1. Reform process: the pace is gradually accelerated and full implementation is imminent
Acceleration of the process: the interval from proposing the establishment of the science and innovation board to the formal opening of the science and innovation board and the opening of the registration system is only 7 months. The interval from proposing to promote the reform of the gem and pilot registration system to the formal implementation of the gem registration system is shortened to 4 months. The interval between the proposal of the Beijing stock exchange and the official opening of the board is only 75 days, and the reform process of the registration system is accelerating. The central economic work conference in 2021 proposed to fully implement the stock issuance registration system. The pace of the comprehensive registration system is gradually approaching, and it is expected to be implemented in 2022.
2. Reform role: broaden financing channels and improve financing efficiency
Broaden financing channels: the proportion of direct financing in China has increased from 15% in 2016 to 29% in 2021, but it is still far lower than that of developed countries in Europe, America and Japan. The registration system reform relaxed the listing conditions of enterprises. For example, after the registration system reform on the gem, the profit requirements for listed enterprises were relaxed, and qualified enterprises with special ownership structure and red chip enterprises were allowed to be listed on the gem, so as to broaden financing channels for more enterprises.
Improve financing efficiency: under the registration system, securities regulators only conduct formal review on the comprehensiveness, accuracy, authenticity and timeliness of application documents, reducing the review process and improving the issuance efficiency. In terms of audit duration, the average queuing time of enterprises listed on the main board is 18 months, while the average queuing time of enterprises listed on the gem is shortened from 17 months before the registration system reform to 10 months after the reform, the average queuing time of enterprises listed on the science and innovation board is 9 months, and the average queuing time of enterprises listed on the Beijing stock exchange is less than 5 months.
More market-oriented delisting: the new delisting regulations issued by Shanghai and Shenzhen Stock Exchange at the end of 2020 optimized the delisting indicators, simplified the delisting process and strengthened the risk warning. Before the reform of the registration system and the new regulations on delisting, the average number of delisting enterprises in China was no more than 5 per year, far lower than the number of delisting enterprises in the United States. After the implementation of the new delisting regulations, a total of 23 companies were delisted in 2021, a record high. The promotion of the registration system and the improvement of the delisting system are conducive to accelerating the metabolism of the A-share market and ensuring the smooth operation of the capital market.
3. Industry structure: the head effect is prominent, and there are still competitive opportunities
The strong head investment bank, HENGQIANG, is the general trend: after the reform of registration system, IPO breaks occur frequently, forcing securities companies to carefully screen projects and improve their underwriting ability, pricing ability and sales ability. Head securities companies with rich project experience and sufficient talent reserves are more competitive. Among the listed securities companies, the net income Cr5 of 22q1 investment banking business was 55%, an increase of 19pct compared with 36% in 2016; At the end of 22q1, the equity underwriting scale Cr5 of the securities industry was 61.3%, an increase of 21pct compared with 2016.
Differentiated competition opportunities for small and medium-sized securities companies: in 2021, the investment banking business income of small and medium-sized securities companies such as Zhongyuan and Guolian increased rapidly. The strong investment banking business is the main trend, but small and medium-sized securities companies are still expected to build high-quality investment banks by mining excellent talents and focusing on advantageous industries, seize the opportunity of the Beijing stock exchange and compete differently with leading securities companies.
4. Investment suggestion: recommend the strong undervalued leader of investment banking
The investment banking department can generate synergy and linkage with other business departments, so the large platform with strong investment banking business and strong business synergy will benefit more. On the whole, we recommend Citic Securities Company Limited(600030) , China International Capital Corporation Limited(601995) (H), Huatai Securities Co.Ltd(601688) .
