Special interview
Author: Zhan Yongyu
2021-01-30 12:10
Last update date: 2021-01-30 12:11
The Hong Kong Stock Exchange (0388) proposed in November last year to raise the profit threshold for listing by 1.5 times or 2 times, which means that if a company fails to earn at least half a billion a year, it will not be listed.
The consultation document stated that the move is to "enhance the quality of main board companies" and combat "shelf companies."
The consultation period will end next Monday (February 1), and there are many voices of opposition from all walks of life, thinking that the new revision is "too hot."
After the independent stock commentator David Webb wrote an article in the middle of the month, another celebrity, Li Hualun, the managing director of Yuming Investment, known as the "bad boy in the stock market," Warren, accepted an exclusive interview with "Hong Kong 01" before the "dead line". To describe the new plan as "Three Thousand Thousands of Your Life", the measures are categorically denounced to stop local SMEs from going public and have an impact on the livelihood of the industry.
The Hong Kong Stock Exchange proposes to increase the minimum profit requirement for IPOs on the Main Board by 1.5 or 2 times.
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The Hong Kong Stock Exchange’s reform of the profit threshold for listing on the Main Board this time can be described as a continuation of increasing the market value threshold from 200 million yuan to 500 million yuan in 2018. There are two plans. If it is less than 50 million yuan, the cumulative profit in the first two years is not less than 75 million yuan; second, the profit in the most recent year is not less than 60 million yuan, and the cumulative profit in the previous two years is not less than 90 million yuan.
Plans 1 and 2 will increase the minimum profit requirement by 1.5 or 2 times respectively. The purpose is to reduce the number of shell companies and maintain the overall quality of the main board listed companies. However, the total profit requirement makes the Hong Kong Stock Exchange the highest among the major exchanges in the world.
According to the consultation document, if the 745 applications for new shares from 2016 to 2019 are reviewed according to the two options, 437 and 486 listing applications are unqualified under the first and second options. In other words, more than 60% of the applications will not be eligible. Threshold for listing.
Li Hualun first "turned over old accounts" referring to the "illogical" requirement to increase market value
As soon as the plan came out, it drew criticism from all walks of life. Independent stock commentator David Webb wrote an article in the middle of this month, listing 10 opinions against the proposal of the Hong Kong Stock Exchange.
And Li Hualun, the managing director of Yuming Investment, another celebrity in the stock market, who some people call the "bad boy in the stock market," also has something to say.
Li Hualun, who has been in the industry for more than 30 years, has been familiar with the listing rules, takeover codes and other regulatory regulations. He specifically "fights" penny stocks and has "helped" more than 300 companies or shareholders caught up in disputes. He bluntly said that this time the profit will be increased. The requirement is more "life-saving" than the 2018 listing value threshold.
He revealed that he heard that many people in the financial circle are more difficult to do under the new measures. The original requirement of 500 million market value and 20 million profit is possible for SMEs, but now it will take a year. Earning half a billion, I can’t help but ask SMEs, "Come on?"
Li Hualun "turned over old accounts" and believed that it was unreasonable for the Hong Kong Stock Exchange to increase its market value threshold in 2018.
(Photo by Li Zetong)
Li Hualun revealed that since the Hong Kong Stock Exchange raised the market value threshold in 2018, many SMEs have encountered a lot of "obstructions" even if they reach the 20 million yuan profit requirement.
He explained that with a profit of 20 million yuan, the price-earnings ratio is 25 times higher than the market value requirement of 500 million yuan.
"Everyone knows how to press the counting machine. You have set a market value of 500 million yuan (requirement), divided by 20 million yuan in profit, and the P/E is 25 times. Please tell me that you are a prophet today, and you are "tricky" on that day. Small and medium-sized enterprises? Is it that Mitton didn't stop me from listing until I met the requirements?" Li Hualun "turned over old accounts" and accused the stock exchange of illogical practices.
"(The Stock Exchange) once asked the sponsor why do you think that the value of the "company" reached 500 million yuan (market value). The sponsor replied because it was underwritten by someone," but the listing application was not approved. Huh?” Li Hualun continued, “You don’t want me to go out of the street (IPO), how do you know that I will overbuy 100 times? Maybe I’m so popular with investors? How can the next conclusion be that I won’t be 25 times P/E?"
It is difficult for SMEs to transfer overseas listing
This new measure focuses on companies with small market capitalization and low profitability. One of the rationales of the Hong Kong Stock Exchange is that in recent years, more and more small and medium-sized companies with low profitability and "high market capitalization" have applied for listing, and some companies have difficulty achieving profit targets after listing. , And cannot prove that its high valuation is reasonable, so it is suspected that its listing purpose is "beer shell".
At the same time, analysts in the industry also pointed out that companies with small market capitalizations often constitute major acquisitions or major transactions, and the cost of taking care of them by the Hong Kong Stock Exchange is not small, but these companies have small transactions and cannot bring much income to the Hong Kong Stock Exchange.
"The Hong Kong Stock Exchange is a commercial organization. I understand its mentality to choose big customers. But now you are a Monopoly. Doing a monopoly in Hong Kong has social responsibilities in addition to making money. To do." Li Hualun said.
Regarding the earlier relaxation of the Hong Kong Stock Exchange’s profitability requirements for the listing of biotech companies, but raising the threshold for listing of small and medium-sized companies appears to be "superior", he asked why biotech companies can be an exception. What contribution?
What kind of powerful medicine did they have?
Is the Hong Kong Stock Exchange responsible for human health, medical care and longevity?
"The Hong Kong Stock Exchange should be responsible for Hong Kong's SMEs, because Hong Kong SMEs who want to list can only be listed in Hong Kong, and they are unable to go out and list outside Hong Kong."
The industry believes that the Hong Kong Stock Exchange's raising the threshold for listing will affect the livelihoods of a large number of financial professionals.
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The livelihoods of financial practitioners are affected
In response to the Hong Kong Stock Exchange’s purpose of cracking down on "beer shells", Li Hualun pointed out that the five most frequently appearing words in consultation documents are "If", "Whether", "May", "Possible" and "Concern". Li Hualun believes This reflects that the Hong Kong Stock Exchange is only unilaterally speculating that the purpose of the company's listing is to "beer shell."
There was a period of time when some listed companies "sell shells" just after they were listed for a year, which attracted the attention of the Hong Kong Stock Exchange.
However, Li Hualun believes that the Hong Kong Stock Exchange does not like it. However, in order to combat the "beer shell", the practice of raising the listing threshold is "too overbearing." The situation is like the regulation that 18 years old can drink. "You go to a bar to drink as soon as 12 midnight. See you the bartender You checked your ID when you were young and found that you just turned 18 years old for only one minute, so can you not sell alcohol to you?"
If the new measures are passed, Li Hualun expects that when many companies are not eligible to apply for listing, the livelihoods of a large number of lawyers, accountants, financial consultants and other professionals will be affected.
He revealed that last year the financial industry had only a strong market for large investment banks, but the business of small and medium-sized banks was average. Most of the employees in the small and medium-sized banks were born and raised in Hong Kong, specializing in the business of small and medium-sized enterprises in Hong Kong. In the economic downturn, it is expected that it will be more difficult to survive.
When asked if it would affect his company's business, he laughed and pointed out that the company did not do IPO business. It is most reasonable for him to comment on this new measure because there is no conflict of interest.
Hong Kong Stock Exchange Listing Reform David Webb Li Hualun
