Summary of Key Points
In June, there was a surge in IPO applications for A-share markets, with 66 new companies approved in one month, exceeding the total number of approvals in the previous five months (44). The Growth Enterprise Market (GEM) and the Beijing Stock Exchange (BSE) became popular choices, accounting for over 70% of the approvals. Some companies performed significantly better than the listing requirements for their respective sectors. Several companies that had previously withdrawn their applications returned, changing their intermediaries and increasing the amount of funds they were seeking to raise. Policy initiatives, such as reforms to the Science and Technology Innovation Board (STAR Market) and GEM, have contributed to this structural recovery in IPO activity, and it is expected that the trend will show a pattern of "differential acceleration" in the second half of the year.
I. Why Did IPO Approvals Suddenly Surge in June?
The reason for this surge can be attributed to the "calendar effect." Ordinary people might wonder why so many applications were submitted in June, but this is actually a well-established industry practice related to the validity period of financial data. The financial reports submitted by companies when applying for an IPO (for example, the annual report from the previous year) are only valid for six months and become invalid by the end of June. By submitting materials in late June, companies can use the annual report from last year or the first-quarter report of this year, avoiding the need to wait for the mid-year report, which is available after July, thus saving time and speeding up the approval process.
For a clearer comparison: In the first five months, the three exchanges combined approved only 44 companies, while in June alone, 66 companies were approved, with 30 approvals occurring in just three days (June 22-24), including a maximum of 12 approvals per day. Investment bank professionals also point out that fewer applications are accepted during the month of the Spring Festival, and it is common for companies to submit their materials in late June to ensure that they use valid financial data.
II. The GEM and BSE Are Becoming Highly Popular
Of the 66 companies approved in June, 25 chose the GEM and 23 chose the BSE, accounting for more than 70% of the total approvals. These two sectors are particularly popular because they are better suited for growth-oriented enterprises. The GEM supports innovation and entrepreneurship, while the BSE has relatively lower entry requirements and focuses on specialized, sophisticated, and innovative companies.
Some of the companies' financial performance is truly impressive:
- Changlong Aviation (on the Shanghai Main Board): Had revenue of 10.6 billion yuan last year (a 6% increase) and a net profit of 690 million yuan (a 10% increase), making it the company with the highest revenue among those approved in June.
- Xingbang Intelligence (on the BSE): Had a net profit of 550 million yuan last year (a 44% increase), far exceeding the minimum requirement of 15 million yuan for BSE listings (36 times higher).
This shows that companies not only want to go public but also need to have solid financial performance to support their applications.
III. Companies Returning with New Strategies
Many companies that had previously withdrawn their applications are making a comeback, adopting new tactics:
- HaoDa Electronics: Approved in 2021 but had its registration terminated. This year, it is applying for the STAR Market again, changing its intermediary team (from Anxin Securities to Guolian Minsheng) and increasing the amount of funds it seeks to raise from 960 million yuan to 1.836 billion yuan.
- XinZhanJiang: Applied to the BSE last June but withdrew its application in April; it is applying again less than two months later.
- GuangYuanNewMaterials: Withdrew its application after the third round of inquiries during its application for the GEM in 2022 and is trying again now.
The reasons for changing intermediaries may be that the previous teams failed to address certain issues, and new teams bring fresh perspectives. The increase in the amount of funds sought indicates that companies believe they are now more valuable and want to raise more capital for expansion.
IV. Policies Are Boosting IPOs
Recent policy changes have played a crucial role in the recovery of IPO activity:
- STAR Market: The fifth set of approval criteria, which does not focus on profitability but on research and development and market potential, has been extended to include areas such as artificial intelligence and quantum technology. A "green channel" has also been established for these companies.
- GEM: In April, a fourth set of criteria was introduced, including indicators like compound revenue growth rates and R&D investment, allowing companies that are not yet profitable but growing rapidly to go public (for example, the company "LianChengHangKong" approved in June used these new criteria).
- Pre-review mechanism: The STAR Market reviews company materials in advance, reducing issues during the approval process and speeding up the process.
These policies essentially create additional opportunities for companies that meet the requirements to get approved more easily.
V. What to Expect in the Second Half of the Year?
Experts predict the following trends:
- Structural acceleration: Not all sectors will see rapid growth; hard-tech industries (such as semiconductors and humanoid robots) and innovative consumer sectors are likely to experience faster development.
- Large companies will avoid applying simultaneously: To prevent market pressure, large companies will not try to go public at the same time.
- More companies will choose the BSE: Specialized, sophisticated, and innovative enterprises will prefer the BSE for listings.
- Long-term trend: The total number of IPOs in 2026 is expected to exceed that of 2025.
In summary, the increase in IPO approvals in June is a result of the combination of the calendar effect, policy benefits, and corporate demand. For investors, this means more new companies will be listed on the A-share market, providing more investment options. However, it is important to be aware that companies applying for the second time may have historical issues, and sectors supported by policies (such as hard technology and innovative consumption) are particularly worth focusing on.
(End of translation.)