At the end of the year and the beginning of the year, the withdrawal of IPO began again. At the beginning of 2022, as of January 8, three IPO companies have applied for withdrawal of materials, of which two are gem projects and one is science and innovation board projects.
In fact, the termination of IPOs has increased significantly recently. In December 2021, 28 IPOs terminated their listing, close to the high level in March of the same year.
According to the analysis of insiders, the year 2021 has ended, and some IPO enterprises fear a sharp decline in annual performance due to poor operation. Therefore, it is not difficult to understand the withdrawal materials of IPO; Of course, some withdraw their listing applications because of compliance defects and inconsistent plate positioning.
Looking back on 2021, a total of 242 IPO companies terminated their listing, of which the number of projects terminated in the registration process increased significantly to 16.
IPO withdrawal tide again?
the number of families terminated at the end of the year increased
In December 2021, the IPO termination situation became more serious again. According to the statistics of the securities times, a total of 28 IPOs were terminated in December 2021, and the last round of IPO withdrawal occurred in February and March 2021. At that time, the shock of on-site inspection and the strict investigation of the regulators on the surprise purchase of shares made the market participants turn to caution, and the number of IPOs withdrawn in a single month was more than 30.
Specifically, in December 2021, there were 16 IPO terminations on GEM, accounting for 57%; 8 and 4 Kechuang board and Shanghai and Shenzhen main board were terminated respectively.
According to the data of previous years, the number of IPO terminations in December is at a high level. In December 2020, the total number of IPO terminations on the science and innovation board and the gem alone reached 29.
Why is it easy to withdraw materials at the end of each year? In this regard, a person from an IPO project team in South China explained to the securities times, “although the annual audit data did not come out so quickly, the overall business situation has been relatively clear in the past year. Some projects withdraw materials because of a sharp decline in performance, and some are drawn to on-site supervision.”
A insurance agent of a large securities firm in East China also has a similar view. He said that some companies to be listed take the initiative to withdraw materials because the annual data are less than expected, the net profit may be less than 50 million yuan, and the company may have other defects; There are also some IPO companies because they do not meet the plate positioning. At present, the science and Innovation Board emphasizes the attribute of science and innovation, and the gem puts forward “three innovations and four innovations”.
In 2021, a total of 242 IPO companies terminated their listing on the main board of Shanghai and Shenzhen, the science and innovation board and the gem. It is worth noting that 16 IPO companies were terminated in the registration process, exceeding the sum of 2019 and 2020.
From the perspective of the industry attributes of terminated enterprises, taking the registration system projects as the statistical sample, the reporter of the Securities Times noted that the number of terminated projects in the “computer, communication and other electronic equipment manufacturing industry” was the largest, accounting for about 17%; “Special equipment manufacturing” ranks second, accounting for about 14%; “Chemical raw materials and chemical products manufacturing industry” ranked third, accounting for about 9%. In addition, software and information technology services, pharmaceutical manufacturing, electrical machinery and equipment manufacturing accounted for more than 5%.
stop “breaking through customs with disease”
random supervision of the exchange
Accordingly, the withdrawal of IPO projects by relevant sponsors has attracted more and more market attention.
According to the statistics of the securities times, the number of IPO projects terminated in Citic Securities Company Limited(600030) in 2021 is the largest, with a total of 22, including 11 on the science and innovation board.
In addition, 17 and 15 IPO projects of Huatai united and Minsheng securities were terminated respectively; There are 14 China Securities Co.Ltd(601066) and Guotai Junan Securities Co.Ltd(601211) and 13 Haitong Securities Company Limited(600837) and Sinolink Securities Co.Ltd(600109) respectively; There are 12 Guosen Securities Co.Ltd(002736) and 10 China International Capital Corporation Limited(601995) and China Merchants Securities Co.Ltd(600999) respectively.
Due to the large number of projects declared by large sponsors, in fact, the proportion of terminated projects is not large, and the impact on large securities companies is also limited.
It is relatively difficult for small securities companies. According to the statistics of the securities times, as of November 23, 2021, the IPO project failure rate of Wanhe securities was high, reaching 83%. As a securities firm with state-owned assets background in Shenzhen, there are only five queuing projects of Wanhe securities on the gem, of which three are terminated, and another one is terminated in the registration process (mainly because the issuer’s financial information has expired and has not been updated for 3 months), and only one is in the inquiry stage. In addition, Wanhe securities had no projects on the science and innovation board and had a single IPO project on the main board of Shanghai and Shenzhen, but it failed to impact the listing in December 2021 and was not approved by the issuance and examination committee.
In addition to the project of Beijing stock exchange, Northeast Securities Co.Ltd(000686) IPO project also has a high failure rate of 57%. According to the data, Northeast Securities Co.Ltd(000686) two gem projects have been listed this year, and another four gem IPO projects have been terminated; There is one project under review on Shenzhen main board, while there is no project on Kechuang board.
It is worth mentioning that in 2021, the regulatory authorities adopted a strict regulatory posture for the projects of “one supervision and one withdrawal”. In July 2021, the CSRC issued the guidance on urging securities companies to be responsible for investment banking under the registration system, which mentioned that the on-site inspection and supervision should be further expanded, the principle of “reporting is responsible” should be adhered to, and the CSRC and the exchange will organize the verification of the items withdrawn after receiving the on-site inspection or supervision notice according to law.
The CSRC also said that it is necessary to establish a standing book on violations of investment banking business, and organize special inspections at least once a year for securities companies with high withdrawal rate of investment banking projects, high default rate of corporate bonds, low evaluation of practice quality and many problems reflected by the market.
Some investment bankers from securities companies told the securities times that this move reflects the determination of supervision to eliminate the behavior of “breaking through customs with illness”, and the recommendation institutions should be more cautious in applying for projects.
According to the reporter of the securities times from the investment bankers of securities companies, in the fourth quarter of 2021, the Shenzhen Stock Exchange explored and established a random supervision mechanism for initial projects. In October of that year, one gem initial project under review was randomly selected from each of the two sponsors who were subject to disciplinary action by the Shenzhen Stock Exchange and had a high proportion of projects withdrawn or not.
According to the latest issue of audit dynamics of gem registration system issuance and listing, Shenzhen Stock Exchange implemented on-site supervision on two randomly selected initial projects in November 2021. The contents of random supervision and problem-oriented supervision have their own emphases. They mainly check the establishment of the internal system of the sponsor’s recommendation business, the performance of the “three lines of defense” of the investment banking business and the implementation of the system, and check whether the documents and verification opinions issued by the sponsor are supported by sufficient evidence in combination with the selected projects.
(source: Securities Times)
