Beijing-Shanghai High-Speed Railway IPO "Flash" To Advance The Fastest Is Expected To Be Audited Next Week.

IPO, the postal savings bank, is likely to be broken.

In November 6th, another big Mac project, which is in the queue of IPO, completed the pre disclosure update. This is only the last two weeks since its formal announcement of A share listing. And this speed has also set a record of the completion of the IPO project in the past ten years.

In the view of the industry, after the completion of the updated pre disclosure of Beijing-Shanghai high-speed railway, the first trial committee and the trial committee will follow. According to the faster speed of the audit project, the Beijing-Shanghai high-speed railway project is expected to be approved before the end of next week.

According to an investment bank official close to the regulatory level, the preliminary argument communication of Beijing-Shanghai high-speed railway has been relatively complete, and its approximate rate will accelerate the completion of the IPO process in a shorter time. Therefore, it may also become the fastest completion and even the next batch of approvals under the IPO approval system.

It is worth mentioning that, in addition to the expected faster issuance speed, the Beijing-Shanghai high-speed railway project has also created a rare number of IPO projects in the capital market. On the one hand, its issuance scale is 15% of the total size of its capital stock, breaking through the ceiling of not more than 10% of the current projects. On the other hand, the item company itself is still at a loss, and there is almost no precedent in the IPO investment projects.

Commission asked: is it Asset Management Co?

Although the industry has long anticipated that the Beijing-Shanghai high-speed railway IPO project will be rushed through the trial quickly, the record process is still far more than the market expected.

"It was thought that the Beijing-Shanghai high-speed railway project would be listed in the first quarter of the year, but at the current rate, it is expected to complete the listing in December of this year." An investment bank in Beijing sighed with emotion.

According to an estimate close to the regulators, the Beijing-Shanghai high-speed railway that completes the pre disclosure is expected to reach the summit next week.

"Pre disclosure is used to respond to feedback. In accordance with the procedures, Beijing-Shanghai high-speed railway will go to the preliminary hearing next week and arrange the trial meeting in a week." The investment bankers close to the regulators said, "if everything goes smoothly and quickest, Beijing-Shanghai high-speed railway is expected to go through the preliminary review process this week, and it will be able to pass next week."

Prior to that, the fastest record of IPO audits was maintained by Foxconn listed last year.

Last February, with the support of the unicorn green channel policy, Foxconn broke through all kinds of potential hurdles to complete the IPO audit process. It took 36 days and 20 working days to report materials.

"At present, both internal and external supervision pay much attention to the issue of this project." The investment bankers close to the regulatory authorities said, "and this is also the first high-speed rail listing project in China, which has a strong symbolic significance."

Although there may be a faster pace of audit, the SFC has raised many questions to Beijing-Shanghai high-speed railway in the feedback link.

Journalist statistics found that there were as many as 54 questions in the four aspects of normalization, information disclosure, financial accounting information and other aspects, and the main problems were focused on normalization and information disclosure.

For example, because the total assets of Beijing-Shanghai high-speed railway are as high as 187 billion 80 million yuan, the nature of the company's high-speed rail passenger transport is also questioned by the SFC if it is a Asset Management Co. In view of the asset restructuring in 2013 -2014, the SFC requested that it disclose details of the relevant procedures.

Among the above feedback, the most controversial market is the SFC's doubts about the nature of Beijing-Shanghai high-speed railway.

According to the prospectus issued earlier in Beijing-Shanghai high-speed railway, as of September 30, 2019, the number of employees with an asset size of up to 187 billion was only 67, of which 25 were seconded. Thus, the SFC said in its feedback letter that the per capita management assets of Beijing-Shanghai high-speed railway amounted to 2 billion 792 million 233 thousand and 700 yuan, requiring that it "carry out specific situations and staff work division of labor in combination with the company's business, indicating whether the issuer is a Asset Management Co rather than a high-speed rail passenger transport company". Besides, it also asked the Beijing-Shanghai high-speed railway to explain "the core competitiveness of the issuer, whether the company has a complete business system, and whether it meets the requirements of the first round approach with a complete capability of facing the market independently."

In the latest updated prospectus, Beijing-Shanghai high-speed railway explained on the above question: "the per capita management assets of our company are relatively large in scale, which is compatible with the mode of entrusted transportation management. However, the company still undertakes professional work such as quality assessment, information feedback and quality improvement in the transportation process."

In addition, because Beijing-Shanghai high-speed railway is only part of the operation assets of the railway, its possible competition proof is also mentioned by the SFC, which requires that there is competition between the ordinary railway and the relevant railway bureaus.

Rare practices

In the industry view, Beijing-Shanghai high-speed railway in the history of IPO has seen a number of rare moves.

On the one hand, Jing Fu Railway Passenger Dedicated Line Anhui limited liability company (hereinafter referred to as Beijing Fook Anhui) still has a deficit situation in 2018 and September this year, and this is also considered as a problem in its declaration feedback letter by the SFC.

"IPO's investment projects rarely reported losses, which is relatively rare." Beijing a listed company secretaries admitted.

However, Beijing-Shanghai high-speed railway also pointed out that the main reason for the loss of Jingfu Anhui is that the company is in the "market incubation period". "With the gradual maturity of the market and the coordinated development of the Beijing Shanghai corridor network effect, it is expected that profitability will improve in the future." Beijing-Shanghai high-speed railway pointed out.

On the other hand, the issue of shares issued by Beijing-Shanghai high-speed railway accounts for 15% of the total share capital issued after the issue, which has also attracted a lot of attention from the market.

According to the prospectus, Beijing-Shanghai high-speed railway plans to issue 7 billion 557 million shares, with a total share capital of 50 billion 377 million shares after issue, and the issue share accounts for 15% of the total share capital issued after the issuance. This initial proportion is unusual. In most IPO projects, the issuance ratio will normally be limited to 10%.

"Usually considering the two tier market and other factors, the proportion of the issue scale will be controlled. IPO enterprises usually have ceilings in the proportion of issuance, because the proportion of public offerings required by the securities law needs to reach more than 10%. Many IPO projects, especially large projects, have been opened on this line these years." An investment bank in Shanghai said, "if it is a A+H project, then there may be a merger calculation, that is, A shares IPO less than 10%, such as the proportion of postal savings banks before is no more than 6%."

In view of this, 15% of the proportion of this issue, coupled with the larger volume of Beijing-Shanghai high-speed railway, will result in a larger scale of fund-raising.

"15% this kind of project is very rare in the A share market, and the project is big, and it can be expected that it will form a super fund-raising scale." The investment bankers said frankly.

If the Beijing-Shanghai high-speed railway's net profit in 2018 was 10 billion 248 million yuan to the parent company and calculated at 50 billion 377 million yuan, its earnings per share after the issue were about 0.203 yuan.

According to the earnings per share level, the 22.98 times earnings price limit of the motherboard IPO and the issuing scale of 7 billion 557 million shares, the price of Beijing-Shanghai high-speed railway is about 4.66 yuan, and the maximum size of the collection is expected to exceed 35 billion yuan.

It is worth noting that the scale of this fund-raising will be third only to China's construction and PetroChina in the history of A shares, and become the largest IPO project in more than 10 years.

It is worth mentioning that this potential big Mac project has also raised concerns in the market.

"Compared with the postal savings banks that are already in the process of issuing, the scale of Beijing-Shanghai high-speed railway is even bigger, and the scale of other IPO projects will probably reach 100 billion scale in a short period of time," he said. A private agency in Shanghai said, "this may bring a siphon effect to the two tier market."