GEM Stocks Broke Through &Nbsp, And Venture Capital Still Has Ten Times Earnings.

Who is swimming naked after the tide? The myth of PE's high returns is fading.

　　 Gem It was once a dream land for millions of people. But after more than a year of rational regression, from stock prices to corporate profits, many GEM companies have seen a substantial decline, and the gem has even become the "worst hit area" in the recent break.

According to the Shenzhen stock exchange data, as of yesterday, the gem price earnings ratio was only 42.55, and is still showing a downward trend. Most of the GEM companies have venture capital figures. With the breakup of GEM companies, some VC companies are talking with reporters about the "great impact". Although the wealth has shrunk, there are still more than ten times earnings.

Wang Yijun, President of China Venture Capital Limited affiliated to the Central People's construction center, told reporters that the impact on venture capital mainly depends on the investment company itself. If the company has growth, it can continue to wait and see.

Venture capital Profit Shrinking

The data of Qing Dynasty show that among the 184 GEM companies that have been counted, there are more than more than 140 venture capitalists, with a total investment of 4 billion yuan. A senior executive of a GEM listed company said that the introduction of VC is mainly concerned with helping companies improve their governance structure.

A senior executive of a GEM listed company told reporters: "most venture capital companies do not participate in the operation of the listed companies, but because they share the experience of listed companies, so for the listing process, many opinions and resources do have a supporting role."

The company and venture capital are obviously a win-win process. From 2009 to 2010, the market price ratio of gem two was 120 times higher than that of the US, and the average price earnings ratio of the US NASDAQ is only 20 times. The risk brought by the overvaluation is triggered this year.

On the one hand is the high valuation, on the one hand is frequent breakage, after entering the 2011, driven by the new stock market boom, up to now, more than 70% of the gem has broken down. The market value of the whole gem has evaporated tens of billions of yuan.

At the same time as the bubble burst, the VC/PE is also facing a sharp decline in wealth, even facing "cold winter".

One insider told reporters that after the listing of enterprises, PE/VC will generally undergo a period of one year's lock up period, and if the two level market changes, then it will be more difficult to quit.

"For us, it is also profitable, although it can not be compared with tens of times earnings before, but at that time only a few dollars in cost when participating in the company, now we still have more than ten times the income," the people said.

"More meat than a monk"

Venture capitalists compete Intensifying

Venture capital investing in the growth enterprise market is a very simple investment mode - low purchase and high sales. By buying shares of a company at a certain price to earnings ratio before the listing of the company, and then waiting for the listing of the enterprise, the stock will be withdrawn from the open capital market to make profits.

This also means that the Pre-IPO project can have fast profitability. The core is that the difference between the one or two tier markets is large, that is, the current capital market provides a systematic capital dividend, so long as the investment company can be successfully listed, the investment premium can be realized.

Wang Yijun told reporters that there are a lot of projects between venture capital and venture capital. "Enterprises raise prices and peer pressure keeps prices rising gradually."

It is understood that almost every week there are new equity investment institutions born, and in the public funded Wenzhou, equity investment is publicly encouraged by the government. "Monk less meat and less" has become another main reason for VC/PE's increasingly compressing profits.

Wang Yijun told reporters, "for us, the price is now ten times higher than the price earnings ratio, unless the company's earnings expectations are very high."

Industry analysts believe that in general, the cost of venture capital entry is between 10 and 20 times. If the current capital market's 40 times earnings ratio is calculated, deducting the time cost of a year's lock up period, the profit of PE can reach at least two times.

Escape VS wait and see

However, some researchers have put forward different views that the gem is expanding rapidly, and there is no scarcity of gem stock. For example, large organizations can only cover hundreds of stocks, and some stocks are unconcerned.

With the expiration of the lifting of the restricted shares of listed companies, venture capital institutions began to earn profits. According to the 2010 annual report, as of April 2nd, a total of 16 GEM companies were reduced by 14 venture capital institutions, with a total reduction of 43 million 472 thousand and 600 shares, with a reduction of 1 billion yuan.

Yesterday, another venture capital "fled", the same creation of Weiye Venture Capital Co., Ltd. from April 27th to May 31st during the reduction of technology [14.70 0.82% shares]116.31 million shares, the number of shares reduced by 1.06% of the total share capital of the company. The average stock price reduction is 23.72 yuan / share, which is 27 million 588 thousand yuan in cash.

Regarding whether to choose to run away at this time, Wang Yijun thinks that "specific analysis of specific problems", some GEM companies have problems in listing, or fraud or lack of long-term profits. For this company, it is not too late to quit. "But some companies' profitability is very good, even if they are facing the pressure of the two tier market, but long-term holding, there may be further value-added in the future."