CDR depth report: initial financing can reach 350 billion yuan.

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 CDR depth report: initial financing can reach 350 billion yuan.


Event: unicorns return to the A stock process accelerates In March 30th, the office of the State Council forwarded the notice of the SFC on the launch of some opinions on issuing stocks or depository certificates in innovative enterprises, and clearly pointed out that the eligible Unicorn companies could choose CDR or IPO to return to A shares. In May 4th, the SFC invited public opinions on the issuance and transaction management of depository receipts. Due to the high cost of IPO preparation time, it is expected that the financing rhythm is CDR after IPO. In addition, after the reform of the Hong Kong stock exchange system or attracting more domestic high quality enterprises to be listed in Hong Kong, the emerging enterprises or after the listing of Hong Kong is listed in the form of issuing CDR to return to A shares. Detailed explanation of CDR: three main lines to discuss the design and operation of CDR (1) CDR issuers, depository and trusteeship: since the RMB capital item has not yet been fully convertible, the CDR issuer is suitable for enterprises with investment projects in China; the depository institutions issued by CDR may be the China Deng company and the required banks and securities firms, with strong combined strength and branches abroad. Securities companies have obvious advantages; trusteeship institutions are generally designated by depository institutions. (2) CDR scheme design: the actual financing ratio of CDR should be based on the domestic liquidity arrangement; the amount of the 1 CDR corresponding to the number of basic stocks is decided by the enterprise and can be adjusted after the listing; the pricing of CDR mainly depends on the recognition of the investors valuation on the issuer. (3) the conversion of CDR and basic securities: the market is currently expected that CDR and basic securities can not be converted to each other (or there is a limit of conversion), or the problem of two markets, two prices will appear. Market forecast: the initial financing scale of CDR can reach 350 billion yuan, or 2-3 in the year. At present, the company in line with the qualification requirements of the opinion has a total of 5 Internet giants of BAJT and NetEase, with a market value of about 7 trillion yuan. According to the financing ratio of 2.5%-5%, the initial financing scale of CDR is expected to reach 1700-3500 billion, accounting for the 0.3%-0.6% of the total market value of current A shares. In view of the liquidity problem, it is expected that 2-3 enterprises will be issued in 2018 and the scale of financing will be 700-2100 billion yuan, which will be 30%-90% of IPO scale in 2017. In addition, for innovative companies that have not yet been listed abroad, we have screened 29 companies that meet the standard, with a market value of about $2 trillion and 700 billion, which is expected to issue CDR or IPO. CDR regression in the short term or catalytic growth plate, long-term A shares or beauty, the overvaluation value of domestic science and technology value premium or gradually converge on the valuation level of overseas science and technology stocks. Industry impact: expected thickening industry income 0.4%-2.7%, leading securities companies thickening effect significantly The income contribution of CDR to the broker is embodied in the underwriting fee, the trust fee and the transaction commission, in which the underwriting fee is a one-time contribution, and the trusteeship fee and the transaction commission are continuous income. Under the assumption that the underwriting rate was 2%, 3%, 4%, and the distribution ratio was 2.5% and 5% respectively, the first batch of 5 CDR enterprises were expected to bring the underwriting income of 35-140 billion yuan for the securities companies. If 2-3 companies are released within the year, the investment income of 2.7%-16.2% will be thickened and the industry income 0.4%-2.7% will be thickened. The comprehensive strength is relatively strong. The leading securities dealers who have branches abroad have a relative advantage in grasping the CDR business opportunities. It is expected that the CDR business has a significant effect on the profit of leading securities companies. Risk hints CDR is less than expected; uncertainty in performance caused by market volatility. Catalog First, unicorns return to the A stock process to accelerate 1.DRs previous life The policy background of the 2.CDR launch 3.CDR is the realistic choice of the return of the middle share Two or three main lines to discuss the design and operation of CDR 1. stone: ADR 2. main line 1: CDR issuers, depository and Trusteeship 3. main line two: CDR scheme design 4. main line three: CDR and the conversion of basic securities Three, how CDR affects A shares 1.CDR initial financing size of up to 350 billion yuan 2. potential unlisted unicorns have a market value of about 2 trillion and 700 billion yuan 3.A share beauty equity is a further step Four, how does CDR affect the securities industry 1. analysis of the profit of the broker from the case of Alibaba Calculation of the income of the securities industry by 2.CDR 3. leading securities firms have more relative advantages Five. Risk