Cn Audit IPOMkt2012Review2013Outlook 080113

©2013 Deloitte Touche Tohmatsu

National Public Offering GroupDeloitte China

31 December 2012

Hong Kong and Chinese Mainland IPO Markets2012 Review and 2013 Outlook


In 1H/2012, the capital market stumbled against the backdrop of the following dismal and jittery events:

2

1• Mass credit downgrade in Eurozone countries

2• Weakening of China’s economy with growth target cut to

7.5%

3• Corporate governance issues of listed companies, sharp

earnings decline among newly listed issuers

4• Anxiety over election result in Greece

5• Sluggish recovery of U.S. economy

Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 Outlook


Hong Kong’s IPO market plummeted in 1H/2012

32 new listings, raising HK$30.6 billion (↓84%)

(1H/2011: 38 new listings, raising HK$187.2 billion*)

The WORST half-year performance in terms of

proceeds raised since financial tsunami in 2009

3 Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 Outlook

Source: Hong Kong Stock Exchange (HKEx), Deloitte Analysis; * including proceeds raised from the offerings of Hui Xian REIT, and the international offering of Glencore International Plc. in 2011


16

3751

23

61

83

24

24

25

5462

57

0

10

20

30

40

50

60

70

0

20

40

60

80

100

SH Main Board SZ SME Board ChiNext

Proceeds Raised

No.

of I

POs

Proceeds Raised in 1H/2012 Proceeds Raised in 1H/2011

Reduced momentum in Mainland’s IPO market in 1H/2012

104 new listings, raising RMB72.6 billion (↓58%)

(1H/2011: 167 new listings, raising RMB173 billion)

4

Source: China Securities Regulatory Commission (CSRC), Deloitte Analysis

(RMB billion)

1H/2012 1H/2011


1H/2012 1H/2011 1H/2012 1H/2011


In 2H/2012, market sentiment gradually picked up upon the following compelling events:

5

6• Monetary easing by People’s Bank of China in lowering

reserve requirement ratio and cutting borrowing rate

7• QE3 of U.S. Federal Reserve (Fed), Outright Monetary

Program of European Central Bank

8• Upbeat China economic statistics point to recovery

9• Successful transition to new leadership in China, positive market

anticipation on economic policies after Central Economic Work Conference

10• Continuation of U.S. administration



A lackluster market for Hong Kong’s IPOs in first three quarters of 2012 but a rebound in last quarter

6Source: HKEx, Deloitte Analysis

(2011: 90 new listings, raising HK$271.4 billion*)


62 new listings, raising HK$89.8 billion (↓67%)

The WEAKEST annual performance in terms of

proceeds raised since the financial tsunami in 2009. However, market sentiment has been picking up since mid-September with the economic stimulus programs from

the U.S. and Europe. Driven by the improved market sentiment and liquidity, proceeds raised in the Q4

took up over 50% of the total

proceeds raised in 2012.


In 2012, Mainland’s IPO market was mired in a deep malaise along with the cooling economy

154 new listings, raising RMB103.4 billion (↓63%)

(2011: 281 new listings, raising RMB282.4 billion)

7

Source: CSRC, Deloitte Analysis

(RMB billion)

25

55

74

38

115

128

33

3535

101 102

79

0

20

40

60

80

100

120

0

20

40

60

80

100

120

140

SH Main Board SZ SME Board ChiNext

Proceeds Raised

No.

of I

POs

Proceeds Raised in 2012 Proceeds Raised in 2011

2012 2011 2012 2011 2012 2011



178.8 174.3

97.8 89.8 86.058.9

020406080

100120140160180200

New York StockExchange**

NASDAQ** Tokyo StockExchange

Hong Kong StockExchange

Shenzhen StockExchange

Bursa Malaysia

Market sentiment at trough resulting in disappointing IPO deal flow and volume in 2012

Hong Kong ranked no. 4 in terms of funds raised globally,

behind those of NYSE, NASDAQ, Tokyo Stock Exchange, but ahead of

Shenzhen Stock Exchange, Bursa Malaysia, and

Shanghai Stock Exchange.

