New Third Board Selection Layer To Declare Enterprise Breaking Hundred Public Offering Pricing Into Hot Focus

The new third board selection layer will usher in the milestone.

Following the announcement of the 5 enterprises of Xingyuan agriculture and animal husbandry and minimally invasive photoelectricity in March 24th, the number of new third boards to be selected is officially broken through 100 major points. It was only three months after the first company announced its impact on the selection layer.

And this also releases multiple signals. On the one hand, when the number of enterprise reserves is enough, it is getting closer to the time when regulators begin to accept the application materials of selected enterprises. On the other hand, when the number of selected enterprises increases, the market focuses on the screening and pricing of enterprises.

The quality of reserve enterprises is uneven.

"At the end of March, over 100 were basically in the market expectation, but in view of the new crown pneumonia epidemic factors and the Spring Festival cycle, there were hundreds of enterprises in a short period of time that indicated that the enterprises approved the new three board reform." A large brokerage firm in Beijing said.

It is gratifying to break through hundreds of milestones, but not all enterprises are excellent.

"From the current announcement of the selected enterprises, the net profit to the mother in 2018 has averaged over 50 million, with a median of more than 30 million. If we look at the data of the three quarter of 2019, we can see that the overall quality is much higher than the financial threshold of the selected layer, but there are also a small number of enterprises' financial indicators which do not meet the standards. New three board senior researcher Peng Hai told reporters.

There are also some market participants who suggest that the quality of the enterprises at present is uneven. Xi Qingqing, a partner of Yun Zhou capital, told reporters: "the quality of the 100 selected enterprises is very large. It is difficult to choose the enterprises with high quality, high growth rate and large scale. We have a relatively high demand for the quality of the enterprises, and only about 10 enterprises are optimistic."

As for the quality of reserve enterprises, Xu Da, deputy general manager of the securities and Investment Bank of China, believes that there will be more high-quality enterprises coming in the future.

He told reporters: "at present, the quality of the selected enterprises is polarized. Some excellent enterprises, even in the main board and the science and technology board, are also benchmarking enterprises. There are also some enterprises that have barely reached the lowest level of the selected layer. At present, the policy of the selected layer is far beyond the market expectation, and many excellent potential enterprises are not well prepared, and the preparation process of the epidemic is also affected. I believe that with the introduction of the selection layer, there will be a steady stream of good companies landing on the selected layer.

Valuation and pricing

With the increasing reserves of the enterprises, the market attention is turning to the valuation and pricing of enterprises.

The first is the issue of the reserve price. The recent national stock transfer system requires that the companies with the selected layer should pre define the issuing price or issuing interval in advance. In addition, according to the rules of issue, the issuer and the main underwriter shall suspend the issue of the public offering of the selected layer enterprises, if the issue price is not within the issue price interval determined by the general meeting of shareholders or lower than the issuing base price determined by the general meeting of shareholders. In other words, the issue of the floor price to some extent gives the market a reference for pricing.

But many market participants believe that the issue of bottom price for the final pricing of interference is not large, more is in line with the process and try not to let some companies destroy the market.

Xu Da said: "the current reserve price is mainly to protect the small and medium investors, and avoid losses to the small and medium investors because of the price of the offering or the selected market. In order to ensure the success of the issue, some companies will be more conservative in issuing the reserve price, and there will be a big difference between the anchorage price reported by the broker and the broker.

"From the majority of the company's issuing bills, the bottom price is lower than the current market price," Peng said. But according to our statistics, the base price is smaller than that of the previous round of external investors. The future issue price will refer to the combined factors such as fixed price and market price. It is expected that the overall price will be higher than the current issuing base price, so the overall impact will be small. The final way price should be determined according to macro factors, capital market environment, industry characteristics, profitability level and other factors.

In fact, what is more disturbing to the issue and valuation is the transaction of the selected companies. In the new three board reform market, this batch of selected enterprises has gone up a lot, and some companies are not low valuations.

According to the twenty-first Century economic report combing, many of the 103 companies that announced sprint selection now have close to or more than 20 times dynamic price earnings ratios. This, or to some extent, is difficult for public offerings. For example, the first Audi SW dynamic price earnings ratio has reached 162 times.

There is no precedent for the public offering of the new third board selection layer, but the market generally expects that the selection layer can give the valuation of the enterprise less than IPO or Ke Chuang plate. Therefore, if the price increases in the two tier market of the pre enterprise are too large, there may even be a discount sale or the failure of the public offering, which is also a matter of concern for the market in the following period. New three board senior investor Huang Pu thinks.

"The level of public offering of selected layers depends on whether the new third board selection layer can run successfully. The selection layer comes from the market selection, pricing should be more realistic, and can not be used for reference by the high price issuing mode of the Chuang Chuang plate. It can only attract investors through low price issuance, so as to ensure that investors entering the different stages are profitable. As far as I know, at present, the public offering fund still has a wait-and-see attitude towards the selection layer, and the inquiry issue may not be suitable for the initial stage of the selection. Direct pricing is more suitable for trading active stocks. For those active stocks, if the discount can be issued directly, it is believed that the enthusiasm of investors will be higher. Hua Tuo capital general manager Zhu Yi Yi told reporters.

However, Xi Qingqing has suggested that the price of the two tier market of some new third board enterprises has exceeded the base price of the enterprises, but it is still in the 50 percent off place compared with the IPO listed companies. "The actual issue price in the future will refer to factors such as transaction prices and trading volume in the current market. And because the selection method, the participating institutions, the structure of investors and the liquidity of the final transaction are almost the same as those of other sectors, we believe that the valuation level will also converge with the "Chuang Chuang board, the gem and the small and medium-sized boards". (Editor: Wu Yan Ling)