hints The following is the following Text of the report First, unicorns return to the A stock process to accelerate In recent years, the Hong Kong exchange has carried out the reform of the issuance system, and the A shares have also begun to embrace the new economy. In March 30th, the State Council announced the official official declaration of the CDR pilot, and the clear and eligible Unicorn company could choose CDR or IPO to return to the A shares. Due to the high cost of IPO preparation time, it is expected that the financing rhythm will be CDR after IPO. In addition, after the reform of the HKEx distribution system, more domestic high quality enterprises are listed in Hong Kong, and the emerging enterprises or after the listing of Hong Kong are listed in the form of issuing CDR to return to the A shares. In May 4th, the CSRC openly consulted on the measures for the issuance and management of depository certificates, standardized the basic CDR system and supplemented the relevant details. It is expected to be published in June at the earliest. 1.DRs previous life The creation of depository receipts is designed to facilitate the listing and trading of depositary stock issuers outside their registered places. Depository Certificate (DR) refers to a negotiable certificate issued and circulated on a countrys securities market on behalf of an overseas company (depository certificate issuer), and each depository certificate represents a certain amount of basic securities issued by a foreign company. According to their distribution or place of exchange, different names are named, such as American depositary vouchers called ADR, EDR (European depositary voucher), HKDR (Hongkong depository voucher), SDR (Singapore depository voucher), GDR (Global depository voucher), and CDR in China. The distribution of depository vouchers is mainly concentrated in the United States. According to the Bank of New York statistics, as of February 28, 2018, there are about 3272 depository certificates in the global stock market. The issuers of depository vouchers are all over the worlds 73 countries, of which the first three are Japan, Britain and China, accounting for 10%, 9%, and 9% respectively. In the trading place, the issuing places of depository vouchers are basically concentrated in the United States, in which the US OTC market and the stock exchange have 2911 depository receipts and transactions, with a total ratio of 83% and a remote lead. The policy background of the 2.CDR launch CDR pilot management method or early June, unicorn CDR regression progress or beyond expectations. In the near future, the regulatory layer made a dense sound of the unicorn CDR return to the A stock. In March 30th, the general office of the State Council forwarded the notice on the launching of some opinions on issuing stocks or depository vouchers in innovative enterprises (hereinafter referred to as opinions); on the same day, China Foundation Association issued private investment fund unlisted The stock investment valuation guidance (trial run) solves the problem of Unicorn valuation, and the supporting policy is efficient. In May 4th only a month later, the SFC formally issued the management method of depository voucher (solicitation draft) (hereinafter referred to as management method), the implementation and refinement of the opinion, visible supervision Layer support for CDR business. Hongkong has accelerated the reform of the issuing system and released restrictions on issuing shares with different rights. At the end of 2017, the HKEx put forward the basic plan for the reform of the issuance system, and consulted with the foreign policy in the first quarter of 2018. In April 24th, the Hong Kong exchange officially announced the revised The Stock Exchange of HongKong Limited securities listing rules, and the new listing rules came into force in April 30th. The reform is mainly embodied in three aspects: first, it provides specific guidelines for the listing suitability of unprofitable biotech issuers; two is an innovative industry company that accepts the same shares of different rights, but has a market value of at least HK $10 billion. If the market value is less than HK $40 billion, it will have to reach HK $1 billion revenue in the last year; three A qualified issuer is allowed to be listed in second Hong Kong, with a market value of at least HK $10 billion. If the market value is less than HK $40 billion, it will have to reach HK $1 billion in the last year. Hongkongs drastic reform of the distribution system or attracting more high-quality domestic emerging enterprises to issue shares in Hong Kong. The opinion clearly points out that the eligible Unicorn companies can choose CDR or IPO to return to A shares, and emphasize the relaxation of the profit requirements for the listing of growth enterprises. According to the pilot enterprises, the opinion points out: (1) industry standards: the Internet, large data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, biomedicine and other high-tech industries and strategic emerging industries; (2) scale standard: large red chip enterprises listed abroad, market value is not Less than 200 billion yuan; innovative enterprises that have not yet been listed abroad (including red chip enterprises and domestic registered enterprises), the operating income of the last