8

(HK$ billion) IPO Proceeds Raised from Key Global Exchanges for 2012


51 Listings55 Listings80 Listings 62 Listings 129 Listings 16 Listings

Source: HKEx, Deloitte Analysis** Exclude proceeds from close-end investment companies, close-end funds and special purpose acquisition companies (SPACs)


Hong Kong

9

Overview of IPO market – 2012IPO activities lost steam amid market downturn

7 7 11

34

13 1421

47

10

2318

2615

10 12 130 0

2

3

02

2

3

3

23

5

34 3 2

0

50

100

150

200

250

300

350

0

10

20

30

40

50

60

2009 Q1 2009 Q2 2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012 Q4*

Proceeds RaisedN

o. o

f IPO

s

HK MB IPOs HK GEM IPOs Proceeds from IPOs (HK$ billion)Slowest Q4 deal flow since financial tsunami down from 31 to 15 y-o-y (↓52%)

MB IPO activities were in droughtin May and September

• Market choppiness stymied IPO plans, leading to a no-show of IPO on the Main Board (MB) in May and September 2012, the worst situation for nearly a decade.• An uptick in market condition since mid-

September upon liquidity boost from another round of quantitative easing from the Fed and stalled IPO market driving the return of new and larger listings since October.

Substantially fewer listing applications accepted by HKEx since 2009

• 114 listing applications for the MB and Growth Enterprise Market (GEM) were received during 2012, substantially down 44% y-o-y from 203.• Only 49 active applications are being

processed, displaying a downward trend from 63, a y-o-y plunge of 22%.

Lapsed, rejected and withdrawal of listing applications at record high since

2004

• In 2012, 52 applications were lapsed without renewal, decreased from 64, or 19% y-o-y. 8 applications were rejected, and 12 applications were withdrawn. Figures have risen from 3, or 167%; and 1, or 1,100% y-o-y respectively.

Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 OutlookSource: HKEx, Deloitte Analysis


4 5 10 1 6 9 11 12 9 6 5 11 8

24 30

5258 46 48

35 26 26 2819 18

15

36

2925 33 30

4340

3114

2526

22

0

20

40

60

80

100

120

140

160

180

0102030405060708090

100

2009 Q3 2009 Q4 2010 Q1 2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2 2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 2012Q4*

Proceeds RaisedN

o. o

f IPO

s

SH MB IPO SZ SME ChiNext IPO Proceeds from IPO

The Chinese MainlandOverview of IPO market – 2012IPO deal flow braked amid fading stock market

10

IPO activities were muted

• Chilled market confidence as manifested by indices plunging through various so-called “rock bottom” levels.

• Significant slowdown of listing application review observed since May. No offering review meeting was held in August, November and December and only one in September and October respectively.

Number of applications were at all-time high

• 851 listing applications were in the queue for the Shanghai (SH) MB, SME Board and ChiNext as of 28 December 2012. Among these, 22 applications were suspended and 2 were withheld for further actions.

• In 2012, another 67 applications were either withdrawn or rejected.

90 IPOs are waiting in the wings

• As of 28 December 2012, 90 applications, which have passed the offering review meeting, were awaiting for listing.

• 739 active applications were under processing.

Source: CSRC, Deloitte Analysis. * SH MB IPO: 1; SZ SME Board IPO: 3; ChiNext IPO: 1.

The weakest Q4 since resumption of IPOs in Q3 of 2009. Deal flow was down from 48 to 5 y-o-y (↓90%) and deal volume tripped from RMB56b to RMB3b y-o-y (↓95%)

(RMB billion)


©2013 Deloitte Touche Tohmatsu11

24

60 92

18 19

1 1 4

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

SH MB SZ SME ChiNextPassed Failed Review suspended Review called off

（Pass rate）

During 2012, 219applications were submitted to the Offering Review Committee.

Among these, 176 passed;

37 failed; 5 reviews were

called off; and 1 review was suspended.

Another 2 companies decided to terminate their IPO plans after passing the offering review meetings.

The overall pass rate was

80%.

The Chinese MainlandOverview of IPO market – 2012Pass Rate of Offering Review Meeting




68%

27%

5%

Number of IPOs byLocation of Issuer

Chinese Mainland Hong Kong International

Hong Kong

12

Overview of IPO Market – 2012Mainland companies continued to be key drivers of new listings

International Listings Shrunk Substantially

• Deal activities were relatively quiet and declined sharply by 67% to three.• IPO volume shattered and dropped 97%

to HK$6.27 billion.• List of authorised jurisdictions for listing

was expanded with the addition of Delaware, U.S. and the Republic of Korea.

Mainland Companies Dominated in All Respects

• 42 out of 62 deals were from the Chinese Mainland, up from 57% to 68% y-o-y• IPO volume picked up to HK$81.1 billion,

representing a 90% (2011: 40%) rise in the proceeds raised in the market.



