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In 2017, Shenzhen Stock Exchange (“SZSE”) earnestly implemented the Party and state policies and guidelines, actively served and engaged in the national development strategy in accordance with the decisions and deploy of Party Committee of China Securities Regulatory Commission (“CSRC “) to focus on supply-side structural reform, constantly raised the ability of direct financing and perfected market cultivation service system. By increasing support towards technology innovative venture and taking effort in pushing reforms in quality, efficiency and momentum of economic development, SZSE achieved positive progress in enlarging direct financing scale, promoting enterprise transformation and upgrading, realizing innovation-driven development, serving the national “Belt and Road” Initiative and other aspects, and further lifted multi-layer capital market’s ability to serve the real economies.
Firstly, SZSE’s direct financing ability has been lifted steadily, and listed companies are becoming better and stronger with the aid of capital market. In 2017, SZSE increased the ratio of direct financing steadily. On the one hand, it continued to expand the supply of high quality increment. 222 additional companies were listed on Shenzhen market with an IPO financing amount of RMB 92.5 billion, and with 79% growth rate of the number of listed companies and 93% growth rate of financing amount, and its IPO numbers and scales reaching the highest level in the world. On the other hand, SZSE optimized the development of existing resources. By taking full advantage of the platform, SZSE actively promoted existing listed companies in using capital market for innovative financing method and meeting the needs of technology innovation. In 2017, there were 264 companies in Shenzhen market which completed their re-financing with a raised funding of RMB 317.1 billion, forcefully promoting the transformation and upgrading of traditional industries, accelerating the layout of emerging industry and helping the Company to improve quality and efficiency. Bank of Ningbo completed the issuance of convertible corporate bonds and raised RMB 10 billion to support its business development. Tus-sound completed non-public offering and raised 4.589 billion to construct environmental protection projects including sanitation integration platform, WTE and food waste treatment. Taking advantage of the capital market, listed companies increasingly integrated industry resources, propelled technical progress, enhanced management effectiveness and reached continuous growth in performance. For the first three quarters of 2017, the average gross revenue for 2,051 listed companies in Shenzhen market was RMB 3.523 billion with a year-on-year growth rate of 25.60%; and the average net return to parent companies shareholders reached RMB 0.258 billion with a year-on-year growth rate of 25.93%. Out of the 1,006 companies with performance report disclosure in Shenzhen market, 80% of which were expecting growth in 2017 compared with the previous year, and the overall performance estimate was promising.
Secondly, SZSE took full advantage of capital market’s resource allocation function to aid listed companies in enhancing development quality. Over the past years, SZSE has actively promoted market buyout and restructuring focusing on industrial integration, cracked down non-authentic and following-style restructuring, purified market environment and guided excellent enterprises with strong innovative ability, broad development prospects and in compliance with the national development strategy in landing capital market via buyout and restructuring. It provided service for supply-side structural reform and supported the transformation and upgrading of traditional industries to achieve the accelerated development of high-tech enterprises. In 2017, 182 listed companies in Shenzhen market completed restructuring with a total transaction amount of RMB 517.1 billion and matching financing amount of RMB 127.3 billion. Through market-oriented buyout and restructuring, those companies optimized recourse allocation, further improved enterprise products quality and service quality and constantly enhanced their core competitiveness and profitability. The national express industry giant enterprise SF Holding was listed on SZSE via restructuring, which accelerated its smart logistic layout of “sky net + earth mat + information net” combination and lifted its core competitiveness. For the first three quarters of 2017, SF Holding gained RMB 49.8 billion in revenue with a net profit of RMB 3.6 billion, and its profit scale continued to grow. Through the acquisition of the international high-end brand Osram’s general lighting business, Mulinsen has become a global Illumination Enterprise. It grew stronger through internal organic growth and external mergers and acquisitions.
Thirdly, SZSE implemented the national innovation-driven development strategy to realize the synergic development capital market and technical innovation. It was pointed out in the 19th CPC report that innovation is the first driver to guide development. As an important platform providing services to real economies, SZSE has long been supportive towards the construction of national innovation system. By strengthening support towards enterprise innovation, guiding capitals towards innovative enterprises and promoting the transformation of technical achievements, SZSE made no effort in building a world leading innovative capital formulation center. Currently, there are more than 760 strategic emerging industries enterprises in Shenzhen, accounting for 36% in all enterprises. And more than 70% of them are on ChiNext board. SZSE cultivated high-tech model enterprises including HIK Vision, BOE, ZTE and IFLY TEK. Meanwhile, SZSE continued to strengthen the project of cultivating listed resources and effectively improve the cultivation and service function of innovative enterprises. The biggest genomics research and development institutions BIG was listed on SZSE ChiNext board in July, 2017 with a matching amount of RMB 0.484 billion to contribute to the medical inspection solutions platform upgrading project and genomics research and development center project. Capital market provides advantages for the sustainable development to enterprises with huge research and development investment and cutting-edge technology. As the new engine for China’s economic growth, the new energy vehicles, energy saving, new energy, high-end equipment manufacturing industry companies listed in SZSE in the strategic emerging industry showed outstanding profitability, recording a year-on-year growth of 95.38%, 49.79%, 44.89% and 33.65% separately for the first three quarters in 2017.
Fourthly, SZSE aided the deepening reform of state-owned enterprises to promote the growth and excellence of state capital. Capital market is an important channel to propel the reform of state-owned enterprises, while SZSE has always played the role of “booster” and “accelerator”. By actively promoting the state-owned listed companies to speed up the optimization of state-owned economy layout, structural adjustment, industrial integration, business expansion through strategic mergers and acquisitions, SZSE has injected new impetus into the reform of state-owned enterprises. In 2017, CNPC Capital completed major assets restructuring and listing as a whole of CNPC Group’s financing sector; Merchant Road achieved listing as a whole through the merger and absorption of Huabei Expressway. The above cases are significant embodiment of capital market’s provision of support and service towards the reform of state-owned enterprises and the cultivation of world class enterprises with global competitiveness, as well as major achievements of listed companies in implementing their development strategies and integrating industrial resources with the help of capital market.
Fifthly, SZSE brought its hub function into full play to help listed companies respond to the national “Belt and Road” Initiative. SZSE actively guided the listed companies to realize the "going global" development strategy through the capital market platform, promoted the listed companies to actively participate in the national “Belt and Road” construction and worked hard to promote the formation of the new pattern of open cooperation. Till now, more than 300 companies in Shenzhen market has participated in the national “Belt and Road” construction including launching of goods and services trade, project investment, project construction, loans and financing, etc. in relevant regions with a total amount of RMB 200 billion involved, covering more than 70 countries and regions. Relying on its rich international engineering general contract management experience, China CAMC invested and participated in China-Belarus Industrial Park project adhering to the principles of discussion, construction and sharing, becoming an example of mutually beneficial cooperation in the successfully landed projects in the “Belt and Road” construction projects.
In 2018, SZSE will remain true to the original aspiration and keep the mission firmly in mind. Taking Xi Jinping’s socialism with Chinese characteristics for the new era as the guide, SZSE will constantly strengthen capital market’s ability in serving real economies, enhance capital market direct financing ability, and promote the healthy development of the multi-layer capital market to better serve supply-side structural reform and innovation-driven development strategy in aiding the high quality development of China’s economy.
