Recently, the “new myth” is no longer, the breaking and abandonment of new shares are becoming more and more intense, and the number of new players is also declining. Meanwhile, the new underwriters are suffering, while investors make complaints about the new shares in order to earn the underwriting fees, while they underwrite all the new shares they have been discarded and bear the loss of the books brought about by the breakup of the new shares.
brokerage investment bank
is the “culprit” of pushing up pricing
On April 21, Fang Xinghai, vice chairman of the CSRC, said at the sub forum of the Boao Forum for Asia 2022 annual meeting that some IPOs have recently fallen below the issuance price, not that there are too many IPOs, but that the pricing power should be further improved.
How are new shares priced? The reporter interviewed a number of investment bankers and learned that first, the lead underwriter discussed an inquiry range with the issuer according to the total fund-raising amount of the company to be listed and the P / E ratio of the industry in which the company is located. Then, determine the final issue price according to the quotation of institutional investors in the three roadshows of listed companies. Therefore, the total fund-raising amount of the issuer and the inquiry mechanism of new shares have become the key factors affecting the pricing of new shares. After entering the inquiry stage, securities companies have little say in pricing.
In September 2021, in order to solve the problem of “institutions holding down the quotation”, the regulator revised the inquiry system. A number of insiders of securities businesses interviewed believed that the new regulations on market-oriented inquiry solved the problem of “insufficient raising” before, but it also caused the problem of high pricing.
According to the new regulations on inquiry, the elimination proportion of high prices was adjusted from “no less than 10%” to “no more than 3% and no less than 1%”. At the same time, the demand for delayed issuance when the pricing of new shares exceeded the “lower of the four values” was cancelled. Therefore, after the implementation of the new inquiry regulations, there have been many phenomena that the placing objects that are not shortlisted at low prices are more than those that are eliminated at high prices, which also directly leads to the high quotation. Chen Mengjie, chief strategist of YueKai securities, believes that this is also an important reason for the subsequent breaking of new shares.
However, the investment banking departments of securities companies charge underwriting fees according to the total amount of fund-raising. The larger the scale of fund-raising, the higher the underwriting fees. Taking NSW as an example, as the “king of fund-raising” this year, it raised more than 5 billion yuan, and as a sponsor (lead underwriter) Everbright Securities Company Limited(601788) received 203 million yuan in sponsorship and underwriting fees.
high frequency and high value abandonment
causing great financial pressure on securities companies
Although the recommendation business of securities companies has made a lot of money, the underwriting of follow-up investment and underwriting departments of alternative subsidiaries of securities companies are also under pressure.
Still taking Everbright Securities Company Limited(601788) as an example, due to nearly 40% of the abandonment proportion of nano chip micro, Everbright Securities Company Limited(601788) had to underwrite the abandoned shares at its own expense of 780 million yuan. Coupled with the strategic placement of its subsidiary Everbright fuzun of 116 million yuan, this means that Everbright Securities Company Limited(601788) will spend 900 million yuan for this project alone. In addition, Chengda pharmaceutical, which was listed at the beginning of this year, Everbright Securities Company Limited(601788) also underwritten more than 28 million yuan.
According to the annual report, Everbright Securities Company Limited(601788) achieved a lead underwriting income of 640 million yuan in 2021. Among them, the IPO realized an initial revenue of 595 million yuan. Overall, in 2021, Everbright Securities Company Limited(601788) achieved an operating revenue of 16.707 billion yuan and a net profit attributable to shareholders of the parent company of 3.484 billion yuan. Therefore, the cash flow occupation of nearly 900million yuan is not a small amount for Everbright Securities Company Limited(601788) .
Guoyuan Securities Company Limited(000728) admitted that since the beginning of this year, about 60 companies on the science and innovation board and gem have broken off on the first day of listing, and many leading securities companies have also suffered heavy losses Guoyuan Securities Company Limited(000728) alternative subsidiary Guoyuan Innovation Co., Ltd. invested a number of shares on the science and innovation board, which were still in a good profit state as a whole. However, due to the long follow-up lock period (24 months), the stock price fluctuated greatly, which also had a great negative impact on the performance of its alternative subsidiary.
Although the abandonment of higher investors will bring greater financial pressure to securities companies, the person in charge of Sinolink Securities Co.Ltd(600109) investment banking believes that it is only a phased phenomenon.
In the view of the person in charge, the fully market-oriented inquiry mechanism for new shares is bound to trigger a dynamic game between investors, such as high price Bo finalists and breaking losses after listing, which will bring certain cyclical fluctuations. When the new income is rich, investors choose to enter the high price blog, push up the issue price and reduce the new income; When the new income decreases or even loses, investors reduce the quotation and push up the new income again. In some mature overseas capital markets, there will be similar cyclical fluctuations in the inquiry and pricing of new shares.
industry insiders appeal
improve the voice of securities companies in pricing
In the view of many investment bankers of securities companies, although the pricing of new shares is generated in the inquiry process of market investors, the final pricing is still completed under the joint consultation of the issuer and the lead underwriter. Securities companies should strengthen their pricing and underwriting ability, carefully examine the reasons for the current situation, and stabilize the pricing of new IPO shares through their professional pricing ability and underwriting ability in case of market fluctuations.
Some insiders said frankly that the pricing power of securities companies and investment banks is more of an ability to communicate with institutional customers. If the investment banking department can have a very good communication mechanism with the institution, which can influence the institution to truly follow the market when pricing, and do not sell when the market is weak, it can effectively avoid breaking. This has very high requirements for the resource control ability of the sponsor and underwriting team of securities investment banks. If we can improve the voice of securities investment banks in the inquiry stage, we can effectively avoid the phenomenon of large-scale breaking.
Wu Kaida, deputy director of deppon Securities Research Institute, believes that in the long run, there is still room for optimization of the placement system at the issue level. For example, strengthen the agreed price right of underwriting, implement discriminatory distribution, compensate in quantity, and the inquiry object providing real information is the incentive mechanism of the mature market. But in essence, to adapt the system to the market environment, we need a more mature market as the basis.
Sun Jinju, assistant president of Kaiyuan securities and director of the Research Institute, also believes that the reduction of the high tick ratio under the new inquiry rules has led some accounts to adopt the strategy of bidding high prices for Bo shortlisted. If the provisions on the high tick ratio can be further improved in the future, the current IPO pricing mechanism will be further optimized to make the IPO pricing a balanced price that can not only reflect the internal value of the company, but also be fully accepted by the market.
