After three consecutive losses, Guangdong Xidi Microelectronics Co., Ltd. (hereinafter referred to as "Xidi Micro") submitted a listing plan for the Science and Technology Innovation Board.
As a company standing at the outlet of chips, Xidi Micro has been working in the field of power management chips for many years, and the main use of funds raised is also to invest in research and development in this field.
Behind the research and development of the main business, Xidi Micro still has a long way to go to get rid of the embarrassing situation of two-way dependence on procurement and sales.
The harder the loss, the higher the valuation
No business likes to lose money, but no business doesn't like high valuations.
In the case of XidiWei, the company shows a bizarre side: the more it loses, the higher the valuation.
According to the prospectus, the main business of Xidi Micro is the research and development, design and sales of analog integrated circuit products including power management chips and signal chain chips, and the main products cover DC/DC chips, super fast charge chips, lithium battery fast charge chips, etc., which are currently mainly used in mobile phones, notebook computers, wearable devices and other fields.
The boom in consumer electronics has given birth to the trillion-dollar Apple company and the growth boom of industrial chain companies. However, Xi Diwei had no connection with this.
The data shows that from 2018 to 2020, XidiWei achieved revenue of 68.1632 million yuan, 115 million yuan and 228 million yuan respectively, and the net profit achieved in the same period was -5.384 million yuan, -9.5752 million yuan and -145 million yuan, respectively, and the continuous loss situation did not improve until 2021.
Ironically, as losses have intensified, The valuation of Xidi Micro has soared.
In November 2019, Xidi Limited, the predecessor of Xidiwei, made a shareholders' meeting resolution, and shareholders Tang Hong, Zhang Xuzhong and Tibet Junheng transferred some or all of their equity to a third party, and the equity transfer was priced at 37.55 yuan / registered capital.
Just one month later, in December 2019, Xidi Limited increased its capital, and Ningbo Hongjing subscribed to the company's new registered capital of 1.99712 million yuan for 150 million yuan, according to which the price of the capital increase was 75.11 yuan / registered capital. In just 1 month, valuations have grown by 100%.
It is worth mentioning that Ningbo Hongjing, who is willing to participate in the capital increase at a high price, is not an idle person, as a private equity institution, its only limited partner is beijing financial street Xicheng Equity Investment Fund, which invested 150 million yuan, accounting for 99.34% of the overall capital of Ningbo Hongjing.
CICC Xicheng (Beijing) Investment Co., Ltd., the managing partner of Beijing Financial Street Xicheng Equity Investment Fund, has a close relationship with CICC. According to xidi micro-prospectus, CICC Xicheng is a holding subsidiary of CICC Jiazi (Beijing) Private Equity Investment Fund Management Co., Ltd., a joint venture indirectly held 51% of THE SHARES of CICC.
Unfortunately, CICC is the joint sponsor of Xidiwei's IPO on the Science and Technology Innovation Board, and the condition for Ningbo Hongjing's 150 million shares is Xidiwei's listing bet.
In September 2020, Xidi Micro conducted a new round of equity transfer and betting. Although the loss margin has increased, it has not affected the company's high valuation at all. The prospectus shows that Shenzhen Chenxin has been partially funded by Xidi Micro with 176.34 yuan / registered capital; not only that, Shenzhen Chenxin has also participated in xidi micro capital increase, this time compared with the capital increase 9 months ago, the price has reached 241.65 yuan / registered capital, an increase of 221.73%.
This also means that in 9 months, according to the increase rate, Ningbo Hongjing, which is closely related to CICC, has become 150 million yuan to 483 million yuan, which shows the speed of capital appreciation.
It should be pointed out that in the above two rounds of capital increase, Xidi Micro signed a VAM agreement with the investor, and the VAM clause was only lifted and terminated in April 2021.
Two-way dependence on purchase and sales
Sitting on the valuation of the rocket, Xidiwei has extremely obvious pain points.
Xidi Micro's prospectus disclosed that the company's end customers mainly include intelligent terminal application manufacturers, automotive vehicle manufacturers and other consumer electronics manufacturers, and in terms of sales, Xidi Micro's dependence on the top five customers is extremely conspicuous. From 2018 to 2020, the total sales revenue of Xidi Micro to the top five customers accounted for 93.87%, 92.15% and 90.51% of its operating income in the current period, respectively. In the first half of 2021, the company's sales to the top five customers still accounted for 93.22%.
It is worth pointing out that in the first half of 2021, Xidi Micro sold 118 million yuan to Taiwan Avnet, accounting for nearly 54% of the overall revenue, and one customer supported half of the revenue.
Dependencies don't just exist on the sales side. On the procurement side, Xidi Micro also has a strong dependence. According to the prospectus, Xidi Micro adopts the Fabless model to operate, focusing on the research and development, design and sales of analog integrated circuits including power management chips and signal chain chips, and entrusts the wafer manufacturing and packaging and testing links to the corresponding foundries to complete.
Therefore, Xidi Micro's suppliers mainly include fabs and packaging and test factories. From 2018 to 2020, the total amount purchased by the company from the top five suppliers accounted for 96.96%, 91.34% and 82.22% of the purchase amount in the same period, respectively.
Procurement and sales double dependence, hoping to enhance the strength of research and development to enhance the bargaining power of the market, or become an inevitable choice of Xidi Micro.
According to the prospectus, in this IPO, Xidi Micro intends to raise an overall amount of 582 million yuan, of which 167 million yuan will be invested in the research and development and industrialization of power management chips for high-performance consumer electronics and communication equipment; more than 85 million yuan will be invested in the research and development projects of new generation automobile and industrial power management chips; 239 million yuan will be invested in the headquarters base and cutting-edge technology research and development projects; and the remaining 90 million yuan will be used to supplement working capital.
Three of the four fundraising projects are related to research and development, which shows that Xidi Micro attaches great importance to the research and development label.
Xidi Micro Fundraising and Investment Source: Prospectus
However, it is surprising that two of the company's three actual controllers have no industry experience, and one of them is 73 years old.
According to the prospectus, there is no controlling shareholder of Xidi Micro, and the largest shareholder is Dai Zuyu, with a shareholding ratio of 26.05%. Dai Zuyu, TAO HAI (Tao Hai) and Tang Ya jointly control 44.82% of the company's shares and are the joint actual controllers of the company. Among them, Dai Zuyu and TAO HAI (Tao Hai) are mother-child relationships.
According to his resume, Dai Zuyu was born in 1948, joined the Chongqing Plastics Sixth Factory in 1965 and retired in 1998; Tang Ya's shares were inherited from her mother He Shizhen. Born in 1949, He Shizhen has been practicing medicine since 1969 before retiring in March 2004.
Xidi Micro's single major shareholder has no industry experience Source: Audit Inquiry Letter Reply
Born in 1972, Tang Ya worked for the Pearl River Shipping Company in Guangdong Province from 1994 to 1996, the Finance Company of Wanbao Electric Appliance Group from 1996 to January 1999, and the freelancer from 1999 to September 2012.
Among the three actual controllers, only TAO HAI (Tao Hai) has relevant industry experience, Tao Hai graduated from Columbia University in the United States, and has worked for fairchild Semiconductor, a well-known semiconductor company in the United States, for more than 6 years. He is also the main operator of Xidi Micro. In addition, TAO HAI has been a U.S. citizen since 2006.
Obviously, Tao Hai is the real helmsman of Xidiwei. Having his mother hold the shares instead of himself may be a stopgap measure to avoid the market's over-interpretation of Tao Hai's nationality, but it is difficult to hide the restlessness and examination of Xidi's micro-valuation under the capital feast.