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Tuchong Creative/Photos provided by Tan Chudan/Table creation Map creation for this edition: Zhou Jingyu

Editor's note: It has been a month since the release of the "Eight Measures for the Science and Technology Innovation Board". How securities firms can play a role in resource allocation and serve the development of new productivity has attracted much attention from all parties in the market. To this end, this newspaper launched a series of reports titled "One Month after the Release of the "Eight Measures for the Science and Technology Innovation Board" and Securities Firms' Layout in Progress", focusing on securities firms' thinking and strategic layout on the new policy.

Securities Times reporter Tan Chudan

One month after the implementation of the "Eight Measures for the Science and Technology Innovation Board", more than a dozen senior executives or key business personnel of securities companies were interviewed by Securities Times reporters and shared their thoughts and prospects on the policy.

Some securities dealers believe that on the one hand, the "Eight Articles of the Science and Technology Innovation Board" are a combination of leniency and strictness, improve the basic system, and enhance the efficiency and inclusiveness of capital market services; on the other hand, it provides a systematic and practical capital market reform plan for the national science and technology strategy.

In addition, many securities firm personnel interviewed also told reporters that in order to improve service to scientific and technological enterprises, their companies have optimized their tracks, organizational structures, assessment mechanisms and other aspects, and strived to play a "chess game" to serve the development of new quality productivity.

Call for launch

Listing Rules for Non-profit Enterprises

The "Eight Rules for the Science and Technology Innovation Board" were officially issued on June 19, and it has been a month since then. During this period, various securities companies have continued to study and discuss the policy, and the industry is also looking forward to the emergence of relevant details and more cases.

"For investment banks, this is undoubtedly the starting gun." When talking about the introduction of the "Eight Articles for the Science and Technology Innovation Board", an investment banker believed that potential business opportunities will most likely increase, which is exciting.

"Institutional inclusiveness" is a keyword frequently mentioned by the interviewees in this interview, and the industry generally affirms the policy's improvement of inclusiveness. Liao Weiping, assistant to the president of Guojin Securities and general manager of Guojin Securities Shanghai Securities Underwriting and Sponsoring Branch, said, "The measures of the 'Sci-Tech Innovation Board Eight Measures' to improve institutional inclusiveness are in line with the new 'National Nine Measures' to promote high-quality development. In the future, it will further clear the difficulties and bottlenecks in the equity and debt financing of hard technology companies."

The reporter noticed that the reform measures on "supporting high-quality, unprofitable technology companies with key core technologies, great market potential, and outstanding scientific and innovative attributes to be listed on the Science and Technology Innovation Board" have attracted much attention from securities investment bankers. Wang Xuechun, vice president of Minsheng Securities and president of the investment banking division, believes that the aforementioned companies have the characteristics of large investment, high threshold, long cycle, high uncertainty in R&D and commercialization, but they are of great strategic significance to the country's promotion of scientific and technological self-reliance, breakthroughs in key core areas, and solving the problem of "stuck neck" in core technologies.

Wang Xuechun said that with the "Eight Articles on the Science and Technology Innovation Board" proposing to support high-quality, non-profit technology companies to be listed on the Science and Technology Innovation Board, and against the backdrop of the current increase in IPO thresholds and comprehensive and strict supervision, the above-mentioned reform measures provide a support path for the rapid development of potential technology unicorns in the capital market.

In this regard, the industry generally expects the regulatory authorities to issue detailed listing rules for unprofitable companies. A relevant business person from GF Securities told reporters that they are very concerned about the above policy and expect the system design of unprofitable companies' listing review to be further optimized.

However, some investment bankers have analyzed that the above reform measures may not be universal, and expressions such as "key core technologies", "great market potential" and "high quality" may actually have high thresholds.

Waiting for more mergers and acquisitions

Refinancing Case

Securities firms also have high expectations for the reform measures on "how to improve the quality of listed companies" in the "Eight Measures for the Science and Technology Innovation Board". Some investment bankers said that they are waiting for more innovative cases to be implemented to provide reference and experience for front-line work.

Since the release of the "Eight Measures for the Science and Technology Innovation Board", the activity of industrial mergers and acquisitions in the market has increased significantly, and many listed companies have disclosed industrial merger and acquisition transactions. In contrast, there have been few cases of mergers and acquisitions and reorganizations of companies on the Science and Technology Innovation Board in the past three years, with less than 15 listed companies disclosing plans from 2021 to 2023.

The person in charge of Dongxing Securities' investment banking business said in an interview with a Securities Times reporter that the potential M&A targets of the Science and Technology Innovation Board are mostly light-asset high-tech companies, which are difficult to value using traditional methods. At the same time, there is a high degree of uncertainty in their profits, making it difficult to acquire them. To a certain extent, this makes it difficult for M&A and restructuring on the Science and Technology Innovation Board to scale up.

