A few days ago, Jiangsu Diao Microelectronics Co., Ltd. (hereinafter referred to as “Diao Micro”)’s application for listing on the Science and Technology Innovation Board was officially accepted by the Shanghai Stock Exchange. China Securities Securities is its sponsor and lead underwriter.
The prospectus shows that the company’s 2020 operating income is 248 million yuan, and the net profit attributable to the owners of the parent company is 40.8071 million yuan. And the operating income is not less than 100 million yuan” listing standard.
In fact, in 2019, Diaowei’s performance is still at a loss, and in 2020, it will turn a loss into a profit. What makes people concerned is that it is also in 2020 that mobile phone manufacturers such as Xiaomi and OPPO have become shareholders, and Xiaomi and OPPO are the end customers of Diao Micro’s products.
OPPO and Xiaomi quickly became shareholders, and their performance soared
Diao Micro is an integrated circuit design company specializing in the R&D, design and sales of high-performance analog chips. The company’s products are mainly divided into two series of signal chain analog chips and power management analog chips, which are mainly used in consumer electronics, smart LED lighting, communication equipment, industrial control and security, and medical equipment.
The prospectus shows that from 2018 to 2020 and from January to June 2021, the company’s operating income was 97.392 million yuan, 137 million yuan, 248 million yuan and 223 million yuan, respectively. The compound growth rate of operating income in 2020 will reach 59.43%, showing a rapid growth trend.
Compared with the rapid growth of operating income, Diowei’s net profit has just turned a loss to profit in 2020. From 2018 to 2020 and from January to June 2021, the company’s net profits were -8.1034 million yuan, -922.9 million yuan, 40.8071 million yuan and 59.692 million yuan.
Main financial data and financial indicators
Image source: prospectus
The company said that since 2020, thanks to the gradual realization of the income from the conversion of the company’s continuous R&D investment and the continuous improvement of the market economy, the company has got rid of the situation of continuous losses caused by continuous R&D investment, and has successfully turned losses into profits. Fast profit period.
Behind the company’s belief that “the gradual realization of income from results conversion and the continuous improvement of market prosperity” are the company’s equity changes, especially the equity changes starting in 2020 when the company’s performance has turned around.
On January 16, 2020, Diaowei went through the procedures of industrial and commercial change registration, and Xiaomi Yangtze River Industry obtained 5.51% of the company’s equity at a price of 54.568 million yuan.
On March 10, 2020, Xiaomi Yangtze River Industry, Gimpo Intelligent, Guoke BOE, Pingtan Rongxun increased the capital of Diowei, and the newly-increased registered capital was 10.2 million yuan. Tan Rongxun subscribed for RMB 68,985,800.
On September 16, 2020, Diaowei passed the non-public issuance of 15.63 million ordinary shares, of which 8.19 million shares were non-publicly issued to OPPO Guangdong. Other subscribed shareholders include Yuanhe Puhua, Nantong Shengxi, Nantong Shengle, Shanghai Xinle, Shanghai Xinxi, Lanqi Investment, etc.
Xiaomi and OPPO have since entered the ranks of Diaowei shareholders. Xiaomi’s industrial investment platform Xiaomi Yangtze River Industry Fund is Diaowei’s fourth largest shareholder, holding 7.5%; OPPO Guangdong holds 4.33%, making it the seventh largest shareholder. And it is precisely with the recognition of end customers such as OPPO, Xiaomi, Dahua, Hikvision, etc., from January to June 2021, the company’s revenue and profit levels have greatly increased, and the operating income in six months reached 223 million yuan, which is close to 2020. The annual income, net profit of 59,692,600 yuan, has exceeded the net profit of last year.
The prospectus shows that in 2019, Xiaomi’s product application company chip only has 974,700 yuan. After Xiaomi’s shareholding in 2020, the amount has soared to 23,061,500 yuan, accounting for 9.32% of the company’s operating income. The amount of OPPO product application company chips also reached 47.0513 million yuan in 2020, accounting for 19.01%, and in the first half of this year it reached 65.946 million yuan, accounting for 29.58%.
