Guidelines For Dismantling The Gem Industry Trust: How To "Break" In The Era Of Registration System

In the past 30 years, there have been more than 4000 A-share listed companies in the capital market, covering 90 industry categories of the national economy. The proportion of Listed Companies in strategic emerging industries has increased from 33.13% in 2016 to 42.63% at present. New technologies, new industries, new formats and new models emerge in endlessly. How can investors see it clearly and clearly?

For a long time, listed companies basically apply a set of information disclosure system. Investors mainly understand a company through the universal information disclosed by listed companies. Due to the different industries and positions of listed companies, investors will inevitably "see flowers in the fog" and "look at the moon in the water" in the face of complicated business models and unfathomable professional terms. They can only judge their investment value through financial statements and notes.

For example, some mobile Internet companies, with brands and traffic, have lost money year after year, but this does not affect them to become giants. Another example is that some biopharmaceutical companies have independent research and development, internationally leading core technologies, and may not have revenue, but the market is still full of expectations.

As a powerful supplement to universal information disclosure, overseas market has always had corresponding information disclosure requirements for special industries with significant impact. The United States, Hong Kong and other mature markets have made special provisions on information disclosure of Listed Companies in specific industries.

With the increasing number of listed companies and the continuous development of business, the demand for information disclosure is increasingly strong. Visual China

With the increasing number of listed companies and the continuous development of business in A-share market, investors' demand for targeted and differentiated industry information disclosure is increasingly strong. For example, the R & D capability and new drug registration progress of pharmaceutical and biological products industry companies are very important to judge whether the company can form core competitiveness in the future. Investors have objective needs for information such as the company's drugs entering clinical trials, making phased progress in clinical trials, receiving new drug certificates, and obtaining pharmaceutical production license approval documents.

Since 2013, Shenzhen Stock Exchange has taken the lead in carrying out the beneficial attempt of industry information disclosure on the gem based on the experience of industry supervision and in combination with the needs of investors, guiding and urging the GEM listed companies to disclose more targeted and industry specific information, so that investors can understand, see through and see clearly.

In 2010, a vaccine enterprise on GEM said in its prospectus that "recombinant HPV vaccine" was in preclinical research and development. Over the past decade, investors have been paying close attention to the progress of bivalent HPV vaccine and 9valent HPV vaccine. The company also disclosed the progress at several important nodes of vaccine R & D registration. Based on the information disclosed by the company, investors are very optimistic about the process of vaccine listing and the company's future performance, and the company's share price is rising. However, when the above vaccine research and development saw the dawn and was about to go public, the company planned to sell the equity of the subsidiary responsible for the relevant business and give up the control right. Based on the understanding of the progress of the vaccine, many investors questioned why the high-quality assets were "sold at a low price" at this time. The reason why investors can continuously obtain the company's vaccine R & D and registration information is precisely because of the industry information disclosure guidelines of Shenzhen Stock Exchange.

A few days ago, Shenzhen Stock Exchange issued two guidelines on information disclosure of gem, including communication and network security. So far, the number of information disclosure guidelines for emerging industries on GEM has reached 15.

So, what aspects should industry information disclosure start from and what important industry information should the company disclose? We might as well take the recently released guidelines on information disclosure in the communications industry as an example.

As an important support for the implementation of 5g and other new infrastructure construction and accelerating the development of modern industrial system, the communication industry is closely related to macroeconomic policies, communication technology development, operators' capital expenditure and other factors. It has the characteristics of strong periodicity, fast technology update and iteration, and high proportion of overseas business.

For the communication industry companies, in order to have insight into the basic aspects of the industry companies and judge the development direction of the companies, investors first focus on the R & D innovation ability of listed companies. The guidelines guide the company to disclose the key technologies or performance indicators applicable to relevant products or businesses in combination with business characteristics, and disclose R & D innovation capability in combination with R & D investment orientation and patent changes. Listed companies in the same industry disclose the above-mentioned important information according to the unified "game rules". Whether the company has "real talent" or not, whether the company has constructed enough technical barriers, and the future development momentum, investors have their own grasp.

