First Batch of Companies under ChiNext New Registration-Based IPO System Kick off Trading under New Rules

(Source: Shenzhen Stock Exchange)

ChiNext, which has been in operation for more than ten years, has ushered in its biggest reform: piloting the registration-based IPO system, according to Xinhua News.

The first batch of companies under the ChiNext registration system will be listed on Aug. 24, which include Beijing Feng Shang Wenhua, Anhui Landun Photoelectron and others, 18 companies in total, with an average issuing price-to-earning ratio of 39.3 times, an average corporate financing amount of about 1.12 billion yuan, and total financing of 20.06 billion yuan, Xinhua News reported.

In addition to the 18 newly listed stocks, more than 800 stocks currently listed on the ChiNext will also be subject to the new rules of the ChiNext registration system reform.

According to Chinese tech media 36Kr, after the opening of the 18 new stocks, eight stocks rose by 100%.

As of 11:05 am on Aug. 24, one of the newly listed firms, “Anker Innovations” (code 300866), a developer of consumer products for homes and cars, came aggressively with its share price reaching 134.63 yuan, an increase of 103.15%. The highest intraday stock price was 168.88 yuan, and the transaction volume exceeded 1.94 billion RMB, 36Kr reported.

According to 36Kr, the number of shares issued by Anker Innovations IPO totaled 41 million, accounting for 10.09% of the total share capital after the issuance. The issue price per share was 66.32 yuan, the total amount of funds raised summed 2.719 billion yuan, and the net amount reached 2.574 billion yuan.

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Compared with the previous approval system, the registration system has undergone huge changes in the basic systems of stock issuance, listing, information disclosure, trading, and delisting to improve the issuance efficiency.

While the first batch of companies under the Shenzhen Stock Exchange’s ChiNext registration system goes public, the trading rules will also change significantly.

Starting from Aug. 24, there will be no stock price range limit for the five trading days before the listing of new stocks on the ChiNext, and the percentage of the price limit will be increased from 10% to 20% after five trading days, which is in line with the Shanghai Stock Exchange’s Science and Technology Innovation Board (the STAR Market), Xinhua News reported.

According to the media, for stocks and funds that have been listed on the ChiNext, a 20% price limit will be imposed on auction transactions. The new trading system also adds a temporary suspension mechanism. Under the condition of no price limit, if the price rises or falls by 30% and 60% from the opening for the first time, trading will be suspended for 10 minutes each.

After the implementation of the ChiNext registration system, letter marks may appear in some stock names, such as “N”, “C”, “U,” where N represents the first day of stock listing, C represents the next day to the fifth day after stock listing, U Indicates that the company is not yet profitable, Xinhua News reported.

The registration system reform will also add a new delisting indicator of “the market value of less than 500 million yuan for 20 consecutive trading days,” to adjust the trading volume and delisting indicators for the number of shareholders.

It will also change the continuous loss index of net profit to a composite index of “After deducting non-recurring gains and losses, the lower net profit is negative, and the operating income is less than 100 million yuan.” The delisting trigger period is unified to two years, and companies that have neither profitability nor income will be eliminated in time.

Besides, a new delisting indicator of “major deficiencies in information disclosure or standardized operation and not corrected on schedule” will be added to strengthen the company’s awareness of compliance disclosure and standardized operation, according to Xinhua News.