Summary of Key Points
Recently, there have been rumors that exchanges have tightened the approval process for IPOs by unprofitable companies. However, several investment bank professionals have clarified that there has been no change in regulatory policies. The increase in the number of applications from unprofitable companies is due to greater policy support, and some of these applications have been rejected due to substandard quality, leading to the misconception that the review process has become stricter. Currently, the policy still encourages unprofitable companies in the hard technology sector to go public. To date, 65 unprofitable companies have successfully listed on the stock markets (64 on the STAR Market and 1 on the GEM Market), with additional companies such as Guangdong Semiconductor and Suoyuan Technology preparing for IPOs.
1. Are the rumors about tighter IPOs for unprofitable companies true? Investment bank professionals: No change in policy, just more poor-quality applications
Many people believe that the review process for unprofitable companies has become stricter, but investment bank professionals unanimously state that the regulatory requirements have remained the same.
- A senior securities broker said, "The review process for unprofitable companies has always been strict. It's just that now, with more successful listings, more companies are trying to apply, and naturally, some do not meet the standards, which leads to the perception of stricter reviews."
- A North China investment bank professional added, "In the past, there were fewer unprofitable companies applying, and they all met the requirements. With the increase in applications, it's inevitable that some do not meet the standards. This is not a tightening of the policy; rather, it's a revelation of the quality issues."
2. The policy has been supporting unprofitable hard technology companies to go public; it's not a tightening, but an expansion of opportunities
In recent years, the policy has continuously favored unprofitable companies, especially in the hard technology sector:
- June 2024: The China Securities Regulatory Commission (CSRC) issued the "Eight Measures for the STAR Market," explicitly supporting high-quality unprofitable technology companies to list on the STAR Market.
- June 2025: The STAR Market underwent the "1+6" reform, introducing a new "Growth Layer" that allows unprofitable companies to use a fifth set of listing criteria (with higher requirements for market value but no revenue requirements).
- June 2026: The fifth set of criteria for the STAR Market was extended to include artificial intelligence and other hard technology sectors.
- April 2026: The GEM Market introduced a fourth set of criteria that do not require profitability but have requirements for market value and revenue.
In short, as long as a company is in the hard technology sector and has potential, the policy is open to them, as long as they do not try to deceive the system.
3. Current status of unprofitable company listings: 65 companies have listed, with more in the queue
- Listed companies: As of August 27, there are 64 companies on the STAR Market and 1 on the GEM Market (Dapuwei-UW), for a total of 65.
- Companies in the queue: Guangdong Semiconductor (GEM Market) has submitted its registration and has been losing money for several years (over 7.8 billion yuan from 2022 to the first half of 2025). Suoyuan Technology (STAR Market) is about to go public (on September 2) and is an unprofitable company in the AI chip sector. Other companies such as Tainu Maibo and Moore Threads are also in the review process.
4. How is quality ensured?
The process for unprofitable companies to list is not based on a simple "meeting the requirements" criterion. It depends on both quality and potential:
- Sponsor institutions must first conduct a thorough review; as a South China investment bank professional mentioned, they must strictly assess the quality of the applications and communicate with the exchanges if there are doubts.
- The exchanges will then reject applications that do not meet the requirements.
- The nature of the company as a hard technology firm is determined by professional organizations, such as the advisory committee and industry authorities, to ensure that it is a genuine hard technology company.
5. Does the market accept these companies? Look at the example of Dapuwei-UW
After the listing of unprofitable companies, the market does not reject them all uniformly; instead, it considers the potential of the companies.
- Dapuwei-UW, the first unprofitable company listed on the GEM Market, lost 1.7 billion yuan over four years but opened at 207 yuan on its first day of trading (with an issue price of 46 yuan) and closed with a 430% increase in value, reaching a total market value of over 100 billion yuan.
- Its half-year report this year showed a fivefold increase in revenue and a net profit of 1.3 billion yuan, indicating that the market recognizes its technology and growth potential.
In summary, the approval process for unprofitable company IPOs is not about tightening restrictions; it's about selecting the best candidates. The policy supports hard technology companies, but quality is the ultimate criterion. With these explanations, the situation should be clearer now, right? No complex terminology—just plain language to help you understand.