The reform of the "first year" of the registration system of the ChiNext Board has blossomed: strengthen the positioning of "three innovations" and "four new" and promote the stock + incremental reform

On August 24, 2021, the GEM reform and pilot registration system officially completed its first anniversary.

Looking back at this day a year ago, the bell of the first batch of enterprises listed under the registration system of 18 GEM companies sounded on the Shenzhen Stock Exchange, and the GEM officially entered the era of registration system.

In this year's time, the capital market has ushered in the reform of "increment + stock" synchronously. The registration system for initial offering, refinancing, mergers and acquisitions and restructuring of the Gem Is established simultaneously, and the basic systems of the capital market such as listing, information disclosure, investor appropriateness management, trading, and delisting are all coordinated and improved.

At the same time, the GEM focused on the positioning of the "three innovations" and "four new" sectors, showing better growth ability, profitability and maintaining a strong innovation attribute.

As of August 20, 182 companies have successfully landed on the GEM through the registration system, 362 sub-GEM refinancing projects have been accepted, and the funds to be raised are 382.898 billion yuan, of which 17 companies have launched a small amount of rapid, 5 companies have been implemented; 23 mergers and acquisitions have been accepted, of which 25 are industrial integration plans in the same industry, accounting for nearly 60%.

On the occasion of the first anniversary of the registration system reform of the GEM, a number of helmsmen from companies, securities companies and venture capital were interviewed by 21st Century Business Herald reporters and summarized the achievements made in the reform of the registration system of the GEM in the past year. In the view of market participants, the reform of the ChiNext Board and the high-quality operation of the pilot registration system have achieved remarkable results since the reform was implemented one year ago, and the sense of gain of all parties in the market is obvious.

Looking back at the development of the past year, with the steady progress of the registration system reform, the Gem market has been further improved and developed, and has become the world's second largest GEM market.

As of July 30, the total market capitalization of GEM listed companies has exceeded 12,765.051 billion yuan (about 2.03 trillion US dollars), ranking second among the world's major GEM markets, second only to the US NASDAQ's market value of 25.66 trillion US dollars.

Talking about the highlights of the registration system reform of the GEM, it is inevitable that its more diversified and inclusive listing conditions and the significant improvement of review efficiency will inevitably be avoided.

As of August 20, 2021, the Shenzhen Stock Exchange has accepted a total of 727 applications for initial listing on the GEM, of which 176 and 551 are translation companies and 551 new reporting enterprises respectively; 182 companies have successfully landed on the GEM, raising a total of 140.147 billion yuan through IPOs, of which 131 are translation enterprises and 51 are newly declared enterprises.

Among the newly declared enterprises under the registration system of the Gem,28 enterprises declared the "second set of standards", that is, "the expected market value is not less than 1 billion yuan, the net profit in the latest year is positive, and the operating income is not less than 100 million yuan". Among them, Maipu Medical (301033.sz) has been listed, and Raiden Micro Force has been registered and effective.

"Judging from the number of IPO companies accepted, the number of issued and listed enterprises and the scale of financing, in one year, we have really seen that the quality of the issuance of the ChiNext Board is guaranteed, which has helped more small and medium-sized enterprises to achieve listing financing, and the overall results have been remarkable." Tian Nianbin, chairman of Songsheng Co., Ltd. (301002.sz), the first batch of enterprises under the registration system of the Gem, said in an interview.

From the perspective of review efficiency, under the registration system of the GEM, the average time from acceptance to meeting of enterprises to be listed is about 150 days, and the average registration time is 52 days, and the review cycle is greatly reduced compared with before the registration system, and the predictability is also greatly enhanced.

"The reform of the registration system implements the issuance review system with information disclosure as the core, and the responses to the IPO's previous audit inquiries are disclosed on the network, and the post-reporting enterprises can grasp the key points and verification requirements in the audit process of the exchange in real time, so as to carry out self-reference comparison and timely standard rectification, effectively weaken the motivation of the enterprise to declare with illness, and play a benign role in promoting the follow-up audit work and audit efficiency." Tang Songhua, member of the executive committee of Huatai United Securities and head of investment banking business, said.

Tian Nianbin also said: "Judging from the review process, in the past year, as a member of the GEM IPO enterprises, we have fully felt the great efforts made by the Shenzhen Stock Exchange to continuously promote the review of the GEM, supervise openness, strive to build a transparent exchange, continuously upgrade the basic system, and optimize the operation process. ”

While promoting the normalization of issuance and "running out" to serve the acceleration of the real economy, the GEM also adheres to the plate positioning of supporting "three innovations" and "four new" enterprises, showing better growth ability, profitability and maintaining strong innovation attributes.

As of August 20, 2021, among the 1,011 GEM companies, 925 were high-tech enterprises, accounting for more than 90%, and strategic emerging industry enterprises accounted for nearly 60%.

At present, the GEM has gathered nine strategic emerging industries, of which four industries such as new generation information technology, biomedicine, new materials, and high-end equipment manufacturing are particularly obvious in the gem cluster development trend.

