Refinancing is an important way for listed companies to engage in direct financing in capital market. It is also an important approach to promote the high-quality development of listed companies. With the sudden outbreak of COVID-19 and complicated and severe changes in 2020, companies listed on SZSE made active use of refinancing instruments and raised CNY 391.383 billion through 260 refinancings, vigorously boosting technical innovation, improving risk prevention & control and development sustainability, and advancing high-quality circulation of technology, capital and real economy.
Financing expanded significantly, further unleashing market vitality. In 2020, the reform of the ChiNext Board and the pilot project of the registration-based IPO system were smoothly implemented. Favorable policies such as better issuance conditions, improved pricing mechanism and higher review efficiency further stimulated the vitality of SZSE's refinancing market. Statistics showed that SZSE completed 260 refinancings (up 150% year on year) via private placement of stocks and convertible bonds, and rights issue throughout 2020, getting CNY 391.383 billion (up 240% year on year) of funds. In particular, CNY 235.838 billion (up 510% year on year) was raised through 129 private share offerings (up 210% year on year), which has become first refinancing option on SZSE. CNY 130.602 billion (up 80% year on year) was raised through 117 private placements of convertible bonds (up 110% year on year), hitting record highs. In 2020, SZSE-listed companies also completed 11 allotments, one public additional offerings and two preferred share offerings, obtaining CNY 24.943 billion. The diverse instruments have added to corporate financing channels.
Institutional inclusiveness was greatly enhanced, strengthening the market sense of gain. The reform of the ChiNext Board and the pilot project of the registration-based IPO system, and refinancing system reform effectively improved market financing environment and satisfied the financing demand of listed companies. In 2020, SZSE-listed companies disclosed 665 refinancing plans seeking a funding of CNY 867.302 billion. Both figures increased by 150% and 140% year on year, respectively. Seizing the opportunity brought by the cancellation of issuance conditions that “the asset-liability ratio at the end of the last period shall not be lower than 45%”, 55 ChiNext Board-listed companies issued convertible bonds to raise CNY 48.117 billion. Thanks to the cancellation of the issuance condition of “profitable in last two years”, 91 private placements of stocks were made to solicit the funds of CNY 92.29 billion. In addition, the base issue prices in most private financing plans were lowered to 80% of reference market price, leaving bigger space for pricing.
The reform of the ChiNext Board and the pilot project of the registration-based IPO system were steadily carried out, further raising financing efficiency. In the reform of the ChiNext Board, it was the first time to simultaneously address both the new and existing stock markets. The registration-based IPO system was also applied in refinancing review, thereby making market resource allocation more efficient. First, the registration in review was conducted steadily and orderly. By the end of 2020, SZSE accepted 267 refinancing applications from the ChiNext Board-listed companies. 160 registration applications were submitted cumulatively, of which 131 were approved. Second, review time was greatly reduced. In 2020, average time taken by SZSE in review and reply dropped nearly 30% over last year with respect to refinancing projects, significantly raising efficiency. Third, effective play was given to the small-sum fast financing function of the ChiNext Board. Taking the small-sum fast financing projects of C&Y Pharmaceutical (300254) and Wenzhou Hongfeng (300283) as examples, it only took eight workdays from application to registration approval and registration approval and fund availability only took nine and five workdays respectively, greatly facilitating financing. Fourth, issuance efficiency was further raised. SZSE released nine guidelines for conducting refinancing business, aiming to improve market services, shortening issuance and listing periods and facilitating efficient and fast handling of applications of listed companies.
Industrial upgrading and transformation were boosted to expedite the replacement of old drivers of growth with new ones. Confronted by complicated economic environment challenges in 2020, SZSE-listed companies grasped the historic opportunity presented by the industrial structure transformation and upgrading and high-quality economic development in China, increased input in core industries and worked hard on independent and controllable core technologies. Companies in electronic communication, computer, biological medicine, electrical equipment and chemical industries launched 132 refinancings, raising CNY 197.806 billion. They were used for frontier technologies and advanced capacity expansion. The number of refinancings accounted for more than 50%, so was the amount of raised funds. CATL (300750) obtained CNY 19.7 billion via private share offering for high-end lead intelligent equipment manufacturing base construction, capacity expansion of automatic equipment production base, research and development of overall digital solution for intelligent lithium-ion battery manufacturing and industrialization. ZTE (00063) obtained CNY 11.5 billion via private share offering for network technology research and product development.
Regulation of convertible bonds was constantly refined, cooling market hype. In response to convertible bond market hype, SZSE, on the one hand, deepened information disclosure and regulatory interaction on trading, paid close attention and made active inquiries, and urged listed companies to properly disclose information and fully revealed the risks relating to companies and convertible bonds. Meanwhile, it stepped up real-time monitoring of intraday trading and inspection, promptly took regulatory measures, reported violation clues, and required suspension of convertible bonds with serious cases for inspection. On the other hand, it optimized institutional arrangements, perfected a temporary suspension system for convertible bonds, issued the mandatory provisions of convertible bond investment risk disclosure statement and curbed speculation. At present, SZSE is quickening steps in formulating relevant business rules according to the Measures on Administration of Convertible Corporate Bonds of China Securities Regulatory Commission (CSRC), in an effort to further perfect convertible bond rules, strengthen convertible bond management and promote standard market development.
2021 is the first year for implementing the 14th Five-Year Plan. Increasing the proportion of direct financing is vital to the high-quality development of the capital market during the 14th Five-Year Plan period. SZSE will continue to conscientiously uphold the policy of "system building, non-intervention, and zero tolerance", remain committed to market- and law-based reform, and constantly enrich rule supply according to the uniform plan of CSRC. Meanwhile, it will refine review mechanisms, tighten frontline regulation and improve services. In addition, it will give full play to market function and support SZSE-listed companies to achieve high-quality development by capitalizing on refinancing instruments.
