Xingye Joe forever: Science and Technology Board is good for

Event

Xinhua News Agency, January 23rd, the 6th meeting of the Central Comprehensive Deepening Reform Committee passed the "General Implementation Plan for Establishing a Science and Technology Board and Pilot Registration System on the Shanghai Stock Exchange", Implementation Opinions on Establishing a Science and Technology Board and Pilot Registration System at the Shanghai Stock Exchange. In this regard, we commented as follows:

Comments

The level of decision-making of the science and technology board, the speed of advancement, and the high priority, are in an unprecedented position in the history of capital market reform, expected in 2019 It can advance to the ground before the first half of the year. The adoption of the "Program" and "Implementation Opinions" at this meeting means that the top-level design has basically taken shape.

Opportunities and Challenges: Kechuang Board creates an incremental market and reshapes the industry landscape in the technology sector. First, the science and technology board is an important supplement to the stock A shares, and the listing standards are more diversified. Breaking through the main criteria of profit, considering the dimensions of income, net profit, R&D investment, industry ranking, etc. Second, the head enterprises should focus on the main business and select the small market value of the technology leader in the segment of the main business. Enterprises conduct mergers and acquisitions and strengthen their position in the industry. The Kechuang board + registration system will accelerate the depreciation of shell resources and provide opportunities for mergers and acquisitions of head enterprises. According to our statistics: in the year of 2018, the total number of M&A projects was 12,169 (+18.2%), and the total amount of M&A was 3.29 trillion yuan (-34.7%). The number of small-scale mergers and acquisitions increased significantly, which is in line with the general trend of mergers and acquisitions. At present, there are 412 companies with a market capitalization of less than 2 billion yuan, which is conducive to the integration of the M&A and restructuring industry chain of the head enterprises. Third, the technology enterprises have increased their R&D investment and transformed the business model innovation into a leading edge in technology investment. At present, BAT R&D and capital investment are only about 1/3 of the US technology giants, and the growth rate is higher than that of US stocks (BAT average is about 60%, FAANG average is 32%). There is still room for improvement in 2019.

One stone stirred up a thousand waves and re-examined a series of supporting systems following the science and technology board. First, the science and technology board + pilot registration system, need to match the exit mechanism. Referring to the US stock market Nasdaq experience, although the listing does not have clear requirements for earnings, the survival of the fittest is obvious. Since 2000, Nasdaq’s delisting companies accounted for 44.5%, and A-share delisting companies accounted for only 7.9%. In the early stage of the listing, Kechuang board can regain revenue and be lightly profitable. After the listing, it takes a long time to realize the profitability of the window.To make provisions, to clear the premise of the "in and out" mechanism to ensure the quality of enterprises; Second, improve liquidity: the establishment of the basic board of the science and technology board to open the daily limit to 15%, set a half-year after the release of the daily limit to 15%. The current “T+1” and ups and downs trading systems in the A-share market have significantly weakened trading liquidity. Kechuang Board is not for all ordinary retail investors. It also has corresponding regulations on the amount of investment and the length of investment, and it has the basis for opening the limit of the price limit. In the early stage, the limit of the daily limit was 15%, which helped to introduce incremental funds, explore high-quality stocks and enhance the attractiveness of the board. Third, the listing rhythm control: the initial expansion will not be greatly expanded. Kechuang Board attaches great importance to the quality audit of listed companies, and does not choose the strategy of swarming. From the rhythm point of view, the launch of more than 9 years of the GEM has a total of 740 listed companies; launched more than 14 years of small and medium-sized board listed 924 listed companies. The science and technology board is in the exploratory stage, regardless of whether it is listed or listed, and it is unlikely to expand significantly in the short term. The blood draw effect is relatively limited.

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Science and technology board has a high level of decision-making, rapid advancement, and high priority. It is in an unprecedented position in the history of capital market reform. It is expected to advance before the first half of 2019. Since its establishment, the Science and Technology Board has been mentioned in many meetings and government work plans within two months, and institutional discussions and opinions collection are also rapidly advancing. On November 5, 2018, President Xi Jinping announced that he would set up a science and technology board and pilot registration system on the Shanghai Stock Exchange. At the Central Working Economic Conference on December 19th, it was mentioned that “the promotion of the establishment of the science and technology board in the Shanghai Stock Exchange and the pilot registration system will be implemented as soon as possible”. On December 24th, the CSRC released the 2019 key work meeting, and the establishment of the science and technology board was placed on the first point; on December 25, the Shanghai Stock Exchange released the key work plan for 2019, and the science and technology board was placed in the first place. "To fully promote the reform of the science and technology board and the registration system pilot as soon as possible." On January 23, 2019, the Central Comprehensive Reform Committee passed a total of 15 programs, of which there were two on the science and technology board, and placed at the forefront of all the programs to give key tips, showing the importance of building a science and technology board. significance. The meeting adopted the "Program" and "Implementation Opinions", which means that the top-level design has basically taken shape.

