Already rich,
why go public?
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The full narration of the video.
Lose money, and you can't list on the main board make money, and you rush to. The main board is the oldest, biggest part of China's stock market. Its most common entry bar: three straight years of profit, at least two hundred million yuan in total. But if a company already makes that much, why the rush to go public?
Picture a company as one big flatbread. When the founder starts alone, the whole bread is theirs. Then friends put in money and take two slices. A few early staff get a sliver too.
Each slice is a share of the company. Going public means cutting more small pieces and laying them out in a market where anyone can buy. That market is a stock exchange. The very first sale is called an IPO, an initial public offering.
Every listed company in China gets a six-digit stock code you can look up in any trading app. One share you buy in that app is one small piece of the bread. A cut bread only gets smaller. A company is different: the money from selling shares can bake a bigger one.
Say a noodle shop earns just enough each year to open one more branch. If a rival opens a hundred a year, it can't afford to wait. One listing brings in more than years of savings ever could. And that money never has to be paid back, with no interest.
The price: the bread now has a lot of new owners. There's a more urgent reason, and it sits with the early investors. Years ago they paid for two slices. But slices of an unlisted bread are hard to sell.
Many investment funds promise their own backers to return the money after a set number of years. When that day comes, the slices have to turn into cash. Once listed, they can be sold on the exchange any day. Same for staff shares and options: unlisted, they're numbers on paper; listed, they become real money.
Listing has a cost too. Every three months, the books are opened to everyone. The share price moves every day, and big decisions must answer to thousands of shareholders. So some very profitable companies refuse to list.
The founder of Lao Gan Ma chili sauce has said: no loans, no outside funding, no listing — do only what your own money allows. SF Express's founder once said he wouldn't list just for money. In 2017, SF Express listed anyway. To list or not comes down to two things: how fast you want to grow, and whether you'll open your books. This is an explainer, not stock advice.
Did a company you worked for ever talk about going public? Did it actually happen?
No profit,
no listing
The usual bar for China's Main Board: a profit every year for three years, at least 200 million yuan in total.
The Main Board is the oldest and biggest part of China's stock market. Companies that get in are already making plenty of money. So why the rush to list?
Think of a company
as a big pie
When the founder works alone, the whole pie is theirs. A friend invests and takes two slices; early staff get a small one. Each slice is a share.
Going public means cutting more small slices and putting them in a big market where anyone can buy. That market is the stock exchange. The first time the slices go on sale is the IPO, the initial public offering.
Every listed company in China has a six-digit stock code you can look up in any trading app. One share you buy in the app is one small slice of that pie.
Cut the pie,
and it grows
A real pie shrinks when you cut it. A company is different: the cash from selling shares can bake a bigger pie. The price is many new owners.
Early investors
want their money back
Same for staff shares and options: before listing they are numbers on paper; after listing they can become cash.
Some rich companies
never list
Quick check
Why would a very profitable company still go public?
Going public sells slices of the pie in a big market: the cash bakes a bigger pie, and slices can be sold any time.
