SOEs realize STAR Market funding power

Efforts to boost innovation, upgrading in strategic emerging high-tech areas

China's push for innovation and upgrading in strategic emerging sectors will lead more State-owned enterprises to be listed on its Science and Technology Innovation Board — or the STAR Market — this year, said analysts and business leaders.

Established in 2019 with the aim of helping the growing number of China's innovative technology enterprises raise funds in the domestic capital market, the STAR Market of the Shanghai Stock Exchange is a trading platform that implements more inclusive and adaptable listing rules to support technologically savvy, innovative companies.

They made the comments after SOEs, including Hubei province-based Aerospace Nanhu Electronic Information Technology Co Ltd and Beijing Shenzhou Aerospace Software Technology Co Ltd, listed on the tech-heavy STAR Market earlier this month.

According to statistics from Beijing Zhiben Venture Management Consulting Co Ltd, a total of six SOEs, such as Anhui province-based Hefei Chipmore Technology Co Ltd and Nexchip Semiconductor Corp along with Hebei province-based Peric Special Gases Co Ltd, have listed on the board so far this year.

Amid the new round of SOE reforms, high-tech SOEs will endeavor to lead the growth of advanced industries, and their advantages in strategic emerging industries — including new-generation information technology, artificial intelligence and integrated circuits — will be enhanced, said Fang Yi, chief strategy analyst of the research institute of Shanghai Guotai Junan Securities Asset Management Co Ltd.

Fang predicted that in the next phase, the dominant advantages of SOEs in strategic emerging industries will become more evident. As a result, their listed companies and related businesses in various industrial chains are expected to benefit even more.

Eager to turn those prospects into reality, Ye Yuanwei, Party secretary of Shanghai Nuclear Engineering Research and Design Institute Co Ltd, a subsidiary of State Power Investment Corp Ltd, said that the company aims to be listed on the STAR Market this year, with a fundraising target of 1.1 billion yuan ($155 million). It plans to attract strategic investors such as State-owned China Chengtong Holdings Group Ltd and TBEA Co Ltd.

After completing a series A financing of nearly 6 billion yuan, Zhang Qiang, president of Tianjin Lishen Battery Joint-Stock Co Ltd, said his company is currently undergoing series B financing and plans to be listed on the STAR market in 2025.

China United Network Communications Group Co Ltd has also been heading in that direction. The Beijing-based group announced earlier this month on the Hong Kong Stock Exchange that its subsidiary — China Unicom SMART Connection Technology Ltd — also plans a STAR Market debut.

Since the establishment of the STAR Market, the board has facilitated the listing and financing of 47 SOEs, with a total initial fundraising amount of 116.5 billion yuan, according to data from the Shanghai Stock Exchange.

Experts said that with strong policy support, a group of high-tech SOEs is expected to exert their efforts in value creation, thereby facilitating the reshaping of their valuations in the stock markets.

"Strong policy support will help SOEs grow in strategic emerging industries and list on the STAR Market. This will speed up their market-oriented operations and strengthen their core competitiveness," said Hu Chi, a researcher at the research center of the State-owned Assets Supervision and Administration Commission of the State Council, or SASAC.

During a recent meeting held in Beijing, Zhang Yuzhuo, chairman of SASAC, urged centrally administered SOEs to intensify their efforts in developing strategic emerging industries. He emphasized the importance of enhancing core competitiveness and actively serving major national strategies.