Textile "Three Golden Flowers" Plunge Into Vortex And Taste "Hole"

Although the Shanghai Composite Index rose sharply in the two trading days in May 21st and May 24th, the cumulative increase reached 4.6%, but it still failed to fill the hole of valuation in the past month.

Since the big crash in April 19th, the Shanghai Composite Index has fallen by 14.6% as of May 24th.

In the past more than a month, the "breakout" of new shares has been frequently seen in the newspaper, which has become the focus of the market.

Statistics show that since the IPO restart in June 2009, as of May 23, 2010, a total of 88 new shares fell below the issue price.

Since the end of 1 this year, China West power has launched the first break of the first day listing of new shares, and the wave of the first day breaking the issue price has come.

According to WIND data, as of May 21st, a total of 11 new shares fell below the issue price on the first day of listing this year (the closing price on the first day of listing was lower than the issue price). In May, 6 new shares fell on the first day, including the textile and garment sector "new Ding" - Jiaxin silk.

In response, market analysts said that the "break" of new shares has a lot to do with the bad environment of the big market, but in the final analysis, it is related to the IPO system.

"The Holland style bidding system adopted by the current inquiry system is in a bull market atmosphere in the two tier market, which is likely to trigger a high price of new shares. While the two market is falling, the new shares issued at high prices are facing the risk of breaking up, thereby increasing the risk of investors' purchase."

Liu Junwei, an analyst at Shenyin and Wanguo, stressed that to solve this problem, we must strengthen the accountability mechanism of inquiry objects. On the one hand, we should change the Holland style bids for American style bidding, and on the other hand, we should expand the proportion of issuing new shares.

Frequent incidents of "breaking" cause heated debate

Analysts said that the high price earnings ratio is the key reason why new shares have broken down frequently.

"Breakage is not a simple process, but a process of risk accumulation and final release after a period of time."

Datong securities analyst said.

Taking small and medium-sized boards as an example, since the IPO restart in July 2009, the average issuance of PE in small and medium sized boards in July was only 33 times, when the market was in a strong upward channel.

With the gradual enlargement of the new money making effect, most agencies chose to push up the quotations to get the next slice of the net, which eventually made the IPO premium higher and higher.

The breakup in January led to a runaway of the first tier market purchase funds, and the issuance of PE gradually declined.

From the perspective of small and medium-sized boards, the issue of PE in February 2010 dropped from 63 times to 45 times in January, which made the opening of the first day premium space again. At this time, the market's downtrend continued to rise and the new funds returned to the primary market, thus making the issue of PE again increased to 56 times in April.

When the market came back in mid April, the breakup began to increase after the IPO, which eventually led to a break in the first day.

Dong Dengxin, director of the financial and Securities Research Institute of Wuhan University of Science and Technology, is similar.

In his blog, he said that the market rule of IPO marketization has been very obvious, that is, as long as the "first day break" phenomenon of IPO is temporarily disappearing, the IPO of IPO will rise confidently. Until the "ceiling" level is reached again, it will re appear the spectacular spectacle of "breaking the first day of IPO", thereby driving the IPO of the IPO to go down again. Then, the phenomenon of "breaking the first day of IPO" gradually decreases, and then the IPO rate of IPO gradually stabilizes.

In fact, although the market is not as good as 2009 this year, the price earnings ratio of new shares is showing signs of "adverse market" rising.

WIND data show that the average price earnings ratio of new shares issued in 2009 is 51.78 times, and the average price earnings ratio of new shares issued this year is as high as 60.57 times.

According to the viewpoint of Shenyin and Wanguo, to solve this problem, we must strengthen the accountability mechanism of the inquiry objects. First, we should change the Holland style bids for the American style bidding, and secondly, we should expand the proportion of the new shares under the network.

Textile "three golden flowers" plunged into vortex

Since the resumption of IPO in June last year, 6 textile new shares have chosen small and medium-sized boards as a place to live, and they have raised 5 billion 492 million yuan in total.

