At the opening ceremony of the 2024 Lujiazui Forum, Wu Qing, chairman of the China Securities Regulatory Commission, announced that eight measures to deepen the reform of the science and technology innovation board will be released. As soon as these words came out, they instantly became the focus.
On the afternoon of the same day, the China Securities Regulatory Commission (CSRC) issued the "Eight Measures on Deepening the Reform of the Science and Technology Innovation Board to Serve Scientific and Technological Innovation and the Development of New Productive Forces" (hereinafter referred to as the "Eight Measures"). In the opinion of experts, this also means that the reform of the science and technology innovation board and the registration system has entered the "deep water area". The release of the "Eight Articles" will help the development of science and technology companies, optimize the financing system, and support mergers and acquisitions, and companies in the semiconductor "hard technology" sector may benefit.
The "Eight Articles" mainly include:
The first is to strengthen the "hard technology" positioning of the Science and Technology Innovation Board. Strictly control the entry gate, and give priority to supporting "hard technology" enterprises that have broken through key core technologies in new industries, new business forms and new technologies to be listed on the Science and Technology Innovation Board. Further improve the accurate identification mechanism of science and technology enterprises. Support high-quality unprofitable technology-based enterprises to be listed on the Science and Technology Innovation Board.
The second is to carry out a pilot project to deepen the issuance and underwriting system. Optimize the pricing mechanism for new share issuance, and pilot adjust the proportion of exclusion of high prices applicable to new stock pricing. Improve the placement arrangements for new shares on the STAR Market, and increase the proportion of offline investors who are willing to hold shares for a long time. Strengthen the supervision of quotation inquiry.
The third is to optimize the equity and debt financing system for companies listed on the Science and Technology Innovation Board. Establish and improve the "green channel" for equity and debt financing, mergers and acquisitions and restructuring of "hard technology" enterprises that carry out key core technology research. Explore the establishment of "asset-light, high R&D investment" recognition standards. Promote the pilot case of refinancing shelf issuance to take the lead in landing on the Science and Technology Innovation Board.
Fourth, greater support for mergers and acquisitions and restructuring. Support listed companies on the STAR Market to carry out mergers and acquisitions and integration of the upstream and downstream of the industrial chain. Improve the inclusiveness of the valuation of mergers and acquisitions, and support the acquisition of high-quality and unprofitable "hard technology" enterprises by companies listed on the Science and Technology Innovation Board. Enrich the payment tools for mergers and acquisitions, and carry out research on installment payment of share consideration. Support listed companies on the Science and Technology Innovation Board to focus on improving and strengthening their main business and carrying out absorption and merger.
Fifth, improve the equity incentive system. Improve the accuracy of equity incentives and better bind interests with investors. Improve the implementation procedures for equity incentives of companies listed on the STAR Market, optimize the application of provisions such as short-term trading and window periods, and study and optimize the arrangements for reserved rights and interests for equity incentives.
Sixth, improve the trading mechanism and prevent market risks. Strengthen trading supervision, and study and optimize the market maker mechanism and after-hours trading mechanism of the Science and Technology Innovation Board. Enrich the STAR Market index, ETF categories and ETF option products.
Seventh, strengthen the supervision of the whole chain of listed companies on the Science and Technology Innovation Board. Strictly crack down on market chaos such as fraudulent issuance and financial fraud on the Science and Technology Innovation Board, and more effectively protect the legitimate rights and interests of small and medium-sized investors. Guide the founding team and core technical backbones to voluntarily extend the share lock-up period. Optimize the "reverse linkage" system for private equity venture capital funds to withdraw. Strictly implement the delisting system.
Eighth, actively create a good market ecology. Promote the optimization of the judicial safeguard system and mechanism of the Science and Technology Innovation Board. Strengthen cooperation with local governments and relevant ministries and commissions, carry out regular visits to listed companies on the Science and Technology Innovation Board, and jointly promote the improvement of the quality of listed companies. We will further implement the action of "improving quality, efficiency and return", and strengthen investor education services.
01
"Hard technology" ranks first, how does the market interpret it?
Over the past five years, the Science and Technology Innovation Board has adhered to the positioning of "hard technology", started from scratch and continued to grow and develop, and the role of institutional reform as a "test field" and the effectiveness of serving scientific and technological innovation have been continuously revealed. As of May 31, 2024, there are 572 listed companies on the STAR Market, with a total market value of 5.17 trillion yuan and a total IPO financing amount of 909.1 billion yuan, making it the first choice for "hard technology" companies to go public. Strengthening the "hard technology" positioning of the Science and Technology Innovation Board has been placed at the top of the eight measures, and it is mentioned that priority will be given to supporting "hard technology" enterprises that have broken through key core technologies in new industries, new business forms and new technologies to be listed on the Science and Technology Innovation Board; Support high-quality unprofitable technology-based enterprises with key core technologies, great market potential, and outstanding scientific and technological innovation attributes to be listed on the Science and Technology Innovation Board.
