Financial News
Written by: Zhang Weilun
2021-01-16 11:26
Last update date: 2021-01-16 11:27
Earlier, the Hong Kong Stock Exchange (0388) consulted on the profit threshold for listing on the Main Board.
Independent stock commentator David Webb posted 10 points on his blog in response to the Hong Kong Stock Exchange’s inquiry.
In 2018, the Hong Kong Stock Exchange increased the market value threshold of companies applying for listing on the Main Board from 200 million yuan to 500 million yuan. He pointed out that the company's market value has nothing to do with the level of governance, but now he complains that listed companies are overvalued.
If the Hong Kong Stock Exchange raises the profit threshold for companies applying for listing, it will make mistakes again and again.
The Hong Kong Stock Exchange has earlier raised the profit threshold for companies applying for listing on the Main Board.
The first option is to increase the profit threshold by 1.5 times to 125 million yuan, that is, the last year's profit during the track record period was not less than 50 million yuan, and the cumulative profit in the previous two years was not less than 75 million yuan.
The second plan is to double the profit threshold to 150 million yuan, that is, the profit in the most recent year is not less than 60 million, and the cumulative profit in the previous two years is not less than 90 million.
The level of profitability has nothing to do with the level of governance
David Webb pointed out that the level of profitability also has nothing to do with the level of corporate governance and has little to do with investment risks.
He pointed out that for a long time, listed companies have always recorded profits first and then made losses. At present, many companies on the main board have suffered losses, even for years.
But as long as they comply with the disclosure and governance codes, investors can invest in them.
He pointed out that since the Hong Kong Stock Exchange can allow unprofitable biotech companies to apply for listing and also allow coal companies that are at a loss to delist, why can't they treat other companies equally and restrict other companies?
If investors want to invest in small businesses, why stop?
He further pointed out that the Hong Kong Stock Exchange is both a regulatory agency and a profit-seeking organization. This consultation may be aimed at reducing expenditure. He also pointed out that the Hong Kong Stock Exchange has spent a lot of manpower and material resources to review corporate prospectuses and can only earn 250,000 yuan.
Compared with technology companies that implement multiple shareholding structures, the Hong Kong Stock Exchange has a much colder attitude towards small companies.
Renewed proposal to merge the main board and GEM
He pointed out that the Hong Kong Stock Exchange is a dominant player and is not subject to competition regulations. From the perspective of social obligations, it should allow more companies that meet the disclosure and governance standards to be listed.
If the Hong Kong Stock Exchange does not want to fall into a conflict of interest, it should transfer the power to review the listing application to the SFC.
At the same time, it also revisited the merging of the Main Board and the GEM board, and the promotion of the three-year complete accounting records for listed companies, and the rules for all companies to issue quarterly reports.
The Hong Kong Stock Exchange proposes to tighten the listing threshold or require a total of 150 million yuan in the three years before listing
David Webb Hong Kong Stock Exchange