It should be noted that Diao Micro has also signed gambling agreements with Qiansheng Investment, Diao Investment, Antai Real Estate, Xiaomi Yangtze River Industry, Cathay Development, Zhaojie Investment and other parties, involving capital increase agreements, performance goals, and priority subscription rights. And many other special terms.
The gross profit margin declined from 2018 to 2020, and the funds raised were 6 times the turnover of last year
With the help of shareholders such as Xiaomi and OPPO, Diowei, which has just made a profit in 2020 and met the requirements for listing on the Science and Technology Innovation Board, seeks to list A shares.
According to the prospectus, the company intends to issue RMB 63.05 million of ordinary shares (A shares) for the initial public offering (excluding the number of shares issued through the over-allotment option), and it intends to raise 1.5 billion yuan, and the net proceeds after deducting the issuance costs The amount will all be used for projects related to the company’s main business.
The projects related to the company’s main business are the analog chip product upgrade and industrialization project, the Shanghai R&D and design center construction project, the Nantong R&D and testing center construction project, and supplementary working capital. The amounts are about 536 million yuan and 4.5 respectively. 100 million yuan, 359 million yuan, and 156 million yuan.
What is of concern is the analog chip product upgrade and industrialization project, and the Shanghai R&D and Design Center construction project, with a total investment of 985 million yuan, accounting for 65.68% of the total raised funds of 1.5 billion yuan. If supplementary flows are added With a capital of 156 million yuan, the proportion is as high as 76.08%.
The implementation locations of these two projects are the 6-9th floor, No. 3_4, Qibao Vientiane Center, Lane 206, No. Jing Road, Minhang District, Shanghai. The company’s wholly-owned subsidiary, Shanghai Didi, has obtained the property and obtained the corresponding real property right certificate. The property will be put into use after the renovation is completed.
Previously, in 2020, Diaowei purchased office houses in Minhang District, Shanghai, and paid a total of 172 million yuan for the purchase of houses in 2020 and the first half of 2021, respectively. The office room is the office room for the analog chip product upgrade and industrialization project and the Shanghai R&D and Design Center construction project.
In other words, most of the funds raised by Diowei this time are used for the construction of these two projects. Compared with the company’s current performance, the 1.5 billion yuan of funds raised can be described as a huge amount. 1.5 billion yuan has reached 6 times the company’s 2020 turnover of 248 million yuan and 37 times the net profit of 40.8071 million yuan.
It is worth mentioning that Diao Micro’s fund-raising projects are only used for research and development, not for production. This is related to the company’s business model. The company adopts the more common Fabless (referring to an operation mode of integrated circuit design companies that have no manufacturing business and only focuses on design) in the integrated circuit design industry. It does not directly engage in the production and processing of chips. The main production links such as packaging and testing are handed over to the foundry and packaging and testing foundries to complete.
The company’s operating costs are mainly composed of wafer costs and subcontracted processing fees. During the reporting period, the company’s purchases from the top five suppliers totaled 68.739 million yuan, 93.024 million yuan, 130 million yuan, and 108 million yuan, respectively, accounting for 81.98 million yuan in total purchases during the same period. %, 86.01%, 89.71% and 88.94%, the overall procurement concentration is at a relatively high level.
At present, the global wafer and packaging and testing production capacity generally enters a relatively tight cycle. Owei’s profitability and the stability of product supply have adversely affected.
In addition, from 2018 to 2020 and from January to June 2021, the company’s sales to the top five customers were approximately 46.158 million yuan, 71.738 million yuan, 123 million yuan and 134 million yuan, respectively. The proportions of the company’s main business income in the same period were 47.4%, 52.51%, 49.86% and 60.19%, respectively, and the customer concentration was relatively high.
From 2018 to 2021 from January to June, the company’s comprehensive gross profit margin was 41.28%, 39.81%, 37.34% and 48.84%, respectively. From 2018 to 2020, the overall gross profit margin has shown a downward trend. Dio Micro explained that it was mainly caused by the year-on-year decline in the gross profit margin of signal chain analog chips. Compared with its peers, Diaowei’s gross profit margin in 2020 is lower than that of its peers.