How is the share price usually set when new shares are issued?
Usually, the shares of listed companies are sold through brokers or market makers according to the terms agreed in the prospectus or registration statement issued to the corresponding stock exchanges. Generally speaking, once the IPO is completed, the company can apply for listing on the stock exchange or quotation system.
Another feasible method of listing on the stock exchange or quotation system is to stipulate in the prospectus or registration statement that private companies are allowed to sell their shares to the public. These stocks are considered to be "freely traded", which makes enterprises meet the requirements of listing on the stock exchange or quotation system. Most stock exchanges or quotation systems have rigid regulations on the number of shareholders of listed companies, which stipulate the minimum number of freely traded shares.
As far as valuation models are concerned, different industry attributes, growth and financial characteristics determine that listed companies apply different valuation models. At present, the commonly used valuation methods can be divided into two categories: income discount method and analogy method. The so-called income discount method is to estimate the future operating conditions of listed companies in a reasonable way, choose the appropriate discount rate and discount model, and calculate the value of listed companies. Such as the most commonly used dividend discount model (DDM) and cash flow discount model. The discount model is not complicated, the key lies in how to determine the company's future cash flow and discount rate, which is also the professional value of underwriters. The so-called analogy method is to select some ratios of similar listed companies to determine the value of listed companies, such as the most commonly used price-earnings ratio (share price/earnings per share) and price-to-book ratio (share price/net assets per share), and then combine the financial indicators of new listed companies, such as earnings per share and net assets per share, and generally adopt predictive indicators. The application of P/E ratio method has many limitations, such as requiring listed companies to have stable operating performance and no losses, while P/B ratio method does not have these problems, but it also has defects, mainly relying too much on the company's book value rather than the latest market value. Therefore, this method is more suitable for companies with high current assets, such as banks and insurance companies. During the IPO period of CCB, according to the pricing range of HK$ 65,438 +0.9 ~ 2.4 determined in the prospectus, the net assets per share after issuance were about HK$ 65,438 +0.09 ~ 1. 15, and the P/B ratio was 1.74 ~ 2.09 times. In addition to the above indicators, valuation can also be made by market value/sales revenue (P/S), market value/cash flow (P/C) and other indicators.
The theoretical value of the company can be reasonably estimated through the valuation model, but to finally determine the issue price, it is necessary to choose a reasonable issue method and fully discover the market demand. At present, the commonly used issuance methods are: cumulative bidding method, fixed price method and bidding method. General bidding methods are common in bond issuance, so I won't go into details here. Cumulative bidding is one of the most commonly used ways of issuing new shares in the world, which means that the issuer determines the issue price through inquiry mechanism and issues shares independently. The so-called "inquiry mechanism" refers to the process that the lead underwriter first determines the issue price range of new shares, holds a roadshow promotion meeting, repeatedly modifies the issue price according to the demand and demand price information, and finally determines the issue price. The average time was 1 ~ 2 weeks. For example, the initial inquiry range of CCB this time was HK$ 65,438 +0.42 ~ 2.27, which was later reduced to HK$ 65,438 +0.65 ~ 2. 10. The final issue price will be determined before1October 25th. The inquiry process is only an expression of investors' intention, and generally does not represent the final purchase commitment.
Under the inquiry mechanism, the issue price of new shares is not determined in advance, while under the fixed price model, the lead underwriter directly determines an issue price according to the valuation results and investors' demand expectations. The fixed price method is simple, but inefficient. In the past, China has always adopted a fixed-price issuance method. On June 7, 2004, the CSRC launched the inquiry mechanism for new shares, which is a key step in marketization.
In June, the Hong Kong Securities Regulatory Commission and the Hong Kong Stock Exchange issued the Joint Policy Statement on IPO Mechanism 5438+0994+0 1. Since then, the large-scale IPO in Hong Kong has basically adopted the mixed IPO mechanism of cumulative bidding and fixed-price public subscription.
After the issuance method is determined, it will enter the formal issuance stage. At this time, if the effective subscription quantity exceeds the issued quantity, it is oversubscribed. The higher the oversubscription multiple, the stronger the demand of investors. In the case of oversubscription, the lead underwriter may or may not have the allotment right, that is, the allotment right, which depends on the rules of the exchange. By exercising the option, the issuer can realize the ideal shareholder structure. In China, at present, the lead underwriter does not have the right to allocate shares, and must allocate shares according to the subscription ratio. It is reported that by the closing date of public offering (10, 19), CCB has attracted 76 billion US dollars of subscription funds, nearly 9 times more than the amount to be issued, and the public offering in Hong Kong has been oversubscribed nearly 40 times, among which the international offering will be decided by the joint account book manager according to various factors. In principle, it is publicly issued in Hong Kong.
When there is oversubscription, the lead underwriter can also use the "over-allotment option" (also known as "green shoes") to increase the number of issues. "Over-allotment option" refers to the option granted by the issuer to the lead underwriter. The authorized lead underwriter can oversell a certain proportion of shares at the same issue price within a certain period after the stock is listed. During this period, if the market price is lower than the issue price, the lead underwriter will directly buy shares from the market and distribute them to investors who subscribe. If the market price is higher than the issue price, it will be issued directly by the issuer. This can keep the stock price relatively stable for a certain period after listing, and at the same time help the underwriters to resist the risk of issuance. In this case, CCB's prospectus stipulates that CICC and Morgan Stanley Tianhui can exercise the over-allotment option on behalf of the international offering underwriters within 30 days after the Hong Kong Stock Exchange starts trading, so as to require CCB to place and issue additional shares with a total of no more than 3,972,890,000 shares, accounting for 65,438+05% of the global initial offering shares.