Since 2010, 20% of new shares have been rejected. Statistics show that powerful sponsoring institutions serve as the leaders in sponsoring, but the number of sponsors is not directly proportional to the approval rate of new shares. For example, only 3 of the 14 companies sponsored by Huatai Securities during the period passed. Despite this, compared with the IPO approval rate after the restart in 2009, this year is already very loose. Previously, it was not uncommon for companies to fail to issue an issuance or to halt the issuance in an emergency. To date, there are still more than a dozen companies that have been unable to go public normally for more than a year after the meeting, and their road to listing is estimated to be hopeless. It can be said that each company has its own misfortunes when it comes to "unqualified daughters-in-law" being turned away. The reasons for rejection involve issues such as growth potential, subject qualifications, financial fraud, related transactions, and environmental protection. However, a company's IPO is usually rejected. It's all caused by many reasons.
Companies that failed to pass the meeting came from all walks of life. The companies that were rejected include YTO, Chengda Pharmaceutical, Shenzhou Computer, Baose Co., Ltd., Xintai Electric, Golden Crown Automobile, Huaheng Welding, Thirteen companies including Lianming Machinery, Hengyuanfa, Creative Information, Deloitte Group, Penngling Hose, and CNTIC Pile Industry were canceled from review, including Eton Electronics and Rapoo Technology.
Haitong Securities sponsored Shenzhou Computer, which was planned to be issued on the GEM, but was rejected at the meeting on March 22. The reason is due to the lack of growth. Shenzhou Computer is famous for its low-price sales in the PC market, but in the eyes of industry insiders, this is the fatal flaw that led to its rejection of the first release. Industry insiders pointed out that in the already low-profit PC market, whether Shenzhou Computer's low-price sales strategy can continue to make profits is highly questionable. Data show that in 2010, the gross profit margin level of Shenzhou Computer's overall products was only 6.31, which is contrary to the high growth requirements of the GEM.
Some companies have been questioned because their performance growth is too high and goes against common sense. Deloitte Group, sponsored by China International Finance Securities Co., Ltd., was cited as one such example. The main business of Deloitte Group is domestic coastal and inland river dry bulk transportation business. Deloitte Group's "Prospectus" shows that from 2008 to 2010, Deloitte Group's main business income was 450 million yuan, 941 million yuan, and 1.289 billion yuan respectively, with a compound annual growth rate of 73. Net profits were 107 million yuan, 179 million yuan, and 238 million yuan, and the net sales profit margins were 23.82, 19.02, and 18.48 respectively. Among listed companies in the same industry, most of them have experienced significant declines in shipping revenue and profits due to the impact of the financial crisis. Deloitte Group's profitability has grown steadily from 2008 to the end of 2009, even far exceeding that of large and powerful companies in the same industry. Its bizarrely high performance growth is obviously contrary to common sense, which may be the reason why the company's IPO was rejected.
In addition to the above reasons, the IPOs of companies such as Kunshan Huaheng, Baose and Lianming Machinery were otherwise due to reliance on related transactions and sales. As for Golden Crown Motors, it is due to the lack of subject qualifications.
Let’s take a look at the two companies whose IPO reviews were canceled this year, Rapoo Technology and Eton Electronics. It is reported that Eton Electronics, which was sponsored by China Merchants Securities, was canceled from the initial launch review in February this year, allegedly due to tax and environmental issues. According to regulations, issuers that have been subject to administrative penalties from industry and commerce, taxation, customs, environmental protection, etc. in the past three years and the circumstances are serious will not be allowed to go public. Data show that from 2006 to 2008, Eton Electronics was fined 10 million yuan by Gongbei Customs due to sales violations, tax evasion and other reasons. In addition, the company mainly produces and sells PCB boards using the industry's common "etching" process, which is extremely polluting to the environment. The above two reasons may become obstacles to the company's listing.
New stocks that successfully pass the IPO meeting are often questioned
Even though the IPO process is getting faster and faster, passing the IPO meeting stage does not mean that the new stock can be successfully listed and can get through by muddle-heading. Even after the meeting, companies still find it difficult to escape many doubts in the industry. There are countless examples of companies that have failed to launch or have been blocked before going public. Listed companies are riddled with problems, which not only exposes the motives of companies to use the capital market to make money maliciously, but also exposes many loopholes in the IPO review process.
The phenomenon of new stocks being shelved after the meeting is not an isolated case. Not to mention the new stocks that have passed the IPO this year, there are many companies that have passed the IPO last year or even three years ago and have still not been able to issue shares. These companies that have not issued the IPO may have no hope of going public. From April 2008 to the end of 2010, 16 companies successfully passed the meeting. However, these 16 companies have not yet been able to go public due to various reasons. Zunyi Titanium Industry, sponsored by Founder Securities, and Shengtong Printing, sponsored by China Merchants Securities, had successfully passed the meeting as early as April 29, 2008 and July 25, 2008. However, nearly three years later, these two companies The listing process has been repeatedly blocked. After the IPO was restarted in 2009, Hengbo Commercial became the only company to successfully pass the IPO that year. However, there has been no progress in the listing process since November of that year. Companies like Hengbo Commercial, Wenfeng World, Northern Glass, etc. have been silent for more than a year after the meeting.
The reason why new stocks have been silent after the meeting is simply that they cannot meet the listing standards. After the meeting, Zunyi Titanium Industry was dragged down by the economic environment, and the company's performance dropped significantly and suffered losses. As a result, the listing process was repeatedly delayed. These companies were really helpless. However, most companies are found to have various problems after the meeting and cannot be listed normally. Wenfeng World, sponsored by Essence Securities, successfully passed the meeting in January 2010, but was later found to have unidentified assets; Garden Biotech, which passed the meeting in August 2010, had not been sorted out due to trade union shareholdings.
The typical cases of new shares being blocked from listing are Suzhou Hengjiu and Shengjing Shanhe not long ago. Last year, due to patent fraud, Suzhou Hengjiu was suspended from its IPO after the issuance amid a lot of media doubts; while Shengjing Shanhe was urgently suspended half an hour before its listing due to suspected sales data fraud, and its second meeting a few days ago was also suspended. no.
For various problems that were exposed after the IPO meeting, the sponsors cannot escape the blame. The heads of relevant sponsor agencies of the above two companies were also punished by the China Securities Regulatory Commission. The incident of termination of listing due to fraud highlighted the loopholes in the new stock issuance system, allowing malicious money-making activities to take advantage of. At the same time, the sponsor's sponsorship capabilities and ethical issues were also questioned.