High Approval Rates Fuel A-Share IPO Boom

As the year draws to a close, the A-share market in China is experiencing significant activity, particularly in the Initial Public Offering (IPO) sectorThe past year has seen 57 companies slated for IPO meetings in Shanghai, Shenzhen, and Beijing, with a commendable approval rate of nearly 90%. This success follows a challenging environment, marked by tighter regulations surrounding new stock issuancesDespite the restrictions, close to half of the companies that successfully passed the evaluation displayed impressive financial performances, demonstrating profitability exceeding 100 million yuan in 2023.

Overall, the number of IPOs this year reflects a steep decline of nearly 70% compared to the previous year, with only 99 new shares hitting the public marketNotably, the company Hong Sifang (603395) marked a spectacular debut, with its share price soaring by 1917.42% on its first trading day

At one point, its price even surpassed a 2145% increase, showcasing the volatility and potential of the market.

On December 27, Danana Biotechnology is poised for its IPO hearingSpecializing in the early diagnosis of invasive fungal diseases and the development of diagnostic products for other microorganisms, Danana aims to raise around 300 million yuan through its upcoming IPOThis hearing follows the trend of ATA Technology and Tian You Wei, both of which successfully gained approval during their meetings earlier this monthThe overall approval rate from 58 hearings has reached a striking 89.66%, with only three companies experiencing postponed decisionsRemarkably, Tian Gong and Ke Long New Material have both achieved approval after facing initial setbacks.

In December alone, two companies have successfully completed their IPO meetings by December 6. Each sought significant amounts of capital—ATA is looking for over a billion yuan to expand its operations, which include the development and production of intelligent measurement systems and automotive instruments

• Chery's Top Seller Hit by Cancellation Surge
• Inference: The Core Component of Future Applications
• Debate Over U.S. Inflation Outlook
• Federal Reserve Plans Changes to Bank Stress Tests
• AI Toy Craze: ByteDance and Tesla Join the Race

This financial ambition highlights the continuing interest in technological innovation within the A-share market, which is largely driven by the interests of investors looking for growth from sectors like automation and smart technology.

The year showed varied activity across the months, with January witnessing the highest concentration of IPO hearings, comprising 15 companiesFebruary followed with 10, while months like March and April were quieterNotably, May and June saw a resurgence in IPO activities, with two and four companies, respectively, making their presentationsBy the latter half of the year, a total of 23 hearings were held in the remaining months leading up to December.

Reflecting on the statistics, 20 of the 33 companies that have registered successfully have made their stock market debuts this yearThe most recent listing was that of Fangzheng Valve, which debuted on December 26 on the Beijing Stock Exchange, skyrocketing 518.2% on its first day of trading

This experienced performance is echoed by others, as evidenced by their share price performance after hitting the marketHowever, there are 13 companies also registered that are still awaiting their turn to enter the market.

Seven companies have seen their IPO plans suspended entirely, with Marco Polo being one which applied for a halt to their listing due to a change in circumstances related to their financial materials, whereas the remaining companies' suspensions stem from other issuesMeanwhile, Zhejiang Energy Gas managed to reach the registration phase in the approval process, targeting around 855 million yuan to enhance its urban gas supply and distribution services.

Forty-eight of the 57 listed companies reported their financial status for 2023 and all achieved profitabilityNotably, one in every half of the firms reported net profits exceeding 100 million yuan, reinforcing the notion of sustainable growth potentials within this sector

The statistics further reveal that four identified companies exceeded profits of 500 million yuan, demonstrating the capacity for robust performance even amidst strict regulatory measuresIn drawing a picture of future outlooks, it is clear that companies with strong financial performances are in the best position to capitalize on upcoming market opportunities.

Looking ahead, several policymakers and analysts anticipate that the expected trend in new stock listings indicates a strengthening future for A-sharesExternal economic factors such as AI advancements and growing consumer market demands are expected to stimulate a revitalization of the capital marketWith favorable monetary policies set to encourage investment inflows, there is optimism that the market will not only stabilize but grow further in 2025, reflecting a healthy equilibrium between demand and regulatory expectations.

Excitingly, the IPO sector also witnessed some astronomical first-day performances this year

Hong Sifang stands out with its more than tenfold increase on debut, a stark contrast to the previously struggling companiesOther companies like Qiangbang New Material and Changlian Technology also saw stock prices surge upwards, suggesting an enthusiastic reception from investors looking to capitalize on favorable ratings and promising potentialsHowever, not all new listings share this success, with Shanghai Hejing being the sole company to falter on its first trading day, dipping below its offering priceYet, the company rebounded quickly, showing resilience in its market performance.

The commentary from market institutions and experts underlines a growing acknowledgment that while the volume of IPOs may have decreased, the quality and resilience of these companies have substantially improved, potentially promising a better and stronger listing environment in the coming yearMuch will depend on evolving market dynamics, government policies, and the businesses' capacity to adapt to changing economic landscapes.

In conclusion, the A-share market's recent trends reveal a transformative year characterized by heightened competition and varied performance dynamics among new stock listings