In the opinion of this person in charge, the reform measures mentioned in the "Eight Articles on the Science and Technology Innovation Board", such as "appropriately improving the valuation inclusiveness of mergers and acquisitions of Science and Technology Innovation Board listed companies" and "acquiring high-quality unprofitable 'hard technology' companies", have actively responded to the difficulties and bottlenecks encountered by companies in conducting mergers and acquisitions, and created good conditions for mergers and acquisitions on the Science and Technology Innovation Board.

In terms of refinancing, the securities dealers interviewed believe that the "Eight Measures for the Science and Technology Innovation Board" have many noteworthy points. The above-mentioned Dongxing Securities investment banker is concerned about the implementation of the pilot case of refinancing shelf issuance on the Science and Technology Innovation Board, and believes that giving companies the autonomy to flexibly arrange the scale of securities issuance at each stage will help reduce financing costs and objectively reduce the impact of single large-scale financing on the secondary market.

A relevant person from Sino-German Securities also expressed his approval of the above view. He also paid attention to the reform measures of "exploring the establishment of 'light assets, high R&D investment' identification standards, and supporting refinancing funds for R&D investment". He believed that this was a major innovation in the reform of the Science and Technology Innovation Board, and it directly targeted a major pain point in the development of new quality productivity.

The person told reporters that this means that the use of funds for refinancing by companies on the Science and Technology Innovation Board will no longer be confined to short-term visible project returns, but will have to look to the long term and embed the needs of the national science and technology strategy into capital market rules, which will help further encourage companies to practice long-termism and investment institutions to cultivate patient capital.

Multiple measures

Serving the development of new quality productivity

With the release of the "Eight Measures for the Science and Technology Innovation Board", it will be worth looking forward to how securities companies will accurately focus on industries related to new quality productivity and actively integrate their own development into the country's major development strategies.

The reporter learned from the interview that the main actions of securities companies include selecting tracks, optimizing organizational structure, adjusting assessment mechanisms, and strengthening collaboration among departments.

Specifically, Guojin Securities has made full use of the role of assessment as a "baton" and resource allocation to layout the industry. Liao Weiping said that Guojin Securities has clearly identified new quality productivity-related enterprises as the priority encouragement direction for underwriting business, and has tilted towards new quality productivity enterprises in internal resource allocation and assessment indicators. "We will shift the focus of project development to strategic emerging industries such as new generation information technology and biology, and at the same time emphasize further attention to traditional industries that are deeply integrated with new technologies, new industries, new formats, and new models."

According to reports, Minsheng Securities and Zhongde Securities have deepened their presence in emerging industries through organizational structure settings. Wang Xuechun said that the industry grouping of Minsheng Securities has been further optimized, breaking through the traditional grouping thinking, focusing on the layout of future technology industries, and focusing on tracks with good growth, promising industry segments, and huge market growth potential. A person related to Zhongde Securities said that the company has specially established a high-end manufacturing industry department to provide customized financial services for the transformation and upgrading of the manufacturing industry. At the same time, it has also successively established investment banking departments with industry expertise such as medical health, new energy, and Internet information technology.

Choosing a track is only the first step. It is also very important to strengthen the industry understanding of practitioners. Liao Weiping said that the new quality of productivity has raised new topics for the business research of investment banks. The project team must also understand the industry and the national strategy for scientific and technological innovation, which puts higher requirements on the knowledge system and business organization model of investment banks. It is understood that due to the characteristics of the Science and Technology Innovation Board serving hard technology, Guojin Securities places more emphasis on the driving role of "industry research".

Relevant persons from Sino-German Securities also have similar views. The company's investment banking business has set up an industrial research department, which can play the role of an "internal think tank", work closely with the project execution team, and increase the frequency and closeness of industrial research services.

In addition, securities firms continue to strengthen the coordination of the "three investments" (investment + investment research + investment banking) and make good use of shareholder resources. Wang Xuechun said that Minsheng Securities will make good use of its own investment research and investment resources, or strategically cooperate with external industrial investment institutions to achieve resource sharing and accurately identify high-quality technology innovation companies. In addition, Minsheng Securities will take advantage of the merger and integration opportunities with Guolian Securities and the rich resources of its major shareholder Guolian Group to achieve complementary advantages and better develop and serve customers in the technology innovation industry.

Under the guidance of the "regionalization, industrialization, capitalization and integration" strategic framework of its parent company Shanxi Securities, Sino-German Securities has built an "investment banking +" comprehensive financial service system to achieve the synergy of "investment banking, investment and investment research" and provide science and technology enterprise clients with full-chain financial service solutions from financing planning, capital operation to industrial integration.