year is not less than 3 billion yuan, and the valuation is not less than 20 billion yuan, or the business income is growing rapidly, with independent research and development, international leading technology, and the competition in the same industry. In a relatively dominant position. In accordance with the pilot method, the pilot red chip enterprises that allow the pilot red chip enterprises to issue the depository vouchers in the domestic capital market and have the conditions for the stock issue to be listed can apply for the application of the stock listing and the domestic registration in the territory of the pilot enterprises. The management measures clearly define the seven conditions for issuing CDR, and introduce a market maker system to increase investor protection and prevent speculation risks. The key contents of the management measures include: (1) clarify the seven issuing conditions, including good financial situation, more than three years of continuous operation, no change in actual controllers for nearly three years, etc. (2) banks, securities dealers, and CSI can act as the trustees, and make clear the nine responsibilities of the trustees. (3) the transaction of depository vouchers can be made by the market maker according to the relevant regulations; (4) management measures refer to investors purchase the depository certificate based on non new basic securities, and it is expected that the incremental issuance and stock conversion are possible; (5) For information disclosure requirements, issuers need to employ domestic representatives to act as secretaries. It is expected that the CDR and IPO financing will be carried out step by step. Due to the high cost of IPO preparation time, and the valuation guidelines began to start in July 1st, the valuation standard application time relatively late, the financing rhythm is expected to first CDR IPO. In addition, after the reform of the HKEx distribution system, more domestic high quality enterprises are listed in Hong Kong, and the emerging enterprises or after the listing of Hong Kong are listed in the form of issuing CDR to return to the A shares. 3.CDR is the realistic choice of the return of the middle share CDR return to A shares is more obvious than other ways. At present, for overseas listed companies to return to A shares, the main ways include direct IPO, backdoor listing, split listing and CDR. If the shares are listed in the A shares direct IPO or the backdoor, it is necessary to privatize the stock market from the stock market and dismantle the VIE structure. The whole process involves multiple interests, complicated processes, waiting for the long time to wait for IPO or the search for the shell resources, and the cost is higher and the risk is greater. Combined with the past cases of stock return cases, it takes 2-3 years to remove the VIE structure and return to A shares. For spin off listing, it is necessary to adjust the equity structure of parent company and subsidiary company. The process is complicated and time cost is high. The issuance of CDR does not require privatization and dismantling of the VIE architecture. The operation is relatively simple and the cost is low. CDR has obvious advantages in terms of formalities, time, and retaining structure. It also enables domestic and foreign financing, diversification of financing channels and investors. Two or three main lines to discuss the design and operation of CDR (1) CDR issuers, depository and trusteeship: since the RMB capital item has not yet been fully convertible, the CDR issuer is suitable for enterprises with investment projects in China; the depository institutions issued by CDR may be the China Deng company and the required banks and securities firms, with strong combined strength and branches abroad. Securities companies will have obvious advantages; trusteeship institutions are generally designated by depository institutions. (2) CDR scheme design: the actual financing ratio of CDR should be based on the domestic liquidity arrangement; the number of basic stocks corresponding to the 1 CDR is determined by the enterprise itself; the pricing of CDR mainly depends on the recognition by domestic investors on the valuations of the issuer; (3) the conversion of CDR and basic securities: the current market expects that CDR and basic securities can not be converted to each other (or there is a limit of conversion limit), or there will be two markets, two prices. At the same time, the introduction of market makers trading system may control CDR through the linkage between the CDR first market and the two level market. The price difference between basic securities. ADR has become a normal form of IPO in the United States. ADR was first created by the Morgan bank in 1927 to make American investors more convenient to deal with foreign stocks. It is a depository receipt for US investors to issue and trade in the US stock market. ADR is an important form of registration of companies outside the United States in the United States, because the issuance of ADR relative direct IPO can avoid obstacles to laws and regulations. Since 2000, the number of IPO families in the United States and the number of ADR publisher in the United States since 2000, the average ratio of ADR is 10%. For example, Baidu, Alibaba and Jingdong have all come to the US market by