Overview of the Two IPO Markets – 2012Both IPO average first-day returns dropped

13

-9%

-10%

-11%

-20%

-27%

33%

39%

42%

59%

87%

-40% -20% 0% 20% 40% 60% 80% 100%

HK IPO Top Five Best/ Worst Performers

Pegasus Entertainment

Dynam Japan

Qualipak

Xiwang Special Steel

China City Railway

Sunley Holdings

Vision Fame

Juda International

China AssuranceFinance

Haitian Hydropower

-14%

-15%

-17%

-17%

-26%

94%

103%

138%

221%

627%

-50% 50% 150% 250% 350% 450% 550% 650%

A-share IPO Top Five Best/ Worst Performers

Ningbo Cixing

Yinbang Clad Material

Jiangsu Yuxing Film Technology

Chengdu Leejun

Jiajia Food

Bluedon

Loncin Industries

Epoxy Base Electronic Material

China Molybdenum

Zhejiang Shibao

Hong Kong

• Average first-day performance was +6.0%, which was higher than the inflation. On a y-o-y comparison, it has increased by 0.1% from +5.9%.

• Top and worst IPO performers on the listing days were both from the GEM, at +87% and -27% respectively.

Chinese Mainland

• Average first-day performance increased by 5.2% from a return of +21.4% to +26.6% y-o-y.

• Both top and worst IPO performers on the listing days were from the SZ SME Board. They generated first-day returns at +627% and -26% respectively.

Source: HKEx, Deloitte Analysis



16%

35%

49%

P/E Multiples of HK IPOs

x < 5 times 5 times < x < 10 times x > 10 times

Market valuation took a drubbing

14

19%

73%

8%

P/E Multiples of A-share IPOs

x < 20 times 20 times < x < 40 times x > 40 times

P/E multiples of Hong Kong new listings hurt by falling market valuation

• 29 deals or 51% of the new listings had single-digit P/E multiples.• Health care & pharmaceutical sector topped the

league with 18 times of average historical multiples when listed.

P/E multiples of A-share new listings plunged upon regulatory policies of lowering

exceptionally high P/E ratios

• 112 deals or 73% of the listings had 20 to 40 times P/E multiples.• Companies from the technology, media and

telecommunications sector ranked top with about 62 times multiples when listed.

Overview of the Two IPO Markets – 2012




Overview of the Two IPO Markets – 2012Valuation of A-share market sloped closer to Hong Kong

15 Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 Outlook

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

2010Q4

2011Q1

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

HKEx - MB 9 13 16 18 17 15 16 17 12 12 9 10 10 9 9 11HKEx - GEM 13 34 33 39 43 29 33 31 26 24 20 22 18 17 17 18SH MB 19 25 24 29 28 18 20 22 23 16 14 13 14 12 11 12SZ SME 25 36 35 47 41 32 40 45 36 31 27 23 23 23 21 22

0

5

10

15

20

25

30

35

40

45

50Av

erag

e P/

E M

ultip

les

Source: HKEx

11x

(Times)


Hong Kong

IssuerProceeds

Raised (HK$ million)

2012

1. The People's Insurance Company (Group) of China 27,607

2. Haitong Securities 14,383

3. Inner Mongolia Yitai Coal 7,009

4. Sunshine Oilsands 4,487

5. Shanghai Fosun Pharmaceutical 3,966

Chinese Mainland

IssuerProceeds

Raised(RMB million)

2012

1. China Comm. Construction 5,000

2. Citic Heavy Industries 3,199

3. Solareast 2,150

4. Ci Xing 2,135

5. Ao Kang 2,066

2011

1. Sinohydro. Group 13,500

2. Sinovel Wind 9,459

3. Power Diversity Automobile 6,300

4. Founder Securities 5,850

5. China Hainan Rubber 4,708

2011

1. Glencore International 77,746

2. PRADA S.p.A. 19,227

3. Shanghai Pharmaceuticals 16,014

4. Chow Tai Fook Jewellery Group 15,991

5. CITIC Securities 14,247

Dwindling appetite dried market in all dimensions and top five IPOs shrunk

16



Source: HKEx, CSRC, Deloitte Analysis


40%

5%10%10%

20%

15%

Hong Kong London Singapore Spain NYSE Shanghai

Two of the global largest IPOs came from Hong Kong, nil from Mainland

17



15.716.016.016.4

19.222.3

29.534.0

42.477.7

0102030405060708090

New China Life Insurance (HKEx/SH MB)Chow Tai Fook (HKEx)Shanghai Pharmaceutical (HKEx)Sinohydro Group (SH MB)Prada (HKEx)Kinder Morgan (NYSE)HCA Holdings (NYSE)Bankia (Spain)Hutichison Port Holdings Trust (Singapore)Glencore International (HKEx/London)