As of August 20, there were 214 new-generation information technology enterprises, 95 biomedical enterprises, 92 new material enterprises and 90 high-end equipment manufacturing enterprises listed on the GEM, with a total market value of about 2.5 trillion yuan, 3 trillion yuan, 1 trillion yuan and 1.2 trillion yuan respectively, and the average annual compound growth rate of the average operating income of the four major industries in the past three years reached about 10%, 21.03%, 11.45% and 13.37% respectively.

It is worth mentioning that backed by a solid capital market, various innovative elements of people, money and materials have accelerated the gathering of innovative enterprises.

GEM companies are also constantly enhancing their investment in research and development and deepening industry-university-research cooperation, and strive to enhance their innovation capabilities and core competitiveness.

According to statistics, among the 1011 GEM companies, the total number of R & D personnel exceeds 370,000, the average company R & D personnel is more than 370 people, and the average proportion of R & D personnel in the total number of employees reaches 19%, of which 203 companies account for more than 30% of R & D personnel. There are 150 actual controllers of listed companies who have worked in universities or research institutes, 55 companies with shareholder backgrounds in universities and research institutes, 16 companies that have been transformed from scientific research institutes, and 82 companies whose founders are "returnees" to start a business.

In the past 12 years, the average research and development intensity of GEM companies is higher than the average level of A-shares, with more than 130,000 core patented technologies related to the main business, and has strong scientific and technological innovation and achievement transformation capabilities. Mindray Medical (300760.sz), Chutian Technology (300358.sz), Sunshine Power (300274.sz) and other companies have independently developed more than 1,000 invention patents, and the strong research and development strength has supported the rapid development of enterprises.

"The Shenzhen Stock Exchange pays attention to serving strategic emerging industries, and the cultivation, growth and expansion of the Shenzhen Stock Exchange actively interact with the service, supervision and innovation of private enterprises. Growth and start-up companies can also be strongly supported by capital markets. The secretary of the board of directors of Ewell Lithium Energy pointed out in an interview.

As an important reform of the capital market "increment + stock" synchronously, the many innovations in the three major capital instruments of refinancing, mergers and acquisitions and equity incentives in the reform of the ChiNext Board have also played a crucial role in the development of the ChiNext enterprises.

For example, refinancing further improves the issuance conditions, issuance pricing mechanism and other institutional arrangements, and the review is more market-oriented, greatly compressing the review time limit and links, reducing the approval time for enterprise refinancing, and also strengthening the establishment of a market-oriented issuance and underwriting mechanism, enriching financing tools, to meet the investment and financing needs of different preferences, and improve the capital market.

According to statistics, as of August 20, 2021, the Shenzhen Stock Exchange has accepted a total of 362 refinancing applications from GEM companies, and 248 refinancings have been registered and effective, with plans to raise funds of 237.049 billion yuan, of which 170 have been implemented and the actual financing is 163.888 billion yuan.

On September 17, 2020, Qianyuan Pharmaceutical (300254.sz) issued shares to specific targets in a simplified procedure and was registered by the China Securities Regulatory Commission, becoming the first company to enjoy the "dividends" of the reform of the small rapid financing system, which took only 8 working days from submission of application to registration, and only 9 working days from registration to capital, which was comparable to applying for a short-term bank loan.

Since the implementation of the registration system, by August 20, 2021, 17 companies have launched a small rapid financing plan, with a plan to raise 3.503 billion yuan, of which 5 companies have been implemented, with a total of 905 million yuan.

Jiang Li, secretary of the board of directors of NINGDE Times (300750.sz), pointed out to the 21st Century Business Herald reporter that in the past two years, the company has made full use of the fast and convenient financing function of the ChiNext market, and adopted more targeted financing methods at different stages of development, successively completing the issuance of 4.5 billion yuan of corporate bonds, 19.7 billion yuan of non-public refinancing and the issuance of 1.5 billion US dollars of foreign bonds, introducing well-known strategic investors at home and abroad to optimize the company's investor structure, and providing sufficient financial support for the company's sustainable development.

"Under the background of the implementation of the registration system reform of the GEM in 2020, the company once again launched the fourth refinancing on the capital platform, and successfully raised no more than 2.5 billion yuan. Through the issuance of this refinancing, the company deeply realized that the relevant departments can take into account the actual situation of listed companies in the process of refinancing, the review is more market-oriented, and the inclusiveness of the system and the effectiveness of the market have been significantly improved. The secretary of the board of directors of Ewell Lithium Energy (300014.sz) also said.

In terms of mergers and acquisitions, the GEM also gives full play to the advantages of the platform, supporting the company to deepen the main business, and actively achieve industrial integration and transformation and upgrading through mergers and acquisitions and restructuring, so as to achieve leapfrog development. As of August 13, 2021, the GEM has implemented and completed 459 major asset restructuring plans, involving a transaction amount of 421.024 billion yuan and a total of 140.088 billion yuan of supporting financing, which strongly supports the development of the real economy.

