Tianrui Instruments listed: Who is the real beneficiary?

On November 16, 2010, for the Jiangsu Tianrui Instrument Co., Ltd. (hereinafter referred to as Tianrui Instrument, 300165.SZ), whose main business was the development, production, and sales of chemical analysis instruments and application software, it was a day of “great joy”. Because on this day its IPO application in the A-share market was approved by the China Securities Regulatory Commission, it has already obtained the “pass” for staying on the A-share GEM. Since then, Skyray Instruments and the lead underwriter Orient Securities have determined that the company's current issuance price is RMB 65.00 per share, which is RMB 5.25 higher than the average offer price of all offline placements. The diluted price-earnings ratio per share is as high as 72.63 times. Tianrui Instruments issued 3.7 million shares under IPO, which was averagely obtained by 10 institutional investors.

On January 25, 2011, Skyray Instrument finally welcomed the listing date with joy. However, to the surprise of the company's shareholders, Tianrui Instruments broke the issue price at the opening price. The opening price was only 59 yuan on that day, much lower than the issue price of 65 yuan per share. On the first day of listing, the highest share price of the company rushed to 59.87 yuan, the lowest drop to 54.03 yuan, to close at 54.16 yuan, a drop of up to 20.01% over the issue price. On that day, the company's turnover was 210 million yuan, and the turnover rate was 24.88%.

After the listing, the first annual report submitted by Skyray Instruments was not "forced." In 2010, the company realized a net profit of 77.126 million yuan, a year-on-year increase of only 9.10%. The company achieved a net profit of 1.938 million yuan in the first quarter of this year, a year-on-year increase of only 3.27%. In 2009, the year-on-year increase in net profit was as high as 49.82%. exist.

On April 25, 2011, it was the 3.7 million shares listed on Tianrui Instrument Network that were placed on the market. This also opened the company's share price drop. On the same day, the stock price plummeted 5.08% to close at 50.26 yuan. The subsequent five consecutive trading days fell continuously. By May 4, the company's stock price had dropped to a minimum of 43.15 yuan. Based on a rough calculation, the 10 institutional investors participating in the company’s offline subscription totaled a loss of 80.845 million yuan.

In stark contrast to the heavy losses suffered by Tianrui Instrument investors, the lead underwriter Orient Securities has earned a profit. As the lead underwriter of Skyray Instruments, Orient Securities believes that the company's reasonable value range is 61.02 yuan/share to 68.37 yuan/share. The average of the quotes given by its 94 offline placement targets was only 59.75 yuan per share, and the final company's issue price was determined at 65 yuan per share.

It is worthy of investors' attention that Ten Rui Instruments has 10 offline placements and 4.12% of effective placements (percentage of offline placements = net distributions/effective purchases), which is also an instrument Spotlighting Technology (300203.SZ), which is in the instrument industry and landed on the A-share ChiNext, is only 2.61% under the net.

The ratio of offline placements may be unfamiliar to investors, but for lead underwriters, it is a good thing, because it is a tool to regulate the total capital raised by listed companies, and it is also a powerful “magic weapon” that regulates the amount of underwriting sponsorship fees. “The ratio of offline placements is a good adjustment tool for listed companies and lead underwriters. Since the amount of offline placements is fixed, the total amount of effective offline purchases can be adjusted on the basis of listed companies and lead underwriters. Higher prices mean that the total amount of effective purchases by offline agencies will decrease, and the proportion of offline placements will be higher, which means that institutional investors who subscribe offline will feel that the initial price of the company is too high, and the possibility of late break may be higher. Sex is very large. The advantage of this is that the financing quota of listed companies will be greatly increased, and the underwriting cost of the main underwriting will also be greatly increased. On the contrary, if the proportion of offline issuance is low, the issue price is also lower. Institutional investors Recognizing this issuance price will make it less likely that the company will break after listing.” An investment banker told the China Business News reporter.

In addition, the issuer and investment bank are unscathed even after the IPO is broken. Therefore, in the face of the temptation of high profits, in addition to the above means, the lead underwriter will also use financial packaging and other means to increase the issuance price of new shares and obtain high underwriting sponsorship fees. According to statistics, 114 IPO companies listed this year have brought more than 6 billion yuan in sponsorship and underwriting income to brokers.