Pi Haizhou: The first day of the IPO is not a bad thing to warn investors to hit new risks

Pi Hai Chau | Cube everyone talks columnist

October 22 is the day when the new stocks of the Science and Technology Innovation Board are listed. According to the usual practice, the listing of new shares will bring a risk-free "new income" to investors who have won the new lottery. But for the winners of Zhongzi Technology, their expected "new gains" have failed, and what greets them is the fate of the first day of the new stock listing. The new winner not only did not get the "new gain", but also had to bear a certain "new loss", and the closing price on the first day of the listing of Zhongzi Technology fell by 6.87% compared with the issue price.

The first day of the new stock listing broke, which is a very heart-wrenching thing for the new winners. In particular, Zhongzi Technology broke at the opening of the market, and did not give the successful bidders the slightest chance to escape. The highest price of the day was 70.50 yuan, which was lower than the issue price of 70.90 yuan, which meant that all the new winners were covered, and all had to pay for their good luck in "winning the lottery".

So, why did Zhongzi Technology break on the first day of listing? There are two main reasons for this. First, the issue price is high, up to 70.90 yuan per share, and its dynamic price-earnings ratio has reached 100 times. Second, the company's performance has slipped sharply this year. The company expects operating income from January to September 2021 to be 860 million yuan to 950 million yuan, down 57.48% to 53.03% year-on-year; expected net profit attributable to the mother to be 45 million yuan to 54 million yuan, down 75.33% to 70.40% year-on-year; and expected net profit attributable to the mother after deduction of 30 million yuan to 39 million yuan, down 84.63% to 80.02% year-on-year. Because of this, the first day of the listing of Zhongzi Technology is not surprising, which further confirms the blindness of investors to hit the new.

Of course, the first day of new stock listing is still relatively rare in the A-share market. Zhongzi Technology is the first new stock to be issued on the first day of listing on the Science and Technology Innovation Board this year, and it is also the second new stock to be issued on the first day of listing since the establishment of the Science and Technology Innovation Board. The first new stock to be issued on the first day of listing on the Science and Technology Innovation Board was Jianlong Weina, and its listing date was December 4, 2019, which has been one year and 10 months since then, which also shows that the phenomenon of the first day of new listing is not common in the A-share market.

In fact, for the A-share market, it is a good thing that the new stock listing broke on the first day. Although for the A-share market, the phenomenon of new stock breaks is not uncommon, but most of these new stock breaks are after a round or even several rounds of market speculation after the listing of new shares, and then the stock price falls back and breaks. Such a new stock break, in addition to reminding investors of the risk of market speculation, is of little significance. On the contrary, the first day of the new stock listing is of greater significance.

First of all, the first day of the listing of new shares is conducive to reminding inquiry institutions to make rational inquiries, rather than blindly quoting high prices in order to obtain new shares. Because institutional investors participating in the IPO inquiry are also required to participate in the IPO placement if the inquiry is valid. If the price of the new stock is too high, the listing will break, which is of course unfavorable for the inquiry agency. Because their participation in the IPO placement share will also be due to the break and float losses.

Secondly, the first day of the new stock listing is also conducive to reminding investors of new risks. Because of the long-term undefeated phenomenon of new shares in the A-share market, the result is that investors must fight when they are new, they do not care about the fundamentals of new shares at all, and they do not care about the issue price of new shares, and even regard the new shares issued at high prices as "meat sign" shares. Although in the past, there were often new stock breaks, but the break of new stocks after some speculation did not endanger the interests of new players, and did not increase the risk awareness of new players. Only the first day of the listing of new stocks will directly damage the interests of the new players, only in this case, the new players will really realize the risks of playing new, so that the new people care about the fundamentals of the new stocks and learn to play new rationally. Of course, in order to achieve this goal, it is also necessary to further increase the phenomenon of the first day of new stock listing, showing a normalization, which is more conducive to investors to rationally play new.

In addition, the first day of the listing of new stocks is also conducive to warning the market of new risks. In the undefeated market environment of new stocks, investors will blindly speculate in new ones in addition to blindly playing new, so that after a new stock is listed, they will usually speculate on several, dozens or even dozens of up and down boards. Therefore, a new stock listing is often subject to speculation in the market. The first day of the listing of new stocks broke, which is a blow to new speculators. Because after the new speculators blindly chased after the new stocks, they found that the stock price not only did not go up, but the stock price fell further, and the new speculation became a trap. Therefore, the first day of the listing of new stocks is also a risk warning for new speculators.

It is precisely because of this that for the A-share market, the first day of the new stock listing is actually a good thing, which is of positive significance for the maturity of the A-share market and the maturity of investors. Therefore, as far as the first day of the new stock listing is concerned, this phenomenon can appear more, and if it can be manifested as a normalization, it will be more conducive to the maturity of the A-share market and investors.

Editor-in-charge: Anqi Liu | Review: Li Zhen | Director: Wan Junwei