Core Viewpoint - The number of companies applying for listing on the Hong Kong GEM has increased this year due to improved market liquidity and valuation recovery, making GEM an attractive option for small and medium-sized enterprises (SMEs) seeking financing [1][2]. Group 1: GEM Market Activity - As of September 26, 2023, 11 companies are currently pursuing GEM listings, primarily in sectors such as basic chemicals, education, textiles and apparel, home building materials, and software and IT services [1]. - In 2024, three companies have submitted their prospectuses to GEM, all of which have completed their listings, while in 2023, five companies submitted applications, with one withdrawing and four becoming automatically invalid [1][5]. - The GEM market has seen a total of 316 companies listed, with 10 companies having a market capitalization exceeding 1 billion HKD [6]. Group 2: Financial Performance of Companies - The annual revenue of the 11 companies aiming for GEM listings is mostly around 100 million RMB, with net profits generally below 50 million RMB, and some companies reporting losses in recent years [2]. - For instance, Ronglian Recycling Technology reported revenues of 133 million RMB and 210 million RMB for 2023 and 2024, respectively, with net profits of 24 million RMB and 35 million RMB [2]. Group 3: GEM Reform and Its Impact - The GEM reform, which took effect in January 2024, aims to lower the listing threshold for SMEs, focusing on supporting startups and growth-oriented companies [2][4]. - Key reforms include a simplified transfer mechanism to the main board, new valuation tests for high-growth companies, shortened post-listing lock-up periods for major shareholders, and the removal of mandatory quarterly reporting [4]. - The reform has led to a gradual release of its effects, with three new stocks listed in 2024, marking a significant change from the previous three years without new listings [5]. Group 4: Market Dynamics and Future Outlook - The ability of mainland companies to successfully list on GEM is influenced by the completeness of their application materials and their responsiveness to regulatory inquiries [5]. - Industry experts suggest that to further invigorate the GEM market and attract more quality SMEs, efforts should focus on enhancing market liquidity and increasing investor participation [5].