Shenzhen Capital Vitality Map: 90% Of Listed Companies Are Private Enterprises, And The Number Of Planned Ipos Is The First, Preferring Gem

Zhou Ying, researcher of 21st Century Capital Research Institute and Chen Li, intern researcher

August 26, 2020 marks the 40th anniversary of the establishment of Shenzhen Special Economic Zone. Backed by the "Pearl River Delta" and backed by the Shenzhen Stock Exchange, Shenzhen is one of the birthplaces of China's capital market. Under the unique geographical advantages and policy environment, Shenzhen has bred the first batch of Listed Companies in China.

This report is the fourth issue of the list of new driving forces behind IPO of the top 100 cities by the 21st Century Capital Research Institute, focusing on "Pengcheng" Shenzhen.

Since the reform and opening up, private economy has injected strong capital vitality into Shenzhen. According to the report on China's urban capital vitality index (2019) compiled and released by Antai School of economics and management of Shanghai Jiaotong University on July 3, Shenzhen ranks first in the comprehensive ranking of capital vitality, with the number of listed companies per capita and the market value of listed companies per capita ranking the first.

Listed companies are the most dynamic microeconomic entities in a city, and their quantity and quality reflect the comprehensive strength of the city to a certain extent. In the past 40 years, Shenzhen has seized the magnificent opportunity of reform and opening up. The number of listed companies has grown from the earliest "old five shares" in Shenzhen in 1990 to 317 by the end of August 2020. The number of A-share listed companies is second only to Beijing's 371 and ranks second to Shanghai in China.

According to wind data, as of August 31, the total market value of 317 A-share listed companies in Shenzhen was 9.74 trillion yuan, second only to Beijing's 13.31 trillion yuan and higher than Shanghai's 7.64 trillion yuan.

As of August 31, excluding the companies that have terminated or entered the IPO stage, the number of IPO queuing companies in a shares has reached 750. Shenzhen and Shanghai ranked first with 70 companies, surpassing 60 in Beijing.

The registration system reform has obviously helped Shenzhen's new capital momentum. The 21st Century Capital Research Institute has noted that among the 70 IPO queuing companies in Shenzhen, 45 are going to be listed on the gem and 20 are planning to be listed on the science and technology innovation board. As many as 65 companies have entered the registration fast lane, only 5 are still in the approval system.

Both listed and queuing companies benefit from a good business environment in terms of capital strength to compete with Beijing and Shanghai. "Private" and "electronic industry" are two key words that cannot be bypassed in Shenzhen capital market.

IT industry leader gem is favored

The information technology industry is a pillar industry in the national economy. According to the data of China's electronic information industry statistical yearbook, the contribution rate of electronic information industry to GDP growth in 2019 is 4.63%. According to the white paper on the development of industrial Internet in Shenzhen, Shenzhen's electronic information industry accounts for about one sixth of the country and one tenth of the world.

Shenzhen is the Silicon Valley of China's electronic industry. With the gathering of information technology and the integration of industrial chain, Shenzhen has a large number of well-known information technology and electronic enterprises, such as Huawei and Foxconn. According to incomplete statistics, Huaqiangbei, known as the "No.1 electronic street in China", has witnessed the birth of 50 billionaires and countless millionaires in history. Their business started in the fields of electronic parts manufacturing, integrated circuits, electronic components and flexible screens.

As of August 31, 28 of the 70 IPO queuing companies in Shenzhen came from the computer, communication and other electronic equipment manufacturing industries, accounting for 40%. Among the 50 IPO enterprises accepted in the first three batches, 7 IPO enterprises, including tefa service, Songsheng Co., Ltd., inno laser, eurotone electronics, Boshuo technology, robust medical and Xinhao optoelectronics, are Shenzhen enterprises, of which 5 are computer communication and electronic equipment industries.

It is worth noting that the Shenzhen listed companies prefer gem. Among the 70 companies, 45 chose gem, 20 chose sci tech innovation board, 4 SME board and 1 main board.

This also means that 65 of the 70 companies to be listed in Shenzhen are located in the registration channel, and only 5 are still listed in the approval channel.

Of the 28 IPO queuing companies in the computer, communications and other electronic equipment manufacturing industries, 19 chose gem.

"The manufacturers of functional devices of electronic products should not only invest a large amount of funds in the early stage to build high-standard production and operation sites and purchase advanced production and testing equipment, but also ensure sufficient working capital to obtain large and long-term orders from high-end customers, which requires higher capital for enterprises." Introduction to Boshuo science and technology.

Antarctic optoelectronics said frankly, "the optoelectronic device industry is not only a technology intensive industry, but also a capital intensive industry. As of December 31, 2019, the asset liability ratio of the company's consolidated caliber is At present, the capital strength is not enough to meet the company's demand for cutting-edge technology research and development, the introduction of advanced production lines and market development, which to a certain extent restricts the rapid development of the company. "

It can be seen that the importance of strong funds for the information technology industry can be seen.