Since the suspension of the fifth set of standards on the STAR Market last year, the A-share listing of unprofitable companies has become almost impossible. A number of brokerage investment banks and primary market investors have no longer included unprofitable enterprises in the scope of project reserves or investment, and the potential strength of them is quite prominent, but only "temporary observation, profit again". In the eyes of some industry insiders, this will inevitably lead to side effects: unicorns are difficult to reproduce, and some "hard technology" companies that require high R&D investment are difficult to survive to the day of "debut".
The "Eight Measures" issued by the China Securities Regulatory Commission this time have brought good news to some "hard technology" companies with strong potential and not yet profitable. In terms of IPOs, in order to adapt to the characteristics of large investment, long cycles, and high uncertainty in R&D and commercialization, we will support high-quality unprofitable technology-based enterprises with key core technologies, large market potential, and outstanding scientific and technological innovation attributes to be listed on the Science and Technology Innovation Board, so as to enhance the inclusiveness of the system.
Among them, many companies have also expressed their views on the impact of the semiconductor industry.
Tianfeng Securities pointed out that the release of the eight policies of the branch is of positive significance to promote the high-quality development of technology companies. Among them, optimizing the financing system to support mergers and acquisitions will help enterprises in the industrial chain to achieve strong alliances, and then cultivate large-scale technology companies with international competitiveness, especially those in the semiconductor "hard technology" sector are expected to benefit from this. In the current context, as the first debate of the U.S. election is approaching, the domestic substitution space in the field of "stuck neck" technology is becoming increasingly prominent, and the advanced process industry chain is particularly worthy of attention. Given the historical background of the Sino-US trade conflict, it is expected that competition in technology fields such as semiconductors and artificial intelligence will become an important focus for some time to come. From the perspective of the industry structure, the demand for AI servers and advanced process industry chain is strong, but the proportion of domestic production is relatively low, and its expansion is restricted by the uncertainty of international trade, so the demand for domestic substitution is particularly urgent. This may prompt relevant domestic equipment and material manufacturers to accelerate the process of product verification and substitution, bringing significant opportunities for investment in the industrial chain.
China Securities Construction Investment said that the eight policies of the Science and Technology Innovation Board will significantly strengthen the support for mergers and acquisitions, including improving the equity and debt financing of "hard technology" enterprises for the research and development of core key technologies, the "green channel" mechanism for mergers and acquisitions, moderately relaxing the inclusiveness of the valuation of mergers and acquisitions of listed companies on the Science and Technology Innovation Board, and enriching payment tools.
In the face of the market's underestimation of the value of strategic scarce industries and high-quality enterprises, the introduction of eight policies is expected to effectively promote the improvement of the new national system, and further open up the virtuous cycle mechanism of "science and technology-industry-finance", so as to accelerate the transformation process of scientific and technological achievements into real productivity. The selection of "Kete Valuation" enterprises should meet a number of strict conditions, including but not limited to: significant strategic scarcity, high degree of innovation, good fundamentals but relatively low valuation, and international competitiveness. It is particularly noteworthy that industries such as high-end equipment, precision manufacturing and new materials in the key areas of "stuck neck", such as semiconductors, industrial software, domestic computing power and other fields with disruptive technologies and future industrial potential, all belong to the key categories of "Kete Evaluation" enterprises.
Minsheng Securities believes that the "Section Eight" policy clearly proposes greater support for mergers and acquisitions. From the perspective of the development history of global technology enterprises, mergers and acquisitions are an important way for global technology companies to become bigger and stronger. According to the law of industry mergers and acquisitions, investment opportunities can be found in three directions: industry leaders with high absolute value of cash on hand; The relative value of cash in hand is high, and the industry has strong mergers and acquisitions. A leading company in the frontier track with the advantage of valuation premium.
02
The semiconductor sector has "risen", which tracks are "bright"
On June 20, affected by the "Eight Articles", the Science and Technology Innovation 50 Index closed up 0.46% against the trend, with a full-day trading volume of 2.691 billion shares, a turnover of 73.311 billion yuan, and a weighted average turnover rate of 1.92%. Among the stocks on the Science and Technology Innovation Board that can be traded on the 20th, 377 stocks closed up, with 14 stocks rising by more than 10%, of which 8 shares rose by the limit, 23 stocks rose by 5% to 10%, and 192 stocks closed down.