issuing ADR. Taking into account the functions of public offering and financing, the three level ADR rate is CDRs main reference mode. ADR can be divided into non participatory ADR (UnsponsoredADR) and participatory ADR (SponsoredADR) according to whether the issuer actively participates. Among them, participatory ADR is the mainstream form, and it is divided into four forms according to the trading place (OTC, exchange, the US private market) and the issue of issuing new shares to be divided into the first, two, three and 144A rules. The first level ADR and two level ADR can not be financed with the existing stock issue ADR, the difference is that the first level can only be on the OTC, and the two can be listed on the market. The level three ADR and 144A private ADR have the financing function based on the additional issuance of new shares. The difference is that the former can be publicly issued, and the latter can only be sold in the United States qualified machine. Construction of investors. The three tier ADR has the highest requirements of complete functions, regulatory requirements and information disclosure. For companies that need to issue CDR, it is more important to open trading and have a financing function. So, at the initial stage of CDR, the three level ADR rate is the main form of CDR reference. Taking the issue and transaction process of the three level ADR as an example, if the overseas listed companies issue ADR in the US capital market, it is necessary: (1) to sign a contract with the depositary and entrust the depositary to issue the ADR; (2) the overseas listed company, through the domestic broker, deposit the newly issued stock in the trusteeship designated by the depositary organization; (3) trusteeship After receiving the stock, the institution notified the depository institution to issue ADR in the United States: (4) the ADR after the issue was sent to the US underwriter to entrust it to underwrite. 2. main line 1: CDR issuers, depository and Trusteeship CDR refers to a negotiable certificate issued by a listed company abroad (including Hongkong, China) in which some of the listed companies have been issued or listed in the local trusteeship agency, issued by the depository institutions within the territory of China and listed in the domestic securities market for the sale of domestic investors. CDR issuers are suitable for enterprises with investment projects in China. Because the domestic RMB capital has not been fully convertible under the current domestic capital, the foreign listed companies can not or can only collect the funds within the limit, so it is more suitable for the domestic investment projects to issue CDR, and will raise funds for domestic projects. Based on the reasons for foreign exchange restrictions, the main bodies suitable for issuing CDR include: (1) the overseas listed Chinese companies (Hongkong red chips, the United States or other markets); (2) the offshore red chip structure has been set up to be listed overseas and the Chinese companies are not yet listed; (3) foreign investment projects in the country are in the foreign country. City company. The company, bank and broker can act as depository institutions. The securities companies with strong comprehensive strength and overseas branches have obvious advantages. The depository institution is the most core organization in the operation of the depository certificate. On the one hand, we should examine the financial situation of the financing enterprises, sign the distribution contract, determine the conversion ratio in the overseas, and on the other hand, undertake the responsibility of underwriting and issuing, and provide relevant financial and consulting services to the domestic investors. The management measures clearly define the nine responsibilities of the depositary, and put forward that the CSRC, the commercial bank approved by the Banking Regulatory Commission and the securities companies approved by the SFC can serve as depository institutions. Under the financial system of American mixed operation, the depository institution and the underwriter are generally held by one institution, while the commercial banks are far behind the securities dealers in both the resources reserve and the securities business operation ability under the separate operation of Chinas financial system. Therefore, at the present stage, the comprehensive strength is stronger and abroad. The advantage of the securities companies with branch offices as depository institutions is more obvious. A trusteeship institution is generally a branch or cooperative institution where the depository institution is located at the location of the underlying securities issuer (outside). During the issuance of DR, the trusteeship agency collects shares and notifies the depository institution to issue depository certificates. During the duration of the DR, it receives dividends or interest according to the instructions of the depositary organization, and remit to the DR issuer and provide local market information to the depository institution. The choice of trusteeship institutions is relatively simple and is designated by depository agencies. 