The new year of 2026 has begun with a significant new wave of IPO on-site inspections. On the evening of January 5th, the Securities Association of China (SAC) announced the lottery list for the first batch of on-site inspections for initial public offering (IPO) companies in 2026, with 11 prospective IPO firms being selected. These companies are all projects accepted for review between November and December 2025, with the STAR Market having the highest number, totaling six selected companies: LandSpace, Pinzhun Laser, Gaokai Technology, Hanuo Medical, Taosheng Technology, and Ruishi Chuangxin. The ChiNext board followed closely, with four companies selected: Luozhou Co., Ltd., Yuexin Semiconductor, Jiuan Intelligent, and Lieqi Intelligent. The Shanghai Main Board had only one company selected: Zhongyan Co., Ltd. It is worth noting that since June 18, 2025, when China Securities Regulatory Commission (CSRC) Chairman Wu Qing officially announced the "1+6" policy measures for the STAR Market at the Lujiazui Forum and declared the "formal activation of the third set of standards for the ChiNext board," the A-share IPO market has shown significant recovery. In the fourth quarter of 2025 alone, the Shanghai and Shenzhen stock exchanges collectively accepted 49 IPO applications, a clear increase compared to 2024. Among these, the "Double Innovation" boards (STAR Market and ChiNext) saw the highest number of accepted companies, with the STAR Market and ChiNext accepting 22 and 21 applications, respectively, in the last quarter of the previous year.
"The current selection rate for IPO on-site inspections is consistent with the proportion of accepted applications. Previously, regulators stated that the coverage of on-site inspections and on-site supervision for newly declared listing companies should be significantly increased to no less than one-third. The sampling rate for on-site inspections in previous years was also above 25%. With the rebound in the number of accepted companies last year, the number of companies undergoing on-site inspections has increased correspondingly," said Cao Gang, a partner at Zehao Capital, in a statement.
Among the 11 selected companies, the hard-tech credentials are substantial from an industry distribution perspective, covering several star IPO projects in fields such as semiconductors, medical devices, commercial aerospace, and artificial intelligence. Due to significant upfront development investments, a total of four companies are currently operating at a loss. A notable example is LandSpace, which became the first commercial rocket company IPO to be accepted following the Shanghai Stock Exchange's release of the "Guidance for the Application of the Shanghai Stock Exchange Listing Review Rules No. 9—Application of the Fifth Set of STAR Market Listing Standards for Commercial Rocket Enterprises." Its pre-IPO valuation from the last round of financing had already reached 20.7 billion yuan. Hanuo Medical, also applying under the STAR Market's fifth set of standards but in the medical device industry, is the first domestic company to achieve localization of an extracorporeal membrane oxygenation (ECMO) system. Ruishi Chuangxin is a domestic radio frequency chip manufacturer that has chosen the STAR Market's second set of listing standards, requiring an estimated market capitalization of no less than 1.5 billion yuan, revenue of no less than 200 million yuan in the most recent year, and a cumulative R&D investment-to-revenue ratio of no less than 15% over the past three years. The company reported revenue of 669 million yuan in 2024, with total R&D investment over the last three years reaching 742 million yuan, accounting for 43.96% of revenue. Yuexin Semiconductor, applying under the ChiNext board's third set of standards, is the first mass-producing 12-inch wafer manufacturer cultivated independently in Guangdong Province, focusing on analog chip manufacturing. Its post-investment valuation from the most recent external equity financing was 25.3 billion yuan. From 2022 to 2024 and the first half of 2025, Yuexin Semiconductor's operating revenue consistently remained above the 1 billion yuan mark.
The remaining seven selected companies have net profit figures ranging from tens of millions to five hundred million yuan, with an average net profit of 169 million yuan and an average operating revenue of 2.013 billion yuan for the most recent year. The company with the largest scale of performance is Zhongyan Co., Ltd., applying for the Shanghai Main Board. It is China's only central state-owned salt industry platform, holding 22 salt mine mining rights and ranking first nationally in production and sales volume. Its 2024 operating revenue and net profit were 7.044 billion yuan and 692 million yuan, respectively. In terms of fundraising scale, the 11 companies plan to raise a combined total of 26.22 billion yuan. LandSpace and Yuexin Semiconductor have the highest proposed fundraising amounts, each at 7.5 billion yuan. Seven companies, including Luozhou Co., Ltd. and Zhongyan Co., Ltd., plan to raise between 1 billion and 2 billion yuan. Lieqi Intelligent and Ruishi Chuangxin plan to raise less than 1 billion yuan, at 913 million yuan and 809 million yuan, respectively. From the perspective of sponsoring institutions, the 11 companies belong to projects handled by 7 different sponsors. China Securities Co., Ltd. has the most selected projects, with three: Pinzhun Laser, Luozhou Co., Ltd., and Zhongyan Co., Ltd. Guotai Junan Securities and Haitong Securities each have two projects, tying for second place. GF Securities is sponsoring Yuexin Semiconductor and Ruishi Chuangxin, while Guotai Junan Securities and Haitong Securities are sponsoring Gaokai Precision and Lieqi Intelligent, respectively.
