In December, multiple Chinese companies planning to go public for the first time have been withdrawing their IPO applications one after another. As of now, over 400 companies have terminated their IPO processes this year, reaching a record high in recent years.
According to a report by “First Financial” on December 3rd, due to the tightening of the IPO process, there have been a significant number of companies discontinuing their applications this year. In December alone, two companies, Jiahong New Materials, originally intended to list on the Growth Enterprise Market, and Feishide, aiming for a listing on the Sci-Tech Innovation Board, have withdrawn their IPO applications within just two days.
Jiahong New Materials had its review terminated after more than a year, while Feishide did not make progress after inquiries and eventually withdrew its application. The phenomenon of terminating reviews has become increasingly common in recent years and especially in the latter part of this year, there have been more cases of reviews being discontinued after the inquiries.
Looking at November, the Shanghai Stock Exchange, the Shenzhen Stock Exchange, and the Beijing Stock Exchange (referred to as the “Hu-Shen-Bei Exchange”) had a total of 12 companies discontinuing their IPO reviews (the Bei Exchange disclosed information on 8 companies terminating their reviews in November).
From the disclosed data of the Hu-Shen-Bei Exchange on terminated reviews, the number of IPO companies discontinuing their reviews this year has shown a pattern of being relatively lower on the two ends and higher in the middle. In June, the three major exchanges disclosed the highest number of 118 companies terminating their reviews; while in May and July around June, there were 47 and 46 companies respectively discontinued by the exchanges.
According to the statistics disclosed by the Hu-Shen-Bei Exchange, as of December 3, the three major exchanges have announced a total of 428 companies terminating their reviews (withdrawing materials + rejection/termination of registration) this year. Among these, the Shanghai Stock Exchange accounted for 150 companies (77 on the Main Board and 73 on the Sci-Tech Innovation Board), the Shenzhen Stock Exchange had 202 companies (54 on the Main Board and 148 on the Growth Enterprise Board), and the Beijing Stock Exchange had 76 companies.
During a comparable period from 2021 to 2023, the number of announced terminations was between 200 and 300 companies. This year, the number of terminations of companies planning to go public has surged, showing a 75% increase compared to the same period last year.
Industry insiders have pointed out common characteristics among the companies withdrawing their IPO applications, such as failure to meet the new listing standards in financial data, and significant decline in performance over the past year.