Beijing Stock Exchange'S Clarion Call, Securities Companies' New Third Board "Industry Chain" To Dig Gold

Beijing stock exchange (hereinafter referred to as the "Beijing stock exchange") has been from the announcement of its establishment to the completion of industrial and commercial registration, and then to public consultation on various business rules.

On September 2, 2021 global service trade summit of China International Service Trade Fair announced the establishment of Beijing stock exchange (hereinafter referred to as "Beijing stock exchange").

On September 5, the Beijing stock exchange has officially completed the industrial and commercial registration, and the first batch of business rules began to open to the public for comments.

According to the plan, after the establishment of the Beijing stock exchange, all selected listed companies will be listed on the Beijing stock exchange. The follow-up listed companies on the Beijing stock exchange will be generated from qualified innovative listed companies.

As an important intermediary of capital market, the establishment of Beijing stock exchange has a direct impact on the future development trend of securities companies.

According to the reporter of the 21st century economic report, some securities companies have begun to tilt their resources to the related businesses of the new third board to welcome the arrival of the Beijing stock exchange.

"The Beijing stock exchange will activate the new third board market and attract more enterprises to list in the stock transfer center." Luo Huizhou, head of the non bank financial group of West China Securities, pointed out that in the future, securities companies with deep layout of listing and market making business on the new third board are more likely to benefit from the establishment of Beijing stock exchange.

The securities industry is working hard

"This week, the company has just published a document, which requires that the new third board and the business of Beijing stock exchange should be connected and coordinated from investment banking, self support, research and brokerage business." the reporter of 21st century economic report learned exclusively from people close to Anxin securities.

In fact, at present, the securities companies can participate in the new third board business. Specifically, securities companies can participate in the public offering of enterprises applying for listing at the selective level as sponsors, continuously supervise and recommend enterprises after listing, provide market making services for enterprises listed on the new third board with their own funds, and participate in the new third board transactions with their own funds. In addition, there are also brokerage and research businesses that are very common in the A-share market, As a whole, it forms a diversified "industrial chain" of securities companies in the new third board market.

"We estimate that the main layout of the following three aspects: first, layout the entire investment banking industry chain and do a good job in comprehensive financial services; second, strengthen the investment of self owned funds; third, strengthen market research." in the interview, there was a person in charge of the new third board business of small and medium-sized securities companies.

There are also domestic head of the new third board securities practitioners said that after the announcement of the establishment of the Beijing stock exchange, the company's internal treatment of the new third board related business thinking has changed, "although there are no practical measures out, but these days, all levels of the company are issuing notices on the new third board or the Beijing stock exchange, which can not be turned around."

It is also because of the ability to go deep into the business core of the new third board market, since the announcement of the establishment of the Beijing stock exchange, the stock market of some securities companies in the A-share market has also ushered in an outbreak.

Since the announcement of the establishment of the Beijing stock exchange on September 2, the concept plate of Shanghai and Shenzhen securities companies has increased by 3.6% and ETF of securities companies has increased by 4.3%. Shenwan Hongyuan, whose securities companies have a deeper business layout on the new third board, has increased by 9.18% in the past three trading days. Other concept stocks of securities companies were also boosted by the news, with Dongfang securities up 16.32%, Dongfang Fortune up 12.82%, Tianfeng securities up 10.91% and Great Wall Securities up 9.68%.

Zhao ran, chief analyst of non bank finance and forward-looking research group of China Securities construction investment, believes that institutional arrangements such as the opening of Beijing stock exchange, listing of asset management companies, market makers on the science and technology innovation board, single T + 0 trading and Shenzhen stock index futures, are expected to be implemented. Measures such as further opening up and guiding medium and long-term funds into the market are expected to be launched, providing incremental performance sources for the securities sector.

According to his calculation, the current price to book ratio of the securities sector is 1.73 times, which is in the 50% quantile since 2016, which is lower than the valuation center of 1.82 times in 2020. However, the profitability of listed securities companies continued to improve. In the first half of 2021, the average return on equity (ROE) increased from 4.5% in the same period of last year to 5.2%, and the price to book ratio should also be increased year on year. "There is a mismatch between the low valuation of the securities sector and its hot performance, which has the potential to repair upward."

Small and medium-sized securities companies have prominent leading advantages in the new third board

In fact, due to the investment threshold, liquidity, continuous supervision fees and periodic report fees, the new third board had the problems of large companies delisting and transferring to Shanghai and Shenzhen, and the small companies were overburdened. The number of listed companies has also decreased from a high of nearly 12000 in 2017 to 7285 at present.

