As the Q3 2024 reports of listed companies have been successively disclosed, with their great strengths, the companies listed on the SSE Science and Technology Innovation Board (STAR Market) have delivered "report cards" highlighting resilience and vitality. As of October 26, among the 143 STAR Market companies that have released their Q3 reports, 107 or more than 70% have achieved profitability. The companies in three strategic emerging industries, namely new-generation information technology, high-end equipment manufacturing and biomedicine, lead the way in performance.
Back to July 22, 2019, with the first batch of the 25 companies being listed on the STAR Market, setting up the STAR Market and piloting the registration-based IPO system, a major reform task in the capital market, was officially implemented.
In November 2019, General Secretary Xi Jinping noted during his inspection tour of Shanghai that to set up the STAR Market and pilot the registration-based IPO system, which required sticking to its positioning, improving the quality of listed companies, encouraging "core technology" enterprises to go public, strengthening information disclosure, reasonably guiding expectations and strengthening supervision.
As of October 24, there are 576 listed companies on the STAR Market, with a total market value of RMB 6.14 trillion. This shows demonstration and agglomeration effects in key industrial chains such as integrated circuits, biomedicine and new energy. Since April 2024, relevant national departments have issued a series of measures and documents to clarify the specific measures for rekindling the STAR Market reform. The STAR Market is further fostering a synergy to deepen reform and enhance inclusiveness, so as to move from an "experimental field" to a "demonstration field" for high-quality development.
Since its establishment, the STAR Market has set up five sets of differentiated listing indicators and allowed eligible unprofitable enterprises, red chip enterprises and enterprises with a special equity structure to be listed, so as to meet the listing and financing needs of science and technology innovation enterprises of different types at different development stages. In recent years, the construction of the STAR Market has been centered on enhancing the inclusiveness of capital market to science and technology innovation enterprises and supporting key core technology innovation. In June this year, the "Eight STAR Market Measures" was issued to enhance the institutional inclusiveness for the listing of high-quality unprofitable enterprises on the STAR Market. The measures explicitly support high-quality unprofitable scientific and technological enterprises with key core technologies, great market potential and outstanding attributes of science and technology innovation to be listed on the STAR Market. Data shows that up to now, 54 enterprises that were unprofitable before IPO have been listed on the STAR Market. According to their 2024 semi-annual reports, 14 of them have a positive net profit, and 44 have secured an operating income topping RMB 100 million, of which 14 have recorded an operating income exceeding RMB 1 billion. Wang Bo, Deputy General Manager of Shanghai Stock Exchange, stated that since the opening of the STAR Market, it has continued to play the role of an "experimental field" for reform, improved institutional inclusiveness and adaptability, and guided the accelerated concentration of factor resources in science and technology innovation.
The high-quality development of listed companies is the basis for improving investability, which is one of the criteria to test the high-quality development of listed companies. In recent years, listed companies on the STAR Market have been encouraged to make full use of market tools such as share repurchase, share increase by major shareholders, regular dividend distribution, M&A and reorganization to enhance investibility and establish and improve internal long-term mechanisms for enhancing value. According to the 2024 semi-annual report data, 70 companies listed on the STAR Market have implemented interim dividend distribution, which is far more than the number in previous years. They cover a number of key industrial chain enterprises such as high-end equipment manufacturing, artificial intelligence and innovative drugs. At the same time, 64 STAR Market companies have continuously distributed dividends this year, presenting a clearer trend of attaching importance to R&D and high dividend distribution. From 2019 to 2023, the compound annual growth rate of operating income and profit of companies listed on the STAR Market were 23% and 24% respectively.
Since the STAR Market' opening, it has focused on supporting "core technology" enterprises with the mission of serving the aim to achieve greater self-reliance and strength in science and technology. The STAR Market moderately increases the requirements for to-be-listed enterprises' R&D investment, number of invention patents and compound growth rate of operating income to guide science and technology innovation enterprises to pay more attention to scientific research investment and industrialization of scientific research results, so as to further improve the quality of applicants. In the process of applying for listing of scientific and technological innovation enterprises, the SSE highlights the significance and pertinence of review inquiry to improve its accuracy. According to the inherent requirements of "core technology" positioning, the SSE strictly teases out "pseudo-technology" enterprises that lack core technologies or scientific and technological innovation capabilities.
The STAR Market has become the first choice for China's "core technology" enterprises to go public. There are 341 state-level specialized and innovative "little giant" enterprises and 49 single champion manufacturing enterprises listed on the STAR Market. A total of 36 STAR Market companies have participated in the "14th Five-Year Plan" National Key R&D Program, covering many key fields such as basic scientific research, key instruments and cutting-edge materials.
The high-quality development of the capital market requires comprehensively strengthening supervision and effectively preventing and resolving risks. In terms of issuance review, the STAR Market strictly controls the admission and adheres to the principle of "taking responsibility upon application". In terms of continuous supervision, it keeps a close eye on key issues of key companies to strengthen risk analysis. In terms of cracking down on violations of laws and regulations, it adheres to the principle of "zero tolerance" and control in early stage and at a small scale to purify the market ecology.
A relevant person in charge at the SSE said that the STAR Market will make sustained efforts in continuous supervision, eliminate regulatory vacuum, improve the quality and efficiency of supervision, ensure effective risk prevention and control with strict supervision, promote the quality improvement of listed companies with strong supervision, guide listed companies, intermediaries and other market players to jointly maintain a healthy and standardized market ecology of the STAR Market, and continuously promote the high-quality development of the capital market.
Excerpt translated from Outlook Weekly, November 2, 2024
See full article at:https://h.xinhuaxmt.com/vh512/share/12261022?d=134dacd&channel=weixin&time=1730531388377
The above information is provided for reference purposes only and does not constitute investment advice.