3. main line two: CDR scheme design Since there is still no specific policy and standard for CDR issue, and combined with the operation practice of ADR, the operation process of the overseas listed companies in the domestic distribution of CDR can be simulated as Figure 7. For the issuing scale of CDR, the number and pricing of basic stocks, and the reference to DR operation practice, it is expected to operate as follows: (1) the distribution scale of CDR: according to overseas experience, the proportion of listed DR financing is generally 2%-5% of circulation market value, but considering the problem of liquidity difference at home and abroad, the actual financing ratio needs to be arranged according to the current liquidity in China. After that, the amount of CDR depends on the transaction, and the issuing of CDR needs to specify a depository institution. When the buying amount of the CDR is greater than the existing amount, the depository institution needs to transfer the underlying securities to CDR in time, and on the other hand, the CDR should be cancelled in time. (2) the number of CDR corresponding base stocks: the number of 1 CDR corresponding to the number of basic stocks is determined by the enterprise, mainly based on the improvement of liquidity, transaction convenience, the expansion of the investor base, and the higher analogy with the same company. But the 1 CDR corresponding to the number of basic stocks is not a constant, after the CDR listing can be adjusted, such as NetEase ADR after the listing of more stock, the ADR per share of 100 shares of ordinary shares to ADR for 25 shares of common shares. (3) the pricing of CDR: the publishers, depository agencies, sponsor agencies and underwriters of CDR are conducting roadshows, enquiries and pricing according to the standard process issued by A shares. Therefore, CDR pricing mainly depends on the recognition of issuers valuation by domestic investors. In addition, the issuance of pricing or supervision and other effects. 4. main line three: CDR and the conversion of basic securities The transferability between CDR and basic securities is the core issue of CDR issue, but the opinions and management measures are not clear. According to the experience of the securities market in the United States and Hongkong, holders of depository receipts are allowed to convert their depository receipts with underlying securities. Since the domestic capital control is still in practice, the RMB is still not convertible, from the perspective of the stability of the financial market and the prudent promotion of the reform, the current market is expected that the CDR and basic securities can not be converted to each other (or there is a limit of conversion limit). According to the experience of DR worldwide, the dollar is used as the trading currency for the free exchange of US dollars, thus connecting the two markets of basic securities and depository vouchers (basic securities and DR convertible), so the price tends to be consistent, otherwise the arbitrage will occur. The stock or depository certificate issued by the pilot enterprises in China should be listed and traded on the domestic stock exchange, and the securities registration and settlement Co., Ltd. should register and deposit management and settlement in Chinas securities registration and settlement company limited company. the RMB is expected to be denominated in CDR because the domestic RMB is not yet freely convertible. If CDR and underlying securities can not be converted to each other, there will be two markets and two prices. The prices of CDR and underlying securities depend on the value judgments of investors in different securities markets. In the long run, the lack of transferability may lead to CDRs price deviating from the price of underlying securities. At the same time, the management measures also put forward that the transaction of depository certificate can be made by market maker according to the relevant regulations. The introduction of market maker system may control the difference between the CDR and the basic securities through the linkage between the CDR first level market and the two level market. Three, how CDR affects A shares At present, the company in line with the qualification requirements of the opinion has a total of 5 Internet giants of BAJT and NetEase, with a market value of about 7 trillion yuan. According to the financing ratio of 2.5%-5%, the initial financing scale of CDR is expected to reach 1700-3500 billion, accounting for the 0.3%-0.6% of the total market value of current A shares. In view of the liquidity problem, it is expected that 2-3 enterprises will be issued in 2018 and the scale of financing will be 700-2100 billion yuan, which will be 30%-90% of IPO scale in 2017. In addition, the potential unlisted unicorns market capitalization of about 2 trillion and 700 billion yuan, is expected to issue CDR or IPO listing. CDR regression in the short term or catalytic growth plate, long-term A shares or beauty, the overvaluation value of domestic science and technology value premium or gradually converge on the valuation level of overseas science and technology stocks. 1.CDR initial financing size of up to 350 billion yuan It is estimated that 2-3 companies will be released in the year, and the scale of CDR financing in 2018 will be 5%-14% of the 2017 financing scale. Early IPO audits tightened, refinancing scale narrowed, has reserved space for CDR liquidity. It is expected that the CDR circulation is stable. If 2-3 are issued in the year, the scale of CDR financing in 2018 is 700-2100 billion, accounting for 5%-14% of the size of financing in 2017, and 30%-90% of IPO in 2017. It is expected that there will not be a liquidity shock to the market. 