New Third Board Selection Layer Preparation Ecological Research: "Small IPO" Investment Machine Ready To Go?

When the new crown pneumonia has not yet ended, the progress of the new three board selection is speeding up.

According to incomplete statistics of the economic report reporters in twenty-first Century, since the implementation of the new hierarchical management system of the stock transfer system, more than 23 new three Board companies have announced the sprint selection layer and launched the "small IPO" guidance work for the selection layer, of which there are not less than 19 listed company starting counseling since February.

According to reporters' multiple interviews, regulators, brokerages, investment institutions, and "selected layer" companies are pushing hard to select layers and small IPO. On the one hand, regulators have repeatedly issued documents or telephone to inform market participants to push ahead with the progress of reform as soon as possible, while brokerages and issuers are also actively preparing for the transfer layer and small IPO preparations. On the other hand, many investment institutions have also sniffed the investment opportunities brought about by the reform, and have made some advance layout for some "selected layer concept stocks".

In the view of many market participants, along with the lowering of the investment threshold of new three boards and the convergence of IPO audit mechanism and transaction mode to the main board market, the new third board selection layer is likely to evolve towards the direction of "Xiao Ke Chuang board", and whether the entry of new investors and funds will make the new third board selection layer repeat the overvalued value of the 2019 science and technology board after opening the board. Feast, the market is waiting to see.

Intensive entry period

The new three Board companies that announced sprint selection and launched small IPO counselling are growing rapidly.

According to incomplete statistics of Wind data, according to the twenty-first Century economic report, according to the January 2nd economic report, since January 2nd, after the announcement of counselling, the total number of new three Board companies will be transferred to the selection layer and the public offering guidance work has been launched. Of them, not less than 16 are in the period of February 17th to February 21st working week.

It is worth noting that at the moment when the new crown virus pneumonia outbreak causes the rate of resumption of work is not saturated, so many selected layers of enterprises are concentrated into the guidance period, which is related to the various regulatory measures taken by the regulatory authorities to ensure the progress of the new three board market reform.

According to the reporter's exclusive report, as early as February 3rd, the first day after the opening of the A shares, the stock transfer system sent a notice to a number of host brokerages, asking the brokers to comb the countermeasures and the supervision and support matters that are required for the current epidemic to carry out the reform work and business of the new three boards, and at the same time, the dispatched offices of the Beijing Securities Regulatory Commission and other dispatched agencies have also issued a notice to send online relevant guidance and registration materials. 。

"The SFC and the stock transfer have clarified the reform of the capital market, including the new three board reform will not be affected by the epidemic, so the notice was intended to urge and ensure that the progress of the related projects can be smoothly promoted." An investment bank in Southern China said, "if a project is affected by the epidemic, it is also necessary to report on the need for regulatory support. At the same time, if it is affected by the epidemic, it can be submitted online, so in February, so many projects have entered the tutorial period."

Due to entering the selection layer can enjoy continuous auction transactions, investors' threshold decline, and become the expected dividends of public fund investment targets, the selected enterprises of these start-up guidance companies have also been on a large scale in the two tier market.

Statistics show that this year, the 23 companies entering the guidance period increased by an average of 26.08%, much higher than the 14.28% market maker index in the same period.

If 5 stocks were traded on the agreement, the remaining 18 market share all rose, while the average increase of the 18 stocks was as high as 37.95%.

Among them, Mingshi innovation rose the highest, reaching 98.26%. At the same time, Chuang yuan instruments, Suzhou shares, Chang Fu shares, Bate Rui and Kangping Iron Branch 5 companies have increased more than 50% since 2020.

It should be noted that these quasi selected enterprises have already ushered in a substantial increase before entering the guidance period. For example, the innovation of Ming stone has risen to 470% since the fourth quarter of last year. In addition, the cumulative gains of Tongcheng medical company, Bate Rui, Suzhou axle stock, Lanshan science and technology, Chuang yuan instrument and Longtai household stock in 5 months have increased by more than 100% in the past 5 months.

"Xiao Ke Chuang ban" wants to come?

In the view of some investors, whether the appropriateness of the new three board investors is reduced or the dividend of the small IPO system is chosen, it indicates that the new three board selection layer reform is forming a "small science creation board" effect.