IPO Proceeds

20%

10%

20%10%

10%

5%

5%

10%

10%

Hong Kong London Malaysia Brazil NASDAQ NYSE Mexico Japan Frankfurt

Source: HKEx, London Stock Exchange, NASDAQ, Tokyo Stock Exchange, Singapore Exchange, Renaissance Capital and Deloitte Analysis and exclude proceeds from SPACs

14.214.414.515.116.5

25.527.6

32.065.8

124.5

0 20 40 60 80 100 120 140

MegaFon (London)Haitong Securities (HKEx)

Telefonica Deutschland (Frankfurt)BTG Pactual (Brazil)

IHH Healthcare (Malaysia)FELDA Global Ventures (Malaysia)

PICC (HKEx)Santander Mexico (NYSE/Mexico)

Japan Airlines (Tokyo)Facebook (NASDAQ)

IPO Proceeds

of the largest are

listed/dually listed in Hong

Kong

5

of the largest are

listed in Hong Kong

2

Year 2012

Year 2011

(HK$ billion)

(HK$ billion)


Hong KongIPO Deal Size AnalysisIn 2012, five deals raised an aggregate of HK$57 billion, which accounted for 64% of the total funds raised during the year.

18

62

3

2

7

1

Total funds raised: HK$295b• CITIC Bank• China Railway Group• Country Garden• SOHO China• Sino-Ocean Land• Fosun International• Alibaba.com• Sinotrans Shipping• Sinotruk• Belle International • China Molybdenum

Total funds raised: HK$66b

• China Railway Construction

• Want Want China

Total funds raised: HK$248b• Minsheng Banking

Corporation• China Pacific

Insurance• China Longyuan Power• Sands China• Metallurgical

Corporation of China• Wynn Macau• Glorious Property• Sinopharm Group• China Zhongwang• Longfor Properties

Total funds raised: HK$449b• AIA Group• Agricultural Bank of

China• RUSAL• Zoomlion• Chongqing Rural

Commercial Bank• Rongsheng Heavy

Industries• Xinjiang Goldwind

Science & Technology

Total funds raised: HK$270b• Glencore• PRADA• Shanghai

Pharmaceuticals• Chow Tai Fook• CITIC Securities • MGM China• Hui Xian REIT• New China Life

Insurance• Samsonite• Sun Art Retail Group• HKT

Total funds raised: HK$90b

• PICC• Haitong Securities• Inner Mongolia Yitai

Coal• Sunshine Oilsands• Shanghai Fosun

Pharmaceutical

0%10%20%30%40%50%

60%70%80%90%

100%

2007 2008 2009 2010 2011 2012

Deal Size of HK MB IPOsMega (>US$1b) Large (US$1b>x>US$0.5b) Medium (US$0.2b>x>US$0.5b) Small (<US$0.2b)

112

11 IPOs raised HK$164b






112 10 7



1.9

1.5 1.6 1.6

1.1 1.0

0.0

0.5

1.0

1.5

2.0

2.5

0

20

40

60

80

100

120

140

2007 2008 2009 2010 2011 2012

Average Proceeds Raised

Proc

eeds

Rai

sed

Deal Size of HK MB New IPOs (excluding US$1 billion mega-deals)

Large (US$1b>x>US$0.5b) Medium (US$0.2b>x>US$0.5b) Small (<US$0.2b) Average

7%

Hong KongIPO Deal Size AnalysisAverage deal size was HK$1,015 million for MB and HK$94 million for GEM

19

(HK$ billion) (HK$ billion)

67 d

eals • HK$

131billion 25

dea

ls • HK$

37billion 50

dea

ls • HK$

78 billion 80

dea

ls • HK$

128billion 58

dea

ls • HK$

64 billion 46

dea

ls • HK$

47billion



Total funds raised: RMB191b

• China State Construction• Metallurgical Corporation of

China • China CNR Corporation• China Shipbuilding Industry• China Merchants Securities• Everbright Securities


• Agricultural Bank of China• China Everbright Bank• Hua Tai Securities• China First Heavy

Industries• China XD Group• Ningbo Port• China National Chemical

Engineering• Hepalink• Kelun Pharmaceuticals


• Sinohydro• Sinovel Wind Group• Pang Da Automobile Trade• Founder Securities


• China Communications Construction

• Citic Heavy Industries • Solareast• Ci Xing• Ao Kang• BROS

The Chinese MainlandIPO Deal Size AnalysisMajorities were smaller deals with the six largest ones raising an aggregate of RMB17 billion, which accounted for merely 16% of the total funds raised.