Saturday, Luo Lai home textiles and fuanna were listed in 2009, raising the amount of 990 million yuan, 953 million yuan and 780 million yuan respectively.

Lian FA shares, Meng Jie home textiles and Jiaxin silk fabrics are newly issued new shares this year. They raised 1 billion 215 million yuan, 816 million yuan and 737 million yuan respectively.

{page_break}

Although the textile and garment sector has only 3 new listings since the beginning of the year, it has not been able to avoid the market downturn, and the fate of the "Breakage" has fallen on Jiaxin silk.

In May 11th, the stock was officially listed and opened at a price of only 22.5 yuan. After that, it went down low and ended up at 21.58 yuan, 1.19% lower than the issue price.

Data show that Jiaxin silk company is one of the largest silk production and export enterprises in China, mainly engaged in the production and import and export trade of silk garments.

The company is a leading export enterprise in Jiaxing. For 10 consecutive years, the company has been awarded advanced export business by the provincial and municipal people's governments, and has exported about 13000000 garments annually.

According to the Jiaxin silk prospectus, the company's IPO raised funds are mainly used for 4 items: "annual output of 6 million tons of natural fiber knitted fabrics and 900 thousand seamless knitted underwear items", "silk and wide fabrics and special embroidered decorative silk technical pformation project", "high-grade silk woven garment technology pformation project", "annual output of 1 million 100 thousand high-grade silk knitted apparel items" and so on.

For institutional enquiry, the company finally established the issue price of 22 yuan per share, issuing 33 million 500 thousand shares, and the P / E ratio was 47.83 times.

In fact, the broker did not agree on the pricing of the stock.

Both Tian Yuan and Jin Yuan Securities gave 30~35 times earnings per share.

Haitong Securities area Zhi Hang's view is slightly different, he only gives the company 20~25 times price earnings ratio.

He believes that textile and garment companies, especially those lacking in subject matter, will not be able to get premium in the valuation of the two tier market.

"Our Forecast Ltd 2010~2012 diluted earnings per share were 0.55, 0.85 and 1.10 yuan respectively, representing an increase of 14.39%, 54.54% and 29.41% respectively compared with the same period. The growth rate of net profit in 2010 is mainly due to the gradual commissioning of the project.

We chose the new silk technology industry and the women's clothing export gold Feida to compare the valuation. In 2010, the average PE was 50 times, but the two companies' share price rises were accompanied by their respective subjects. The current valuation reflects the premium of the subject matter.

The average PE of the textile industry is also 51 times higher (reflecting the premium of all kinds of subjects).

Therefore, the price of Jiaxin silk two level market may not reach the level of Xinmin technology and Jin Fei Da and the average level of textile industry.

We believe that the valuation of textile enterprises with such a lack of subject matter can be 20~25 times, which means that the reasonable valuation of Jiaxin silk should be 11~13.75 yuan. "

Qu Zhihang mentioned in the pricing report of Jiaxin silk.

As of May 24th, the shares of Jiaxin silk still lingered below the issue price.

The daily newspaper closed at 19.69 yuan, a slight rise of 5.97%.

The fate of jointly issued shares and the dream of home textiles is not much better than that of Jia Xin silk, although it will not be "broken" on the first day of listing, but with the downvaluation of the stock market, the two stocks eventually tasted "bitterness" bitterness, which in May 5th and May 4th once pierced the issue price.

In April 23rd and April 29th respectively, Luen FA shares and Meng Jie home textiles landed in Shenzhen's small and medium sized boards. The issuing prices were 45 yuan / share and 51 yuan / share respectively, and their P / E ratios were 31.47 times and 53.13 times respectively.

At present, these two stocks are struggling under the issue price.

As of May 24th, the closing price of lufa shares was 41.36 yuan, while Meng Jie home textiles was closed at 48.28 yuan, 8.09% and 5.33% lower than the issue price respectively.