"The reform of selected layers is becoming more and more like the last year's science and technology board." Zhang Hua, a listed broker dealer in Beijing, has pointed out that, on the threshold of investors, the selection level is 1 million, which is 500 thousand more than that of the science and technology board, with a large number of investors who have 1 million securities assets. IPO is an exchange trial and a SFC registration. The selected layer is also a stock transfer. The SFC approves that the process is convergent. Many signals indicate that the upcoming selection layer is more and more like a "small board".

However, unlike the science and technology board, the selection layer is creating a huge IPO investment opportunity for the market.

"The traditional quasi IPO is one-way, because the shares before the company is not listed is locked, and the issuer needs to release the quota to the IPO organization, but the new three boards have been transferred to the IPO stage. Especially for some market making enterprises, as long as they can get the threshold of opening the new three boards, they have the opportunity to participate in the IPO investment." The investment bankers said.

"One of the characteristics of the new three board is that if it is a market transaction, the chips can be bought, even if it is announced that the selected layer will not be suspended, unless the company's initial declaration is transferred to the stock market." Chang Feng, a Shanghai investment bank, also pointed out that "this means that the existing three board innovative level enterprises are becoming an open and two-way open IPO project pool."

According to the latest arrangements by the end of 2019, the new three boards' basic level, innovation level and selection level are 3 million, 2 million and 1 million for the 20 consecutive days, respectively. Compared with the previous 5 million yuan financial assets, the industry is expected to have more investors to open accounts.

"Over the past 5 million of financial assets have become a huge barrier for more investors to enter the new three board market. Now the decline in investment threshold, the number of incremental funds and new three boards will increase further." A securities dealer in Southern China said frankly, "at present, 2 million of securities assets can basically buy most of the potential selection targets. We are also introducing some investment opportunities for new third board with some high net worth customers."

However, according to its feedback, the number of new three board accounts has not yet increased too fast.

"If the funds continue to enter the new three board market, the first accounts will definitely get some good tickets at a lower price than the late ones, so the number of people who opened accounts really increased." The above sales department said, "but on the whole, the market's sensitivity to this matter is not high. On the one hand, there is no such kind of heat and" registration system "label of the science and technology board. On the other hand, there are epidemic factors. Many brokers, including us, do not support off-site businesses, so the account opening situation has not increased very rapidly.

In the view of some product designers, compared with the past participation in the proposed IPO investment needs to subscribe for private equity products, the new three boards as a "quasi IPO investment" threshold has also been greatly reduced.

"Private equity investment threshold is less than 1 million, many millions, and some partnership products mainly invest in a target." Beijing's three party wealth commentators said, "now the new three board selection arrangement has further opened the door for such investment, which will attract many private equity agencies to participate. On the other hand, some investors will also bypass private equity products to directly Wade."

It is worth mentioning that although many companies have announced a sharp increase in the sprint selection layer and started the first guidance, there is still a big valuation gap compared with the science and innovation board.

According to the twenty-first Century economic report, according to Wind's statistics on the new three boards listed companies (the lowest and the highest value), it is found that the latest average rolling price earnings ratio of these companies is only 9.69 times.

The above 23 companies that have entered the guidance period have higher price earnings ratios. The statistics show that the average price earnings ratio of the 23 companies has reached 32.33 times, but this is still a little bit more than the average price earnings ratio up to 130.01 times as high as February 24th.

"From the perspective of institutional innovation and the gradual increase of heat, the average price earnings ratio of selected layers still has much room for improvement." "On the one hand, the selected layer itself has the expectation that the transfer board will be listed, and it will become a new IPO investment venue. On the other hand, more than 1 million of the investors and public offering funds may also come in, so as to lift the valuation center of the selected layer."

Hunting method

Although the "selected layer" enterprises have investment value, there are still many problems lingering around the top of the current investors. For example, for the larger investment institutions, the liquidity of the new three board market is still low.

"Although the liquidity of the new three board market has improved under the dividend policy, there is still difficulty in dealing with relatively large volume of funds, because the marginal pricing power is very strong, and hundreds of thousands of votes have been lifted up the stock price, so it is not easy to buy chips at low prices." Wang Yan, a private-equity investor in Beijing, who focuses on the selection of investment opportunities, said frankly, "there is still no way to predict the liquidity of the selected layer."

The response of some agencies is to try to find potential landing targets to diversify investment so as to carry a larger amount of capital and volume, while some companies that have not yet explicitly transferred the level of information release have relatively lower valuations, which is also attractive to many investment institutions.