20

38

31


0%10%20%30%40%50%60%70%80%90%

100%

2009 2010 2011 2012

Deal size of A-share IPOs

Mega (>RMB5b) Large (RMB5b>x>RMB1b) Medium (RMB1b>x>RMB0.5b) Small (<RMB0.5b)

6 IPOs raised RMB123b 9 IPOs raised RMB143b 4 IPOs raised RMB35b 6 IPOs raised RMB17b

6

9 4 1



The Chinese MainlandIPO Deal Size AnalysisAverage deal size was RMB1.3 billion for MB, RMB635 million for SME Board, and RMB475 million for ChiNext respectively.

21

0.7

1.0 0.9

0.6

0.0

0.2

0.4

0.6

0.8

1.0

1.2

0

50

100

150

200

250

300

2009 2010 2011 2012

Average Proceeds Raised

Proc

eeds

Rai

sed

Deal size of A-share New IPOs (Excluding RMB$5 billion mega-deals)Large (RMB5b>x>RMB1b) Medium (RMB1b>x>RMB0.5b) Small (<RMB0.5b) Average

28%

(RMB billion) (RMB billion)

93 d

eals • RMB

68billion

338

deal

s • RMB

338billion

277

deal

s • RMB

247billion

153

deal

s • RMB

98 billion




Hong KongEighty percent of the IPOs were priced at and below the mid-point with almost half at the low-end of the range.

8%

12%

38%

42%

IPO Pricing in 2012

10%

15%

30%

45%

IPO Pricing in 2011

Top of the IndicativeRange

Above the Mid-Point ofthe Indicative Range

At and Below the Mid-Point of the IndicativeRange

Bottom of theIndicative Range

22 Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 OutlookSource: HKEx, Deloitte Analysis


Hong Kong Liquidity retreated amid poor market visibility

23

38% of the MB IPOslaunched were under-subscribed.

For the well-received ones,

73 % of themwere over-subscribed for

less than 5 times.

0

500

1,000

1,500

2,000

2,500

20122011

No.

of T

imes

of O

ver-

subs

crip

tion

Best-received IPOs in terms of Over-subscription Rate

2,179x

57x

(2011: 31%)

(2011: 43%)

Milan Station China Machinery


Source: HKEx, Deloitte Analysis and for Main Board listings only


The Chinese MainlandIPO over-subscription rate remained astonishing amid poor sentiment and market slowdown

24

All IPOs were over-subscribed.

42 % of them were over-subscribed for

over 100 times.

742x

479x

0

100

200

300

400

500

600

700

800

20122011

No.

of T

imes

of O

ver-

subs

crip

tion

Best-received IPOs in terms of Over-subscription Rate


Zhejiang Shibao

Shenke Slide Bearing

(2011: All)

(2011: 47%)



20%

8%

3%

23%11%

16%

16%

3%

2012 Energy & Resources

Financial Services

Health Care &Pharmaceutical

Manufacturing

Property

Retail & Consumer Business

Technology, Media &Telecommunications (TMT)

Others

14%

10%

6%

22%6%

32%

8%2%

2011

Hong Kong

25

Number of IPOs by IndustryManufacturing sectors topped the ranking



The Chinese MainlandNumber of IPOs by IndustryManufacturing sector dominated IPO activities of the A-share market

26

4%1%

6%

46%

3%

14%

23%

3%

2012

Energy & Resources

Financial Services

Health Care &PharmaceuticalManufacturing

Property

Retail & ConsumerBusinessTMT

Others

4%1%8%

52%2%

14%

18%1%

2011




24.7%

47.5%

4.7%

10.5%

4.6%6.5%

1.3%0.2%

Energy & Resources Financial Services Health Care & Pharmaceutical Manufacturing Property Retail & Consumer Business TMT Others