"In recent years, most securities companies are reducing the business of the new third board, reducing the number of enterprises that continue to supervise and make market. Some independent business departments of the new third board are also merged into the investment banks. The loss of market personnel is also common." for the establishment of the Beijing stock exchange, some securities dealers who stick to the new third board business lament that it has finally ushered in a "turning point".

In the view of the securities dealers, compared with the IPO market, the unit price of various projects in the new third board is lower. "Big securities companies don't look up to it. Instead, the new third board has become a key point for small and medium-sized securities companies to achieve overtaking on the curve in the past few years. In recent years, some securities companies have abandoned the business of the new third board, but there are still institutions that continue to pay attention to this market."

Luo Huizhou said that the establishment of the Beijing stock exchange and the implementation of relevant rules are expected to revitalize the new third board market and attract more enterprises to list in the stock transfer center. Securities companies with deep layout of listing and market making business on the new third board are expected to benefit.

According to the statistics of Huaxi Securities, such as Kaiyuan securities, Shenwan Hongyuan, Zhongtai securities, Anxin securities, China Securities construction investment and Soochow securities have a certain share in the related business of the new third board.

Of the 7285 companies listed on the new third board, Shenwan Hongyuan securities recommended 455 of them to be listed, ranking first in the industry. Then, Anxin securities recommended listing 342 companies, Zhongtai securities recommended 288 companies, Kaiyuan securities 254, and Dongwu securities 241, which also constituted the "top five" of securities companies' new third board business.

It is worth mentioning that, compared with Shenwan Hongyuan securities, Kaiyuan securities, as a small and medium-sized securities company, occupies the first place in the industry in terms of the number of entrepreneurs continuously supervised and listed, the number of stocks making the market in recent years, and the reserve items declared by the selected level.

In terms of the number of listed companies under continuous supervision, Kaiyuan securities currently supervises 600 enterprises listed on the new third board, 40 of which are higher than Shenwan Hongyuan, the second place, and 313 more than Guorong securities. From the number of market making stocks from 2020 to the end of August 2021, Kaiyuan securities has provided market making services for 60 enterprises in total, while the second capital securities and the third YueKai securities have respectively carried out market making business of more than 30 enterprises.

In addition, since the subsequent listed companies of Beijing stock exchange will be generated from qualified innovative listed companies, the amount of project reserves will determine whether the securities companies win in the starting line in the relevant business of Beijing stock exchange.

According to the statistics of Huaxi Securities, Kaiyuan securities and Shenwan Hongyuan securities are both at the forefront of the reserve projects declared by the Beijing stock exchange in the future, with 32 and 30 reserve projects respectively. In the follow-up, such as Anxin securities, China Securities construction investment, Soochow securities and other securities companies also have more than 10 reserve projects.

However, although small and medium-sized securities companies have a good layout in the new third board business, the merger and reorganization business in the market is dominated by the head securities companies.

According to the statistics of Huaxi Securities, the market share of CITIC Securities and CICC as financial advisers in the merger and acquisition transactions on the first announcement date in 2020 will reach 26.41% and 25.9%, respectively. In the second place were China Securities construction investment, Huatai Securities and China Merchants Securities, which accounted for 69.29% of the total market share in the M & a market of the new third board.

"Mergers and acquisitions are more difficult because of the technical difficulties, and the market concentration of financial consultants is high." for the future, the merger and acquisition business of the new third board will be dominated by the head brokers, "Luo Huizhou explained. At the same time, she said that during the guidance process of listing on the new third board, the corporate governance system, equity structure, financial data and tax payment have been standardized. The new third board market is not only the stock pool of investors, but also the M & a project pool of other enterprises. Beijiao hopes to provide a large number of objects for M & A, which can greatly improve the efficiency and success probability of M & A of listed companies. The merger and reorganization of securities companies will usher in a more lasting dividend.

"This is a dimension reduction attack. The M & a department does not have large projects and IPO projects. It ranks low in the investment banks of securities companies, but it is still higher than the team working in the new third board business." according to the new third board business personnel of domestic small and medium-sized securities companies, although most of the leading securities companies have given up the market making and recommendation business of the new third board, they can still make up the price with quantity in the merger and acquisition business of the new third board, Keep a good revenue.

In the view of the new third board business personnel of the securities company, in the future, with the establishment of the Beijing stock exchange, the listed enterprises of the original new third board may usher in more rapid development, driving the unit price of various projects in the market. "If the profit environment is fully improved, the large securities companies may still be able to kill back to the new third board market, and the small and medium-sized securities companies that now occupy the advantages may be squeezed out of the core."