In the rise of the semiconductor sector, analog chips seem to be particularly eye-catching. The "Section Eight Articles" point out that in terms of mergers and acquisitions, it is appropriate to increase the inclusiveness of the valuation of mergers and acquisitions of listed companies on the Science and Technology Innovation Board, and support the listed companies on the Science and Technology Innovation Board to focus on enhancing their ability to continue operations and acquire high-quality unprofitable "hard technology" enterprises. On June 24, the chip sector moved in early trading, and NOVOSENSE and Minxin shares rose by more than 10% in intraday trading. Analog chip company NOVOSENSE announced on the 23rd that it intends to acquire a total of 79.31% of the shares of Shanghai McGoon Microelectronics in cash.
The analog chip field is regarded as the main beneficiary of the new deal, and the merger and acquisition integration of the analog chip industry is a common industry development method. It is expected that the mainland analog chip industry will gradually move towards the development path of centralized integration. At present, there are about 34 analog chip companies listed in the market, of which 26 are on the Science and Technology Innovation Board, and there are still a large number of unlisted analog companies in China as potential merger and acquisition targets. Some companies are already actively deploying the acquisition of related businesses, and the "Branch Eight Articles" will help optimize the industry pattern and promote the leading companies to improve their scale and collaborative operation capabilities. In addition, the analog industry is now nearing the end of inventory destocking after experiencing drastic price cuts and inventory depletion in the previous two years, and the industry is expected to rebound with the recovery of demand in the industrial sector.
In addition to the simulation track, the third-generation semiconductor industry has also shown its positive momentum. It is reported that the wafer enterprise Xinlian Integration officially released a refinancing plan on June 21, planning to fully acquire the remaining 72.33% of the equity of its holding subsidiary Xinlian Yuezhou Integrated Circuit Manufacturing (Shaoxing) Co., Ltd. (hereinafter referred to as "Xinlian Yuezhou") through a combination of issuing shares and paying cash. This move aims to achieve a wholly-owned controlling stake and incorporate Xinlian Yuezhou into its wholly-owned subsidiary.
Xinlian Yuezhou is the main implementation body of the second phase of the Xinlian integration project, with a silicon-based production capacity of about 70,000 pieces/month. In addition to the main layout of silicon-based power device production capacity, Xinlian Yuezhou has also further forward-looking layout of SiC MOSFET, VCSEL (GaAs) and power drive (high-voltage analog IC) and other higher technology platforms and more scarce production capacity. At present, the production capacity of silicon-based IGBT and silicon-based MOSFET in Silian Yuezhou is 70,000 pieces/month, and the production capacity of SiC MOSFETs is 5,000 pieces/month, of which SiC MOSFET products have reached 5,000 pieces/month shipments by the end of 2023, and are expected to reach 10,000 pieces/month in 2024.
03
Semiconductors ushered in a series of favorable policies
If Kebatiao is not a policy directly aimed at the semiconductor industry, then the establishment of the National Integrated Circuit Industry Investment Fund Phase III Co., Ltd. (hereinafter referred to as the "Big Fund Phase III") in May 2024 is a favorable policy focusing on semiconductors. The third phase of the big fund has diversified in terms of investment fields, which not only include traditional equity investment and asset management, but also further extend to venture capital fund management services. Banks, as the main investors, will have a more stable investment style.
In addition, local governments have also introduced a number of policies aimed at promoting the vigorous development of the local semiconductor industry. For example, Chengdu has promulgated Several Policies of Chengdu High-tech Industrial Development Zone on Supporting the High-Quality Development of the Integrated Circuit Industry, and Shanghai has formulated the Interim Measures for the Management of Disruptive Technology Innovation Projects in Shanghai.
Just as the rise of Silicon Valley is inseparable from the active promotion of the U.S. government, in order for a country to maintain its innovation advantages and industrial competitiveness, it not only needs continuous innovation and development at the enterprise level, but also continuous adjustment and optimization at the policy level to ensure that enterprises can always occupy a leading position.
The role of government in industrial innovation and competition is indispensable and not once and for all. International technology and industry competition is a continuous evolutionary process, and current innovation leaders are likely to become followers in the future. Therefore, the government should continue to play its key role in industrial innovation and competition to promote the continuous progress and development of the industry.