"If the company announces the selection layer, the stock price will further rise at this time. If we can dig ahead some Quality Inc with high potential to select the level and meet the requirements of the selection layer, we can obviously get a more substantial return on investment than the direct investment has announced to enter the selection layer." Wang Yan frankly said, "if the new three board quality enterprises, there is hope to sprint the selected layer and IPO."

According to the reporter, at present, when investing in mining potential selection targets, investment institutions are still concerned with the fundamentals and growth quality of enterprises.

"The key is to mine good quality and potential growth companies, which is a prerequisite, because both the stock transfer system and the future investors will definitely choose a good company for IPO or investment." A private person in Shanghai also stressed. "If we take a step back, even if we fail to catch up with the selection layer, we will eventually be able to cash in through other ways. On the contrary, if the quality of the company is general, even if the announcement is to be selected, I will not consider it."

While grasping the fundamentals, observing the listed company's research and accounting policy adjustment and other signal changes has also become a way to invest in some institutions.

In December 30, 2019, the new third board company, the main information security hardware and software company, announced that the company's accounting valuation method was about to change, that is, the proportion of the bad debt collection standard of accounts receivable was adjusted. Meanwhile, the data also showed that the net profit after 2018 was 34 million yuan, and ROE reached 11.30%. San Bo Run will also meet the selection requirements.

"If we do not follow the adjustment of accounting standards by the Ministry of finance, changing accounting policies often excludes the preparation for some capital, and at the same time, if the company meets the requirements of the selection layer at large probability, it is easy to be chased by funds." The above-mentioned private sector analysts said.

After the release of the above news, Saint Bo Ran also met with capital chasing - in the 2 trading days from January 3, 2020 to January 6th, San Bo Run rose 33.08%.

In addition, whether the company is supervised by the Department is also regarded as an object of hunting. "If the company's fundamentals are good, and it will be investigated by relevant departments such as stock transfer, it may also become a potential selection target." Wang Yan said.

Obstacles to advancement

In view of the new layering reform of new three boards, buyers and sellers have all been ready to fight, but according to the twenty-first Century economic report reporter's investigation, there are still many problems that have troubled the reform of the new three board market.

For example, some investment bankers pointed out that the absorption, storage and development of related projects are still limited by the quality problems of many new three Board companies.

"This business is an opportunity for investment banks. Last year, the company has been digging potential projects." Li Di, a listed broker in East China, said, "the quality of these projects that are now prepared can be said to be good, but the following possible projects are becoming more and more difficult to find, and some projects may have holes."

"I approached a listed company last year, from the financial point of view is still very healthy, the company is also OK in all aspects, but there are some historical compliance problems. This situation may be difficult to pass under the tighter selection review, so the last item is shelved." The above investment bankers said, "therefore, if there is sufficient project reserves, the sustainable development of this hierarchical reform and small IPO mode may become a challenge."

At the same time, whether there will be enough institutional capital to participate in the placement of new shares will also become a challenge for both underwriters and issuers.

In fact, it is difficult for underwriters to find private placement institutions to be the potential placement objects of the selected new shares.

"Private institutions have their own pricing and investment research capabilities. If quality enterprises can invest in the innovation stage, they do not have to wait until the IPO is selected." Chang Feng pointed out.

Another potential hope is the public offering fund. According to the reporter, some public offering agencies are currently focusing on the product design and preparation around the new third board selection layer. However, it is still necessary to draw a question mark about whether the products and the funds behind can be completed before the selective layer reform officially falls.

"The current regulatory direction is that the selected enterprises need to fulfill the same requirements as the Shanghai and Shenzhen markets, which is precisely to meet the public access." A product of a large public offering agency in Beijing admits, "however, the innovative research, market research, product declaration and issue and collection of public offerings will also take a process. Whether there is a public offering can form a strong market support before the selection layer comes out, there is still uncertainty."

However, some investment bankers pointed out that there is no lack of potential target in underwriting.

"The underwriting department has some existing customers. After all, the selection layer is the focus of the reform now, and the broker should also make reimbursement. Even if there is no public offering, the inquiry pricing and placement can still be found by the buyer." Zhang Hua said, "there will be more" Shanghai deepening "in public offering pricing, but no public offering will come in time, and it should not be a problem.

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