Author: Curly Fat Star
Source: Grandway IPO Research Institute
The Science and Technology Innovation Board welcomes tens of billions of semiconductor enterprises again!
Tomorrow, the domestic RF front-end PA module leader Weijie Chuangxin (Tianjin) Electronic Technology Co., Ltd. (hereinafter referred to as "Weijie Chuangxin") will officially open the subscription, the issue price is 66.60 yuan / share, the issued market value of 26.645 billion yuan.
In the context of the semiconductor industry has not yet improved, how will Weijie Chuangxin land on the A-share market?
1
The first IPO of the "Godmother of Copycat Machines"
Behind the weijie Chuangxin, we have to mention its founder Rong Xiuli.
Post-80s people may not be strangers to her. In the early years, when Nokia dominated the country, the "Tianyu Mobile Phone" founded by Rong Xiuli once won the champion of domestic mobile phone sales, and was jokingly called "the king of the cottage machine" by the public, and Rong Xiuli also got the name of "the godmother of the cottage machine".
Rong Xiuli, Source: Network
Rong Xiuli actually does not have a prominent family background, but is stronger than others. Born in 1963 to an ordinary working-class family in Xinxiang, Henan Province, Rong Xiuli was admitted to Hunan University at the age of 16 to study internal combustion engines.
After graduation, Rong Xiuli was assigned to work at the Luoyang Tractor Research Institute, which lasted for ten years. The 29-year-old Rong Xiuli is not willing to be ordinary, and went to Beijing alone to study for an MBA.
It was this choice that changed her life for the rest of her life.
After completing her MBA, Rong Xiuli entered a company with a telephone exchange. At that time, when it was still a BP machine, Finland's largest mobile phone agent Bai Li Feng planned to promote Big Brother into the Chinese market and entrusted Rong Xiuli's company to conduct research.
Rong Xiuli realized the alternative space of the mobile phone market and persuaded the boss to take over its agency rights in China.
However, promotion has not been smooth. Expensive prices and high phone bills hindered the marketing process, and at one point the company lost 1.6 million yuan. Unexpectedly, Rong Xiuli took over this mess, until the awakening of China's mobile phone industry, the company achieved a turnaround.
In 2002, Rong Xiuli established Beijing Tianyu Longtong Communication Equipment Co., Ltd. and began to make her own mobile phone. However, unlike other manufacturers, Tianyu Longtong has reached a cooperation with Foxconn and MediaTek and chosen to operate in the form of OEM production. At the same time, Rong Xiuli adopts a "buyout sales" strategy, allowing agents to set their own prices and sales, so that agents have greater profit margins.
This strategy undoubtedly worked well in the market at that time. In 2007, tianyu mobile phone shipments reached 17 million units, once won the title of domestic mobile phone sales champion, and the following year, Rong Xiuli debuted on the Hurun IT rich list with a wealth of 4.2 billion yuan. In that era, when Huawei and Xiaomi were not yet born, Tianyu mobile phones were not beautiful as the "king of cottage machines".
Source: Network
However, later, due to the lack of attention to research and development, coupled with the impact of smart phones, Tianyu mobile phones failed to transform in time, and eventually helplessly became a brand that relied on the sale of elderly machines to survive.
The frustration in the mobile phone market does not prevent Rong Xiuli from expanding its territory.
As early as 2010, Rong Xiuli founded Weijie Chuangxin, and plunged into the field of RF front-end chips. Until today, Weijie Chuangxin is about to land on the Science and Technology Innovation Board, behind which there is no shortage of mediatek, Huawei, OPPO, VIVO, Xiaomi and other well-known investors and industry leaders.
Before the IPO, Rong Xiuli directly held 14.8% of the company's shares, and indirectly controlled a total of 9.39% of the company's shares through Tianjin Yujie and Tianjin Yuteng, while Sun Yijun held a total of 14.10% of the shares through direct or indirect means, and the two held 38.29% of the total shares, which was the actual controller of the company. In addition, Gaintech, Guijin Capital, Hubble Investment, and OPPO Mobile held 28.12%, 8.65%, 3.57%, and 3.39% of the shares respectively.
Rong Xiuli, who is nearly a year old, has finally ushered in the first IPO company, but what is the color of The Core?
2
Caught in the quagmire of losses
The main business of Weijie Chuangxin is the research and development, design and sales of RF front-end chips, the main products are RF power amplifier modules (PA modules), accounting for more than 97% of revenue, in addition to some RF switching chips, Wi-Fi RF front-end modules and receiver module products.