2. potential unlisted unicorns have a market value of about 2 trillion and 700 billion yuan The potential unlisted unicorns are expected to issue CDR or IPO, with a total market value of 2 trillion and 740 billion yuan. According to the threshold requirements for the innovative enterprises that have not yet been listed abroad, we have selected a total of 29 enterprises with a valuation of not less than 20 billion yuan, with a total valuation of about 2 trillion and 740 billion RMB, according to the list of Unicorn enterprises published in the 2017 China Unicorn Development Report. It is worth noting that, as the opinion also demands that the business income of this kind of enterprise is not less than 3 billion yuan in the last year, and the business income of the enterprises in the list is not fully disclosed, so the number of eligible enterprises may be less. 3.A share beauty equity is a further step In the short term, it will push the valuation premium of high-tech stocks and tend to converge in the long run. From the comparison of A shares and American industries, we can see that the value of A shares in the three industries of information technology, medical treatment and consumption have a premium phenomenon, especially the most significant premium premium of scientific and technological enterprises. In the short term, taking into account the market focus and policy bias towards the new economy, the valuation level of A shares may be promoted. In the long run, the overseas Chinese science and technology stocks issued CDR helping high quality leading companies to return to A shares, and also make the A share valuation system and foreign markets at the same time to optimize the domestic market pattern. With further linkage, the overvaluation premium of domestic technology stocks will gradually converge to the valuation level of overseas technology stocks. High quality stocks return, increase the relevant plate valuation differentiation. The unicorn enterprises that return to A shares in the way of CDR are mainly high quality enterprises in the four new industries. With their own technical strength and profitability, and the policy background of developing new economy, the approximate rate of the companys valuation will be significantly improved after the return of the total market value of 360 from the return of the total market value of the United States stock after the return of US stocks by nearly 5 times. With the return of more high growth enterprises, the risk preference of the market for growth shares will also affect the flow of stock capital in the domestic A stock market. The valuation of truly high-quality companies will be improved, while the valuation pressure of companies with poor performance will increase, and the degree of valuation differentiation within the sector will be enhanced. Four, how does CDR affect the securities industry The income contribution of CDR to the broker is embodied in the underwriting fee, the trust fee and the transaction commission, in which the underwriting fee is a one-time contribution, and the trusteeship fee and the transaction commission are continuous income. Because of the introduction of market maker trading system, if a broker acts as a market maker, the market making price difference income can be obtained. Under the assumption that the underwriting rate was 2%, 3%, 4%, and the distribution ratio was 2.5% and 5% respectively, the first batch of 5 CDR enterprises were expected to bring the underwriting income of 35-140 billion yuan for the securities companies. If 2-3 companies are released within the year, the investment income of 2.7%-16.2% will be thickened and the industry income 0.4%-2.7% will be thickened. The comprehensive strength is relatively strong. The leading securities dealers who have branches abroad have a relative advantage in grasping the CDR business opportunities. It is expected that the CDR business has a significant effect on the profit of leading securities companies. 1. analysis of the profit of the broker from the case of Alibaba In September 2014, Alibaba issued third ADR to the United States, publicly issuing 320 million copies of ADS, each ADS represents a common stock, of which 123 million ADS are issued through new shares, and 197 million ADS is issued by Alis major shareholders (including YAHOO, Ma Yun, etc.) to transfer part of the old stock, and raise a total of $21 billion 770 million to create the New York Stock Exchange The largest IPO record in history. In the course of the issue, the Alibaba selected Citibank as the depository institution, and the trusteeship was the branch of Citibank in Hongkong; in the underwriting link, Ali designated six investment banks such as Swiss credit, Deutsche Bank, Goldman Sachs, Morgan chase, Morgan Stanley, Citibank and so on as the main underwriting group. (1) depository institution: as the most important institution in the issue, the fees charged are the highest and the fees are embodied in the underwriting sponsorship fee. The underwriting cost of Alibaba ADR is $3.1 and the underwriting rate is 1.43%. The rate of underwriting