At the same time, the valuation of mergers and acquisitions is becoming more reasonable. According to statistics, the average asset appraisal premium rate of major asset restructuring on the ChiNext board reached 6.65 times, the average valuation premium rate from 2015 to 2017 during the peak period of mergers and acquisitions was more than 7.5 times, and after the implementation of the registration system, the average appreciation rate dropped to 3.61 times, the premium rate has dropped significantly, and the overall valuation of mergers and acquisitions and restructuring is more rational.

"The reform of the registration system of the ChiNext Board has relaxed the criteria for determining major asset restructuring, greatly reduced the information disclosure cost of enterprises, and improved the efficiency of project implementation; at the same time, the non-mandatory requirements of the target of mergers and acquisitions and restructuring have a synergistic effect with the main business of the listed company, and only as an information disclosure requirement, broadening the selection range of the target of the listed company." An executive of a GEM technology company in South China pointed out.

In terms of equity incentives, the reform not only increases the total amount of incentive shares and options from no more than 10% of the total share capital to 20%, expands the scale of granting, but also increases or revises incentive tools and pricing, greatly relaxes the flexibility of listed companies to implement equity incentives, provides more program options for listed companies to implement equity incentives, and then helps enterprises reserve talent advantages in fierce competition and achieve strategic development goals.

"After the reform of the registration system of the ChiNext Board, the equity incentive system has been greatly optimized, and a new equity incentive tool for the second type of restricted stock has been added, which combines the price concession of the 'first type of restricted stock' and the advantages of 'option' not having to contribute in advance, reduces the financial pressure of the incentive object, and reduces the cumbersome procedures such as the repurchase and cancellation of listed companies, so that the company has more flexibility and more flexible operation methods when implementing specific plans, which is conducive to achieving better incentive results." At present, the company launched the Second Class II restricted stock incentive plan in October 2020, enjoying 'institutional benefits' and achieving good results. Jiang Li introduced.

In addition to improving the level of serving the real economy, the GEM has also made many efforts and innovations in how to control the quality of listed companies, protect the legitimate rights and interests of investors, and maintain the long-term stable development of the domestic capital market, among which simplifying the delisting procedure and smoothing the "export customs" is a major focus of the GEM reform.

In 2020, the Shenzhen Stock Exchange revised the Rules Governing the Listing of Stocks on the Growth Enterprise Market on 12 June and 31 December 2020 respectively, to reform the delisting mechanism of the Growth Enterprise Market from the perspective of improving the quality of existing listed companies and strengthening the efficiency of market resource allocation, adding new market value indicators and composite financial indicators, streamlining and optimizing the delisting process, and building a market ecology of survival of the fittest.

Up to now, since 2020, a total of 7 companies on the GEM have been terminated, of which Shenwu Environmental Protection and Shengyun Environmental Protection have been forcibly delisted due to their par value of less than 1 yuan. In addition, as of August 20, 2021, there were 5 companies with a stock price of less than 2.5 yuan per share on the ChiNext board (excluding Tianxiang retreat), all of which have been implemented risk warnings.

At the same time, 16 companies have been implemented for touching the financial indicators of the new regulations, of which 6 companies such as *st Baode (300023.sz) have been implemented in 2020 due to the negative net profit before and after deducting non-deductions and the operating income of less than 100 million yuan after deducting income unrelated to the main business.

"At present, the reform of the capital market registration system with information disclosure as the core is advancing rapidly, the efficiency of listed companies' IPOs has been significantly improved, the reform of the basic system such as trading and refinancing has been quickly followed, and it is more important to improve the exit mechanism under the registration system." The above-mentioned executives of South China Technology Company said.

Zuo Ding, president of Shenzhen Venture Capital, also said: "On the one hand, accelerate the cleanup of the stock market 'undead birds' that exist in the market. Such listed companies have either long-term performance losses, or serious financial conditions, or belong to 'zombie' enterprises, and their existence in the capital market has no meaning. On the other hand, for listed companies that have vicious violations of laws and regulations such as financial fraud, insider trading, and market manipulation, it is necessary to strictly implement the delisting system and maintain market cleanliness. Only by doing a good job of 'entrance gate' and smoothing the 'export pass' can we realize the survival of the fittest in enterprises and promote the long-term and stable development of the market. ”

It is worth mentioning that in recent years, the GEM has also broadened diversified exit channels such as bankruptcy and restructuring, and the number of cases of diversified delisting on the GEM through bankruptcy reorganization, restructuring and listing, asset sales and other channels has gradually increased.

According to statistics, in terms of reorganization, Baolixin (300116.sz), Tianhai Defense (300008.sz) and other companies have completed the implementation of the reorganization plan to resolve bankruptcy risks, and the restructuring of Many companies such as Tempus International (300178.sz) and Huayi Jiaxin (300071.sz) is in the planning or promotion stage;

In terms of restructuring, Sunflower (300111.sz) and Yingkang Life (300143.sz) have divested most of the original risk assets and business to achieve business transformation, and the restructuring and listing of Aiskai (300521.sz) and Pulisheng (300442.sz) are under review.

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