38.0%

12.1%6.7%4.1%

5.5%

29.7%

3.9%

22.17

42.62

4.19

9.40

4.07

5.94

1.28

0.16

0 10 20 30 40 50

Energy & Resources

Financial Services

Health Care & Pharmaceutical

Manufacturing

Property


TMT

Others

2012

27

Hong KongProceeds from financial services sector took up nearly half of the proceeds raised

103.02

32.72

18.27

11.08

15.03

80.66

10.59

0.03

0 20 40 60 80 100 120

Energy & Resources

Financial Services


Manufacturing

Property


TMT

Others

2011

(HK$ billion)

(HK$ billion)

Energy & Resources

Well Ahead of Others with Glencore Offering

Financial Services Led with Haitong

and PICC Offerings


Source: HKEx, Deloitte Analysis; including proceeds raised from the offerings of Hui Xian REIT, and the international offering of Glencore International Plc. in 2011


3.9%4.5%

6.5%

46.8%6.7%

18.3%

13.0%0.3%

3.9%1.7%5.3%

43.6%

7.3%

15.3%

20.6%

2.3%

Energy & Resources Financial Services Health Care & Pharmaceutical Manufacturing Property Retail & Consumer Business TMT Others

28

4.01

1.74

5.49

44.98

7.50

15.97

21.33

2.41

0 10 20 30 40 50

Energy & Resources

Financial Services


Manufacturing

Property


TMT

Others

2012

The Chinese Mainland

11.04

12.79

18.47

132.01

18.91

51.62

36.64

0.98

0 20 40 60 80 100 120 140

Energy & Resources

Financial Services


Manufacturing

Property


TMT

Others

2011

(RMB billion)

(RMB billion)

ManufacturingWell Ahead of

Others

Manufacturing Topped the

Rank

Manufacturing sector was driving 44% of the total proceeds




Hong KongOutlook - challenges overshadowed the market

29

HK IPO Market

Eurozone worrieswhether the beleaguered countries could turnaround or even would get worsened; right policies to energize the contracting economy

Looming U.S. fiscal cliff

how this will play out and affect the U.S. economic recovery

Pace of China’s recovery

direction and magnitude ofeconomic stimulus policy

Keen competitions from other bourses in the

regionHKEx is at the crossroads



The Chinese MainlandOutlook - challenges clouding the market

30

A- share IPO

Market

Worsening corporate earnings

Cooling down of Chinese economy

Ongoing unlock of large volume of restricted

shares

The “three high” issue*

Liquidity drain pressure due to astonishing IPO backlog

*High P/E, proceeds and offer price



The Chinese MainlandSignificant policies, further new procedures are expected to be launched in early 2013, bringing further changes to the market

31

A-share Market

Transparency of Listing Process

Reduction of Securities

Transaction Costs

Tightened Delisting

Rules

IPO Pricing Reform

IPO Approval

Pace

Speed Up Approval of

QFIIs

Invitation to five to 10 individuals investors to participate in pricing procedures

Details of responsibilities for issuers, intermediary institutions, legal firms, accounting firms and rating agencies

Regulate deal flows to prevent significant drain of market liquidity

Increase of US$ and RMB QFII quotas to US$80 billion and RMB270 billion, respectively

Lower requirements for QFII application

Delisting of issuers having negative net asset values or annual operating income of less than RMB10 million for three consecutive years

Three rounds of securities transaction cost cut to 0.02%

Details of listing process and applications under review



Hong KongOutlook – key listing trends

Mainland Enterprises “Go Global”• Mainland POEs• Relaxation of listing

requirements of H-share under CEPA* IX•Market reform of B-share –

switching from B-share listing to H-share listing in Hong Kong• H-share offerings of A-share

companies

• Support outbound M&A activities

RMB Internationalisation• Relaxation of H-share in raising RMB in Hong

Kong• RMB-denominated IPOs• RMB-denominated exchange traded funds

tracking Hong Kong stocks

Streamlining of Secondary Listing Process• International listing• Secondary listing or listing by introduction

HKEx’s Acquisition of London Metal Exchange• International capital market for mining and

natural resources companies

Listing of Home-grown Brands• Family business expansion for increased brand

recognition• Wealth management to pass onto the second

generation

32

* Closer Economic Partnership Arrangement (CEPA)



The Chinese MainlandOutlook – key listing trends

“New Third Board” －over-the-counter market

Western region development

Seven strategic emerging sectors

Priority development of cultural, and agricultural, forestry, fishing and livestock industries

33

State policy driven processAlign with State development

plan

Areas where government funding will flow, and where

private funding is expected and priority business sectors will

advance



Hong KongOutlook - sector allocation for IPOFinancial services, property, and retail & consumer sectors will be the foci.

