Currently, there are6Homegrown Hong Kong-listed companies, including SMIC International, BeiGene, Novartis Oncology, etc.3Many red-chip companies listed on the Hong Kong and Shanghai stock exchanges, as well as China Resources Microelectronics Corporation, Gecko Microelectronics Corporation, and No. 9 Company3A red-chip company listed only on the Sci-tech Innovation Board. With the largestIPO listingHuahong Company has started subscription. After its listing, Huahong Company will become the first company on the STAR Market7Only red-chip stocks, also the number4Only red-chip stocks that have been listed overseas. Red-chip repurchaseAThe path is maturing, and the institutional system is continuously improving. Especially after the full registration-based IPO system was implemented, the clear application criteria for red-chip enterprises listed on the Sci-tech Innovation Board were replicated and applied to the main board. Red-chip enterprises that meet the policy criteria for innovation pilots can apply Market value+Income "standard".
What role has the large amount of funds raised by the Sci-tech Innovation Board played in the development of sci-tech innovation enterprises, especially leading enterprises worth hundreds of billions? Why have red-chip companies flocked to list on the Sci-tech Innovation Board? As red-chip companies returnAWill the improvement of the system and its integration with the entire market trigger a rebound?AHype? Frost & SullivanFrost & SullivanJia Pang, Partner and Managing Director of Frost & Sullivan Greater China, was interviewed by Securities Daily to discuss the above topics.
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Securities Daily
Q
Securities Daily Reporter: How has the large amount of funds raised through the Sci-Tech Innovation Board (STAR Market) contributed to the development of science and technology innovation enterprises, especially those leading enterprises with hundreds of billions in revenue?
The Sci-Tech Innovation Board has raised a large amount of funds, providing sufficient financial support for the development of sci-tech innovation enterprises and improving their financial conditions. The characteristics of companies listed on the Sci-Tech Innovation Board are advanced technology, belonging to strategic emerging industries strongly supported by the state, which can promote scientific and technological innovation and industrial development towards intelligence and efficiency, with rapid growth in business scale. Some companies face situations such as small asset size and short establishment time, making it difficult for them to raise funds through bank loans or other means. Therefore, for sci-tech innovation enterprises, raising funds through listing is a method with lower costs, higher feasibility, and a larger amount of supplementary capital.
The use of raised funds is mostly for strategic investments by enterprises, such as expanding new business segments, investing in research and development to improve technology, digital networking construction, capacity expansion, etc. For leading enterprises with hundreds of billions in assets, a large amount of capital is also needed to support the company's development, thereby consolidating and enhancing its market position, accelerating technological research and product iteration, and exploring the possibilities of new businesses. By utilizing raised funds, enterprises can quickly expand their scale, enhance the competitiveness and market share of products and services, and achieve better development. Secondly, from a financial perspective, after listing and raising funds, shareholders' equity usually increases, and the enterprise does not need to increase additional debt, thus improving the company's asset-liability ratio.
Q
Securities Daily Reporter: Why are red-chip companies flocking to the Sci-tech Innovation Board for listing (or what is the attraction of the Sci-tech Innovation Board for red-chip companies)? As red-chip companies returnAWill the improvement of the system and its integration with the entire market trigger a rebound?ABooming?
（1Firstly, most of the businesses of red-chip companies are carried out domestically. Red-chip companies returnAIt can make the communication channels between the domestic capital market and enterprises in their industries smoother. It facilitates investors to become more familiar with enterprises, understand their business models and operating environments, deepen domestic investors' understanding and recognition of enterprises, help enterprises establish brand images, and at the same time, the Sci-tech Innovation Board provides more reasonable valuations and liquidity for enterprises. Secondly, regarding red-chip backAIn comparison to the main board, the Sci-tech Innovation Board (STAR Market) has institutional advantages. The STAR Market is an important part of the multi-level capital market, mainly established to encourage enterprises with high-tech capabilities. It has more lenient requirements for the asset scale, revenue scale, profitability, equity structure, and corporate governance organizational structure of companies applying for listing compared to the main board.
（2)2018Before the year, companies listed on domestic stock exchanges had to be joint-stock limited companies registered in China. Therefore, red-chip enterprises must first dismantle their red-chip structures before they can returnAListed financing in the stock market. In order to establish a multi-level and open and inclusive capital market, enhance the influence and initiative of enterprises, and further attract enterprises to returnAThe General Office of the State Council forwards the China Securities Regulatory Commission's 'Several Opinions on Carrying out Pilot Programs for Domestic Issuance of Stocks or Depositary Receipts by Innovative Enterprises' ('Pilot Opinions') and the 'Announcement on Arrangements for the Listing of Innovative Pilot Red-chip Enterprises on Domestic Markets'[2020]24number)“(“24Announcement on the Issuance of Convertible Corporate Bonds (No. 20230600), allowing eligible enterprises to retain their red-chip structure for domestic financing.
2023year2month1On the same day, the Central Committee of the Communist Party of China and the State Council approved the 'Overall Implementation Plan for the Full Implementation of the Stock Issuance Registration System'. Subsequently, the China Securities Regulatory Commission issued drafts of fourteen regulatory documents, including the 'Administrative Measures for the Registration of Initial Public Offerings of Stocks (Draft for Soliciting Opinions)', and made them public for public comment; each exchange also simultaneously issued corresponding supporting regulatory documents. This means that after the implementation of the STAR Market4After more than a year of pilot implementation, the full implementation of the reform of the stock issuance registration-based system was officially launched. After the full implementation of the registration-based system reform, for red-chip enterprises that are already listed overseas and those that are notAThe main board, science and technology innovation board, and growth enterprise market provide multiple sets of listing standards for listings. With the return of red-chip enterprisesAWith a sound system, given the higher liquidity of the domestic capital market, the wide range of investors, and more convenient communication channels, the return of red-chip enterprises will become an inevitable trend.
*This interview was published in Securities Daily. Reporter: Xing Meng Original title: Huarong Company has started subscription yesterday The Sci-tech Innovation Board reaches hundreds of billionsIPO listingwill increase8an >> .
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