First Firms to Go Public on China’s Main Boards Using New IPO System All Soar(Yicai Global) April 10 -- The first 10 companies to list on the China mainland stock exchanges’ main boards under the new registration-based mechanism, which allows for a quicker and more simplified process, all opened up on their debut today.
Electronics components maker CECport Tech’s share price [SHE:001287] surged more than two and a half times, while oral hygiene firm Dencare came second [SHE:001328], almost doubling. Coal power producer Shaanxi Energy Investment's stock [SHE:001286] gained the least at 4.1 percent.
The 10 firms lodged their applications on Feb. 20, the day when it was announced that the registration-based initial public offering system would be extended to the main boards, and it has only taken 50 days from filing to listing. The previous application-based mechanism, which involved review by regulatory bodies, could take years to process.
The Shenzhen and Shanghai bourses approved the 10 applications in just 35 days on March 14 and then handed the filings to the China Securities Regulatory Commission for review. The CRSC normally has a 20-working-day review window, but it took just two days to give the greenlight on March 16.
The registration-based system was rolled out in Shanghai’s Nasdaq-style Star Market and Shenzhen’s ChiNext Board in 2019. More than 1,000 companies have gone public using this method to date, raising over CNY1.2 trillion (USD174.6 billion).
The registration-based mechanism does not cap IPO prices, when before they had to be no more than 23 times the firm’s price-to-earnings ratio. There is also no daily limit imposed on price swings in the first five days of trading before going public.
The 10 firms all determined their offer price based on market-oriented methods. The five that listed in Shanghai had a median price-to-earnings ratio of 35 times, according to their 2021 financial report. Of those which went public in Shenzhen, coal power company Shaanxi Energy had the highest price-to-earnings ratio at 90.6 times and CECport the lowest at 26.8 times.
Editor: Kim Taylor