34

Fina

ncia

l Ser

vice

s –

Ban

ks &

Se

curit

ies

Firm

s

Meet capital and liquidity ratio alongside with business expansion

Accelerate growth from expansion of QFII/ RQFII quota

Expand products, business and international coverage In

fras

truc

ture

-rel

ated

–Pr

oper

ty

Stimulate economy through tremendous infrastructure investment and boosting new urbanisation

Macro-economic control on this sector is expected to have bottomed out

Overall property market sentiment gets stabilised

Funding needs for project development

Ret

ail &

Con

sum

er B

usin

ess

Income re-distribution initiatives to even and increase average income per capita

Funding for M&A activities to fuel expansion as valuation gets reasonable

Tap into the Mainland market, the second largest economy and luxury goods consumption market

“Going-out”

“New urbanisation”

“Well-off society”

2015Year

3rd Year of 12th Five-Year Plan



The Chinese MainlandOutlook - sector allocation for IPOStrategic emerging industries under the 12th Five-Year Plan are the hot picks.

35

Agricultural, forestry,

fishing and livestock



Around70-80 companies will be listed during the year,

raising approximately HK$100-150 billion.

Hong Kong’s IPO Market in 2013

36

(2012: HK$89.8 billion, ↑11% - 67%)

Growth surges in China and the U.S removes the overcast in the market.A new chapter in the development for Hong Kong with booming pipelines will begin.

We are cautiously optimistic about the IPO deal flow and volume for 2013.

(2012: 62 new listings, ↑13% - 29%)

Source: HKEx, Deloitte Estimate



Around150 companies will be listed by the end of 2013,

raising approximately RMB100 billion.

The Chinese Mainland’s IPO Market in 2013

Source: CSRC, Deloitte Estimate

37

Market transformation develops alongside with tight liquidity and weak corporate earnings will stem IPO activity and good valuation.

The pipeline is fully stocked and the IPOs are expected to go full steam ahead as soon as the market confidence restores.

Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 OutlookHong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 Outlook

(2012: 154 new listings, ↓2.6%)

(2012: RMB103.4 billion, ↓3%)


Deloitte’s Market Share in Hong Kong IPO in 2012

38

32%

68%

Deloitte Non-Deloitte

Number of IPOs IPO Proceeds Raised

29%

71%

Deloitte Non-Deloitte




Deloitte is their reporting accountantMajor deals completed in Hong Kong in 2012

Sunshine Oilsands Ltd.

The company is the largest holder of non-partnered oil sands leases by area in the Athabasca oil sands region and Canada. It is the largest international listing in 2012 on HKEx, raising HK$4.5 billion.

Jiangnan Group Ltd.

It is a leading manufacturer of wires and cables for power transmission, distribution systems and electrical equipment in China.

Haitong Securities Co., Ltd.

It is a leading full-service securities firm in China with an integrated business platform, extensive branch network and substantial customer base. It raised HK$14.4 billion proceeds through its H-share listing.

Wonderful Sky Financial Group Holdings Ltd.

The company is principally engaged in the provision of financial public relations services in Hong Kong.

Christine International Holdings Ltd.

The company is a leading bakery chain operator in China. It offers a range of bakery products through an expansive multi-channel retail network, including 898 retail outlets in 22 cities.

Trigiant Group Ltd.

The group is one of the leading manufacturers engaged in research, development, sales of RF coaxial cables series and other related accessories for use in mobile communications andtelecommunications equipment in China.



Deloitte is their reporting accountantMajor deals completed in Hong Kong in 2012

China Nonferrous Mining Corporation Ltd.

The company is a leading fast growing and vertically integrated copper producer that focuses on mining, ore processing, leaching, smelting and sale of copper. It is based in Zambia.

China Yongda Automobiles Services Holdings Ltd.

It is a leading passenger vehicle retailer and comprehensive service provider in China. It focuses on offering automobiles from luxury and ultra-luxury brands.

Wanguo International Mining Group Ltd

The company is principally engaged in the business of mining, ore processing and sale of the concentrates products in China.

CIFI Holdings (Group) Co. Ltd.

The company is engaged in the property development, property investment and property management business in China.

Casablanca Group Ltd.

The company is one of the leading branded bedding products companies in China and Hong Kong.

