Xin Long Technology debuted today: the annual income is 209 million yuan, and the investment in research and development is not as good as that of its peers

According to the announcement of the 7th Review Meeting of the Listing Committee of the Science and Technology Innovation Board in 2022, Shanghai Xin Long Semiconductor Technology Co., Ltd. (hereinafter referred to as "Xin Long Technology") will be held for the first time today, with Haitong Securities as its sponsor.

In this IPO, Xin Long Technology plans to raise 263 million yuan for synchronous rectification of high-voltage high-power chip R&D and industrialization construction projects, R&D center construction projects and supplementary working capital.

The prospectus shows that there is no controlling shareholder of Xin Long Technology, and Li Ruiping, Du Yan and Chang Xiaohui hold a total of 93.11% of the company's shares, which is the actual controller of the company.

1Detailed R&D expense ratio is low

Founded in 2012, Cindrom is a company specializing in the research and development, design and sales of analog integrated circuits for power management.

During the reporting period, the company achieved revenue of 111 million yuan, 158 million yuan and 209 million yuan, and net profit of 28.6881 million yuan, 43.1677 million yuan and 67.0961 million yuan in the same period, showing an overall upward growth trend.

The comprehensive gross profit margin of Xin Long Technology fluctuated, from 2019 to 2021, 43.42%, 42.18% and 49.36%, respectively, an increase of 7.18 percentage points in 2021, mainly because the company raised the sales unit price of some products.

From the perspective of revenue composition, the main business of Xin Long Technology is power chips, including medium voltage power supply chips, high voltage power supply chips and LED lighting driver chips, of which medium voltage power supply chips are its main source of income, accounting for 65.92%, 62.74% and 67.85% of revenue from 2019 to 2021.

Power chips are widely used in various types of electronic products, with the vigorous development of downstream industries, such as vehicle electronic devices, communication equipment, industrial control and other fields of increasing demand for it, the global power chip market size has grown from 19.1 billion US dollars in 2015 to 25 billion US dollars in 2018, and is expected to reach 56.5 billion US dollars by 2026. In the domestic market, the scale from 2018 to 2020 is 68.153 billion yuan, 74.3 billion yuan and 76.3 billion yuan, with a compound growth rate of 5.81%, if the growth rate remains unchanged, the power chip market still has broad growth space in the future.

However, in the power chip industry, there are many low-end enterprises but the market share is not high, while the market share of high-end products is relatively concentrated, in 2020, the world's top ten analog integrated circuit design companies the total market share of up to 62%.

In China, most companies are mainly engaged in low-end product business, such as lighting equipment, consumer electronics, etc., the competition is more fierce, from 2019 to 2021, the market share of Xin Long technology is 0.15%, 0.21% and 0.26%, respectively, at a low level.

It is worth noting that during the reporting period, the R&D expense ratio of Xin Long Technology was 6.59%, 6.37% and 7.45% respectively, and it was lower than the average of the same industry in 2019 and 2020, and if the company continued to maintain low R&D investment, it would be difficult to match comparable companies in the same industry.

2

Mainly distributed

Xin Long technology adopts the Fabless business model, not directly engaged in product production and manufacturing, wafer manufacturing and packaging testing and other production links entrusted to professional suppliers to complete.

During the reporting period, the company mainly purchased wafer and packaging and testing services, and the purchase amount of the top five suppliers accounted for 85.17%, 85.05% and 87.08% respectively, of which China Resources Micro has always been the largest supplier of Xin Long Technology, and from 2019 to 2021, the proportion of the amount purchased from it was 36.45%, 42.35% and 41.76% respectively. If the supplier's production capacity is limited or there are adverse changes in cooperation, the company's production capacity is likely to be difficult to support the company's sales growth, which will adversely affect the operating performance.

In terms of sales, Xin Long Technology adopts the sales model of "payment to delivery", in 2019 and 2020, the company's production and sales rate is more than 100%, respectively, 113.29%, 109.16%; in 2021, in the case of tight production capacity in the semiconductor chip industry, the company actively expanded production capacity, resulting in an increase of 48.72% over the previous year, sales increased by 15.89%, and the production and sales rate fell to 85.06%.

In addition, the company is mainly based on distribution, and the way of cooperation with dealers is buyout distribution, during the reporting period, the distribution revenue accounted for 99.42%, 99.75%, 99.69% of the revenue, due to the dispersion of end customers, the promotion ability of dealers is higher, if the sales ability of dealers can not keep up with the company's development needs, it will adversely affect the overall performance of the company.

During the reporting period, the total sales amount of the company's top five customers accounted for 53.15%, 54.44% and 49.48% of the revenue, showing a fluctuating downward trend, and the top five customers in 2021 included Haili Seiko, Hangzhou Xuhang, Shanghai Yiheng, Lianben Technology and Silicon Core.

3 Conclusions

Benefiting from the continuous strong downstream demand, the power chip industry has a broad space for development, and the operating performance of Xin Long Technology is likely to be boosted, but at present, the company's market share and research and development capabilities are in a weak position, and the superimposed supply and marketing business risks will bring challenges to the company's future development to a certain extent.