New board greeted by SMEs
By Zhang Jin and He Na (China Daily)
Updated: 2004-05-19 08:46

Zeus Information Technology Co Ltd, a private firm based in China's northeast, is preparing to list on the sub-board of the Shenzhen Stock Exchange.

The establishment of the long-awaited sub-board, to serve small and medium-sized enterprises (SMEs), was approved by the China Securities Regulatory Commission (CSRC) earlier this week.

It paves the way for the creation of a truly independent second board in the long run.

Analysts say Zeus' move represents SMEs' high expectations for the NASDAQ-like board and partly reflects their huge thirst for capital.

"We have been working for this for a long time," said company President Wang Benzhong. "We plan to submit our listing application to the CSRC next year."

The company wants to raise 150 million yuan (US$18.1 million) through the initial public offering to fuel further research and development.

Wang said although he was concerned about the traffic jam being created by those wanting to list on the main board, he was optimistic.

"The SME board has rejuvenated our hope," he said.

Zeus provides hardware and software services to governments, banks, companies and individual computer users to ensure their network security and secrecy.

Wang said Zeus' investors are now adding holdings so its registered assets reach 50 million yuan (US$6.05 million), a minimum requirement for listing.

And Zeus is now talking with a leading Chinese PC supplier, which Wang declined to identify, to establish a manufacturing base for computers with improved security features in Changchun, the capital city of Jilin Province in the northeast.

"If the negotiation proceeds smoothly, the base will be built late this year or early next year," Wang said.

The 3-year-old high-tech firm realized a revenue of 18.33 million yuan (US$2.22 million) and a profit of 3.02 million yuan (US$365,175) last year.

Wang is confident about the prospects of the fledgling company, saying increasing awareness among computer users about the need to protect information will accelerate the demand for security products.

However, analysts say the company's listing plan still faces some uncertainty as the SME board is not actually up and running.

"SMEs are generally in great need of capital to sustain and expand themselves," said an analyst from Guotai Jun'ai Securities.

"It is a matter of course that they will eye the SME board after they find difficulties in getting loans from banks and listing themselves on the main board."