Commission once again to increase the market review LED IPO impact

For those listed qualification flaws, and attempt to quasi IPO enterprises through the cosmetic results, profit manipulation and other means "muddle through", in the face of the Commission's latest release of strict regulatory signals, "quit" or is the best choice.

According to the latest data show the practical training of sponsors, and the previous training courses mainly on the IPO audit process is different, the Commission relevant responsible person at the meeting focused on the "further improve transparency, restraining the market participants behavior", "further strengthen the audit supervision process," "to further strengthen the cosmetic results, profit manipulation regulation" three aspects, which is particularly concerned about the IPO enterprise whitewash performance, profit manipulation.

It is understood that since 2006 a total of 231 companies to apply for IPO the SFC Fashen Wei was rejected, in addition to the problems of sustained profitability, financial data, and abnormal prospectuses failed to make a reasonable interpretation "is one of the main cause of IPO quasi listed companies crashed. Behind the abnormal financial data, it is often revealed that some companies whitewash performance, profit manipulation.

According to the person in charge, IPO companies whitewash performance, profit manipulation is mainly reflected in three ways. The first is fictitious performance, fraud listing. The *ST is a typical representative of this kind of company, from 2004 to 2009 the existence of inflated assets, inflated false purchase, sales and other illegal acts, suspected the issue of fraud, forgery of official documents and other criminal acts.

In contrast, the accounting standards in the implementation of the level of profit manipulation in IPO companies are more common. One of the most common means of manipulation is to change the accounting policies and accounting estimates, which are embodied in the following aspects: to extend the depreciation period of fixed assets, to reduce the proportion of bad debts, to change the way of income recognition and so on". Because accounting standards allow changes in accounting policies and accounting estimates, they are subject to the principle of prudence. Therefore, in the IPO review process, the Commission requires the issuer can not arbitrarily change the accounting policies and accounting estimates, if the risk level changes after higher than the industry average level of listed companies, that do not comply with the principle of prudence.

As for some IPO companies use accounting standards blind spot or take a new approach to the implementation of profit, asset manipulation, regulators in recent years, the timely development of a number of financial audit standards to be blocked". For example, the regulatory authorities found at the beginning of 2011, part of the IPO enterprise before listing through capital or transfer to executives or key technical personnel sell shares of the case are increasing, and the listing of the executive compensation gap between before and after large, so there is the stock payment transfer cost phenomenon. Based on this, the Commission on the relevant accounting standards for in-depth study, the final IPO company how to implement the share payment guidelines to form a consensus. Since 2011, a total of 39 IPO companies to confirm the cost of share payment of $722 million, accounting for the proportion of net profit before deducting the share of the cost of payment of 13%.

In addition, changes in the normal production and operation activities (deferred payment to increase cash flow, postpone advertising investment to reduce sales costs, etc.) is also one of the means to whitewash the performance of IPO companies. Regulatory authorities in particular pointed out that the obvious signs of operation and led to the deterioration of the financial indicators of IPO companies, will be submitted to the trial committee in the preliminary report of the Committee concerned. In 2010 is not listed in a textile enterprise as an example, in the reporting period sales revenue, profit growth is good, but the amount of inventory, inventory turnover rate of 1.53, far lower than the industry average of 4.23 listed companies, asset liability ratio reached 78%, and a large number of illegal financing instruments.

Impact on the development of LED Enterprises

Expansion of production, to reduce the cost of scale, is the main purpose of LED listed companies financing. To achieve the listing, a process is the development of the company, one is to provide funds for the development of enterprises, and to build a sustainable future development of the capital market financing platform; the two is to become a listed company, the enterprise will further improve the corporate governance structure; the three is through the market, to attract and retain top talent, and further enhance the technical strength; the four is the listed companies can form the advertising effect, great prestige, brand. Five is to use the platform of listed companies, the implementation of M & a strategy. At the same time, the listing also help to further expand production capacity, expand the LED lighting market, to deal with the explosive growth may occur at any time.

The Commission to increase the listing review, will increase the difficulty and slow down the process of LED listed companies. From a micro perspective, it will affect the company's strategic planning is preparing for listing, or make the company plans to increase production delays or even reimbursement, thereby affecting the company's overall development strategy. From a macro perspective, because most of the LED enterprises to enter the capital market for the purpose of improving productivity, and many enterprises are ready to rely on in these two years to enter the capital market to expand their scale of capital, improve the productivity, the delay of the listed companies in the process, from a certain extent, slowing the whole LED market substantial capacity release, resulting in market pressure especially to pile up in excess of requirement, currently has a serious excess capacity LED raw materials, LED chip and LED lighting market, is a good thing.