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by the issue of after-tax profit earnings. Which, after-tax profit per share for the year before the issue of after-tax profits per share , 70% + issue when diluted share after-tax profits are expected to * 30%.

Taking into account the forecast profit for the year : March 17, 1998 "issued by China Securities Regulatory Commission issued a number of questions about stock supplementary notice " For the IPO pricing methodology was revised , the issue price will be modified by dividing the profit forecast for the year in issue weighted average number of shares in issue in those days and then multiplied by earnings. This approach, while avoiding the company priced based on past historical performance drawbacks , however, the reliability of earnings forecasts but had another problem.

Overall, the Securities Act of 1996 and 1999, before the implementation of this period, the IPO pricing using price-earnings ratio is relatively fixed pricing method , based on the issue price of new shares per share after-tax corporate profits and a relatively fixed level of earnings OK. Since stock prices are an obvious issue administrative color , the earnings release and disconnect the secondary market , the average price-earnings ratio , resulting in stock issuance and secondary market trading price of the great differences between the price , IPO day, ie 50% -250 % of the gains, which also led to a series need to be further addressed.

July 1, 1999 entry into force of the " Securities Law" stipulates that the stock issue price by the issuing company and the underwriters determined after consultation . This shows that China's stock market price mechanism, to the market a major step forward . July 29 the same year, China Securities Regulatory Commission issued "on the way to further improve the stock issuance of the notice" ( hereinafter referred to as "pass" ) , the pricing for the IPO market turned into a further explicit requirement that issuers and underwriters in consultation pricing , institutional investors to take part in pricing . However, the issue price will still audit by the Commission and therefore remain competent authorities on the issue of price control. This is from the "pass" can be seen , the IPO issue price can exceed the price range , but beyond the limits of the amount is not clear . Pricing for this stage are basically limited to past earnings release be relaxed and with different distributions ( placing tariffs ) , respectively, as follows:

"Notice" also provides that: the total share capital of 400 million yuan more than the company can be taken online issue of the ordinary investor placing with a combination of corporate shares. In this release mechanism, legal briefings, to institutional investors and strategic investors inquire first introduced the concept of the IPO market , the issuing company and the underwriters pursuant to institutional investors on inquiry information obtained to finalize the issue price , also has the distribution rights to some of the shares , so the introduction of legal mechanisms for placing inquiry promote China IPO pricing process in the market, at the same time , regulators have gradually relaxed at this stage with dilute earnings release restrictions, to the more market-oriented customization issue price . While mature markets Inquiry Mechanism large differences still exist , ho