Event: from December 8 to 10, 2021, the central economic work conference was held in Beijing. The general secretary delivered an important speech, clarifying the full implementation of the stock issuance registration system.
It is clear that the stock issuance registration system will be fully implemented, and the main board registration system will be implemented soon. One of the important tasks to increase the proportion of direct financing during the 14th Five Year Plan period is to fully implement the stock issuance registration system and broaden the entrance of direct financing. Since the pilot launch of the registration system in 2019, the science and innovation board and the gem have successively piloted the registration system. In 2021, the Shenzhen main board was merged with the small and medium-sized board, and the Beijing Stock Exchange opened the board and implemented the registration system. At present, only the main board of Shanghai and Shenzhen has not implemented the registration system. With the steady progress of the reform of the registration system, the continuous improvement of market recognition and the gradual adaptation of market subjects, it means that there is a solid foundation for comprehensively promoting the registration system. Therefore, the statement of “fully implementing the registration system” at this meeting shows that the reform of the registration system is expected to accelerate, and we expect that the main board is expected to implement the registration system in 2022.
The normalized issuance of IPO is good for the large investment banking business of securities companies, and drives the expansion of capital market at the same time. In the past, due to the long audit cycle and low pass rate, IPO issuance showed strong volatility. Under the comprehensive registration system, the IPO review speed is accelerated and the pass rate is improved. In 2018, the IPO scale of the whole market was 137.8 billion yuan, and the pass rate was only 58%. 2019 is the start-up year of the registration system. The approval rate of IPO has increased to 89%, further increased to 95% in 2020 and 86% in 2021, still maintaining a high level. Since 2019, 2020 and 2021, the IPO scale of the whole market has been 253.2 billion yuan, 480.5 billion yuan and 479.2 billion yuan respectively, which has been significantly improved compared with that before the implementation of the registration system. Among them, the science innovation board and gem with the registration system have contributed considerable increment. In the three years, the total IPO scale of the science innovation board and gem has reached 112.5 billion yuan, 311.9 billion yuan and 292.6 billion yuan respectively, accounting for 44%, 65% and 61% of the issuance share of the whole market. Therefore, we expect that after the full implementation of the registration system, the IPO is expected to realize normal issuance and further expand the scale. On the one hand, it will drive the steady growth of the investment banking business of securities companies and bring the business opportunities of direct investment and follow-up investment of securities companies. On the other hand, it will also drive the expansion of the asset side of the capital market. Benefiting from the implementation and promotion of the comprehensive registration system, investment banking revenue is expected to increase by 15% year-on-year next year.
Securities companies developed differently and increased investment in the investment banking market. In terms of project scale, the average single project scale of IPO in the whole industry in the past three years was 1.07 billion yuan, while the average single project scale of CICC, CITIC and CSCI ranked among the top three in terms of fund-raising scale reached 2.5, 1.2 and 1.3 billion yuan, all higher than the industry level. From the perspective of the competition pattern in the industry, since 2019, 2020 and 2021, Cr5 has ranked 58%, 55% and 52% respectively. The overall concentration has maintained a high level and decreased slightly, mainly because a large proportion of incremental projects since the registration system come from small and medium-sized emerging technology enterprises with low average scale, and these projects are usually dominated by small and medium-sized securities companies with regional characteristics. The reform of registration system has given small and medium-sized securities companies an opportunity for differentiated development of investment banking business, and may reshape the competition pattern of securities companies and investment banks in the future.
Supervision may be tightened to strengthen the function and role of financial intermediaries. Under the registration system, securities companies undertake more important responsibilities and need to review and judge the authenticity, accuracy and integrity of enterprise information disclosure, which is directly related to the quality of listed companies, thus affecting the ecology of the capital market. Therefore, since the registration system, the regulatory authorities have maintained a high pressure on violations of laws and regulations and repeatedly stressed the responsibility of compacting the “gatekeeper” of intermediary institutions. So far this year, the CSRC has issued more than 60 tickets for investment banking, involving IPO, refinancing and other businesses. The reasons for punishment include failure to perform relevant duties diligently, insufficient due diligence and so on. The regulatory authorities are determined to crack down on illegal securities activities. In the future, they may further strengthen supervision and force securities companies to improve their practice quality, which is conducive to the long-term and healthy development of the industry.
Investment suggestions: the Central Economic Council has set a steady growth tone, stated that it will maintain reasonable and sufficient liquidity, fully implement the reform of the registration system, exceed market expectations, improve liquidity expectations, and under the dual effect of policy dividends, the valuation of the securities sector is expected to improve. We recommend investors to pay attention to the investment opportunities of the securities sector, and recommend the main wealth management securities companies, such as Gf Securities Co.Ltd(000776) and China Industrial Securities Co.Ltd(601377) , Orient Securities Company Limited(600958) , Focus on Citic Securities Company Limited(600030) , East Money Information Co.Ltd(300059) and China International Capital Corporation Limited(601995) H.
Risk tip: the policy implementation is less than expected, the supervision is stricter, and the capital market fluctuates sharply
