Analysis on the listed SMEs in the Pearl River Delta
1. The Introduction of the Listed SMEs in the Pearl River Delta
1.1 General Situation
From mid-February to mid-April, 8 companies in the Pearl River Delta (PRD) have launched
IPOs via the SME board and the Chinext with the raised capital of 4.7 billion Yuan and the PE
ratio of 27.19.
The 8 newly listed companies are engaged in electrical appliance, electronic components,
software, building materials, chemical products, etc. As to the locations, there are 3 companies in
Shenzhen, 2 in Guangzhou and Foshan respectively, 1 in Zhongshan.
As of April 10th, there are 178 PRD companies listed on the SME Board and the Chinext, of
which 120 companies on the SME Board and the rest on the Chinext, accounting for 17.9% and
19.2% of the total company number of the relative sector respectively.
Table 1: the number of listed companies on the SME Board or Chinext
SME
board
Chinext
Total
Guangzhou
22
Shenzhen
67
8
30
35
102
Zhongshan
7
1
8
Foshan
11
1
12
Dongguan
3
4
7
Zhuhai
8
Jiangmen
1
Huizhou
1
Zhaoqing
1
Total
120
1
2
1
2
2
3
58
178
5
13
Sources: prepared by GZS Research Department according to Wind’s data
1.2 The comparison of IPOs
With regard to the nationwide level, from mid- mid-February to mid-April, there have been 26
companies newly listed on the SME Board and the Chinext with average PE ratio of 29.97 and
average capital raised of 603.7 million Yuan. Worth-mentioning, the non-PRD companies have
launched more IPOs with higher average PE ratio and more raised capital compared with their
PRD counterparts. Besides, the PE ratios under IPOs have been declined to lower than 30 due to
the effort made by the regulatory agency.
2. Supportive Policies
2.1 The MIIT’s policies
The Ministry of Industry and Information Technology (MIIT) has announced a number of
measures relating to the SMEs, including additional guarantee amount of 1.5 trillion Yuan for the
small & micro enterprises, additional 250 thousand guaranteed enterprises, in support of 600 startup bases and 800 public service platforms for SMEs, reduction of enterprises’ financial burden.
2.2 Guangdong Province’s measures
As Guangdong Province is one of the most SME-intensive areas in China and SMEs are key
to the region’s healthy and sustainable development, the Guangdong provincial government has
announced a series of supportive measures, including fiscal support, tax reduction, financing
support, market expansion assistance, public service enhancement, etc.
3. Case Study
Alpha (002292)
Having Established for more than 15 years, Guangdong Alpha Animation and Culture Co.,
Ltd. (hereinafter called as “Alpha” or ”the company”) is the biggest animation-related toys
company in China and also engaged in the production and publication of the animation videos and
comic books. Since September, 2009, the company has been successfully listed on the SME board.
At the end of 2008, a year prior to its IPO, the company’s total asset, operating income and
operating profit was 435 million Yuan, 451 million Yuan and 67 million Yuan respectively. After
3-years’ development since its IPO, the company’s total asset, operating income and operating
profit has achieved to 1.62 billion Yuan, 1.056 billion Yuan and 156 million Yuan by the end of
2011, representing a 2.72 times, 1.34 times and 1.33 times growth respectively.
We believe the company’s success has been attributed to the following reasons:
(1) A more convenient platform for fund raising
After raising 917 million Yuan via its IPO, the company has obtained sufficient financial
resource and is capable of investing and integrating the industrial chain. For example, the
company has diversified its businesses into the production of animation videos and their extended
products, and distribution channels as well. The investment and integration of the industrial chain
has laid a solid foundation for the company’s business growth.
(2) A more attractive platform for talents
An animation-related company is an intelligence-extensive company, therefore, management
and creative talents are the most valuable asset for this kind of company. On the other hand, a
public company obtains a unique advantage over a private company since it is able to offer a more
attractive compensation package to talents in terms of higher salary and stock option. Obviously,
Alpha has been benefiting from its listing situation in terms of the recruitment of competent
talents.
Writers: David Zheng, Ouyang ming, Wang Jianchao, employees of Guangzhou Securities Co.,
Ltd.(GZS)
Profile of GZS
Incorporated in 1988, GZS is engaged in securities businesses such as investment banking,
brokerage, consulting, asset management, fund management, futures brokerage. As the R&D
platform for GZS, the Research Department specializes in the analysis of macro-economy, strategy,
industry and listed company, provides services for regional SMEs and establishes the mission to
become the research expert of PRD listed companies and the financial consultant for the PRD
SMEs.
Writers’ Profile
Mr. David Zheng P.H.D., Deputy President and Chief Economist of GZS. Before returning
China, Mr. Zheng had obtained his P.H.D. degree from George Washington University, USA, and
worked in the World Bank. Mr. Zheng has been in charge of major research projects of national
and provincial levels and obtained awards from the Securities Association of China, Guangdong
Province and Guangzhou City.
Mr. Ouyang Ming, bachelor of Law and master of Business Administration, macro-economic
analyst of GZS with financial business experience of over 10 years.
Mr. Wang Jianchao, master of Finance with working experience in fund management firms.
Mr. Wang has published several essays on core journals of national level.