On March 18, under the registration system, the new inquiry regulations were implemented for half a year.
China Securities Co.Ltd(601066) Chen Youxin, member of the securities investment banking commission, executive director and managing director of the equity capital market department, told the Securities Daily that in general, the concentration of investors’ quotations has decreased significantly and the quotations have gradually returned to the research on the fundamentals of the industry and the company; The Underwriters’ reasonable pricing ability has been gradually strengthened, and the issuance P / E ratio has become more reasonable.
effective quotation interval width widened
valuation and pricing center is more reasonable
According to statistics, as of March 17, 2022, since the implementation of the new inquiry regulations, 126 inquiry IPO projects on the science and innovation board and the gem have completed their subscription. Among them, there are 58 science and innovation boards, with a total amount of funds raised of 97.545 billion yuan; 68 GEM companies raised a total of 61.806 billion yuan. The average issuance P / E ratio of the above 126 projects was 56.35 times (excluding unprofitable companies and extreme values with P / E ratio greater than 200 times), which was significantly higher than 18.66 times (excluding unprofitable companies) one month before the implementation of the new regulations. Chen Youxin believes that “after the implementation of the new regulations, the initial valuation and pricing center is more reasonable.”
In the new regulations on inquiry, the rejection ratio of high prices is adjusted from “no less than 10%” to “no more than 3% and no less than 1%”. Chen Youxin said that in actual operation, the elimination ratio of IPO high prices of 126 projects was no less than 1%, which opened the bidding game space for investors and effectively improved the previous phenomenon of “holding together and pressing prices” of offline investors. At the same time, the concentration of investors’ quotation has also decreased significantly. The average width of the effective quotation range of offline investors has increased from 1.18% one month before the new regulations to 39.40%. The upper limit of effective quotation of some projects exceeds the issuance price by more than twice.
In addition, after the implementation of the new regulations, there has been a breakthrough in the pricing of new share issuance under the registration system. Chen Youxin revealed that before the implementation of the new rules, offline investors were more common in the phenomenon of “collusive quotation” because they were subject to the requirements of “10% high price elimination” in the underwriting rules and the pricing did not exceed the “lower of the four values”. After the implementation of the new regulations, unlike the previous single investment purpose of “Bo shortlisted”, offline investors pay more attention to the research on the fundamentals of the company, the valuation level of comparable companies in the market and other factors. The behaviors such as price matching and grouping have been restrained, and the compliance, independence and professionalism of offline inquiry have been strengthened. Taking Huaqin Technology issued on February 24, 2022 after the new regulations as an example, nearly 43.77% of investors’ quotations are concentrated between 176.84 yuan / share and 190.00 yuan / share, showing a decentralized trend.
Chen Youxin further analyzed that the reduction of the elimination proportion of high prices has effectively alleviated the embarrassing situation that offline investors fully recognize the company’s value, but it is difficult to give a higher quotation, prompting offline investors to gradually move up the quotation center. In addition, the issue pricing can break through the “lower of the four values”, and there is a large choice for the pricing of new shares, which further increases the incentives and constraints of buyers and sellers, and highlights the functions of market value discovery and resource allocation. Data show that after the implementation of the new regulations, 26 of the 126 projects issued have broken through the “lower of the four values”, of which the highest breakthrough of anxiu biology is 14.21%.
Gf Securities Co.Ltd(000776) said that since the implementation of the new regulations for half a year, the effect has been obvious, the investment logic of new shares has gradually changed from “Bo shortlisted” to the target investment value, and the function of inquiry value discovery is prominent; The effectiveness of the pricing mechanism has been significantly improved, and the marketization level of IPO pricing has been effectively improved.
shares were mixed after listing
quotation organization structure optimization
From the perspective of market performance, after the listing of new shares, it is no longer a unilateral surge, but a normal rise and fall situation.
According to statistics, one month before the new regulations, the average returns of IPO projects on the science and innovation board and gem on the first, fifth and tenth days of listing were 201.42%, 179.88%, 159.35% and 284.08%, 250.07% and 230.96% respectively; After the implementation of the new regulations, as of March 17, 2022, the average returns of IPO projects on the science and innovation board and gem decreased to 32.00%, 30.22%, 30.52% and 76.22%, 64.04% and 65.25%, respectively. Chen Youxin believes that “after the implementation of the new regulations, the increase after the listing of new shares is significantly lower than that before the implementation. Therefore, the pricing tends to be more reasonable.”
