Source丨IT orange
Author丨Wu Meimei
Editor丨Judy
Cover picture source: Wenxin Yige
It's not easy to understand how difficult and complex a company's journey to IPO is, especially now. Some simple and straightforward data can help us understand the current situation and trends. According to Wind data, in the first quarter of this year, 80 companies voluntarily withdrew A-shares. From the perspective of the reasons for the voluntary withdrawal, most companies said that it was "based on the re-evaluation of the capital market path planning and future strategic development considerations", some companies because of the update of financial data, the performance of the "change of face", touched the corresponding regulatory review red line, or the current market environment has undergone major changes, and some enterprises have withdrawn due to on-site inspections and on-site supervision. It can be seen that it is becoming more and more difficult to IPO now, not only because the external macro environment is not good, but also because of strict supervision at the regulatory level, and it is almost impossible to go public by luck and fraud. Based on the professional IT orange database, this article will bring you an analysis of the domestic IPO market in the first quarter of 2024.
The number of newly listed companies in China declined for 4 consecutive quarters
Since the second half of 2023, the number of newly listed companies in China has fallen from 115 to less than 50 (48), down 36% month-on-month and 50% year-on-year. It is worth noting that this downward trend has been going on for 4 quarters. The IPO market continues to face challenges as we enter 2024, with the number of newly listed companies further decreasing, and the IPO market can be described as dismal. Admittedly, this is closely related to factors such as the global economic situation, the tightening of A-share IPO policies, and slightly pessimistic market sentiment among investors. Since August 2023, the domestic A-share market has been tightened in stages, and the China Securities Regulatory Commission has increased its review and supervision of IPOs, and about 200 companies have terminated their IPOs in 2023. In February this year, the main leadership of the China Securities Regulatory Commission was adjusted, and Wu Qing became the tenth chairman of the China Securities Regulatory Commission, and the first chairman of the China Securities Regulatory Commission from the securities regulatory system (rather than the banking system). At a symposium held in March, Wu Qing said that listed companies are the foundation of the market and must focus on improving the quality of listed companies. The regulatory authorities' requirements for the quality of listed companies have been improved in many ways, and strict entry control is one of the main measures, which also means that the policy of IPO tightening will continue. As a result, the decline in the number of IPOs and the scale of financing in the first quarter was also expected, but the decline was still relatively severe.
From the perspective of listing places, it can be more clearly perceived that the amount of new IPO funds raised in the A-share market will peak at 141.09 billion yuan in the second quarter of 2023, and in the past year, as the main position for domestic companies to be listed, the total amount of funds raised by A-shares has fallen off a cliff. By 2024Q1, the total amount raised from new IPOs of A-shares was 23.449 billion yuan, down 23% month-on-month and 63% year-on-year. In Q1 2024, the average fundraising size of domestic A-share new IPOs will be about 500 million yuan, with a change of 19% month-on-month and a year-on-year decrease of 24%. In terms of the Hong Kong stock market, in the fourth quarter of 2023, the amount of new IPOs raised by Chinese companies in Hong Kong reached a high of 12.649 billion yuan, and in the first quarter of 2024, the amount of IPO funds raised fell sharply to 3.139 billion yuan, a decrease of 75% quarter-on-quarter and 24% year-on-year. IT orange data shows that in the past five quarters, the amount of funds raised by Chinese companies in the US stock IPO is generally small, and the amount of financing in the second quarter of 2023 is the smallest, only 130 million yuan, but it reached 6.828 billion yuan in the first quarter of 2024, showing a significant recovery, mainly due to the Lotus IPO on the NASDAQ, a subsidiary of Geely Holding Group, which contributed $880 million in fundraising.
The number of IPOs on the STAR Market in a single quarter hit a new low since the opening of the board
In terms of the number of new listings on various exchanges, compared with the first three quarters of 2023, the Hong Kong Stock Exchange in Q4 2023 will absorb the largest number of newly listed companies in China, reaching 21, and in the first quarter of 2024, although only 12 have successfully IPOed in Hong Kong, it is still slightly more than the Shenzhen Stock Exchange and the Shanghai Stock Exchange. To some extent, after the second half of 2023, the A-share policy tightening is a positive for the Hong Kong stock market, attracting many domestic companies to list in Hong Kong. According to previous data, in the first two months of 2024, the number of Chinese companies applying for IPO on the Hong Kong Stock Exchange is on the rise, with 28 companies submitting, and Hong Kong stock IPOs are expected to heat up this year. In addition, this year, there are also signs of recovery in U.S. IPOs, with more Chinese companies successfully listing in the U.S., reaching 6 in the first quarter, including Lotus, which went public through SPAC curves. It is worth noting that in the first quarter of this year, the number of new stocks on the Science and Technology Innovation Board fell from 20 in Q3 2023 to single digits, with only 4 companies, down 55.6% year-on-year and 20.0% month-on-month, respectively, accounting for 1/3 of the board of the Shanghai Stock Exchange. According to IT Orange data, since the launch of the STAR Market in 2019, more than 1,330 Chinese companies have applied for listing on the STAR Market. However, since 2023, the simultaneous tightening of the STAR Market and the new policy trends of A-shares have brought about a visible impact. Analysts believe that one of the reasons for the significant decrease in the number of enterprises accepted by the STAR Market is that the listing threshold was raised after the revision of the "science and technology innovation attributes" evaluation system of the STAR Market at the end of December 2022, and some enterprises were unable to meet the positioning requirements of the STAR Market. In addition, in December 2022, the China Securities Association issued the Measures for the Evaluation of the Quality of Investment Banking Business of Securities Companies (Trial), which made stricter treatment for the withdrawal of IPO application materials by securities firms and intermediaries. As a result, sponsors have become more stringent in the IPO project application stage, which has also led to a significant decrease in the number of companies applying for the STAR Market. In the first quarter of 2024, the Beijing Stock Exchange absorbed 8 newly listed companies, and all of them came from previous NEEQ listed companies. Since the reform of the New Third Board in recent years, the New Deal has provided great convenience for more and more selected listed companies to directly transfer to the Beijing Stock Exchange.