Zhengzhou Coal Mining Machinery Group Company Ltd.

It is a leading comprehensive coal mining and excavating equipment manufacturer in China. Its H-share IPO raised HK$2.3 billion.



Deloitte is their reporting accountantRecently completed A-share listings

41

China Molybdenum Co., Ltd.

It is specialized in mining, dressing, smelting and processing of molybdenum and tungsten.

Universal Scientific Industrial (Shanghai) Company Ltd.

It is a global leader in providing services and solutions in electronic product design and manufacturing.

Beijing Cuiwei Tower Company Ltd.

The company is principally engaged in the development and operation of department store chain on the Chinese Mainland.

Agricultural Bank of China Ltd.

It is one of the four state-owned banks in China. Its IPO was the largest in the A-share market in 2009, raising RMB59.6 billion.

Great Wall Motor Company Limited

The company is engaged in the repair of motor vehicles, development and research, manufacturing and sales of vehicle parts.

Shandong Molong Petroleum Machinery Company Ltd.

The company is specialised in the design, research and development, processing, manufacturing and sales in China and petroleum machinery export.



Deloitte China at a Glance

Our China Practice• Over 10,000 people in 16 offices

• Serving one-third of all companies listed on the Hong Kong Stock Exchange

• Leading position in public offering services in key capital markets and was the reporting accountant for the global largest IPOs in both 2010 (Agriculture Bank of China) and 2011 (Glencore International Plc)

• Advising the Ministry of Finance in the Chinese Mainland on the development of international accounting standards and tax systems since 1993

We have achieved many industry firsts:• The first to co-sponsor a GEM listing on the

Stock Exchange of Hong Kong

• The first to sponsor a Hong Kong Main Board listing

• The first to pioneer the listing of RMB-denominated REIT (Hui Xian REIT)

• The first to bridge the gap between Japanese Generally Accepted Accounting Principles and the IFRS and assisted the Hong Kong IPO of the first Japanese company (SBI Holdings, Inc.) on the Hong Kong Stock Exchange

Our China Practice• Over 10,000 people in 16 offices

• Serving one-third of all companies listed on the Hong Kong Stock Exchange

• Leading position in public offering services in key capital markets and was the reporting accountant for the global largest IPOs in both 2010 (Agriculture Bank of China) and 2011 (Glencore International Plc)

• Advising the Ministry of Finance in the Chinese Mainland on the development of international accounting standards and tax systems since 1993

We have achieved many industry firsts:• The first to co-sponsor a GEM listing on the

Stock Exchange of Hong Kong

• The first to sponsor a Hong Kong Main Board listing

• The first to pioneer the listing of RMB-denominated REIT (Hui Xian REIT)

• The first to bridge the gap between Japanese Generally Accepted Accounting Principles and the IFRS and assisted the Hong Kong IPO of the first Japanese company (SBI Holdings, Inc.) on the Hong Kong Stock Exchange

Deloitte China National Public Offering GroupYour Winning Team for Listing on Capital Markets

Deloitte offices

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©2013 Deloitte Touche Tohmatsu43 Hong Kong and Chinese Mainland IPO Markets - 2012 Review and 2013 Outlook

ContactsNational Public Offering Group

Edward AuCo-LeaderTel：+852 2852 1266Fax：+852 2815 8476Email：[email protected]

Patrick TsangCo-LeaderTel：+86 21 6141 1818Fax：+86 21 6335 0177/0377Email：[email protected]

Southern China

Clement Hung Deputy Regional Managing Partner, Southern ChinaTel：+852 2852 1056Fax：+852 2542 4225Email：[email protected]

Terence Cheung PartnerTel：+852 2852 6405Fax：+852 2541 3817Email：[email protected]

Northern China

Samuel WongAudit Leader of Northern China RegionTel：+86 10 8520 7288Fax：+86 10 8518 1218Email：[email protected]

Taylor LamPartnerTel：+86 10 8520 7126Fax：+86 10 8520 7494Email：[email protected]

Eastern China

Dick KayPartnerTel：+86 21 6141 1838Fax：+86 21 6335 0177Email：[email protected]

Anthony WuPartnerTel：+86 21 6141 1808Fax: +86 21 6335 0177/0377Email：[email protected]

mailto:[email protected]









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As early as 1917, we opened an office in Shanghai. Backed by our global network, we deliver a full range of audit, tax, consulting and financial advisory services to national, multinational and growth enterprise clients in China.

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