Concerns over stricter IPO screening for loss-making companies have been circulating, yet investment bankers indicate no shift in regulatory stance, emphasizing instead a heightened scrutiny of application quality.

Recent market chatter suggested exchanges were tightening IPO approvals, particularly for unprofitable enterprises. However, multiple investment bankers told Caixin that no change in regulatory tone has been observed recently. As policy incentives unfold, more loss-making firms are actively pursuing listings, but project quality issues are drawing increased attention.

"I haven't sensed any new direction in IPO policy; scrutiny of unprofitable issuers has always been stringent. Some prospective companies may see successful cases emerge and feel encouraged. With more applications coming in, those failing to meet standards could make the review process appear tougher," a veteran sponsor representative noted.

A banker from a North China-based securities firm echoed this view, stating that as the number of IPO filings from unprofitable firms rises, the likelihood of subpar applications also grows. "The regulatory approach has been consistent. Previously, fewer loss-making firms filed, and those that did aligned with positioning requirements. Now, with a larger volume, some naturally fall short, and quality may dip as quantity surges," he explained.

Data from Wind shows that as of August 27, 64 unprofitable firms have listed on the STAR Market since its inception, with one on the ChiNext Board. Several others, including Enflame Technology and CanSino Semiconductor, are still awaiting listings.

Emphasis on Vetting IPO Application Quality

Interviews with multiple investment bankers revealed that current IPO policies for unprofitable companies remain largely unchanged. "It's not that all loss-making firms can list; the policy has opened a door, but if everyone rushes to file, misunderstandings arise. This shouldn't be framed as policy tightening," the aforementioned sponsor said.

A banker from a South China securities firm concurred, noting that it's premature to claim restrictions on unprofitable IPO filings. The onus is on sponsors to rigorously vet project quality. "There's no specific benchmark for quality, but meeting listing criteria alone isn't sufficient. If uncertain, early communication with the exchange is advisable, and the acceptance stage will also serve as a filter," he added.

Addressing market concerns about tightened STAR Market scrutiny, the North China banker said: "The tech growth tier is designed for unprofitable hard-tech firms. Regulatory reviews have consistently prioritized industry leaders, leaving assessments of tech attributes to advisory committees and sector authorities. The regulatory approach hasn't wavered."

Recent policy support has spurred an uptick in IPO filings from unprofitable companies. In June 2024, the CSRC's "Eight Measures for the STAR Market" explicitly backed quality unprofitable tech firms seeking listings there. By June 2025, the "1+6" reform package introduced a tech growth tier, reinstating the STAR Market's Fifth Set of Listing Standards for unprofitable firms and broadening its scope.

This June, support deepened further: the Fifth Set's applicability expanded to artificial intelligence, while additional "hard tech" sectors like quantum technology, biomanufacturing, and embodied intelligence gained backing for STAR Market listings. Beyond the STAR Market, the ChiNext Board added a Fourth Set of Listing Standards in April, imposing market cap and revenue requirements but waiving profitability criteria.

Under these evolving frameworks, unprofitable IPO applications have multiplied, with some queued firms breaking through review hurdles. Following the 2024 "Eight Measures," applications from Xi'an Yicai-U (688783.SH), Aorui Micro-UW (688790.SH), Shanghai Siasun Semiconductor, and Shanghai Zhaoxin Semiconductor were accepted. After the "1+6" policy, Heyuan Biotech-U (688765.SH) and Bibete-U (688759.SH) advanced swiftly, securing registration approvals in July and August last year. New acceptances included TNB Biotech-U (688806.SH), Moore Threads-U (688795.SH), Muxi Shares-U (688802.SH), LandSpace, and Enflame Technology (688801.SH).

On June 27, 2025, the ChiNext Board accepted its first unprofitable IPO application from Dapu Micro-UW (301666.SZ). Subsequent filings from firms like Dugen Core, Boya Advanced Materials, Shenzhen Cloud Leopard, Chenxin Technology, Chengli Aviation, Sichuan Tengdun, CanSino Semiconductor, and Leju Robotics followed.

Over a Dozen Unprofitable Firms Listed Since Last Year

To date, 65 unprofitable companies have listed on the STAR Market and ChiNext combined. This month, Guoyi-U (688828.SH) debuted on the STAR Market on August 11, joining three other unprofitable listings this year: TNB Biotech-U, Shiya Technology-UW (688781.SH), and Beixin Life (688712.SH). Overall, ten such firms have listed on the STAR Market since the restart in 2025.

The ChiNext Board also welcomed its first unprofitable listing this year. Dapu Micro-UW went public on April 16, issuing 43.62 million shares at RMB 46.08 per share. Its opening price surged to RMB 207.23, closing at RMB 244.55, a 430.71% gain, with market cap exceeding RMB 100 billion on day one. Annual reports show four consecutive years of losses from 2022 to 2025, with adjusted net losses of RMB 368 million, RMB 642 million, RMB 195 million, and RMB 489 million, totaling around RMB 1.7 billion. Its latest half-year report, however, shows revenue of RMB 4.72 billion and net profit of RMB 1.33 billion, up 531.17% and 477.08% year-on-year, respectively.

Several unprofitable firms are still advancing toward listings. CanSino Semiconductor, targeting the ChiNext Board, has submitted for registration. Per the Shenzhen Stock Exchange website, its application was accepted last year, passed review in mid-June after two rounds of inquiries, and filed for registration on June 18. Its prospectus shows losses from 2022 to the first half of 2025, with adjusted net losses of RMB 1.55 billion, RMB 2.47 billion, RMB 2.5 billion, and RMB 1.33 billion, respectively.

Enflame Technology, aiming for the STAR Market, is set to commence its subscription soon. The company recently announced plans to issue 43.04 million shares, representing 10% of post-listing total shares. The preliminary inquiry date is August 28, with online and offline subscription on September 2.