Zhongjin: It is expected that the market size of private placements will remain stable and rise in 2026, and project returns can still be expected.

CICC released a research report stating that the size of fund-raising for private placement projects is expected to remain stable and increase by 2026, with the fund-raising size for competitive bid projects estimated to reach 165 billion yuan. CICC has established a private placement investment strategy that combines style rotation thinking. Based on historical backtesting performance, since 2020, this strategy has achieved an annualized return rate of nearly 30%, showing significant advantages compared to private placement portfolios without screening, and stable excess returns over the years. Based on the momentum dimension of the moving average model and the risk dimension of the valuation differential indicator, the current model still considers growth style relatively favorably, and recommends the use of a prosperous mindset to select high-quality projects. Annual Review of 2025: Market size increased, project returns continued to rise Refinancing mainly includes private placements, public offerings, rights issues, preferred shares, convertible bond issuances, etc. Compared to other refinancing methods, private placements have relatively low requirements in terms of corporate profitability and leverage, so most refinancing projects of listed companies adopt private placements. 1) Market review: In 2025, the size of the private placement market increased, with the number of new proposals and approved projects both increasing year-on-year. The total fund-raising amount reached 714.13 billion yuan, of which state-owned banks raised 520 billion yuan. In addition, the discount on projects completed in 2025 (average 12.7%) decreased slightly compared to the previous year, reflecting the increase in bidding competition; project returns (average 36.3%) showed a more significant improvement compared to the past three years, which is conducive to attracting more investors to participate in the private placement market in the future. 2) Income decomposition: The income of private placement projects in 2025 mainly comes from discount income and market income during the lock-up period. Although the average discount rate of projects issued in 2025 has decreased slightly compared to the previous year, discount income still contributes stably to the income of private placement projects, with an average discount income rate of 15.8% in 2025. At the same time, projects issued in 2025 have also benefited significantly from the uptrend in the capital market over the past year. Regarding the excess performance of individual stocks during the lock-up period, there is also a certain degree of positive contribution in the projects issued in 2025, with a return rate of about 2.6%. 3) Fund preference: The proportion of various investors participating in private placement projects has remained relatively stable over the years, with public funds being the main source of funds. In 2025, public funds, foreign funds, and securities institutions relatively preferred projects with high discount rates when participating in private placement projects. Outlook for 2026: Market size stable and rising, project returns still promising Market size: CICC expects the size of fund-raising for private placement projects to remain stable and increase by 2026, with the fund-raising size for competitive bid projects expected to reach around 165 billion yuan. CICC's forecast for the fund-raising size of competitive bid projects in 2025 in the report "2025 Refinancing Outlook: Clouds Clearing, Setting Sail Again" was quite accurate. In 2025, considering the slowdown in project progress in the private placement market since the fourth quarter, if the trend of adding new proposals continues, and considering the review period, the fund-raising volume of private placements issued next year may show a pattern of high first and then low. CICC further estimates the total fund-raising size based on the mean conversion rate for normal years, and expects the fund-raising size for competitive bid projects to be around 165 billion yuan. Income outlook: The private placement market in 2026 may provide a safety margin of around 10 percentage points. The income of private placement projects can be roughly divided into discount income, market income during the lock-up period, and excess stock income during the lock-up period. The discount income and excess stock income during the lock-up period can be used as references using historical data under similar conditions. The average discount rate from 2023 to 2025 was approximately 13.8%, corresponding to a discount income of about 16.0%. Since the new regulations in 2020, the average excess stock income during the lock-up period has been -6.4%. Therefore, considering the possibility of negative excess stock income during the lock-up period, the private placement market may still contribute about a 10 percentage point safety margin.