitality of the M&A and reorganization market, and A-share M&A and reorganization are entering an active period. "We believe that it is becoming increasingly important to focus on M&A and reorganization, and M&A and reorganization is a key theme in the current A-share market," Hua Chuang Securities further stated.The Three Major Characteristics of Restructured Bull Stocks

Mergers and acquisitions (M&A) and restructuring can address the issue of the "dam" in the IPO process, and at the same time, they are an important way for listed companies to improve quality and efficiency. Against this backdrop, Huachuang Securities has pointed out that companies with three major characteristics will be potential beneficiaries of M&A and restructuring:

Firstly, it is the asset injection under the same actual controller. Huachuang Securities stated that recently, due to the relatively slow pace of IPOs in the primary market, companies that are unlikely to go public in the short term and have financing needs can inject assets through listed companies under the same actual controller.

Secondly, it is the value of shell resources. In Huachuang Securities' view, for some high-quality assets, given the current slow pace of IPOs, they can also consider obtaining financing opportunities through backdoor listings. Currently, some listed companies with smaller market capitalization, more dispersed shareholding ratios, weaker profitability, and higher debt ratios may be potential targets for mergers and acquisitions.

Thirdly, it is the expectation of internal industry chain M&A and restructuring. Huachuang Securities believes that some listed companies with a certain scale currently have ample cash, and due to factors such as performance growth pressure, challenges to industry status, and low market recognition, there may be demands for internal industry chain M&A and restructuring.

At present, many M&A and restructuring bull stocks possess at least one of these characteristics. For example, Shuangcheng Pharmaceutical, the most eye-catching M&A and restructuring concept stock in the current market, belongs to the situation of asset injection under the same actual controller. Since its resumption on September 11th, Shuangcheng Pharmaceutical has achieved 23 consecutive trading day limits, with a cumulative increase of 551.72%. According to the restructuring announcement, Shuangcheng Pharmaceutical previously stated its intention to purchase the equity of Aola Shares through significant asset swaps, issuance of shares, and cash payments. The announcement shows that Shuangcheng Pharmaceutical mainly engages in the production of chemical synthetic peptide drugs, while Aola Shares mainly focuses on the research, development, and sales of analog chips and mixed-signal chips, with a low correlation between the two. The common feature is that both have the same actual controller, with Shuangcheng Pharmaceutical's actual controller controlling 57.52% of Aola Shares through Aola Investment and Ningbo Shuangquan, among other companies.

Songfa Shares belong to the category of having shell resource value. The announcement shows that the company plans to swap all its assets and operating liabilities as of the assessment base date with the equivalent part of the 50.00% equity of Hengli Heavy Industry held by Zhongkun Investment, and at the same time, purchase the remaining 50.00% equity of Hengli Heavy Industry held by Suzhou Heneng, Heneng Investment, and Chen Jianhua.

Before this transaction, Songfa Shares mainly engaged in the research and development, production, and sales of daily ceramic products, with main products including daily porcelain, fine porcelain, and ceramic wine bottles. Through this transaction, the company will strategically exit the daily ceramic manufacturing industry, and Hengli Heavy Industry will become the company's wholly-owned subsidiary. The company's future main business will be the research and development, production, and sales of ships and high-end equipment. Since its recent resumption, Songfa Shares has recorded seven consecutive trading day limits.

In addition, many research institutions believe that the restructuring expectations of companies with central and state-owned enterprise attributes will be stronger.52 Companies Have the Potential to Become Blue-Chip Stocks

Upon analysis, many listed companies meet the aforementioned characteristics.

According to research reports, Huachuang Securities conducted a detailed screening based on these characteristics. The screening criteria for asset injections under the same actual controller are as follows: 1. Companies with the same actual controller and companies that have not passed the IPO review; 2. If the major shareholder actually controls multiple listed companies, they are matched and eliminated based on the relevance of their main businesses; 3. Companies with the latest announcement date of the IPO application process since the beginning of 2020.

Ultimately, Huachuang Securities identified 71 listed companies with expectations for asset injections under the same actual controller, of which 34 are state-owned enterprises, including Shenzhen Technology, Yantian Port, and securities stocks such as Shenwan Hongyuan, etc.

The screening criteria for companies with shell resource value are: 1. Cost consideration, total market value < 5 billion yuan; 2. Dispersed shareholding ratio; 3. Insufficient profitability; 4. High debt ratio; 5. Private enterprises. Based on this screening, 12 companies such as Jinlong Electric Motor, Chaofan San, and ST Lingda meet the criteria.

The screening criteria for internal mergers and acquisitions and restructuring expectations within the industry chain are: 1. Scale: total market value > 10 billion yuan; 2. Desire to improve industry status: 3. Desire to improve performance; 4. Desire to improve recognition; 5. Ability for mergers and acquisitions and restructuring. Based on this screening, 20 companies meet the criteria.