IPO is an initial public offering of shares.
Refers to the initial public offering of joint-stock companies to the public. The IPO pricing process is divided into two parts. Firstly, the theoretical value of listed companies is estimated through a reasonable valuation model. The second is to reflect the relationship between supply and demand in the market by choosing the appropriate distribution method, and finally determine the price.
Initial public offering refers to the first time that an enterprise sells shares to the public. Usually, the shares of listed companies are sold through brokers or market makers according to the terms agreed in the prospectus or registration statement issued to the corresponding stock exchanges. Generally speaking, once the initial public listing is completed, the company can apply for listing on the stock exchange or quotation system.
Another feasible method of listing on the stock exchange or quotation system is to stipulate in the prospectus or registration statement that private companies are allowed to sell their shares to the public. These stocks are considered to be "freely traded", which makes enterprises meet the requirements of listing on the stock exchange or quotation system. Most stock exchanges or quotation systems have rigid regulations on the number of shareholders of listed companies, which stipulate the minimum number of freely traded shares.
As far as valuation models are concerned, different industry attributes, growth and financial characteristics determine that listed companies apply different valuation models. At present, the commonly used valuation methods can be divided into two categories: income discount method and analogy method. The so-called income discount method is to estimate the future operating conditions of listed companies in a reasonable way, choose the appropriate discount rate and discount model, and calculate the value of listed companies. Such as the most commonly used dividend discount model (DDM) and cash flow discount model.
The discount model is not complicated, the key lies in how to determine the company's future cash flow and discount rate, which is also the professional value of underwriters. The so-called analogy method is to select some ratios of similar listed companies to determine the value of listed companies, such as the most commonly used price-earnings ratio (share price/earnings per share) and price-to-book ratio (share price/net assets per share), and then combine the financial indicators of new listed companies, such as earnings per share and net assets per share, and generally adopt predictive indicators.
The application of P/E ratio method has many limitations, such as requiring listed companies to have stable operating performance and no losses, while P/B ratio method does not have these problems, but it also has defects, mainly relying too much on the company's book value rather than the latest market value.
Therefore, this method is more suitable for companies with high current assets, such as banks and insurance companies. During the IPO period of CCB, according to the pricing range of HK$ 65,438 +0.9~2.4 determined in the prospectus, the net assets per share after issuance were about HK$ 65,438 +0.09~ 1. 15, and the P/B ratio was 1.74~2.09 times. In addition to the above indicators, valuation can also be made by market value/sales revenue (P/S), market value/cash flow (P/C) and other indicators.