From 2018 to 2020, the revenue scale of Weijie Chuangxin showed an "explosive" growth, from 284 million yuan to 1.810 billion yuan, with a compound annual growth rate of 152.48%, and in the first half of 2021, the revenue scale almost caught up with the annual revenue of 2020, reaching 1.702 billion yuan.
However, behind the eye-catching revenue growth, Weijie Chuangxin is deeply mired in losses.
During the period, the company's net profit attributable to the mother after deducting non-deductions was -40.2832 million yuan, -32.9544 million yuan, -101 million yuan and -16.5041 million yuan, respectively.
The reason for this is not unrelated to the continuous decline in gross profit margin.
From 2018 to 2020, the comprehensive gross profit margin of Weijie Chuangxin fell from 21.89% to 17.92%, far below the average of the same industry by more than 30%, and it was far from the gross profit margin of more than 50% of the industry leader Zhuoshengwei. Compared with the gross profit margin of about 45% of foreign Skyworks and Qorvo manufacturers, to a certain extent, it reflects that in the context of intensified market competition, the company's product competitiveness is insufficient and the bargaining power is weak.
In this regard, Weijie Chuangxin also admitted that the unit price of its product sales is affected by the market pricing, customer bargaining power and past sales prices of similar products of leading Us and Japanese manufacturers. At the same time, product costs are susceptible to raw material prices, supply chains, etc., coupled with the large-scale production of comparable companies in the same industry, the unit cost is lower, resulting in certain differences in the company's gross profit margin.
Specifically, as a core product, pa modules have a gross profit margin that has dropped from 22.04% to 18.08%.
The so-called PA module is to amplify the weak RF signal of the RF front-end transmission channel, so that the signal power reaches the antenna transmission and the power requirements received by the communication base station, which is the core device of the RF front-end signal transmission in the 2G-5G era. At present, the product models of the PA module are mainly concentrated in 4G, 2018-2021 H1, and the revenue accounts for 93.78%, 98.13%, 89.30%, and 73.58%.
As we all know, from 2020 onwards, China's smart phones have gradually transitioned from the 4G era to the 5G era, and mobile phone manufacturers such as Huawei, Xiaomi, and OPPO have launched various models of 5G mobile phones. According to data from the China Academy of Information and Communications Technology, the overall shipment of mobile phones in the domestic market in 2021 was 351 million units, of which 5G mobile phone shipments were 266 million units, accounting for 75.9% of mobile phone shipments in the same period.
Although the company's 5G PA modules began to sell in 2020, the proportion of revenue is still small, with H1 reaching only 26.42% in 2021. That is to say, the product structure of Weijie Chuangxin has not kept up with the changes of the times.
It should be known that the development of 5G is the trend of the times, which puts forward more stringent requirements for the performance and technology of 5G PA module products, which also means that related companies cannot slacken off in 5G product research and development. In this context, the company's R&D expense ratio continued to decline, from 19.52% in 2018 to 6.41% in H1 in 2021, and lower than the average of comparable companies in the same industry.
With the lessons of Tianyu mobile phones before, will history continue to repeat itself?
In the long run, Weijie Chuangxin wants to reverse and improve profitability and get out of the quagmire of losses, and it also needs to further strengthen product research and development, improve product shipments and market share.
It is worth mentioning that the main products of Weijie Chuangxin are widely used in mobile terminals such as mobile phones, tablet computers, smart wearable devices, and communication equipment such as wireless broadband routers, and downstream customers include mobile phone manufacturers such as Xiaomi, OPPO, vivo and ODM manufacturers such as Huaqin Communications, Longqi Technology, and Wingtech Technology.
During the reporting period, the company's operating income to the top five customers accounted for 99.80%, 95.91%, 98.68% and 99.08% respectively, the customer concentration is extremely high, once the downstream customers have major changes or cooperation with the company broke, Weijie Chuangxin faces the risk of order reduction or loss, which in turn affects the company's operating performance.
In fact, customer A ranked as the fourth largest customer in 2019-2020, accounting for 14.71% of sales in 2020, while in 2021 H1, due to company A reasons, the company did not generate sales revenue.
3
brief summary
Fundamentally, the performance of Weijie Chuangxin presents a situation of "increasing revenue without increasing profits", which is behind its product structure falling behind, gross profit margin decline, insufficient R & D investment and other multiple factors, even with the blessing of many star companies such as Huawei and MediaTek, the lack of profitability will eventually be eliminated by the market.
From the perspective of the capital market, in the past six months, the overall stock price trend of the A-share semiconductor industry has been weak, and the market value has shrunk significantly. Taking the price-to-sales ratio of 14.72 times corresponding to the company's issue price, the average level of the same industry is 15.15 times, which is within a relatively reasonable range, which also means that the company's stock price performance after listing is susceptible to market sentiment.
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