Listed company opportunities and challenges: KechuangThe board creates an incremental market and reshapes the industry landscape in the technology sector. On the whole, the science and technology board has a strong and light form, and it has a heavy income capability and a light short-term profit. It is good for the head enterprises and lowers the valuation of shell resources. First, the Science and Technology Board is an important supplement to the stock A-share market. The listing standards are more diversified, providing financing support for listed companies with high growth potential. In terms of market access, the company breaks through the criteria of profit-based standards. The access standards for listed companies can be considered from the perspectives of income, net profit, R&D investment, number of granted patents, and industry ranking. Second, they have core technological advantages. Enterprises will take advantage of the capital market, and the advantages of the head enterprise can be further highlighted. From the “Report on the Guidelines for the Consultation of the Board of Directors for the Board of Directors of the Board of Directors on January 11th”, the entry of the board of science and technology is focused on: “1. Have independent intellectual property rights; 2. The main income comes from its technology; Have a mature R&D system/team; Fourth, have a mature business model." The industry focuses on five major areas: next-generation information technology, high-end equipment manufacturing and new materials, new energy and energy conservation, biomedicine, and technical services. Third, in line with the trend of science and technology, the head enterprises will further accelerate the integration of the industrial chain of mergers and acquisitions, increase investment in research and development, and gradually shift from model innovation to technological innovation. On the one hand, the gradual advancement of the science and technology board + registration system will further accelerate the depreciation of the shell resources, providing opportunities for the merger and reorganization of the head enterprises. According to Wind statistics, the total number of M&A projects in 2018 was 12169 (+18.2% yoy), and the total amount of M&A was 3.29 trillion yuan (-34.7% yoy). The amount of M&A market declined and the number of M&A increased significantly. As of January 23, 2019, the number of A-share listed companies with a market value of less than 2 billion yuan reached 412. The head enterprises should focus on the main business, select small-capital enterprises with technology leaders in the main business scope to conduct mergers and acquisitions, and improve their own industry status; on the other hand, in 2019, technology companies will increase their R&D investment and improve their technological innovation capabilities. The trend will accelerate further. According to our statistics, BAT R&D and capital investment are only about 1/3 of the US technology giants, and the growth rate is higher than that of US stocks (BAT average is about 60%, FAANG average is 32%). There is still room for improvement in 2019 [1] .

One stone stirred up a thousand waves and re-examined a series of system construction directions after the launch of Science and Technology.

First, Science and TechnologyBoard + pilot registration system, need to match the corresponding exit mechanism. The registration system does not mean not to review, but to strengthen the information disclosure mechanism and give it to the market to vote. Only by clearing the export and import, can we guarantee the survival of the fittest, and as the incremental market, the science and technology board will always guarantee the source of living water. Referring to the US stock market Nasdaq experience, although the listing does not have clear requirements for profit, the survival of the fittest is obvious, and the market-oriented mechanism is used to screen high-quality enterprises. According to our statistics, since 2000, Nasdaq has listed 3,567 companies and 1944 delisted enterprises. Delisting enterprises accounted for 44.5% of the total number of enterprises, and the number of newly listed companies accounted for more than half; A shares, since 2001, there are 2,596 listed companies and 166 delisted enterprises, and the delisted enterprises accounted for only 7.9%. In the early stage of the listing, it is possible to re-revenue and lightly profit, to emphasize the status of the industry and the profit model and to light short-term gains. After the listing, it is necessary to stipulate how long the window should meet the profit requirements. Through the dredge "in and out" mechanism to ensure the healthy vitality of the science and technology board.

Second, the improvement of the trading mechanism: In the initial stage of the establishment of the science and technology board, the daily limit was set to 15%, and after half a year, the daily limit was released to 15%. The reason is that the current “T+1” and ups and downs trading systems in the A-share market have significantly weakened trading liquidity. After releasing the daily limit to 15%, it will help to introduce some incremental funds and explore high-quality stocks. In fact, the investment of Science and Technology Board is not required for investor access. There will be corresponding regulations on the amount of investment and the length of investment. The Science and Technology Board has the ability to open the limit of the price limit.

Third, the listing rhythm control: the initial expansion will not be greatly expanded. Judging from the current public information, Science and Technology Board attaches great importance to the quality audit of listed companies, and will not choose the strategy of swarming. The first batch of listed companies have a high probability of being a head enterprise with strong core technology, high technical threshold, strong R&D capability, and certain scale and industry representation. From the rhythm point of view, the launch of more than 9 years of the GEM has a total of 740 listed companies; launched more than 14 years of small and medium-sized board cumulative listing of 924 listed companies; Kechuang board attaches great importance to the quality audit of listed companies, and Will not choose the strategy of swarming. From the rhythm point of view, the launch of more than 9 years of the GEM has a total of 740 listed companies; launched more than 14 years of small and medium-sized board listed 924 listed companies;Regardless of the listing method or the registration method, the Science and Technology Board is in the exploratory stage and is unlikely to expand significantly in the short term. The blood-sucking effect of Kechuang board on the stock market is relatively limited.

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