Secondly, the industry status and core competitiveness of the company. Some companies are engaged in the manufacturing of transmission equipment, switching equipment, access equipment and other communication system equipment and parts, while others focus on network design, network optimization, network operation and maintenance, communication engineering construction and other supporting services. Investors have a better idea of the position of the industrial chain, market position, major technological innovation changes, development of subdivided industries, advantages and challenges faced by the company.

The third is full risk disclosure. The communication industry has a rapid technology update and iteration speed. Promoting 5g network construction, application promotion, technology development and security assurance is an important direction of 4G to 5g transformation. The transformation and development is bound to be accompanied by uncertainties and risks, including the risks that the emergence of new products or technology routes in the market may have a significant adverse impact on the company's core competitiveness, the risk of changes in core technical personnel, the risk of patent infringement litigation, etc. It is a complete and accurate information disclosure to discuss both the prospect and the risk.

Finally, we should standardize the behavior of "rubbing hot spots" and "speculation on concepts". Under the concept of information disclosure as the core, the information that has a significant impact on the stock price and investment decision of listed companies belongs to the category of information disclosure. In order to better show their competitiveness, many listed companies have the willingness to disclose voluntarily. However, some voluntary information disclosure is slowly "out of shape", for example, 5g theme has been hot in 2020, some companies have never involved in the field of communication, or spent millions to set up subsidiaries engaged in chip research and development, and the share price has continued to rise, but in fact, the business qualification has not been obtained, and it is impossible to start business. In view of these situations, the guidelines further clarify that the company should fully disclose the specific conditions of obtaining qualification certification and passing the certification of important customers and the impact on the company.

Investment is not only about "now", but also about "future" and "expectation". The so-called "wine is also afraid of deep alley", industry information as an important basis for investors to judge the value and future of listed companies, appropriate information disclosure, for the real core competitiveness of listed companies, can undoubtedly help them stand out. For the capital market, the development and changes of the industry promote the survival of the fittest of listed companies, promote the flow of capital and science and technology to the real competitive real economy, and promote the high-level cycle of science and technology, capital and real economy.

Of course, from the buyer's point of view, it is natural to hope that the more detailed the industry information disclosed by listed companies, the better, but information disclosure must also take into account efficiency and cost. In the process of formulating industry guidelines, the exchange listened to the voices of all parties and fully balanced the actual situation of both sides of information supply and demand. The introduction of the guidelines is not to blindly increase the company's information disclosure costs, but in line with the concept of "combination of release and management", it is determined to "manage" concept speculation and risk matters, and "release" the clauses with high implementation cost and low usefulness for decision-making. For example, in the process of soliciting opinions on the information disclosure guidelines of the communication industry, it focused on the development characteristics of the industry and the information demand of investors' decision-making, and reduced the detailed index disclosure requirements such as welding loss and bit error rate, which significantly increased the burden of the company. In fact, in the early stage, when Shenzhen Stock Exchange systematically revised the published industry information disclosure guidelines, it has deleted the clauses that may involve the company's trade secrets, the disclosure effect is not good, and the disclosure is not necessary.

"Opinions of the State Council on further improving the quality of listed companies" clearly puts forward that it is necessary to "take the demand of investors as the guidance, improve the standards of information disclosure by industry, and optimize the content of disclosure". In August 2020, the growth enterprise market reform and pilot registration system was smoothly implemented, which focused on supporting the listing and financing of new economy enterprises in line with the positioning of "three innovations and four innovations". The new economy enterprises are quite different from the traditional industries in terms of industry characteristics, business models, value and risk, and have higher requirements for the disclosure of industry-specific information. Industry information disclosure guidelines subdivide the industry characteristics and clarify the classification disclosure requirements, which helps to enhance the readability and comprehensibility of information disclosure. It can be said that the concept of "information disclosure as the core" is consistent from IPO to continuous supervision. At present, the gem information disclosure guidelines have covered 15 emerging industries, including medicine, energy conservation and environmental protection, industrial robots, integrated circuits, lithium batteries, etc., involving more than half of the GEM listed companies.

Only by cutting through the hard stone can we know that jade is gold. On the road of registration system reform, continuously improving the effectiveness and pertinence of information disclosure is the inevitable need of deepening the reform of capital market system, and also the practical requirement of giving full play to the decisive role of the market.

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