Notably, unlike the past market apprehension surrounding IPO on-site inspections, recent years have seen a significant strengthening of the "accountability upon application" awareness within investment banking departments under regulatory pressure. Issues such as companies applying with underlying problems or engaging in strategic "slot-occupancy" applications have also improved, leading to a sharp decline in the withdrawal rate following on-site inspections. Taking 2025 as an example, the SAC conducted three batches of on-site inspections, selecting 16 companies, including 6 STAR Market applicants, 3 ChiNext board applicants, and 7 Shanghai/Shenzhen Main Board applicants. Unlike the mass withdrawals seen in previous years after selection for inspection, none of the companies selected in 2025 terminated their applications. In contrast, the termination rates for on-site inspections on the Shanghai and Shenzhen exchanges from 2021 to 2024 were 58.69%, 76.47%, 82.36%, and 50%, respectively. Meanwhile, among the 2025 selected companies, 6 have already achieved registration effectiveness, and 1 has submitted for registration, resulting in a success rate of over 40%, a marked improvement compared to previous years.
For a period, the phenomenon of "withdrawal upon inspection" was a major persistent issue in the IPO process. Regulators introduced a series of combined measures to correct this. In March 2024, the CSRC revised and issued the "Provisions on On-site Inspection of IPO Enterprises," strengthening the principle of "accountability upon application." The provisions stipulate that inspections will proceed thoroughly even if a company withdraws its application; withdrawal does not affect the implementation of the inspection or the handling of discovered issues according to laws and regulations. A mechanism for conducting inspections directly without prior notice was also added to deter companies attempting to rush through with problems or apply strategically, thereby improving the quality of listed companies at the source. Subsequently, the Shanghai and Shenzhen stock exchanges also mentioned in their relevant document' revision explanations that they would curb the "withdrawal upon supervision" phenomenon, strengthen the warning and deterrent effect of strict supervision, and clarify that an issuer's withdrawal of its listing application or a sponsor's revocation of sponsorship for an on-site supervision project does not affect the implementation of the supervision. In April 2025, the Shenzhen Stock Exchange's released "Shenzhen Stock Exchange Review Rules for Securities Issuance and Listing of Companies (2025 Revision)" again emphasized the need to strictly enforce and solidify the responsibilities of intermediaries. It aims to fully leverage the gatekeeping role of on-site supervision, continuously improve the review mechanism combining documentary review and on-site supervision, place greater emphasis on preventing financial fraud and fraudulent issuance in the review process, strictly enforce the "gatekeeper" responsibilities of intermediaries, and clarify the importance and necessity of on-site verification work. During this period, the exchanges also successively issued penalties for violations discovered during on-site inspections. A notable example was in June 2025, when the Shenzhen Stock Exchange announced five penalty notices related to the FMD Microelectronics IPO project, penalizing the issuer, the sponsor, the sponsor representatives, the accounting firm, and the signing accountants simultaneously.
Tian Lihui, Dean of the Institute of Financial Development at Nankai University, stated that the essence of on-site inspections is to use market-oriented means to screen for "truly high-quality" enterprises and prevent companies with underlying issues from depleting market trust. "Regulators use on-site inspections to guard the entry gate for listings, improving the quality of listed companies from the source." Zheng Yu, a professor at the East China University of Political Science and Law's School of International Financial Law, believes that comprehensively strengthening supervision at access points like IPO on-site inspections can, on one hand, enhance the deterrent effect on compliance for prospective listed companies and intermediaries, prompting them to be more prudent during the application process, thereby potentially reducing the number of companies that ultimately complete the registration process. On the other hand, it will also correspondingly increase the preparation costs for listing for these companies and intermediaries. Under the current registration-based system framework, companies need to make more cautious trade-offs regarding compliance and the timing of their application, a process that might delay their originally planned financing schedules during development.
Comments