Shanghai tech board shows fresh approach to listings by admitting loss-making chipmaker

When the Shanghai Stock Exchange (SSE) recently unveiled its list of nine companies that had been approved to file initial public offerings (IPO) on the proposed Science and Technology Innovation Board (STIB), one stuck out.

Suzhou-based semiconductor manufacturer Hejian Technology is remarkable because it is the only company on the list that has yet to turn a profit. It reported a net loss of RMB 146 million (around $21.7 million) in 2018, and has run at a loss for three years, according to its prospectus (in Chinese) filed to the exchange.

China’s two stock exchanges, also known as the A-share markets, have a series of stringent entry requirements that allow only profitable companies to list. For example, to file for an IPO on the SSE, an applicant must record net profits for the last three years which total more than RMB 30 million. The same rule applies to the Shenzhen Stock Exchange (SZSE).

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