New IPOs in the manufacturing sector accounted for more than half, and Guangdong was the largest province in China
Among the new domestic IPO companies in 2024Q1, 8 companies are registered in Guangdong, accounting for 17%. These include Guangzhou-based cosmetics manufacturer Ba Wei Co., Ltd., Dongguan-based transformer manufacturer Maxim Technology, and Zhuhai-based mobile operator software and technology service provider Jingwei Tiandi. There are 7 and 6 companies registered in Beijing and Jiangsu respectively, and the number of IPOs accounts for 15% and 13% of the number of new shares in Q1 in China, including Huayang Co., Ltd., a micro-precision syringe developer in Changzhou, Quanxin Biopharma, a medical antibody drug research and development company in Taizhou, A.C.-China Jiahe, a cancer diagnosis and treatment service provider in Beijing, Lesle Group, a mobile advertising service provider, Youjiayoubao, an insurance technology company, and Rokos, a corporate employment and vocational training service platform. Five Zhejiang companies achieved IPOs in the quarter, such as Lianlian Digital, a cross-border payment service provider based in Hangzhou, Haisheng Pharmaceutical, a company focusing on the research and development of APIs and pharmaceutical intermediates, and Jiezhong Technology, an auto parts manufacturer in Shaoxing. In addition, Hong Kong also added 5 new listed companies in the first quarter, of which 3 were IPO on the Hong Kong Stock Exchange, such as gaming and entertainment service provider "Pale Palace" and potash fertilizer company "Michael Group", as well as Hong Kong financial public relations service company "Hui Yue Finance" and security service company "Rongzhi Group SU Group" listed on the NASDAQ. Hubei, Shanghai, Shandong, Fujian, Sichuan, Shaanxi, Henan, and Anhui each have 1~4 newly listed companies, accounting for 32% in total. (See the table below for a detailed list)
In Q1 2024, 15 companies in the domestic advanced manufacturing field achieved IPOs, a decrease of 21% month-on-month, and 9 companies in the traditional manufacturing field achieved IPOs, a decrease of 55% month-on-month. At present, among the newly listed companies in China's A-share market, manufacturing-related industries account for half of the country. The adjustment of the IPO policy has had a greater impact on this type of industry, resulting in a significant decline. In the first quarter, four new listed companies were added to the enterprise service industry: Jingwei Tiandi, Rokos, Zhongchuang Co., Ltd., and Rongzhi Group. There are three newly listed companies in the medical industry, namely U.S. China Jiahe and Quanxin Biopharma, which are listed in Hong Kong, and Haisheng Pharmaceutical, which is listed on the A-share market. Three companies in the automotive transportation sector have achieved IPOs: pledged vehicle monitoring service providers "Changjiu Shares" in the automotive distribution sector, Jiezhong Technology and Lotus, and one or two new listings in other industries such as logistics and agriculture.
More than half of the IPOs raised less than $500 million
In Q1 2024, 28 domestic newly listed companies raised less than 500 million yuan in IPOs, accounting for 60%, 11 IPOs raised more than 500 million yuan and less than 1 billion yuan, accounting for 23%, and 9 companies raised more than 1 billion yuan in IPOs, all but 1 of which were listed on the U.S. stock market, the rest were listed on the A-share market. In Q2 2023, there will be nearly 10 billion yuan of IPO fundraising by Crystal Integration and Innolink, and in Q3 2023, there will be an IPO of 22.1 billion yuan of Hua Hong Semiconductor's A-shares, and by Q1 of 2024, the largest IPO raised in the quarter will only be 880 million US dollars (about 5.72 billion yuan). In terms of listing locations, the largest A-share IPOs raised in the quarter were Yongxing Co., Ltd., a provider of municipal solid waste treatment solutions, which raised RMB2.43 billion, while the highest IPOs in Hong Kong were Suteng Juchuang, a provider of autonomous driving lidar environmental perception solutions, which raised HK$788 million in an IPO, and Lotus, a U.S.-listed IPO, which raised about US$880 million.
More than one-third of the newly listed companies have raised capital in the primary market
What is the pre-IPO situation of the 48 domestic companies listed in the first quarter of 2024?IT orange data shows that 15 new IPO companies have only raised funds in the primary market, accounting for 31% of the total. Among them, the new economy enterprises with the largest number of financings are the autonomous driving lidar environment perception solution provider "Suteng Juchuang" and the cross-border payment service provider "Lianlian Digital". Another 15 companies were listed on the New Third Board, and then 7 applied for IPO listing again, including 4 companies such as U.S.-China Jiahe, Bawei Shares, and Jundingda, which returned to the primary market for private equity financing after delisting, and then re-listed, and 8 companies were quickly listed on the Beijing Stock Exchange through direct transfer. Finally, there are 18 companies that have not disclosed any external equity financing. Due to the significant decrease in IPO data in the first quarter, the data is very limited from the number of IPO projects harvested by investment institutions, for example, the head Shenzhen Capital only has 3 new IPO projects: Longqi Technology, Xingchen Technology, and Jundingda, Yunfeng Fund has 2 IPO projects in Longqi Technology and Suteng Juchuang, Geely Holding has also received 2 IPO projects in the automotive field of Lotus and Suteng Juchuang, and other institutions have even less gains. No more diagrams.
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