Research On IPO Pricing Method Of Biomedical Industry Based On Cluster Analysis

In this paper, we present literature review on new issue system firstly. The literature reviews include new issue regulatory mechanism, pricing system and new stock value estimation model. Then the new issue system and IPO pricing development and change process in China is given.The paper focus on the IPO pricing of biomedical industry based on cluster analysis. All possible influencing factors which are related to IPO pricing are analyzed firstly. An index system is proposed based on the related factors. The index system include the profitability, liquidity ratios and leverage ratios, operation efficiency ratios, development ability and competition and capital stock extension ability of newly listed companies'. 57 biomedical listed companies of A stock market are taken as initial samples and 5 new issue public companies which is initially public offered in 2004 are taken test samples. The demonstration research of biomedical industry IPO pricing method is presented based on those samples.The proposed method can solve the underpricing of IPO and form a more reasonable price which can reflect the true value of new issue stock. Furthermore, appropriate new issue stock pricing may control the new issue risk both for listed companies and underwriter. In addition, reasonable pricing is helpful for resource allocation in capital market.