is closely related to the size of the company, the stock exchange and the valuation of the market. We count the issuance of the 60 of the shares issued to the United States in the form of ADR from 2010 to the present. The ADR issue rate is between 1.41%-22.79%, the average issuing rate is 3.54%, the median is 9.75%. (2) trusteeship fee: the trusteeship agency charges the ADR holder through the broker to charge the trusteeship fee, and in the process of ADR issuance and cancellation, ADR has to pay the cost of service per person, not more than $0.05 per share. Other expenses that need to be paid include cash dividends and so on. According to the Alibaba annual report, the holder of ADS (the actual base stock represented by ADR) needs to pay, write off, cash dividends and other expenses to the Citibank trusteeship, the cost is not more than $0.05 /ADS, and the other expenses to be borne include tax, fee, registration fee, etc., up to no more than $0.05 /ADS/. (3) brokerage commission income: securities dealers can obtain Commission revenue through ADR transactions, and the Commission of American brokers will be charged in two ways: $5-7 per dollar and $0.005 per share. Calculation of the income of the securities industry by 2.CDR The income contribution of CDR to the broker is embodied in the underwriting fee, the trust fee and the transaction commission, in which the underwriting fee is a one-time contribution, and the trusteeship fee and the transaction commission are continuous income. As for the implementation of the CDR, we have not yet issued substantial policies and systems at home. For the underwriting rate, we calculate the ADR rate of 3.54% in the United States and the domestic IPO rate. At present, the domestic IPO rate is generally 5%-7%. According to the statistics of wind, the domestic IPO underwriting rate is about 6.5% in 2017. It is worth noting that the larger the scale of the fund raising and the lower rate of the IPO. The size of the company, which is in line with the qualification requirements of the opinion, is expected to be larger in CDR distribution, and CDR or enjoy preferential policy, CDR underwriting rate or lower IPO underwriting rate, assuming the underwriting rate is 2%-4%. The first 5 CDR companies are expected to generate 35-140 billion yuan in underwriting revenue for brokerages. We analyze the sensitivity of underwriting income, assuming the underwriting rate is 2%, 3% and 4%, assuming the distribution ratio of 2.5% and 5%, and calculates the underwriting income of the first 5 companies. 5 companies that meet the qualification requirements are expected to reach 1700-3500 billion in CDR financing, and 5 pilot enterprises have brought underwriting income of 34.49-137.97 billion for securities companies, accounting for the proportion of investment banks in 2017 to 6.8%-27.1%, accounting for 1.1%-4.4% in 2017. If 2-3 are issued in the year, it is expected that the scale of CDR financing in 2018 is 700-2100 billion, which will bring 13.80-82.78 billion yuan to securities firms, increase the income of investment bank, 2.7%-16.2%, and increase the industry income of 0.4%-2.7%. 3. leading securities firms have more relative advantages Participatory DR depository business is divided into four major banks, of which New York Mellon bank occupies more than half of the market share. According to the 2016 DR market report issued by the New York Mellon bank, the depository business of the participatory DR is monopolized by New York Mellon bank, Citibank, Deutsche Bank and JP Morgan. The market share of New York Mellon bank is the highest, and the Citibank and Deutsche Bank are evenly split, and the market share is 16%. The market share is 11%. In the region, New York Mellon has the best performance in Latin America, occupying more than 70% of the market share; Citibank takes up 21% of the market share in the Asia Pacific region, and is slightly inferior in other regions; Deutsche Bank occupies an advantage in Europe, the Middle East and Africa, with a market share of 20. JP Morgan has a relatively balanced performance in various regional markets. Because CDR depository institutions need to be familiar with the operation of domestic and foreign securities market, with strong securities issuance plan, securities listing recommendation and guarantee ability, international investment bank has strong cross-border service ability and has a more relative advantage in the DR business. The comprehensive strength is relatively strong, and the leading securities companies with branches abroad have a comparative advantage. As the CDR issue involves two markets, the demand for cross-border service capacity and underwriting ability of securities dealers is higher, leading securities dealers have global business layout and have a more relative advantage in holding CDR business opportunities. CDR business is expected to have a significant thickening effect on the profits of leading securities companies. We are optimistic about the marginal improvement of the leading securities companies. Five, risk indicates that CDR is less than expected, and the uncertainty of market volatility results in performance. The source of this article: Wang Jians angle responsibility editor: Yao Liwei _NT6056 Five. Risk hints CDR is less than expected; uncertainty in performance caused by market volatility.