2023 A-share IPO sketch: both the number and the amount of funds raised decreased year-on-year

On December 29, with the listing of Dali Cap on the GEM, the number of IPO companies in the A-share market has reached 313 this year.

Following the announcement by the China Securities Regulatory Commission on August 27 that the pace of IPOs will be tightened in stages, there have been obvious structural changes in the IPO market this year. Wind data shows that a total of 313 A-share companies have landed this year, including 110 on the Growth Enterprise Market, 59 on the Main Board, 67 on the Science and Technology Innovation Board and 77 on the Beijing Stock Exchange, raising a total of 356.539 billion yuan, and the number of IPOs and the amount of funds raised have declined significantly compared with 2022.

Under the registration system, the market environment for the survival of the fittest has been strengthened, and the valuation levels of new shares of different qualities have rapidly diverged after listing. This year, there are not only new stocks such as Mongoli and Aweite that have risen amazingly on the first day of listing, but also 52 new stocks that have broken on the first day of listing. Huahong Company raised 21.203 billion yuan, becoming the "fund-raising king" of new shares listed this year, and Suochen Technology became the most expensive new stock this year with an issue price of 245.56 yuan.

The number and amount of funds raised decreased year-on-year

As one of the basic functions of the capital market, IPO is the main way for enterprises to raise funds directly, and it is also an important means for the capital market to serve the real economy.

Wind data shows that in 2023, there will be 313 A-share listed companies, raising a total of 356.539 billion yuan through IPOs, while 428 A-share IPO companies will raise a total of 586.886 billion yuan in 2022, and the number of IPO companies and the amount of funds raised in 2023 will decrease by 26% and 39% year-on-year respectively.

The significant decrease in the number of IPOs in 2023 has occurred since September this year. In the four months from September to December this year, the IPO raised 18.119 billion yuan, 8.469 billion yuan, 9.435 billion yuan, and 15.002 billion yuan respectively, with a total of 51.025 billion yuan raised in the four months, while the IPO raised 163.8 billion yuan from September to December last year.

It is worth noting that 2023 is the first time that IPO fundraising has declined since the launch of the registration-based pilot. The five-year IPO funds raised from 2019 to 2023 will be 253.248 billion yuan, 477.866 billion yuan, 542.643 billion yuan, 586.886 billion yuan, and 356.539 billion yuan respectively.

The Growth Enterprise Market (GEM) and the Science and Technology Innovation Board (STAR Market) are the main fronts for IPOs this Wind data shows that since the beginning of this year, the largest number of listed companies is the GEM, with a total of 110, and the board with the highest total funds raised is the Science and Technology Innovation Board, reaching 143.884 billion yuan.

Compared with the Shanghai and Shenzhen stock exchanges, the IPO market of the Beijing Stock Exchange this year is relatively "popular". Since the beginning of this year, a total of 77 companies have landed on the Beijing Stock Exchange, raising a total of 147.733 billion yuan. In terms of the number of listed companies, the Beijing Stock Exchange is second only to the Growth Enterprise Market this year, surpassing the 67 companies on the Science and Technology Innovation Board.

Some industry insiders believe that the Beijing Stock Exchange has become the highlight of this year's IPO financing market. It is reported that on September 1, the "19 Articles of the Beijing Stock Exchange Deep Reform" was promulgated, in which the regulator optimized the implementation standard of "continuous listing for 12 months", and at the same time clarified that high-quality small and medium-sized enterprises that have already met the listing conditions are allowed to make an initial public offering and be listed on the Beijing Stock Exchange under the premise of meeting the market positioning of the Beijing Stock Exchange.

Overall, among the IPO companies listed in 2023, they are mainly in the manufacturing industry, and the top three industries are machinery and equipment (59), electronics (43), and basic chemicals (30).

By region, the top five regions are Jiangsu (58), Guangdong (51), Zhejiang (47), Shanghai (26), and Beijing (20). In terms of fundraising, the top five were Jiangsu, Guangdong, Shanghai, Zhejiang and Beijing, accounting for 68% of the total fundraising.

The performance of the IPO market is divergent

Huahong Company, which landed on the Science and Technology Innovation Board on August 7, was the largest IPO of the year, raising 21.203 billion yuan, and the smallest was Chicheng Shares, raising 68 million yuan.

Statistics show that in addition to Huahong, the top 10 IPO projects this year also include Xinlian Integration (11.072 billion yuan), Jinghe Integration (9.96 billion yuan), Shaanxi Energy (7.2 billion yuan), Aviation Materials (7.109 billion yuan), Canadian Solar (6.907 billion yuan), Huaqin Technology (5.852 billion yuan), Hunan Yuneng (4.5 billion yuan), Suneng (4.257 billion yuan), and Yuntian Lifei (3.899 billion yuan).

