EVEN though regulators in China relaxed listing rules to allow loss-making companies to go public, the first batch of applicants to make it on to the new Shanghai technology board’s review list suggests not much has changed — yet.

Out of the 111 firms that made it to the application stage, all but one posted a profit last year. The listing of the outlier, Ninebot Ltd., is on hold.

“China wants to ensure the first listings are successful and of good quality,” said Fu Gang, a fund manager at Shanghai RiverEast Asset Management Advisory Ltd. “The strict vetting process will remain in place, before China gradually relaxes its regulation over the board.”

While this may result in higher quality listings, companies have found the process less simple than they may have hoped. Many filings have been mired in scrutiny, after the Shanghai Stock Exchange peppered applicants with questions due to what it saw as insufficient detail.

The exact start date for the new technology board remains unknown, and could be affected by the ructions in China’s stock market amid the trade war with the United States. Nonetheless, the Shanghai exchange has said it will review listing applications of three companies at its first IPO review meeting June 5, a sign that it may soon issue the first approvals.

Firms generally need a three-year track record of profitability before they can apply for an A-share listing. China’s earlier attempt at a Nasdaq-style board, the ChiNext, has a more lenient requirement of two years, or one year if the applicant’s latest full-year revenue meets a threshold.

The new board aims to be less demanding, allowing loss-making firms as long as they meet other criteria, such as raking in sufficient revenue and maintaining a steady cash flow.

Tech board applicants that posted profit in 2018 and 2017 saw corporate earnings grow by an average 76 percent last year, according to calculations. That compared with 25 percent growth for companies on the benchmark Shanghai Composite Index, or a 16 percent expansion rate for those listed on ChiNext.

Tech board applicants are also allocating a larger proportion on research and development spending than their ChiNext counterparts. They allocated about 9.2 percent of their 2018 revenue on research and development, compared with 5.2 percent on the ChiNext board. Those listed on the Nasdaq Global Select Market allocated 14.7 percent of revenue last year. (SD-Agencies)