Five Chinese firms postpone IPOs as regulator tightens supervision
Five Chinese firms announced on Monday that they had postponed their initial public offerings (IPOs) after China's stock regulator said overnight it would strengthen its supervision of IPOs.
The companies, all of which planned to list on China's Shenzhen stock exchange, made the announcements in filings to the exchange.
The China Regulatory Commission said in a statement late on Sunday that it would strengthen its supervision of IPOs, after a small drug maker postponed its share sale saying it was "too big".
The stock watchdog, which had promised a more hands-off approach to IPOs after resuming them earlier this month following a 15-month hiatus, said it will step up monitoring of the deals and their pricing.
The statement comes after Jiangsu Aosaikang Pharmaceutical said on Friday it had delayed its IPO after pricing it at 72.99 yuan per share, equivalent to 67 times its 2012 net profit.
The average PE ratio of pharmaceutical companies listed on Shenzhen's Nasdaq-style ChiNext is 55.31, according to the state-run Shanghai Securities Journal.
The CSRC denied it had forced Jiangsu Aosaikang Pharmaceutical to halt its IPO, saying the decision was made by the company and the underwriter, China International Capital. But sources familiar with the matter had earlier told Thomson Reuters publication IFR that the regulator had pressured the drug maker to postpone.
In the statement issued on Sunday, the CSRC said it would stop the IPO and mete out punishment according to relevant rules if an issuer and lead underwriters are found to have used information other than what is disclosed publicly in the prospectus.
The issuer and the underwriters will be required to publish special statements in advance to caution investors against potential risks if the proposed IPO price points to a price-to-earnings ratio that is higher than the average PE ratio of their listed peers, it said.
(Read more: China approves new IPOs, ending listing freeze)
Consulting firm PwC has forecast the Chinese IPO market could be worth up to 250 billion yuan in 2014.