From the perspective of fundraising, the fundraising situation of enterprises varies greatly due to the influence of enterprise quality, market environment, industry policies and other aspects. Overall, the average financing amount of new shares this year has declined, with 313 listed companies raising an average of 1.139 billion yuan, of which 65% of the funds raised are less than 1 billion yuan, and 8 companies have raised even less than 100 million yuan of new shares on the Beijing Stock Exchange.

Overall, the number of IPOs listed this year has decreased significantly compared with last year. A total of 313 new shares were listed this year, of which 52 were broken, with a breakage rate of 16.61%, which was significantly improved from last year's breakage rate of 28.27%.

The biggest decline on the first day of listing this year was Dongfang Carbon, with an issue price of 12.6 yuan and a total of 403 million yuan. On the first day of listing, it quickly broke down, and the stock price fell 21.67% as of the close.

Since the cancellation of the new stock subscription with funds to market value subscription, the new shareholding has become a system dividend for A-shares, and this is also a win-win policy. However, judging from the development experience of mature capital markets, breaking the issuance is also the only way for the marketization of new share issuance. The first-day breakage rate of Chinese concept stocks listed in the United States is as high as 40%, and the first-day breakage rate of new shares in the mainland and Hong Kong markets has also reached about 15%.

The average first-day increase of new stocks this year was 66%, significantly higher than last year's 31.59%. Especially since the second half of this year, with the slowdown in the pace of new stock issuance, the average first-day increase of new shares has increased significantly.

On August 9, Mongoli officially landed on the GEM, and continued to rise by up to 3699.81% after two temporary stops, and the highest amount of 98,400 yuan could be earned in the first sign. As of the close of the first day of listing, the share price of MGL was 98.02 yuan per share, an increase of 1742.48%, setting the largest increase on the first day of listing of new shares this year.

In addition, Awei, which landed on the Beijing Stock Exchange on October 27, rose by 1008.33% on the first day, ranking second in the first day of new stocks this year, and the first in the first day of new stocks on the Beijing Stock Exchange this year. Market participants believe that in addition to high-quality business and stable performance, low pricing and small circulation may be the main reasons for Ahwit's speculation on the day.

It is expected to maintain a relatively low speed of issuance

The significant decline in IPOs and refinancings this year is directly related to the tightening of IPO and refinancing policies in August.

On August 18, the China Securities Regulatory Commission proposed to "reasonably grasp the rhythm of IPO and refinancing, and improve the counter-cyclical adjustment of the primary and secondary markets." On August 27, the China Securities Regulatory Commission said that according to the recent market situation, the pace of IPOs will be tightened in stages to promote the dynamic balance of investment and financing;

Some interviewed investment bankers pointed out that the decline in the performance of IPO companies, the listing positioning does not meet the latest regulatory requirements, and the changes in the business conditions of enterprises due to changes in industry policies are also important reasons for the decline of IPOs.

Looking ahead to the IPO market next year, some institutions remain optimistic as A-shares enter the era of a full registration-based system. According to Deloitte China's 202 Chinese mainland 3 and Hong Kong IPO Market Review and 2024 Outlook report, the development of the primary and secondary markets has gradually been balanced with the normalization of scientific and rational issuance in the A-share IPO market. Compared with the performance in 2022, the number of new shares issued and the amount raised in 2023 are on a downward trend. However, it is reassuring to note that the Shanghai Stock Exchange and the Shenzhen Stock Exchange are still the top two global IPO destinations in 2023 with strong performance.

Deloitte pointed out that looking forward to 2024, the A-share market will continue to issue new shares in a scientific and reasonable manner, and the A-share IPO market will obtain 260-330 new shares to raise funds, amounting to about 267 billion yuan to 317 billion yuan. At the same time, with the support of a package of pragmatic policies for the high-quality construction of the Beijing Stock Exchange, the Beijing Stock Exchange may attract more new shares to be listed and issued.

Institutions expect that new shares will remain issued at a relatively low rate in 2024. Guotai Junan pointed out that after 2015, there has been no comprehensive suspension of IPOs in A-shares, but the slowdown in the pace of IPOs in the relatively sluggish market performance may last for half a year to a year (such as 2018), so it is expected that in 2024, the main board and the innovation and innovation sector stocks will still maintain a relatively slow pace of issuance, and the number of issuances is expected to be 200 to 250 throughout the year, with a total fundraising scale of 200 to 300 billion yuan. In addition, the issuance of new shares on the Beijing Stock Exchange is normalized, and the increase is expected to pick up and hit new ones. Guotai Junan pointed out that according to the issuance rhythm in 2023, it is estimated that the Beijing Stock Exchange will issue 80 to 140 companies in 2024.