Zhongtai: Further deepen the reform of the Growth Enterprise Market, focusing on the opportunities for technological growth and high-quality innovative enterprises.

Zhongtai released a research report stating that the current round of ChiNext reform aims to enhance the attractiveness of high-quality growth assets and further strengthen the institutional support for serving the new productive forces in the capital market. Technology growth remains a key policy support direction. It is recommended to focus on the ChiNext board and innovative companies planning to go public, with a strong focus on research and development input, clear industrialization pathways in specific directions, especially in high-end equipment, advanced manufacturing, AI applications, new materials, and new consumer technology fields. In terms of style, it is advisable to continue to adhere to the screening strategy of "heavy on quality, light on themes", prioritizing innovative companies with verifiable orders, revenue, research and development investment, and competitive barriers, rather than relying solely on concept mapping and emotionally driven high-volatility small-cap stocks. This round of policies is more favorable for the valuation restoration of high-quality growth stocks rather than a broad diffusion of low-quality technology themes. Zhongtai's main points are as follows: 1. Event: On April 10, with the approval of the State Council, the China Securities Regulatory Commission issued the "Opinions on Deepening the Reform of ChiNext and Better Serving the Development of New Productive Forces", launching eight measures around IPOs, registration review, financing mergers and acquisitions, reform of the investment side, and comprehensive supervision throughout the process. 2. Comments: The fourth set of listing standards is the core breakthrough of this round of ChiNext reform. The new standards set two differentiated paths. Compared with the existing standards, regulatory judgment on the quality of companies has shifted from traditional profit indicators to comprehensive recognition of growth, innovation, and industrialization capabilities, which is more conducive to attracting a group of high-quality innovative companies that are not yet profitable but have strong technological barriers, commercial prospects, and growth potential. At the same time, this institutional arrangement also clarifies the division of labor between ChiNext and the Science and Technology Innovation Board: the Science and Technology Innovation Board continues to focus on breakthroughs in "from 0 to 1" hard technology, focusing on key core technology research companies; ChiNext focuses more on technology transformation from "from 1 to 10" and industrial expansion, mainly serving growth-oriented innovative entrepreneurship companies. In general, the introduction of the fourth set of standards will not only help enhance the institutional adaptability of ChiNext to new productive enterprises but also promote the formation of a clearer differentiation positioning and a more complete innovative financing chain in multi-level capital markets. Drive ChiNext to form a capital tool system covering the full life cycle of enterprise growth. The "Opinions" also synchronize the improvement of refinancing, mergers and acquisitions, and trading mechanisms, focusing on enhancing ChiNext's capital support capabilities throughout the lifecycle of innovative companies, including establishing an IPO pre-review mechanism, allowing IPO companies to carry out capital increase through shares issuance to existing shareholders during the approval process, and promoting the landing of refinancing shelf issuance system for ChiNext. In general, this reform is not limited to broadening the IPO entrance but aims to build a complete capital tool chain covering "listing-financing-mergers and acquisitions-trading", further transforming ChiNext from a single financing platform to a comprehensive capital market platform serving the growth and expansion of innovative enterprises. Further strengthen the frontline role of local governments in nurturing enterprises for listing. Specifically, while the review responsibilities and standards of the registration system remain unchanged, under the arrangement of pilot local governments sending information of companies planning to go public, the role of local governments in the process of enterprise listing has shifted from focusing on policy support, resource management, and coordination services to the early screening of high-quality enterprises, identifying growth potential, and nurturing for listing. This helps establish a more systematic gradient incubation mechanism around emerging industries in the jurisdiction, enhancing the efficiency of connecting high-quality enterprises with the capital market, accelerating the entry of a group of companies that meet the sector's positioning into ChiNext. Enhance the attractiveness of ChiNext for high-quality growth assets and improve the overall market's expectations for the financing environment of innovative enterprises. It is important to emphasize that policy support is not for all non-profitable enterprises but for those high-quality non-profitable innovative enterprises with clear commercialization paths, verifiable revenue growth, and strong research and development investment barriers. At the same time, regulators also strengthen the review and approval of IPOs, pressing intermediary institutions' responsibility as "gatekeepers", guarding against "concealed application" and low-quality expansion, and further strengthening risk disclosure and constraint mechanisms through the "U" emblem for non-profitable companies, restrictions on controlling shareholders and senior executive share reductions. Overall, while this reform is expected to increase the market's risk appetite for growth-oriented innovative companies, its impact is more likely to be reflected in the valuation restoration of high-quality growth stocks and companies with strong industrialization capabilities, rather than forming a blanket bonus for broad-tech concepts and low-quality thematic stocks. Further enhance the institutional support of the capital market for serving new productive forces. Overall, this round of reform does not merely add a set of listing standards but systematically improves the issuance and listing, refinancing, mergers and acquisitions, trading mechanisms, and regulatory constraints, aimed at financing characteristics of emerging industries and future industries enterprises with "technological leadership, prominent growth potential, but relatively lagging profit release." It enhances the inclusiveness of the system while strengthening risk prevention, promoting the capital market to form a more balanced balance between supporting innovation and improving quality. For the capital market, this is not only a further optimization of ChiNext's functional positioning and service boundaries but also an important institutional signal for the direct financing system to better serve high-quality development and nurture new productive forces. Investment recommendations: 1) Technology growth remains a key policy support direction. The investment focus of this round of ChiNext reform is not on the general rise of technology themes but on the institutional dividend converging on "high-quality growth assets". It is recommended to focus on the ChiNext board and innovative companies planning to go public, emphasizing specific directions with a strong focus on research and development input and clear industrialization pathways, especially in high-end equipment, advanced manufacturing, AI applications, new materials, and new consumer technology fields. 2) In terms of style, it is advisable to continue to adhere to the screening strategy of "heavy on quality, light on themes," prioritizing innovative companies with verifiable orders, revenue, research and development investment, and competitive barriers, rather than solely relying on concept mapping and emotionally driven high-volatility small-cap stocks. While regulators are enhancing inclusiveness, they still emphasize strict approval of IPOs, pressing intermediary institutions' responsibility, and strengthening risk disclosure through mechanisms such as the "U" emblem for non-profitable companies and shareholding constraints. This indicates that this round of policies is more favorable for the valuation restoration of high-quality growth stocks rather than a broad diffusion of low-quality technology themes. Risk warning: Unexpected tightening of global liquidity, complexity of market game, and complexity of policy change rhythm, etc.