It refers to the stock offering price fixed at the time of issuance of a joint stock limited company.
China is determined to adopt two ways: one is the fixed price method, that is, before the issue by the lead underwriter and the issuer according to the law to determine the case: new issue price = after-tax profit per share x issue price ratio.
The second is the range of price seeking, also known as the “bidding issue”.
That is, to determine the ceiling and floor of the price of new shares issued, according to the principle of issuance, in order to meet the maximum price as the determination of the issue price.
The stock issue price is the most basic and important content in the stock issue plan, which is related to the fundamental interests of the issuer and investors and the performance of the stock after listing.
If the offering price is too low, it will be difficult to meet the issuer’s financing needs, and even damage the interests of the original shareholders;
However, if the issue price is too high, it will increase the risk of investors, increase the issue risk and difficulty of the underwriting institutions, inhibit the enthusiasm of investors to subscribe, and affect the performance of the stock after listing.
Therefore, the issuing company and underwriter must take into account the company’s profit, industry factors, stock price level and other factors, and then determine a reasonable offering price.