Profits dampener for mainland IPOs
Data shows companies that listed last year had unexpectedly lacklustre earnings, which could trigger a regulatory tightening for new candidates
Mainland companies planning to float their shares on the A-share market have reason to feel apprehensive after reading the earnings forecasts of the firms that recently preceded them.
The rash of profit declines immediately following initial public offerings (IPOs) could prompt the securities regulator to tighten the procedures for reviewing companies hoping to raise funds from the market.
Nearly a third of the companies that launched offerings last year would report earnings drops, Hexin said. The finding was based on earnings forecasts from 124 newly listed firms.
Seven firms will report full-year earnings down more than 50 per cent from a year earlier.
The phenomenon could cast a shadow on the prospects for mainland offerings, which were suspended by the China Securities Regulatory Commission (CSRC) in early October to bolster investor confidence.
While the CSRC did not give a date for the reopening of the listings market, it may be deterred from restarting the vetting of fresh applications by concerns about the quality of listing candidates, investment bankers said.