In addition, according to statistics, from the implementation of the new regulations to the end of January 2022, a total of 94 inquiry IPOs on the science and innovation board and gem have been issued and listed, of which 22 new shares broke on the first day of listing. In contrast, in February this year, only one of the nine new shares listed on the science and innovation board and the gem broke, the breaking rate dropped sharply, and the performance of new shares after listing was “strong”. As of March 17, 4 of the 11 new shares listed since March had broken. Chen Youxin believes that “it is mainly affected by the wide fluctuation of the A-share market in March, of which three completed the listing during the sharp decline of the market from March 14 to March 15.”
Gf Securities Co.Ltd(000776) said that in the early stage of the implementation of the new regulations, there was a periodic phenomenon of new share issuance, and then with the quotation and pricing of new shares gradually returning to the market value, the number of new share issuance decreased significantly, and the investment in new shares changed from game behavior to judgment of the value of new shares.
“On the whole, excluding the impact of wide-ranging market fluctuations, with the implementation of the new regulations, the IPO break under the registration system has greatly improved,” Chen Youxin said
“The importance of investors’ research and valuation ability is becoming more and more prominent.” Chen Youxin further explained that under the new regulations, the new strategy of blindly “winning the competition” is no longer effective, forcing institutional investors to pay attention to the fundamental research of new shares and improve their research and valuation ability. At the same time, under the background of the breaking of some new shares and the decline of expected returns, the quotation institutions that lack research pricing power and blindly quote high prices for “winning the shortlist” began to leave gradually. After the implementation of the new regulations, the number of placing objects participating in inquiry decreased by an average of 7%. The further optimization of the structure of quotation institutions is conducive to the pricing of new shares.
Gf Securities Co.Ltd(000776) believes that after the implementation of the new regulations, the proportion of institutions with outstanding professional ability among the remaining active participants has increased.
Chen Youxin also said that the Underwriters’ reasonable pricing ability is gradually strengthening. Underwriters are more objective, prudent and professional in the writing of investment report and issue pricing, so as to better play the role of “gatekeeper of capital market”; At the same time, the follow-up risk brought by the breaking of new shares also further promotes the underwriters to play a reasonable pricing role.
“The self balancing ability of the market is improving.” Chen Youxin further explained that the sharp decrease in the number of cases solved on the first day of IPO shows that the market has formed a good self-regulation mechanism, and the buyers and sellers of the market have further played a game to re-establish the balance between the primary and secondary markets.
comprehensive registration system conditions are gradually met
securities companies pay equal attention to the recommendation and underwriting business
This year’s government work report lists “comprehensively implementing the stock issuance and registration system and promoting the steady and healthy development of the capital market” as one of the tasks in 2022; Meanwhile, when the CSRC held the 2022 system working meeting, it said that the conditions for the full implementation of the stock issuance registration system are gradually met.
“The implementation of the comprehensive registration system will bring three changes to the capital market.” Chen Youxin believes that it is conducive to institutional investors to strengthen the valuation and pricing of new shares, improve the compliance risk control system, and make prudent and reasonable quotations; It is conducive to securities companies to further strengthen the underwriting function and do a good job in value transmission, interest balance and comprehensive services; It is conducive to the reasonable pricing of IPO projects, improve the financing efficiency and improve the financial support to the real economy.
Gf Securities Co.Ltd(000776) said that with the implementation of the comprehensive registration system, the capital market will accelerate the recruitment of new enterprises in the future, and social capital will select and judge enterprises with more investment value. Therefore, the focus of investment banking business of securities companies will change from recommendation business to both recommendation and underwriting business.
Chen Youxin put forward four suggestions on how to strengthen the construction of investment bank contracting and sales pricing capacity in the future: improve the quality of information disclosure and do a good job as a “gatekeeper”; Improve the research and valuation ability and realize value transmission with high-quality pricing; Strengthen marketing ability and actively expand institutional customer resources; Strengthen the professional level of employees and build a diversified talent echelon.