"The soil of Shenzhen's local high-tech enterprises is fertile, and the volume and scale of Shenzhen's advanced manufacturing industry rank first in China. The Shanghai Stock Exchange has implemented a registration system on the science and technology innovation board. After the reform of the registration system on the gem is implemented, more high-tech enterprises will be listed in Shenzhen. " Dong Dengxin, director of the Institute of Finance and securities of Wuhan University of science and technology, said.

On August 24, the opening ceremony of registration system of gem was held in Shenzhen Stock Exchange. Among the 18 listed companies in the first batch, there are three Guangdong enterprises. Among them, gemet and Eurocom are local enterprises in Shenzhen, both of which belong to computer, communication and other electronic equipment manufacturing industries.

"Compared with the listed companies in the same industry, the financing capacity of the company is relatively insufficient, and the company mainly relies on its own funds and bank loans to support its development," Antarctic optoelectronics, which is eager to be listed, said in its prospectus. The future listing will make full use of the capital market to effectively broaden financing channels and continuously improve the capital structure.

90% of listed Shenzhen enterprises and private enterprises

The 40 year history of Shenzhen is a history of private economy.

Jia Xingdong, director of the Shenzhen Municipal Bureau of industrial information technology, said that at present, Shenzhen has 1.97 million private enterprises, with the highest entrepreneurial density in China. Among the local listed companies in Shenzhen, private enterprises account for 90%. Private economy contributes 40% of GDP, 60% of tax, 70% of employment and 90% of patent.

"The private economy has become the most dynamic and competitive backbone in Shenzhen's economic development, and has formed a significant leading situation and business card effect nationwide." He stressed.

In the first half of this year, the spread of new crown pneumonia in the world has caused a great impact on the domestic and foreign economy.

Shenzhen Huaqiang said that the supply side and demand side of the electronic industry in which the company is located have been affected to a certain extent. Although the electronic industry chain as a whole shows a strong anti shock ability, the alternation process of the new and old innovation cycle of the electronic industry is forced to slow down, the recovery cycle of the overall prosperity is lengthened, and the industry is in a state of readiness.

Li Hexing, who impacted the IPO, also said, "if the global new coronavirus pneumonia epidemic continues to spread, which further affects the global industrial chain and supply chain, it may have an adverse impact on the company's future business performance."

On the other hand, since 2019, the uncertainty of Sino US trade friction has increased, and the United States has frequently imposed sanctions on Chinese enterprises. A number of Huawei suppliers are expected to be affected, such as lihexing, Saiyi information and Jamet. Huawei is the largest customer of the three enterprises.

Li Hexing expressed its concern in the prospectus, "in each period of the report period, the proportion of the issuer's sales revenue to Huawei's operating revenue was 69.22%, 61.38%, 75.47% and 47.49% respectively. If foreign governments continue or further take regulatory measures to restrict Huawei's normal business activities, its market share may decline, thus reducing the demand for the company's products, leading to a sharp decline in the company's operating performance. ".

According to the understanding of the 21st Century Capital Research Institute, private enterprises still have the pressure of small capital strength, single financing channel and insufficient introduction of high-end professionals.

Under multiple pressures, Shenzhen has also made a positive response.

Since the outbreak of the epidemic, Shenzhen has issued a series of policies and measures with high gold content represented by "16 preferential policies for enterprises", which provided 20 billion yuan of financial support for 61 listed enterprises and 2.7 billion yuan of short-term liquidity support for 194 small and medium-sized enterprises, which effectively reduced the burden of enterprises and was widely praised by enterprises.

On April 14, Shenzhen took the lead in launching the "financial Ark" project in the whole country to carry out innovative anti epidemic actions for financial support enterprises. At present, eight policy propaganda conferences and bank enterprise docking meetings have been held, serving 25000 small and medium-sized enterprises, with a total loan of more than 150 billion yuan.

According to the data of Shenzhen Local Finance Bureau, as of the end of June, 84 key enterprises in Shenzhen received 4.47 billion yuan of preferential interest rate loans this year. Financial institutions under the jurisdiction handled nearly 4000 re discount businesses for enterprises to resume work and production, totaling 12.57 billion yuan.

Looking back on the past, the development of the capital market is closely related to the changes in the number of Listed Companies in Shenzhen. In 1990, with the formal opening of Shenzhen Stock Exchange, Shenzhen's "old five stocks" came on the market; from 1991 to 2000, the number of Listed Companies in Shenzhen increased to 76; from September 2000, affected by policy adjustment, the Shenzhen Stock Exchange suspended the issuance of new shares, and the number of listed companies in Shenzhen basically did not increase in the following five years; since 2006, the capital market in Shenzhen has resumed, the small and medium-sized board has developed rapidly and the growth enterprise market has opened The number of new A-share listed companies in Shenzhen reaches double-digit every year, with an increase of 40 in 2017 alone. Now, the start of the gem registration system is expected to bring more new capital momentum to Shenzhen.

"The number and quality of Shenzhen A-share listed companies are good, thanks to the environment supporting innovation in Shenzhen. The government encourages and supports innovation, has incubation policies for science and technology-based enterprises, and is in the forefront of the country in terms of talent introduction, household registration and personnel settlement. " Yang Delong, chief economist of Qianhai open source fund, pointed out this.

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